Kotak Life Ad

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SUMMER TRAINING

ON

PROFILE FOR POTENTIAL LIFE ADVISOR

AT

KOTAK OLD MUTUAL LIFE INSURANCE

COMPANY

IN PARTIAL FULFILLMENT OF THE REQUIREMEMT

IN THE MBA DEGREE OF VNSGU, SURAT.

SUBMITTED BY: - GUIDED BY:-

KATHROTIA VIPUL N. INTERNAL

GUIDE:

EXAMINATION NO. 44 DR.R.S.SHAH

MBA 1ST YEAR EXTERNAL

GUIDE:

DIVISION:-A MR.TEJASBHATTI



Acknowledgement:

It is a highly reverent privilege for having got the illuminating

opportunity to work under Kotak old mutual life insurance company for the

fulfillment of my MBA course.

This acknowledgement is a petite endeavor to thank all those who

were directly / indirectly involved in my project and bestowed me their kind co-

operation in pursuit of the same.

My summer training stint at Kotak gave me the precious sapience and

insight in the study of Profile for Potential Life Advisor.

I am highly indebted to Mr. VATSAL SHAH and no words would

suffice to express my thanks for his assiduous co-operation and precious

guidance in my training period. Without his prudent guidance, solicitous

interest and encouragement the project would not have been possible. I

express my sincere gratitude to Mr. TEJAS BHATTI for bestowing on me,

his kind and gracious facilitation of the training.

I thank with deep deference to DR R.S.SHAH , for his inimitable

contributive endeavor in guiding me throughout the project.

I pay my deep regards and reverence to my family for their affectionate

support, inspiration and ultra guidance besides me during the entire project. I

express my gratefulness to all people who lended me their esteemed and

highly significant time and help for completion of the project.

KATHROTIA VIPUL N.

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PREFACE:

To be an MBA student is a matter of pride because you are in a field

which helps you to develop from a normal human being into a disciplined and

dedicated professional. In the management field you cannot create success

stories if you are not a good learner. You need to be a good learner to

sharpen your knowledge in the particular field to achieve and attain the

desired goals and heights.

Mere bookish or theoretical knowledge cannot help you in any field

whether it is management, technology, research, or any other field. The only

thing that can help you is having a sound practical knowledge of the

concerned field. As part of my learning in management field and also a

requirement of the MBA programme, I have been very fortunate to receive

practical knowledge in KOTAK OLD MUTUAL LIFE INSURANCE COMPANY

I received my training at Kotak as a requirement of the MBA

curriculum. This training has made me clear the difference between the

theoretical knowledge and the practical scenario, making me aware of the

importance of practical working conditions/situations.

I have tried to present whatever knowledge I gained, and learned at

Kotak during my training period in a very systematic manner.

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DECLARATION:

I undersigned, KATHROTIA VIPUL N. declare that this general training

and project report entitled, “PROFILE FOR POTENTIAL LIFE

ADVISOR ” is the result of my own study research work carried out during

May-June 2007 and has not been previously submitted to any other university

or institute for any other examination and for any other propose by any other

person.

I will not use this project report in future to use as submission to any

other university, institution or publisher without written permission of my guide.

If I am found as defaulter of any declaration, I know that my present or

future submission may become invalid and I may not be permitted to appear

in the final exam in the college or institution, where I am studying.

KATHROTIA VIPUL N.

4



EXICUTIVE SUMMARY:

In third semester as my training obligation for MBA program during this

summer project, my special topic was PROFILE FOR POTENTIAL LIFE

ADVISOR in Kotak Old Mutual Life Insurance Company.

During this summer project I have taken 100 hour training. I have taken

examination to becoming Life Advisor, which is conducted by IRDA.

Report contains all the general information of Life Insurance. 100 hours

training was become helpful to make clear all the concept of Life Insurance

like assignment, nomination, rider, different non forfeiture option, calculation

of premium etc.

I have also taken product training which was become helpful to

understand different plans of Kotak Old Mutual Life Insurance Company. And

I have also done marketing for company’s product in which I have sold two

policy.

I have also made market survey to know segment from which most

people come to become Business Associate and preference given by client to

prefer Kotak old mutual life insurance company. I have also applied

hypothesis for that survey.

5



INDEX:SECTION PARTICULAR PAGE NO

I 1. General Report

1.1 Brief history of Insurance 10

1.2 How Insurance Work 11

1.3 Advantages of life insurance 12

1.4 Information of Agent 14

2. Principle of life insurance 18

3. Principle of utmost good faith 19

4. Information related to Insurable Interest 21

5. Premium 23

6. Bonus 27

7. Name of Insurers 28

8. Information of Kotak Mahindra Group 29

9. Plant layout, Org. Chart, Process Flow 33

10. Kotak Group Company 37

11. Mission, Vision and Strategy 45

12. Branch Location 48

13. Underwriting 50

14. Insurance Document 54

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15. Policy Condition 57

16. Different Non-forfeiture Option 59

17. Assignment & Nomination 62

18. Group Insurance 65

19. Actuarial Profession 69

20. Law and Regulation 70

21. Plans of Kotak life insurance

21.1 Kotak Term Plan 72

21.2 Kotak Money Back Plan 74

21.3 Kotak Endowment Plan 78

21.4 Kotak Preferred Plan 80

21.5 Kotak Child Advantage Plan 83

21.6 Kotak Retirement Income Plan 84

21.7 Kotak Group Plan 91

II Profile For Potential Life Advisor

1. Research Objective 97

2. Research Design 99

3. Questionnaire 100

4. Sampling Design 102

5. Chi-Square Hypothesis Testing 108

6. Conclusion 118

7. Bibliography 119

7



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SECTION: I

GENERAL REPORT

9



BRIEF HISTORY OF INSURANCE:

The business of insurance started with marine business. Traders, whoused to gather in the Lloyd’s coffee house in London, agreed to share thelosses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship. The first insurance policy was issued in1583 in England. In India, insurance began in 1870 with life insurance beingtransacted by an English company, the European and Albert. The first Indian

insurance company was the Bombay Mutual Assurance Society Ltd, formed in1870. This was followed the Oriental life Assurance Co. in 1874, the Bharat in1896 and the Empire of India in 1897.

Later, the Hindustan Cooperative was formed in Calcutta, the UnitedIndia in Madras, the Bombay Life in Bombay, the National in Calcutta, theNew India in Bombay, and the Jupiter in Bombay and the Lakshmi in NewDelhi. These were all Indian companies, started as a result of the swadeshimovement in the early 1900s. By the year 1956, when the life insurancebusiness was nationalized and the Life Insurance Corporation of India wasformed on 1st September 1956, there were 170 companies and 75 providentfund societies transacting life insurance business in India. After theamendment to the relevant laws in 1999, the L.I.C. did not have the exclusiveprivilege of doing life insurance business in India. By 31.3.2002, eleven newinsurers had been registered and had begun to transact life insurancebusiness in India.

HOW INSURANCE WORKS:

The mechanism of insurance is very simple. People who are exposedto the same risks come together and agree that, if any one of them suffers aloss, the others will share the loss and make good to the person who lost. Allpeople who send goods by ship are exposed to the same risks, which arerelated to water damage, ship sinding, piracy, etc, Those owning factories arenot exposed to these to these risks, but they are exposed to different kind of risks like, fire,

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hailstorms, earthquakes, lighting, burglary, etc. Like this, different kinds of risks can be identified and separate groups made, including those exposed tosuch risks. By this method, the heavy loss that any one of them may suffer isdivided into bearable small losses by all. In other words, the risk is spreadamong the community and the likely big impact on one is reduced to smaller manageable impact on all. There are certain principles, which make itpossible for insurance to remain a fair arrangement. The first is that it isdifficult for any one individual to bear the consequences of the risks that he isexposed to. It will become bearable when the community shares the burden.The second is that the peril should occur in an accidental manner. Nobody

should be in position to make the risk happen. The occurrence has to berandom, accidental, and not the deliberate creation of the insured person.

The collection to be made from each person in advance is determinedon assumptions. While it may not be possible to tell beforehand, while personwill suffer, it may be possible to tell, on the basis of past experiences, howmany persons, on an average, may suffer losses. The following two examplesexplain the above concept of insurance.

ADVANTAGES OF LIFE INSURANCE:

Life insurance has no competition from any other business. Manypeople think that life insurance is an investment or a means of saving. This isnot a correct view. When a person saves, the amount of funds available atany time is equal to the amount of money set aside in the past, plus interest.

This is so in a fixed deposit in the bank, in national savings certificates, inmutual funds and all other savings instruments. If the money is invested inbuying shares and stocks, there is the risk of the money being lost in thefluctuations of the stock market. Even if there is no loss, the available moneyat any time is the amount invested plus appreciation. In life insurance,however, the fund available is not the total of

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the savings already made, but the amount one wished to have at the end of the savings period. The final fund is secured from the very beginning. One is

paying for it later, out of the savings. One has to pay for it only as long as onelives or for a lesser period if so chosen. There is no other scheme whichprovides this kind of benefit. Therefore life insurance has no substitute.

Even so, a comparison with other forms of savings will show that lifeinsurance has the following advantages.

• In the event of death, the settlement is easy. The heirs can collect themoneys quicker, because of the facility of nomination and assignment.

The facility of nomination is now available for some bank accounts.

• There is a certain amount of compulsion to go though the plan of savings. In other forms, if one changes the original plan of savings,there is no loss. In insurance, there is a loss.

• Creditors cannot claim the life insurance moneys. They can beprotected against attachments by courts.

• There are tax benefits, both in income tax and in capital gains

• Marketability and liquidity are better. A life insurance policy is propertyand can be transferred or mortgaged. Loans can be raised against thepolicy.

The following tenets help agents to believe in the benefits of lifeinsurance. Such faith will enhance their determination to sell and their perseverance.

• Life insurance is not only the best possible way for familyprotection. There is no other way.

• Insurance is the only way to safeguard against the unpredictablerisks of the future. It is unavoidable.

• The terms of life are hard. The terms of insurance are easy.

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• The value of human life is far greater then the value of property.Only insurance can preserve it.

• Life insurance is not surpassed by many other savings or investment instrument, in terms of security, marketability, stability of value or liquidity.

• Insurance, including life insurance, is essential for the conservationof many businesses. Just as it is in the preservation of homes.

• Life insurance enhances the exiting standards of living.

• Life insurance helps people live financially solvent lives.

• Life insurance perpetuates life, liberty and the pursuit of happiness.

• Life insurance is a way of life.

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DEFINITION OF AN AGENT:

An agent is one who acts on behalf of another. The ‘another’ on whosebehalf the agent acts, is called the principal. This is the simple definition. Thelawyer is the agent of the client, when he argues the case in court. Anambassador is an agent of his country. It is the function, which determines therelationship of agency, not the designation.

According to section 182 of the Indian Contracts Act, an ‘agent’ is aperson employed to do any act for another or to represent another in dealingwith a third person. The person for whom such act is done or who is sorepresented is called the ‘principal’. In the insurance industry, the term ‘agent’is ordinarily applied to a person engaged by the insurer to procure newbusiness. The Insurance Act defines an insurance agent as one who islicensed under Section 42 of that Act and is paid by way of commission or otherwise, in consideration of his soliciting or procuring insurance business,renewal of policies of insurance. He is, for all purposes, an authorizedsalesman for insurance.

Under Section 183 of the Contract Act, any person who is a major,

according to the law to which he is subject, and who is of sound mend, canemploy an agent. Section 184 provides that as between the principal and thirdpersons, any person may become an agent. Thus, though a minor may beemployed as an agent and the principal would be bound by his actions, theminor himself will not be liable to his principal. Unlike other contracts, noconsideration is necessary to create an agency contract.

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AUTHORITY OF AN AGENT:

While the maxim cited above makes the principal liable for all the acts

done by the agent, he can restrict his liability by specifying the extent of authority granted to the agent. This authority may be expressed or implied. Anauthority is

Said to be expressed when it is stated by words, spoken or written. It isimplied when it is to be inferred from the circumstances of the case.

The L.I.C. does not authorize its agents to collect premia or other

amounts from policyholders. But if the agent collects such amounts, remitsthem to the insurer and gets receipts to be handed over back to thepolicyholder, implied authority can be inferred or construed. The LIC’s standhas been that its agents are not authorized to collect renewal premiums andthat if they do so, they are acting as agents premiums and that if they do so,they are acting as agents of the policyholder and not of the LIC. Theimplication is that if an agent collects premium from a policyholder and doesnot remit the same in the office, the L.I.C. would not be liable for that amount.The courts have upheld this stand. Other insurance companies in India maynot follow LIC’s practice. They may grant more or less authority.

METHODS OF REMUNERATING AGENTS:

A life insurance agent works on commission basis. He is paid a statedpercentage of the premium collected through his agency. Section 40 A(1) of the insurance Act stipulates that the maximum amount which can be paid to alife insurance agent, by way of commission or remuneration in any form, shall

be 35% of the first year’s premium, 7.5% of the second and third year’srenewal premium and 5% of subsequent renewal premium.

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There are some exceptions to this. During the first ten years of theinsurer’s business, he may pay 40% instead of 35% of first year’s premium.Under certain circumstances, commission of 6% can be paid on the renewalpremium even beyond the third year. Within these limits, the manner of remunerating the agent will be determined by the insurer. Normally, under term assurance plans, commission rates are less. Similarly, for shouter duration policies, commission rates are lesser than under longer durationplans. Under single premium plans and pension/annuity plans, rate of commission is very small.

New agents may be paid a stipend to be adjusted against thecommission to be earned, as and when the business begins to come in.Brokers are paid on a totally different basis.

PROCEDURE FOR BECOMING AN AGNET:

The insurance Act, 1938 lays down that an insurance agent mustposses a license under Section 42 of that Act. The license is to be issued bythe IRDA. The IRDA has authorized designated persons, in each insurancecompany, to issue the licenses on behalf of the IRDA. The fee for the license,the manner of making an application, etc., have been described in the IRDARegulations.

A license issued by the IRDA will be valid for three years. The licensemay be to act as an agent for a life insurer, for a general insurer or as a“composite insurance agent” working for a life insurer as well as a general

insurer. No agent is allowed to work for more than one life insurer or morethan one general insurer.

The qualifications necessary before a license can be given are that theperson (individual or corporate insurance executive) must

• Be at least 18 years old

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• Have passed at least the 12th standard or equivalent examination, if heis to be appointed in a place with a population of 5000 or more or 10thstandard otherwise.

• Have undergone practical training for at least 100 hours in life or general insurance business, as the case may be, from an institution,approved and notified by the IRDA. In the case of a person wanting tobecome a composite insurance agent, the applicant should havecompleted at least 150 hours practical training in life and generalinsurance business, which may be spread over six to eight weeks.

• Have passed the pre-recruitment examination conducted by theInsurance Institute of India or any other examination body recognizedby the IRDA.

A person with the following disqualifications is debarred from holding alicense

• He has been found to be a unsound mind by a court of competent jurisdiction

• He has been found guilty of criminal breach of trust,misappropriation, cheating, forgery or abetment or attempt tocommit any such offence.

The license once issued, can be cancelled whenever the person

acquiresa disqualification.

Applications for renewal have to made at least thirty days before theexpiry of the license, along with the renewal fee of Rs.250. If the application isnot made at least thirty days before the expiry, but is made before the date of expiry of license, an additional fee of Rs.100 is payable. If the application ismade after the dated of expiry, it would be normally be refused.

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Prior to renewal of the license, the agent should have completed at

least 25 hours practical training in life or general insurance business or atleast 50 hours practical training in life and general insurance business in thecase of a composite insurance agent.

Insurers, who select agents for appointment, make arrangements for training, for appearing in the prescribed examinations, and obtaining thelicense from the IRDA. The procedures have been streamlined and there islittle loss of time for any step in the process.

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PRINCIPALES OF LIFE INSURANCE:

A life insurance policy is a contract, in terms of the Indian Contract Act,1872. A contract is an agreement between two or more parties to do, or not todo, so as to create a legally binding relationship. A simple contract must havethe following essentials.

• Offer and acceptance

• Consideration

• Capacity to contract

• Consensus ‘ad idem’ (genuine meeting of minds)

• Legally of object or purpose

• Capability of performance

• Intention to create legal relationship

Insurance is a specialized type of contract. Apart from the usual essentialsof a valid contract, insurance contracts are subject to two additional principals’viz. Principal of Utmost Good Faith & Principal of Insurable Interest. Theseapply to all insurances, both life and non-life.

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PRINCIPLE OF UTMOST GOOD FAITH:

Commercial contracts are normally subject to the principal of caveatemptor i.e. let the buyer beware. It is assumed that each party to the contractcan examine the item or service, which is the subject matter of the contract.Each party can verify the correctness of the statements of the other party.There is no need to take the statements on trust. Proof can be asked for.

In the case of insurance contracts, this principal does not apply. Most of the facts relating to health, habits, personal history, family history, etc., whichform the basis of the life insurance contract, are known only to the prosper does not disclose them. The underwriter can ask for a medical report.

A summary of the doctrine of utmost good faith was given in the case of Rozanes vs. Bowen in 1928 as follows “As the underwriter knows nothing andthe man who comes to him to ask for insurance knows everything, it is theduty of the assured to make a full disclosure to the underwriter without being

asked, of all material circumstances. This is expressed by saying that it is acontract of utmost good faith”.

The law imposes a greater duty on the parties to an insurance contractthan in the case of other commercial contracts, to disclose relevantinformation. This duty is one of utmost good faith or Uberrimae Fides. It is theduty of the proposer to make a full disclosure to the underwriter. Theimplications are that, in the event of failure to disclose material facts, thecontract can be held to be void ab initio.

Every circumstance that would have a bearing on the judgment of aprudent insurer in fixing the premium or determining the acceptability of theproposal for insurance is a material fact. Therefore, facts regarding age, hight,weight, build, nature of occupation, smoking/drinking habits, medical history,surgeries, earlier insurances, etc., must be disclosed.

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There are certain circumstances, which need not be disclosed. They are

• Facts of common knowledge, which every one is supposed to know.

• Facts of law

• Facts which a survey would have revealed.

• Facts which could be reasonably discovered, by reference to previouspolicies and records available with the insurer.

The duty of disclosure in life insurance operates till the risk commences.The breach of principal of utmost good faith may arise due tomisrepresentation or non-disclosure. Misrepresentation or non-disclosureshould be

• Substantially false and known to the proposer as false

• Not known to the second party

• Concerned with facts which are material to the acceptance or assessment of the risk or material to the benefits obtained by theproposer

• Calculated to induce the other party to enter into a contract on its ownterms.

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INSURABLE INTEREST:

All risks are not insurable. Otherwise, an insurance contract would beno different from a wagering contract. Wagering contract is illegal in terms of Section 30 of the Indian Contract Act and therefore invalid. What distinguishesan insurance contract from a wagering contract is that the insured must have

an insurable interest in the subject of insurance.

In simple terms, it means that the proposer must have a stake in thecontinuance of the subject insured and could suffer a loss, if the risk is notcovered through insurance. What is insured is the financial or pecuniaryinterest in the subject matter of insurance. The insured must be in arelationship with the subject of insurance, whereby he benefits from its safetyand well-being and would sbe prejudiced by its loss or damage.

A wager is what is commonly called a ’bet’. Example is, “who will win theworld cup?” One of the parties to the bet will lose. The odds also are that hemay gain. Therefore, the risk is a speculative risk and is not insurable. Theparty concerned could have avoided the loss. Insurance assumes that theevent insured against (peril) is not subject to the control of the insured.

The Insurance Act, 1938 does not define insurable interest. Court judgments have established the circumstances in which insurable interest isdeemed to exist. It has been held that a person has unlimited insurableinterest in his own life. Other clarifications relevant for life insurance are

• A husband has insurable interest in the life of his wife and vice-versa

• An employer has insurable interest in his employee to the extent of thevalue of his services.

• An employee has insurable interest in the life of his employer to theextent of his remuneration for the period of his notice

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• A creditor has an insurable interest in the life of the debtor, to the

extent of the debt

• Partners have insurable interests in the lives of each other • A surety has an insurable interest in the life of his co-surety to the

extent of the debt and also on the life of the principal debtor

• A company has an insurable interest in the life of a key valuableemployee.

If member of families are in business together or there are some other financial relationship, insurable interest arises as a result of such financialinvolvement. The insurable interest arises, not because of the family ties, butbecause of the business ties. Partners can insure each other’s lives, becausethey stand to lose in the event of death of any of them. A creditor may losefinancially if a debtor dies before repaying a loan. His interest would be limitedto the outstanding loan with outstanding interest.

The legal position about children’s assurances is not quite clear. It ispresumed that parents have insurable interest in the life of a child as a child

i.e. so long as he is a child. Therefore, most of the L.I.C.’s children’s policiesincorporate a vesting clause, whereby the policy vests in the child onattainment of majority.

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PREMIUMS:

Premium is the consideration that the policyholder has to pay in order to secure the benefits offered by the insurance policy. It can be looked uponas the price of the insurance policy. It may be a one-time payment. That is not

common. Often, it has to be paid regularly over a period of time. A default inpremium can be endanger the continuance of the policy. If that happen, thepolicy will be treated as lapsed and the expected benefits will not be available.The consequences of default are specified in the policy conditions.

RISK, NET, PURE PREMIUM:

Cost to meet the risk of death for one year at a particular age is calledthe risk premium. The risk premium is based on the probabilities of death atvarious ages. Mortality tables prepared for use of insurance offices, containdata relating to such probabilities.

The risk premium would be adequate to pay the claims, if all thepolicies were term assurance policies for one year. In the case f Endowmentpolicies, claims have to be paid on survival after some year. Therefore, theactual premium collected would have to be more than the risk premium,

whenever falling due. Here also, the mortality tables would be used toestimate the number of persons who may survive the terms.

The premium collected by insurers is not utilized every year for payment of claims. This is so for many reasons. One is that the realexperience may not be exactly as indicated by the mortality tables, second,the portion of the premium is meant to meet survival benefits. The balancepremium remaining with the insurer will be invested and will earn someinterest. To the extent of the expected interest earnings, the premium chargedcan be reduced. The premium worked out after taking into the account the

interest, is called the net premium or pure premium.

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LOADINGS:

The administrative expenses of the insurer have to be met out of thepremiums paid by the policyholders. To this extent, the premium to becollected will higher. Such additions to the pure premium are called ‘loadings’.

One of the loadings is due to administrative expensed. Loadings maybe made for other reasons as well. One of them would be for unexpected

contingencies and fluctuations. A major catastrophe like an earthquake or accident or riots or epidemic, can raise the number of deaths to a much higher level then normal. The risk premium based on mortality tables would be foundto be inadequate to meet catastrophic claims. Insurers, therefore, as a matter of safety provide for such contingencies and fluctuations, by ‘loading’ thepremium suitably.

Bonus has to be given to participating policyholders. Bonus is declaredout of the surpluses determined after actuarial valuations. Surpluses, in away, reflect the profitability of the business or the quality of management of

the business. Nevertheless, insurers load the premiums on account of thebonus. In practice the actual bonus declared should be the higher than theloading.

LEVEL PREMIUM:

Company spreads risk premium on a uniform basis through out theterm of the policy. Such uniform premium called as level premium. It alsoprevents adverse selection of policyholders. It may be inferred to the

policyholder that younger aged people are charged lower amount of premium,whereas old aged people are charged higher amount of premium. Hence toavoid adverse situation to arise among policyholder, Level Premium is takeninto account.

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OFFICE PREMIUM:

The premium figure arrived at after loading the net premium or pure premium, is called the Office premium. They are now ready for use. Thepremium figures printed in the promotional literature and brochures are theoffice premiums.

The increase of decrease may be in percentage terms like ‘add or subtract 2.5%’ or in simple numbers like ‘add or subtract Rs. 1.00’. practicesof insurers vary. Some provide for rebates for yearly modes and noadjustments for quarterly or monthly modes. Some provide increases for quarterly or monthly modes, but no adjustment made for yearly modes. Thisdepends on how the insurer concerned has worked out the office premiums.

EXTRA PREMIUM:

Extra premiums may be charged on any particular policy. This mayhappen because of the grant of some benefit in addition to the basic benefitsunder the plan, like accident benefit or premium waiver benefit. Riders provideadditional or supplementary benefits. Extra premium may become chargeablebecause of underwriting decisions. If the risk of the life to be insured isassessed as more than normal because of health or because of nature of jobsor habits, underwrites may charge extra premiums. These are usually statedas say, Rs. 2 per thousand, and will be added to premium otherwisechargeable.

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PREMIUM CALCULATION:

Step 1: Find out tabular premium i.e. premium quoted in publishedpremium rates for given age (nearer, next or last birthday as the case may be)for the relevant plan and term. This premium is per thousand sum assured.

Step 2: Deduct adjustment for large sum assured, if applicable.Assuming that the insurer allow rebates as follows

Rebate per thousand S.A.

Step 3: Mode rebate

Rebate as per mode of payment

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Rs.25, 000 – Rs.49, 000 Rs.1/-

Rs.50, 000 – Rs. 99, 999 Rs.1.50/-

Rs.1, 00,000 and over Rs.2/-

MODE OF PAYMENT REBATE/EXTRA

Yearly 3% Rebate

Half-Yearly 1.5% Rebate

Quarterly No Rebate

Monthly 5% Extra



Step 4: Make an adjustment for Occupational extra and Health extra

Step: 5 Multiply these by SA

Step: 6 Make adjustments for Double Accident Benefit if any

LIFE FUND:

In normal trading businesses, the excess of income over theexpenses in any accounting year, would be considered as profit and will bedistributed among the owners. These is not so in life insurance. First of all, thecontract for which the premium is paid, does not come to an end at the endthe year, it is a long term contract. The profit, if any, can be determined onlyafter the contract comes to an end.

The practice of the level premium implies that a part of the premium

collected in any year, is meant to cover the higher risk of future years and hasto be kept till such risks arise. In relation to endowment plans, the premiumhas the saving element, which has to be paid as claim at the end of the term.

For all these reason, the principles of prudent life insurancemanagement require that all the income from the life insurance business(including the earnings from the investments) be kept aside in a life fund,earmarked exclusively to meet the liabilities under life insurance policies.

ACTUARIAL VALUATION:

Actuary estimates the liabilities of Insurance Company in respect of business in its books. Then estimates the amounts of premium that are due tobe received in the future. The difference between the two is the fund requiredby the insurer to stay solvent.

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Separate funds need to be maintained for non-participating policies.Premiums is calculated on the basis of certain assumptions and expectationsof :

• Mortality

• Interest

• Expensed

Actuarial valuation is process where company checks the validity of these assumptions made. Insurance Act requires that Actuarial Valuations bedone every year.

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BONUS:

The distribution of the valuation surplus to policyholders is donethrough the declaration of ‘Bonus’. Only policyholders who opt for ‘Participating’ or ‘With profit’ policies would be entitled to bonus. Other policyholders who have ‘Non-participating’ or ‘Without profit’ policies would bepaying slightly lesser amount of premium for the same kind of insurancecover, because of the factor of bonus loading.

There are four types of bonus.

1. Simple Reversionary Bonus

2. Compound Reversionary Bonus

3. Final Additional Bonus or Terminal Bonus

4. Interim Bonus

• Reversionary Bonuses are a bonus which is declared every year butcredited in to the account of the policyholder and payable on maturityor death of if it occurs earlier.

• Sum Assured is immediately increases as soon as bonus is declared

• Final Additional Bonus is one time bonus payable as incentive to keepthe policy in books of company till maturity or death.

• Interim Bonus is payable if policy mature or death occurs withinintervaluation period

• Every plan has different bonus.

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• Reversionary Bonus added to the Sum Assured could be either simpleor compounded.

• Terminal Bonus may also be declared for policies which havecontinued for longer time.

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NAMES OF INSURERS:

GOVERNMETN INSURER IN INDIA:

• Life Insurance Corporation of India

PRIVATE INSURERS IN INDIA:

• Kotak Old Mutual Life Insurance Co. Ltd.

• Bank of Baroda

• Reliance Insurance Limited.

• Sahara India Life Insurance Co Ltd.

• Tata AIG Life Insurance Co. Ltd.

• Aviva Life Insurance Company Pvt. Ltd.

• HDFC Standard Life Insurance Co. Ltd.

• Birla Sun Life Insurance Co. Ltd.

• ICICI Prudential life Insurance Co. Ltd.

• SBI Life Insurance Company Ltd.

• MetLife India Insurance Co. Ltd.

• Allianz Bajaj Life Insurance Co. Ltd.

• Max New York life Insurance Company.

• ING Vysya Life Insurance Company.

32



KOTAK MAHINDRA GROUP:

BANKING HISTORY:

Established in 1984, The Kotak Mahindra group has long been one of India’s most reputed financial organizations. In February 2003, KotakMahindra Finance Ltd, the group’s flagship company was given the license tocarry on banking business by the Reserve Bank of India. This approval

creates banking history since Kotak Mahindra Finance Ltd. is the firstcompany in India to convert to bank.

A LIFETIME OF VALUE:

Kotak Mahindra one of India's leading financial institutions was born in1985 as Kotak Capital Management Finance Limited. This company waspromoted by Mr. Uday Kotak , Mr. Sidney A. A. Pinto and Kotak & Company.Industrialists Mr. Harish Mahindra and Mr. Anand Mahindra took a stake in

1986, and that's when the company changed its name to Kotak MahindraFinance Limited. It's been a steady and confident journey to growth andsuccess.

33



In October 2005, Kotak Group acquired the 40% stake in Kotak Prime

held by Ford Credit International (FCI) and FCI acquired the stake in FordCredit Kotak Mahindra (FCKM) held by Kotak Group in May 2006, KotakGroup bought 25% stake held by Goldman Sachs in Kotak Capital and KotakSecurities.

Kotak Mahindra is one of India's leading financial institutions, offeringcomplete financial solutions that encompass every sphere of life. Fromcommercial banking, to stock broking, to mutual funds, to life insurance, toinvestment banking, the group caters to the financial needs of individuals andCorporates.

The group has a net worth of over Rs. 2,900 crore, employs around8,800 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 282cities and towns in India and offices in New York, London, Dubai andMauritius. The Group services around 2 million customer accounts.

34



INFROMATION OF KOTAK MAHINDRA BANK:

THE COMPLETE BANK:

Kotak Mahindra Bank, address the entire spectrum of financial needsfor individual and Corporates. From Retail Finance to Equities, Mutual Funds

to Life Insurance and Investment Banking, KOTAK have the products, theexperience the infrastructure and most importantly the commitment to deliver pragmatic, end-to-end solutions that really work.

MEMBERS OF BOARD OF DIRECTORS:

1. Chairman Mr. K.M.Gherde

2. Executive Vice Chairman and Mr. Uday KotakManaging Director:

3. Other Board of Directors Mr. Anand MahindraMr. Cyril MahindraMr. Pradeep KotakMr. Shankar AcharyaMr. Shivaji Dam

4. Executive Director Mr. C. JayaramMr. Dipak Gupta

5. Secretary and Sr. Vice Miss Bina Chandarana

President

35



Corporate Identity:

What KOTAK people have to say about their

Symbol?

The symbol of the infinite ka reflects our global Indian personality. Theka is uniquely Indian while its curve forms the infinity sign, which is universal.One of the basic tenets of economics is that man’s needs are unlimited. Theinfinite ka symbolizes that we have an infinite number of ways meets thoseneeds.

ORGANIZATION STRUCTURE:

36

AREA MANAGER



AREA MANAGER - Mr. Levish Kamdaar

Asst. BRANCH MANAGER - Mr. Kurien Abraham

BRANCH MANAGER - Mr. Vatsal Shah

Total Employees:- 25

Total Life Advisors:- 200 approximately.

37

BRANCH MANAGER

SALESMANAGER AGENCYMANAGER CORPORATEEXECUTIVES

LIFEADVISORS

CORPORATEBANK

Asst. Br.MANAGER



PLANT LAYOUT:

MAIN ENTRY

38

NEW VIP ROAD, WAY TO GO AIR PORT

WASHING

ROOM

TRAINING

ROOM

XEROX

COMMON PHONE AND CHAIR

FOR WAITING

RECEPTION

MEETING

ROOM

LA

ROOM

BRANCH

MANAGER ROOM

MEETING

ROOM

COLLECTION

DEPARTMENT



ORGANIZATIONAL FLOW:

39

MD

NATIONAL HEAD

VICE HEAD

AREA MANAGER

BRANCH SALES MANAGER

SALES MANAGER AGENCY MANAGER

LIFE ADVISOR

LIFE ADVISIORSLIFE ADVISORS



Process Flow:

40

LIFE ADVISOR TAKE

APPOINTMENT OF CLIENT

YESNO

LA MARKETSTHE PRODUCT

NOT AGREE TOTAKE POLICY

AGREE TO TAKE POLICY

LA TRIES TOSLOVE

DOUBTNOT

END

LA WILL COMPLETE ALL FORMALITYOF FORM AND COLLCOLLECTION

DOUBTCLEARED

AGENCTY/SALES MANAGER VERIFYIT AND MAKE HIS HER SIGNATURE

AUERIES

NO YES

PROCUDURE OF SUBNISSION OF FORMAND COLLECTION TO DEPARTMENT

MANAGER TRY TOSLOVE DOUBT

SOLVED NOTSOLVED

DEPOSITE RECEIPT IS GIVEN TO CLIENTAND PROCESS OF UNDERWRITING WILL

DECLARED ASSTANDRD LIFE

NOT DECLAREDAS STANDARD

ASK FOR EXTRA

PREMIUM

AGREE TO PAY

PAY TO PARTICULAR

NOTAGTREE

RETURN ALLTHE PREMIUM

WITH IN 15



KOTAK GROUP COMPANIES

(INFORMATION ABOUT GROUP COMPANIES)

KOTAK MAHINDRA PRIME LTD.:

Kotak Mahindra Prime Limited is 100% subsidiary of Kotak MahindraGroup formed to finance all passenger vehicles. The company is dedicated tofinancing and supporting automotive and automotive related manufacturers,dealers and retail customers. The company offers car financing in the form of loans for the entire range of passenger cars and multi utility vehicles. Thecompany also offers inventory funding to car dealers and has entered intostrategic arrangement with various car manufacturers in India for being their preferred financier.

As on March 31, 2005, KMP has a retail distributor network comprisingof 54 branches (including representative offices) covering about 100 locationsin 17 states in the country and has a wide network of Direct MarketingAssociates, brokers and agencies supporting the distribution network andservicing around 1,13,000 customers.

KOTAK MAHINDRA CAPITAL CO. LTD.:

• Kotak Investment Banking (KIB) is India’s premier Investment Bank

• Kotak Investment Banking and Kotak Institutional Equities representthe securities business of the Kotak Mahindra Group.

41



• Kotak Investment Bank is a full service Investment Bank bringing to itsclients the global reach and the local knowledge and skills of KotakMahindra. As a full service Investment Bank, Kotak InvestmentBanking’s core business areas include Equity Issuances, Mergers andAcquisitions, Advisory Services and Fixed Income Securities andPrincipal Business.

• Its strength lies in understanding the client’s businesses backed by astrong research team and an extensive distribution network, whichspans a wide variety of investors across the country. It is also the firstIndian Investment Bank to be registered with Securities & FuturesAuthority in the UK and the National Association of Securities andDealers in USA.

• It’s the first Indian Investment Bank to be appointed by the Governmentof India as a Co-lead Manager in their international divestment of GasAuthority of India Ltd. through a GDR offering.

• Kotak Investment Bank today well positioned in an increasing globalizeenvironment to provide full service to its clients based either in India or

overseas.

KOTAK MAHINDRA ASSET HANAGEMENT COMPANY:

Kotak Mahindra Asset Management Company (KMAMC), a wholly ownedsubsidiary of KMBL, is the asset manager for Kotak Mahindra Mutual Fund(FMMF). FMAMC started operations in December 1998 and has over

1,35,000 investors in various schemes. KMMF offers schemes catering toinvestors with varying risk-return profiles and was the first fund house in thecountry to launch a dedicated gilt scheme investing only governmentsecurities.

42



KOTAK SUBSIDIARIES:

Kotak Mahindra International Limited (KMIL) is the international arm of the Kotak Mahindra group and was incorporated in 1994 in Mauritius, with abranch in Dubai. Today the international operations also cover the UnitedKingdom, through Kotak Mahindra U.K. Limited and in the USA, throughKotak Mahindra Inc. USA. These companies are subsidiaries of KotakMahindra Capital Company (KMCC) – the Investment Banking Division of theGroup. Services offered include GDR and ADR trading and broking Mahindrawas the first Indian group to be registered with the Securities and Futures

Authority, U.K. Also, Kotak Mahindra is the first Indian group registered in theUS providing service to both Institutional investors and High Net Clients in theUS for their investments into Indian markets.

KOTAK SECURITIES:

• Kotak Securities Ltd., subsidiary of Kotak Mahindra Bank Ltd., is one

India’s largest brokerage and distribution house. Over the years KotakSecurities has been one of the leading investment service providerscatering to the needs of various investor categories both institutionaland non-institutional

.• The private client group of the company provides value added

investment advisory services to high net worth individuals, NRIinvestors, corporate and Banks. The investment product range offeredby PCG covers equity investment and equity trading, equity derivatives,portfolio management, IPOs and Mutual funds. The company has fullfledged research division involved in macro economic studies, sectoralresearch and company specific division involved in combined with astrong and well networked sales force which helps deliver current andup to date market information and news.

• Kotak Securities Ltd., Depository Participant with National SecuritiesDepository Limited (NSDL) provides dual benefit services wherein theinvestors can use the brokerage services of the company for executingthe transactions and the depository services for settling them.

43



• Under the portfolio Investment Scheme offered by the company, a

highly competent team comprising of Equity Strategist, a PortfolioManager and a team of equity, technical and derivatives analystsmanager the funds of the investors.

• Kotak Street – the retail arm of Kotak Securities Ltd., offers online(through www.kotaksecurities.com) and offline services, its well-researched expertise and financial products to the retail investors.

• Kotak Securities Ltd., also an Approved Intermediary under the

Securities Lending Scheme, 1997, facilitates clients to borrow and lendsecurities.

44

http://www.kotaksecurities.com/

http://www.kotaksecurities.com/



KOTAK OLD MUTUAL LIFE INSURANCE:

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venturebetween Kotak Mahindra Bank ltd. (KMBL) and Old Mutual plc. At Kotak Life

Insurance, the main aim is to help customers take important financial decisionat every stage in life by offering them a wide range of innovative life insuranceproducts, to make them financially independent.

Kotak Mahindra Old Mutual Life Insurance Ltd. , a company offeringLife Insurance products, is one of India’s premier & growing insurancecompany employing over 1000 people, across various offices in India.

We aim to achieve a balance between what our people want asindividuals and what the organization expects of them.

The most talented people choose to join and stay with us because weoffer them opportunities to:

• Deliver the best – working with the most talented colleagues.

• Rapidly build skills, knowledge and experience.

• Work in a challenging environment that constantly demands them tooperate at the edge of their ability.

• Be recognized and rewarded for their achievement by acceleratedcareer paths and differentiated rewards.

• Be a good corporate citizen.

45



MANAGEMENT:

Managing Director Mr. Gaurang Shah

Chief Financial Officer Mr. G. Murlidher

Vice-President (Sales) Mr. Nandip Vaidya

Vice-President Mr. Arun Patil(Sales and Mgmt. Dev.)

Health Sales Training Mr. R.S.Prasad

46



BRIEF INFORMATION ABOUT OUR

MANAGEMENT:

Mr. Gaurang Shah (Managing Director):

Mr. Gaurang Shah is the Managing Director of Kotak Mahindra Old

Mutual Life Insurance Limited. Mr. Gaurang Shah is a Chartered Accountantand a Cost and Works Accountant. He has also done his Company Secretaryship from the Institute of Company Secretaries of India. Mr. Gaurang Shahhas been with the Kotak Group for the past eight years where he has helddifferent positions of great responsibility and juggled multiple tasks effectively.His cumulative experience, primarily in financial services, stands at over 21years, several of those in building the retail finance business. At Kotak LifeInsurance, Mr. Shah will focus on developing new lines of businesses andleveraging the company's existing competencies and network to steer KotakLife Insurance on its ongoing growth path with even greater thrust. Mr. Shahhas a commendable expertise in managing a large number of employees.

Mr. Shah has been previously associated with Kotak Mahindra Primussince its inception and has contributed towards its growth to become aRs.2000 Cr plus business. Before coming to Kotak Life Insurance, GaurangShah was Group Head of Retail Assets for Kotak Mahindra Bank. The RetailAssets include commercial vehicles, personal loans, structured products, car loans and loans against shares.

Mr. G Murlidhar (Chief Financial Officer):

Mr. Murlidhar is a Chief Financial Officer and Company Secretary of Kotak Life Insurance. Mr. Murlidhar is an associate member of the Institute of Chartered Accountants of India, an associate member of the Institute of Company Secretaries of India, and graduate member of the Institute of Cost &Works Accountants of India.

47



Mr. Murlidhar possesses over 20-year work experience and has earlier worked with National Dairy Development Board (NDDB), MDS Switchgear Limited and Nicholas Piramal India Limited and Ion Exchange Ltd. Prior toKotak Life Insurance; he held the position of VP-Finance at Gujarat Glass Ltd.

As Chief Financial Officer at Kotak Life Insurance, he oversees allaspects of Finance including Operations, Regulatory, Internal Control,Finance, Accounts and Treasury.

Mr. Arun Patil (Vice President – Sales & Management

Development):

Mr. Arun Patil is the Vice President - Sales & ManagementDevelopment with Kotak Life Insurance. A post- graduate with Law

qualifications, he has over 25 years' experience in life insurance industry. He joined as a Direct Recruit Officer in L.I.C. and worked in various departmentssuch as Sales, Marketing, I.T., Publicity, and Housing & BranchAdministration all across the country. On foreign deputation to Fiji Islands for 5 years, Mr. Patil substantially increased the market-share of LIC incompetitive environment. After heading LIC's premier Mumbai Division, he joined the then ICICI Ltd. as a member of the insurance venture team andlater worked for ICICI Prudential Life Insurance Company as Head of SalesDevelopment. Widely traveled all over the country & the world several timesfor insurance related work, Mr. Patil presently has responsibilities to enhancethe skills, knowledge, productivity, and professionalism of the sales-force, with

special emphasis on developing all Managers to enhance their competencies,capabilities & managerial effectiveness.

48



ABOUT OLD MUTUAL:

Old Mutual was established more than 150 years ago and hasdeveloped into an International financial services group whose activities arefocused on asset gathering and asset management. The Old Mutual Groupoffers a diverse range of financial services in three principal geographies:South Africa, the United States and the United Kingdom. The company islisted on the London Stock Exchange with a market capitalization of approximately $6 billion and is a member of the elite FTSE 100 index. In the

2003 rankings of the World’s 500 largest corporations by Fortune magazine,Old Mutual climbed 87 places to position number 366 and was also listed asthe 14th largest insurance company in the world.

Old Mutual is the largest financial services business in the SouthAfrica, through its life insurance, asset management, banking and generalinsurance operations. The company serves 4 million life insurancepolicyholders and employs over 13,000 South Africans in its local operations.

In the USA, Old Mutual is one of the top ten fixed annuity businesses

offering an array of specialist asset management skills through its 23 assetmanagement businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002.

Operations in the United Kingdom are focused on wealth management,through Gerrard as one of the leading private client stock broking businessesin the UK.

49



Share interests of a person discharging managerial

responsibilities (PDMR) and total voting rights:

1. Net settlement of a Deferred Delivery Award by a PDMR:

Old Mutual plc (the Company) announces the following changes inshare interests of a PDMR.

A Deferred Delivery Award held under the Old Mutual Share Optionand Deferred Delivery Plan (SOP) was net settled by Paul Hanratty,

Managing Director of Old Mutual South Africa, as follows:

PDMR No. of shares netsettled

Originalgrant date

Awardprice

Date of netsettlement

Netsettlementprice

P Hanratty 260,769 3 March2004

R11.77 3 July 2007 R23.70

The total number of shares in the Company held by Mr Hanratty asDeferred Delivery Awards or options under the SOP and the OMSAManagement Incentive Share Plan (MISP) after the above transaction is668,846.

50



2. Total voting rights:

The Company's issued ordinary share capital currently comprises5,504,668,788 ordinary shares of 10p each. African life subsidiaries of theCompany hold a total of 291,345,136 ordinary shares in the Company in their policyholders' funds. These shares cannot be voted while they are held bysubsidiaries of Old Mutual plc because of applicable provisions of UKcompany law. Therefore the total number of voting rights in the Company'sordinary share capital is 5,213,323,652.

51



BUSINESS MISSION:

KOTAK OLD MUTUAL LIFE INSURANCE:

To build a Financial Institution from India of World-

• Scale

• Size

• Quality

OLD MUTUAL LIFE INSURANCE:

• To use the broad and well established South African base to create amultinational business.

• To build businesses in the United States and the United Kingdom thatfocus on the sector of the market with good fundamentals and wherethe skills can add value.

• Aim to have roughly equal exposure to each of these 3 markets in nextfive years.

• To look upon a build business in Asia to provide growth in 5 to 10 yearstime.

52



BUSINESS STRATEGY:

OLD MUTUAL LIFE INSURANCE:

“To offer superior investment capabilities internationally.”

“To build and protect clients’ assets.”

OLD MUTUAL’S COMETITIVE ADVANTAGE:

• By considering the peer group to be the large multinational financialservices groups.

• As a relatively new entrant into the United States and the UnitedKingdom markets, the company is able to pick the most attractiveopportunities, given current market conditions that match their capabilities.

• Expansion of business in Asian region, particularly with Kotak LifeInsurance, India.

• The South African businesses that work more closely together to meetthe opportunities of economies transformation in that region.

53



UDAY KOTAK’S VISION:

“To be one of the top players in Life Insurance Marketer, India andcreate value for our stake holders.”

KOTAK OLD MUTUAL’S VISION:

1. GLOBAL INDIAN FINANCIAL SERVICES BRAND

• Indian Understanding: Global Standards of Delivery.

2. MOST PREFERRED EMPLOYER/BUSINESS PARTNER

• Home for bright minds and entrepreneurial skills.

3. MOST TRUSTED FINANCIAL SERVICES COMPANY

• High Standard of Compliance/Corporate Governance.

4. VALUE AND NOT JUST SIZE

• Business driven with both Value and Growth in mind.

54



Branch location:

Registered Office Customer Service

Centre 6th floor, Peninsula Chambers, Raghuvanshi Mills Compound,Peninsula Corporate Park, Ground floor, Krishna House,Ganpatrao Kadam Marg, Lower Parel, Senapati Bapat Marg, Lower Parel(W)Mumbai - 400 013 Mumbai 400 013.Tel : (022) 6663 5000. Tel : (022) 6050 5000

Fax : (022) 6663 5111 Toll free No.: 1800-22-8081Fax : (022) 6663 5363

AGRA JODHPUR

AHMEDABAD JORHAT

RMBALA KAITHAL

AMRITSAR KANPUR

ANAND KARNAL

AURRANGABAD KOLHAPUR

BANGOLALORE KOLKATA

BARODA KOTTAYAM

BHARUCH LUCKNOW

BHAVANAGAR LUDHIANA

BHOPAL MADURAI

CHANDIGARH MEHSANA

CHENNI MUMBAI

55



COCHIN NADIAD

COIMBATORE NAGPUR

DELHI NASIK

FARIDABAD PALANPUR

GANDHIDHAM PATIALA

GUWAHATI PUNE

HISSAR RAJKOT

HYDERABAD SURAT

INDORE TINSUKIA

JAIPUR TRICHY

JALANDHAR THRISSUR

JAMNAGAR VALSAD

JAMSHEDPUR VAPI

56





• Physical Hazards are Age, Sex, Build, Physical Condition,

Physical Impairments, Personal History and Family History.

• Occupational Hazards are arise out of one’s job. The nature of the job or the place in which the job is done have effects on theworkers.

• Moral Hazard refers to the intentions of the proposer. If theintention is to seek undue advantage through insurance policy,there is some moral hazard.

Moral hazard is not measurable. But in the following situation,moral hazard can be suspected.

• The proposer is old, has not been insured so far and theproposal is for a large amount.

• The proposal is for an amount much larger than what theincome would justify.

• A large amount of insurance is proposed on the life of the

family member while the male earning members are notinsured or are insured for relatively small amounts.

Assessing Risk:

In order to make decision on the level of risk, help of specializeddoctors, medical referees etc. can be taken. Underwriters can use Numerical

Rating System, as guidelines to identify and interpret data:

• Variations are given values depending upon significance.

• Values are grouped and tabulated showing the extra mortality and theappropriated extra premium.

• Underwriter calculates variation and place life in their respective class.

58



• Underwriter then work out premium to be charged accordingly.

On the basis of assessment, decision on the proposal is taken whichmay/may not consider standard rates, extra premium, any lieu of, modifiedterms, specified clause, postponement for a specified period, decline due toheavy risks etc.

NON-MEDICAL UNDERWRITING:

Non-medical underwriting is limited to younger ages, less than 45years old. There is a limited on SA as well, which, over the years, had beenraised up to Rs. 1, 00,000. The limit is higher for those in employment inreputed organization with leave records, medical check up at entry etc. Thelimit is as high as 5, 00,000 in a case of Commissioned Officers in the ArmedForces and Rs. 4,00,000 for the employees of Government. These limits arenot sacrosanct. The conditions for non-medical insurance are decided byinsures from time to time, depending on their experience.

FEMALE LIVES:

Insurers have been cautions about granting insurance on female lives.This was because of high pregnancy related death, particularly remote areas.There was also history of frauds. The practices have changed during the lastfifty years. Working women and educated women are treated on par withmen. Some women who do not have any earned income are considered,provided that husband are adequately insured. Women in the purdah are notconsidered. These are not rigid rules or principles. Every insurer will have itsown experiences and practices. Some insurer allowed lower premium ratesfor working women.

59



UNDERWRITING BY KOTAK LIFE INSURANCE AGENT:

The agent has to inform insurer about the factors that affect the risk of the subject matter of insurance. The agent has to make sure of this bysubmitting an unambiguous report and also by ensuring that the proposalpapers do not

Conceal any information. This is an obligation that the agent owes to theinsurer. This is also an obligation that agent owes to the insured.

5 EASY STEPS TO BUYING A POLICY:

1. Initially, calculate the exact amount of insurance that you need

2. Decide which product suits you best based on your life stage and need

3. Calculate the premium that you need to pay on the basis of the productthat you have decided to buy

4. Once you have decided on all the above parameters, get in touch witha Life Advisor at any of the Kotak Life Insurance branch offices.Alternatively, you can call us on 1-600-22-8081 and leave your nameand contact details so that we can arrange for a Life Advisor to contactyou.

5. Our Life Advisor will assist you in filling up a proposal form. In additionto a proposal form, you need to submit some financial documents thatare required in order to buy a policy. The Life Advisor will notify the listof financial documents required for the same.

60



INSURANCE DOCUMENT:

A life insurance policy is a contract. The stakes in the contract areusually large and interested in the stakes, many. There could be disputeinvolving the insurer and the insured or the insurer and the beneficiaries of thepolicy or between the beneficiaries. The terms and conditions of the policy willprovide the grounds to decide the issues in the dispute. These terms will bebased on and will relate to statements and actions at a various times duringthe codes of the policy. These will have to be proved through documents.Documentation, therefore, is important in the life insurance business.

PROPOSAL FORM

The first document in the insurance file is the proposal or applicationfor insurance. It is usual to obtain the proposal in a standardized, printed form.This is to be completed by the proposer in his handwriting and signed in thepresence of a witness. Contracts require signatures to be authenticated

through witnesses.

If someone else has filled up the proposal form, the person filling theproposal form has to declare that he wrote the answers as dictated by theproposer, that the questions were read out to him and that he had understoodthe answers. If the proposer has answered the questions in a languagedifferent from the question, there must be a declaration to the effect that thequestion were explained to the proposer in his language and the answerswere written by him only after understanding the questions fully. If theproposer is illiterate, the thumb impression has to be attested by a third party,who has to give a ;declaration that the question were explained to him and

answers dictated by him were recorded truthfully and were read out to himand were understood by him.

The proposal form will contain information as to

(a) the name and address of the proposer,

(b) name of the person to be insured, if different

61



(c) details of the person to be insured like his occupation and date of

birth

(d) details about the insurance required like plan, term and sumassured

(e) riders to be added

(f) Details about earlier proposals for insurances.

Further particulars required along with the proposal, would include

(a) preferred mode of premium

(b) whether the policy should be backdated, to get the benefit of a lower age and a lower premium

(c) employment particulars to enable SSS deductions and

(d) Nomination.

PERSONAL STATEMENT:

The personal statement is to be completed along with the proposal.This asks for particulars about the state of health of the person proposed tobe insured, his family history, his personal habits, medical consultations and

illnesses, absence from work due to medical grounds, etc.

Under the Regulations issued by the IRDA in April 2002, a copy of theproposal is to be supplied to the policyholder within 30 days of the completionof the contract.

62



The medical report and the reports submitted by the agent or other

officials of the insurer are considered confidential and will not be madeavailable to the proposer.

FIRST PREMIUM RECEIPT (FPR):

The underwriter’s decision on the proposal may be to accept at OR onmodified terms. If it is accepted at OR, the policy can be commencedimmediately, provided the full premium has been paid. The FRP will beissued. If the acceptance is on modified term, the proposer has to agree to themodified term and pay the balance premium if any, before the FRP can beissued. The IRDA Regulations require that the decision on the proposal

should be made by the insurer within 15 days.

The FRP is the evidence that the insurance contract has begun. Thepolicy document, which is the evidence of the contract, may be issued onlyafter some time. Once policy document is issued, the FPR becomesirrelevant.

The will state that the proposal for insurance has been accepted andthat the premium has been received. It will give the particulars of the policy,

such as policy number, date of commencement of risk, date of maturity, dateof last payment of premium, premium amount, mode, name and address of the life assured. The due date of the next premium due is also stated.

However, the Regulation issued by the IRDA, provide that thepolicyholder has the option to withdraw from the contract within 15 days of theissue of the policy. He will be entitled to refund of the premium paid, less costof risk for the short period and expenses towards medical examination andstamp duty.

63



RENEWAL PREMIUM RECEIPT (RPR):

When the policyholder pays the subsequent premiums due under thepolicy, renewal premium receipts are issued. These RPRs are important toprove payment, as defaults can lead to termination of the contract. Renewalreceipts are not issued in respect of policies under SSS.

Electronic systems are being developed for payment of premium.These include electronic clearing systems, direct debit to the bank account or payment through the internet. Credit and debit cards, may also be accepted.

ENDORSEMENTS:

In a pre-printed policy from, the standard policy condition and privilegesare printed. If any of them need modification, in keeping with the terms of acceptance, endorsements are attached to the policy. If individual policies areprinted by computers, such endorsements may be avoided.

During the currency of the policy, alterations may be effected in age,plan or term, sum assured, mode of premium payment, etc. Separateendorsement will be placed on and kept attached to the policy document, toindicate such changes.

Nominations made subsequent to the issue of the policy are to bemade on the back of the policy itself as endorsements. Assignments can alsobe made on the back of the policy.

64



POLICY CONDITION:

The policy states the obligation and rights of the policyholder, as will asthe terms and conditions of the policy.

AGE:

The policy conditions provide that, if the age of the life assured is foundto be higher than the age as stated in the proposal, apart from any other rightsand remedies available to the insurer, premium at the higher rate will have tobe paid from the commencement, with interest. In such case, the insurer’sright and remedies would include also the right to declare the policy ab initiovoid, on the ground of suppression of material facts.

The following are usually accepted as proofs of age

•

Certified extract from the municipal records

• Certificate of baptism

• Certified extract from family Bible if it contains fate of birth

• Certified extract from school or college records

• Certified extract from service register of employer

• Passport

• Identity cards issued by Defence department in case of defencepersonnel

• Marriage certificate issued by a Roman Catholic Church

65



Non standard age proofs

• Horoscopes

• Self-declaration by way of affidavit

• Elder’s declaration

• Certificate by village panchayat.

DAYS OF GRACE:

The policy stipulates that the premium has to be paid in the insurer’soffice on the dates specified therein. These dates are called ‘due dates’.

Premiums are required to be paid on the due dates mentioned in thepolicy. Insurers however allow a ‘grace period’ for payment of premium.Payment within the grace period is considered to be payment on time. The

grace period would be one month, but not less than 30 days for yearly, half-yearly or quarterly modes of premium and 15 days for monthly modes of premium. In the case of SSS, if the premiums are deducted by the employer and there is a delay n remitting the same to the insurer’s office, the delay isusually condoned. If the delay happens frequently, the SSS arrangement maybe terminated.

The ‘days of grace’ for the various made are:-

• 1 month but not less than 30 days for yearly, half yearly andquarterly modes of premium

• 15 days for monthly mode

• No days allowed for SSS mode

66



If the premium is not paid within the days of grace, it is considered a

default and the policy is said to lapse.

Following are the benefits of days of grace:-

• Extention in premium paying period.

• If death occur within days of grace, full sum assured will bepayable after deducting outstanding premium without interest.

Premium are also collected in banks and the date of deposit at bank isconsidered as the date of premium payment

LAPSE AND NON-FORFEITURE:

A payment within the days of grace is deemed to be a payment on thedue date. If the premium is not received by the insurer within the days of grace, there is a default on the part of policyholder. The insurer is entitled tosay that the policy comes to an end. Such termination is called ‘Lapse’.

In practice, however, insurer do not forfeit all the premiums paid whenthe policy lapse. The Insurance Act does not allow such forfeiture. The reasonis that every policy acquires a reserve as a result of:

1. premiums in the early years of the policy being more than what

is justified and

2. The savings element in the premium.

The policy conditions provide various safeguards to policy holder, whenthere is a premium default. These provision are called non-forfeiture provision.There are various options. One of them is to return to the policyholder and

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amount that represent the reserve. This amount is called ‘Surrender Value’ or

‘Cash Value’.

The other non-forfeiture options are:

• making the policy paid up

• keeping policy in force through premiums advanced from thesurrender value and

• providing term assurance cover from the surrender value

PAID UP VALUE:

Under this option, the SA is reduced to a sum which bears the ratio to

the full sum assured as the number of premiums actually paid bears to thetotal number originally stipulated in the policy.

Formula for paid up value:-

Paid up value = No. of premiums paid X SA

No. Of premiums payable

Premiums are not required to be paid on a policy which has becomepaid-up. If other benefits related to the SA are payable, the benefits will nowbe related to the reduced paid-up value.

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KEEPING POLICY IN FORCE:

The option of continuing the policy as in full force is made possible bynationally advancing premium as a loan from surrender value. This cancontinue as long as the total premiums advanced, is not more than thesurrender value. Its main advantage is that the insurance cover is fullysafeguarded and not reduced. Also, the policyholder can pay the premiumwhenever he is in a position to do so and the policy will continue to be inforced. The interim failure to pay will have no effect. If the policy is ‘With

Profits’ it will be entitled to bonus additions.

EXTENDED TERM ASSURANCE:

The third option is of extended term insurance cover. Under this option,the insurer converts the policy in to a single-premium term insurance for thefull SA of the policy for such a period as the net surrender value will purchase,as the insured’s age at the time of lapse of the policy. These is similar to thesecond, except that the premium advanced from the surrender value is notthe premium due under the policy, but the premium necessary to provide theterm insurance cover, equal to the SA.

Under the extended term, the policy remains in full force for the fullsum assured for a limited period instead of a reduced paid up amount of insurance remaining in force for the entire policy period, in the first option.

REVIVAL:

• When a policy lapse, it benefits neither the insurer nor the insured. Theinsured loses the insurance risk cover for the full amount. It signifies areversal of the decision to arrange for an insurance cover andtherefore, exposes the policy-holder to possible adversecircumstances.

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• For revival of policies, the following will normally be necessary

o Arrears of outstanding premiums with interest

o Proof of continued good health

• The requirement of proof of good health varies according to theduration of lapse and also according to the SA. Up to six month fromthe date of lapse, no proof is necessary. Only the arrears of premiumwill do. This period of six month is extended to 12 months in the case

of policy, which have been in forced for at least 5 years. If the policy isdue to matured within a year, then also, only arrears of premium areenough.

• Where proof of continued good health is necessary, the nature of proof can be a simple declaration or an elaborate medical examination withspecial reports. The considerations are the same as in case of a freshproposal for insurance.

• The special revival scheme is allowed if,

o The policy had not acquired any Surrender Value on the date of lapse.

o The period expired after lapse is not less than six months andnot more than three years.

o The policy had not been revived under the scheme before.

• The original policy will be endorsed for changes in the date of

commencement, age, premium, date of last installment of premium,and maturity date. The difference between the old premium and thenew premium with interest thereon will have to be paid. Thepolicyholder will be required to pay the endorsement fee.

• Under the Installment Revival Scheme, the policyholder will not berequired to pay full arrears but only six monthly premiums or half of theyearly premiums. The balance of the arrears will be spread over theremaining due dates in the policy year current on the date of revival,and two full policy years thereafter.

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• Another scheme offered is the Loan-cum-revival scheme, where under

the arrears required for revival are advanced out of the Surrender Value of policy, as a loan under the policy. If the loan available under the policy is more than the amount required for revival, the excess maybe paid to the policyholder, on request.

ASSIGNMENT:

A life insurance policy is property. It represents rights. It is anactionable claim as described in the Transfer of Property Act 1882. A lifeinsurance policy forms part of the estate of the assured and can be sold,mortgaged, charged, gifted or bequeathed. Sectionals 130 and 131 of theTransfer of Property Act detail the procedures for transfer of the interests inthe policy.

An assignment transfers the rights, title and interest of the assignor tothe assignee. Legal provisions for assignment of insurance policies areavailable in almost all the countries. Section 38 of the Insurance Act, 1938

states that

• The assignment can be done by an endorsement on the policy or by aseparate deed. When the assignment is made by an endorsement onthe policy itself, no stamp duty is necessary. Separate deeds have tobe stamped

• It must be signed by the transferor or his duly authorized agent

• The signature must be attested by a witness

• The assignment is effective as soon as it is executed

• It must be sent to the insurer along with a notice.

The person making the assignment should have the right or title to theproperty in question. The assignor must be major and competent to contract.An assignment involving a part of the policy moneys is considered to be badin law. An assignment once made cannot be cancelled or even altered inform, by the assignor unless the assignee reassigns the policy.

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Assignments are of two kinds, absolute, and conditional. In both cases,

all rights, title and interest of assignor in the policy pass to the assignee. Theassignee becomes the title holder and can deal with the policy in any manner he likes. He does not have to take the consent of the assignor.

In conditional assignment, the interest in the policy automaticallyreverts to life assured on the occurrence of the specified condition.

NOMINATION:

Nomination is a simple way to ensure easy payment of policy moneysin the case of a death claim. As per Section 39 of the Insurance Act, 1938, theholder of a policy on his own life, may nominate the person or persons towhom the money secured by the policy shall be paid in the event of the death.This can be made at the time during the currency of the policy. A personhaving a policy on the life of another, cannot effect a nomination.

A nomination can be changed by the policyholder by making another endorsement on the policy.

When a policy is assigned, the existing nomination is automaticallycancelled. The assignee, not being the life assured, cannot make anomination. When the policy is reassigned to the life assured, he will have tomake a fresh nomination.

A nomination gives the nominee only the right to receive the policymoneys in the event of death of the life assured. A nominee does not have

any right to the whole (or part) of the claim. He only has the right to give avalid discharge but has to hold the moneys(all of it) on behalf of those entitledto it.

When a nominee is a minor, an appointee should be appointed by thepolicyholder. The appointee must affix his signature to the endorsement either in the proposal form or on the text of the policy in token of his havingconsented to act as an appointee. The life assured has a right to revoke theappointment of the appointee and appoint a fresh appointee. The appointeeloses his status when the nominee becomes a major.

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When the nominee is a minor and there is no appointee, the claimamount under the policy, cannot be paid to the guardian, appointed or natural.

It can be paid only to the legal heirs of the deceased life assured.

Nominations made after the commencement of the policy have to beintimated to the insurer. Otherwise, they are not effective.

SURRENDERS AND LOANS:

Surrender is a voluntary termination of the contract, by thepolicyholder. A policyholder can surrender the life insurance policy at any timebefore it becomes a claim. The amount payable on surrender is called thesurrender value or cash value.

The surrender value is usually a percentage of the premium paid or apercentage of the paid up value. The percentage increases as the duration of the policy increases.

In most of the life insurance policies, insurers provide the facility of loans. Loans are given up to 80% or 90% of the Surrender Value of the policy

in question. Interest is charged on loans.

The procedure for grant of loan would provide that the policy must beassigned absolutely to the insurer. The assignment in favour of the insurer for getting the loan under the policy does not invalidate an existing nomination.

FORECLOSURE:

As the name suggest, foreclosure means closure or writing off thepolicy before its actual maturity. When a loan is granted under a policy, the lifeassured has a choice t pay the interest or allow it to accumulate to beadjusted from the policy moneys payable when the claim arises. This ispossible only if the premiums are paid regularly and the policy remains inforce. In case of paid-up policies, the surrender value will not grow as fast asthe accumulated interest. The principal loan and accumulated interest couldbecome more than the surrender value at some time. In that case, foreclosurebecomes necessary.

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When it is decided to take foreclosure action, a notice may be issued to

the policyholder calling for the payment of arrears of loan interest. If theinterest is not paid, the policy is foreclosed, which means surrendered to loan.The foreclosure action is complete when taken in the insurer’s office. Thebalance surrender value, if any, after adjusting the principal loan andoutstanding loan interest, is paid to the policyholder, after obtaining thedischarge voucher

GROUP INSURANCES:

Group insurance is a plan of insurance, which provides cover to a largenumber of ‘individuals under a single policy called the “master policy”. Theindividuals covered under the master policy are not parties to the contract.The contract will be between the insurer and a body that represents the groupof individuals covered. A bank or financier can make arrangements through agroup policy to protect his interests against defaults occurring because of thedeath of the debtors.

In India, the development of group insurance has taken place since theearly 1960s. Before that, the group insurance business was very little.Originally, group insurance was confined to employer-employee groups only.

Group insurance schemes are used by the government, as instrumentsof social welfare. Social security is a concern of Government in all countries.But the dimensions of social security vary considerably.

Because the contract is with the body, that body is the policyholder.

The individuals are the beneficiaries. The amount and terms of insurance arenegotiated by the policyholder and not by the individual beneficiaries. Thebenefits will be determined on bases that apply uniformly to all the individuals.

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FUNDAMENTALS OF ‘GROUP INSURANCE SCHEME’:

• Policyholder is the ‘body or group of individuals’ together

• All individuals within that body are ‘beneficiaries’

• ‘Amount’ and ‘Term of insurance’ are decided by the policyholder

based on uniformly applicable criteria

• Benefits determined on bases which apply uniformly to all individuals

• Premium paid by policy holder

• There are two scheme for premium

o Contributory method

o Non-contributory method

• In group insurance only one policy will be issued. This policy is knownas master policy.

• There will be only one proposal in group insurance

• Different from ‘salary saving scheme’

•

Primary objective of the group should not be to avail benefits from thisscheme

• Entry and exit from the group is not on the free will of individuals

• Underwriting/selection is on the whole group

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• Premiums change year on year because of new entrants and exits, asalso the group composition changes

• Premium may also change because of the ‘mortality experience’ of thegroup

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RURAL AND SOCIAL SECTORS:

LEGEL PROVISIONS:

Vide paragraph 19 of the First Schedule of the Insurance Regulatoryand Development Authority Act, 1999, sections 32B and 32C have beenadded to the Insurance Act, 1938. These sections read as under.

32B. Insurance business in rural or social sector – Every insurer shall,after the commencement of the Insurance Regulatory and DevelopmentAuthority Act, 1999, undertake such percentages of life insurance businessand general insurance business in the rural or social sector, as may bespecified, in the Official Gazette, by the Authority, in this behalf.

32C. Obligations of insurer in respect of rural or unorganized sector and backward classes.

The Regulations made by the IRDA, in terms of these provisions, werenotified in the Official Gazette on 19.7.2000. They were amended in October 2002 and notified in the Official Gazette dated 16.10.2002. Under theseRegulations,

• The rural sector has been defined as a place in which, as per the latestcensus, the population is less than 5000, the density of population isless than 400 per square kilometer and more than 25% of the maleworking population is engaged in agricultural pursuits. (Agriculturalpursuits are defined as cultivation, agricultural labour, work in livestock,forestry, fishing, hinting, plantation, orchards, and allied activities.)

• The social sector is defined as including the unorganized sector, theinformal sector, the economically vulnerable or backward classes and

• other categories of persons, both in rural and urban areas.

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• The unorganized sector is defined as including self-employed workers

such as agricultural labour, bidi workers, brick kiln workers, carpenters,cobblers, construction workers etc.

• The informal sector is defined as the small scale, self-employedworkers typically at a low level of organization and technology, with theprimary objective of generating employment and income withheterogeneous activities like retail trade, transport, repair andmaintenance, construction etc.

• People below the poverty line are included in the expression

economically vulnerable or backward classes.

Insurers who begins to transact life insurance business in the year 2000 or later, are required by these regulations to write, in the rural sector.

• At least 5% of the total policies written direct, in the first financialyear, going up to

• 9% in the second financial year,

• 12% in the third financial year,

• 14% in the fourth financial year and

• 16% in the fifth financial year.

With regard to the social sector, the obligations are laid down as• 5000 lives in the first financial year,

• 7500 lives in the second financial year

•

10000 lives in the third financial year

• 15000 lives in the fourth financial year

• 20000 lives in the fifth financial year

It has also been provided that in the first year, if the period of operationis less than twelve months, the obligation of lives in the social sector, could beproportionately less. It is also provided that the IRDA may normally revise theobligations once in five years.

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INFORMATION OF THE ACTUARIALPROFESSION:

An actuary is a person who has passed specialized examinationsconducted by the Actuarial Society of India or the Institute of Actuaries,London. He is the technical expert on life insurance matters studying themortality of the insuring public, evaluating the financial condition of theinsurers, determining the policies to be offered and the premium to be

charged, determining the policies to follow in underwriting and investments of its funds, deciding on the bonus that can be declared on the participatingpolicies, and so on. A good actuary is a good economist, a good statisticianand a good security analyst. Every well-managed insurance company willhave an actuary to continuously study its operations and advise themanagement on the appropriateness of their policies. The periodical valuationof a life insurance company, required to be conducted as per the provisions of the Insurance Act, is the responsibility of the actuary. The premium proposedto be charged by the insurer, has to be certified by the actuary before they aresubmitted for the approval of the IRDA.

The IRDA Regulations requires that every life insurance company musthave an Appointed Actuary, whose obligation and duties include

• Render actuarial advice to the management of the insurer, inareas of product design and pricing, insurance contract working,investment and reinsurance

• Ensure the solvency of the insurer at all times

• Comply with the Act in regard to premium, values of assets andliabilities

• Certify the actuarial report and other returns

• Certify the determination of the mathematical reserves.

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LAW AND REGULATIONS:

INSURANCE ACT, 1938:

The Insurance Act 1938, which came into effect from 1st july 1939, andwas amended in 1950 and later in 1999, is the principal enactment relating tothe business of insurance in India. The Act contains provisions regardinglicensing of agents and their remunerations, prohibition of rebates, andprotection of policyholder’s interests.

Section 2 (5A) defines ‘chief agent’ as a person who, not being asalaried employee of an insurer, in consideration of commission (a) performsany administrative and organizing functions for the insurer and (b) procureslife insurance business for the insurer by employing or causing to beemployed, insurance agents on behalf of the insurer. Section 2 (17) defines a‘special agent’ as one who procures life insurance business, in considerationof commission, employing or causing to be employed insurance agents on

behalf of the insurer. He only procures business through agents but does notperform administrative functions like a chief agent.

Section 42A provides for the registration of chief agent and specialagents. Certificates to function as such are to be issued after registration. Thecertificates are valid for 12 months and may be renewed. The provisions alsostipulate the number of insurance agents that a chide agent may employdirectly or through special agents and the minimum business they have to do.Similarly, there are stipulations about the number of agents to be employed bya special agent and the minimum business to be done.

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INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY ACT 1999:

This Act, passed in December 1999, provided for the establishment of the IRDA to protect the interests of holders of insurance policies, to regulate,promote and ensure orderly growth of insurance industry and for mattersconnected therewith or incidental thereto. It also sought to amend theInsurance Act, 1938, the Life Insurance Corporation Act, 1956 and theGeneral Insurance Business (Nationalization) Act, 1972.

The IRDA is a corporate body. It is advised by an Insurance AdvisoryCommittee consisting of not more than 25 members to represent the interestsof commerce, industry, transport, agriculture, consumer forums, surveyors,agents, intermediaries, organizations engaged in safety and loss prevention,research bodies and employees’ associations in the insurance sector.

The Regulations framed by the IRDA, in so far as they affect theworking of the agents, age reproduced in full at the end of this course.

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DIFFERENT PLANS OF KOTAK LIFE INSURANCECOMPANY:

FOR INDIVIDUAL

KOTAK TERM PLAN:

1. What is Kotak Term Plan?

Kotak Term Plan is a pure risk product that aims to cover your life at anominal cost. You may want to take this plan to cover your outstanding debtslike a mortgage, a home loan etc. Since this is a pure risk cover product, thereare no maturity benefits payables on survival. This is a non-participating plan.

2. Who can avail of this plan?

• How old do you have to be to avail of this plan?

Minimum age - 18 yearsMaximum age - 60 years

• For what term can I avail of this plan?

10 - 30 years for regular premium5 - 30 years for single premium

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• What is the minimum premium that I need to pay and at what

intervals can I pay them?

Mode Amount

Quarterly Rs.540Half Yearly Rs.1055Annually Rs.2000Single Premium Rs.10000

• What is the maximum age that the plan can cover you till?

70 years

3. What are the advantages of this plan?

• It is a low-cost insurance plan.

• You can choose between a regular premium payment option or a single premium payment option. In case you opt for theregular premium payment option, you may pay your premiumseither annually, or in half yearly or quarterly installments.

• Your Kotak Term Plan can be converted into any other planoffered by Kotak Life Insurance (except for another Term plan)provided there are at least 5 years before cover ceases.

• In case you forget to pay your premium by the due date, you areentitled to a grace period of 30 days from the date of unpaidpremiums.

• In case of a financial emergency, you have the option tosurrender the policy provided you have taken the singlepremium payment option.

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4. What value-adds can you opt for?

You may avail of the following non-participating value-adds for a nominalpremium at the time of taking your policy, subject to aggregate premium on allvalue-adds (except Critical Illness Benefit) not exceeding 30% of the basicKotak Term Plan premium.

• Accidental Death Benefit: This benefit provides an additionalamount (over and above the basic sum assured) to thebeneficiary in the event of the accidental death of the lifeinsured. The maximum cover available under this rider is equalto the basic sum assured (subject to a maximum of Rs.10lakhs).

• Permanent Disability Benefit: This benefit can be added toyour basic life insurance policy to provide financial support incase of disability due to an accident. The amount payable under this benefit would be paid out as an annuity. The maximumpermanent disability benefit that you can avail of is equal to thebasic sum assured (subject to a maximum of Rs.10 lakhs).Permanent disability is defined as permanent and immediateinability to work or permanent loss of use of two limbs or total

and permanent loss of sight.

• Critical Illness Benefit: This benefit can be added to your basiclife insurance policy to provide financial support in the event of amedical emergency. On the first occurrence of critical illnessduring the term of the policy, you would receive a portion of thesum assured to reduce your financial burden in this emergency.

5. What do you receive on maturity of the policy?

Since this is a pure risk cover plan, there are no maturity benefits.

6. What happens in the event of death of the life insured?

In the event of death during the term of the policy, the beneficiary wouldreceive the sum assured.

7. Are there any Tax Benefits?

Section 80C, 10(10D) of Income Tax Act would apply. Premiums paid for Critical Illness Benefit qualify for benefits under Section 80D. These benefitsare

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as per the currently prevailing tax regulations and you are advised to consult

your tax advisor for details.

KOTAK MONEY BACK PLAN

1. What is Kotak Money Back Plan?

The Kotak Money Back Plan not only covers your life, it also assuresyou a certain percent of the sum assured as cash payment at regular intervalsof every 5 years. It is a savings plan with the added advantage of life cover and regular cash inflow. This plan is ideal for planning special moments like awedding, your child's education or purchase of an asset etc. This is aparticipating plan (with profits).

2. Who can avail of this Plan?


Minimum age- 18 yearsMaximum age- 60 years


15, 20 & 25 years


75 years


1. The plan not only covers your life but also provides you with a survivalbenefit payout every 5 years.

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2. In the unfortunate event of death of life insured, the beneficiary wouldreceive the death benefit. The death benefit keeps increases by 7% of the sum assured every year.

3. On maturity, you would receive the sum of the Survival Benefit, Bonusaddition and guaranteed addition.

4. Bonus addition is the amount in the Accumulation Account, in excessof the sum assured. Accumulation Account is your personal account inwhich the premiums that you pay are deposited, the return declaredevery year is added and the survival benefit payouts, risk and expensecharges are deducted. Guaranteed addition is the guaranteed amountpayable on maturity, over and above the Survival Benefit.

5. The amount available in the Accumulation Account is invested invarious financial instruments (as per IRDA regulations) so your moneyworks hard for you.

6. The Automatic Cover Maintenance facility ensures the policy remainsin force even if you miss premium payments. This facility is availableafter the first three years of the term.

7. You have the benefit of a 15-day free look period.8. You have the option of paying premiums quarterly, half yearly or yearly.9. The amount available in the Accumulation Account is invested in

various financial instruments (as per IRDA regulations) so your moneyworks hard for you.10.The Automatic Cover Maintenance facility ensures the policy remains

in force even if you miss premium payments. This facility is availableafter the first three years of the term.

11.You have the benefit of a 15-day free look period.12.You have the option of paying premiums quarterly, half yearly or yearly.


You may avail of the following value-adds for a nominal premium at thetime of taking the plan, subject to the aggregate premium on all value-addsnot exceeding 30% of the basic Kotak Money Back Plan premium

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• Term Benefit/ Preferred Term Benefit: In the event of deathduring the term of this benefit, the beneficiary would receive anadditional death benefit amount, which is over and above thesum assured. The maximum Term Benefit you can avail of isequal to the basic sum assured. Where the term benefit cover applied for is more than Rs 10 lakhs, better rates may apply,subject to meeting eligibility requirements.

• Accidental Death Benefit: This benefit provides an additional

amount (over and above the sum assured) to the beneficiary inthe event accidental death of the life insured. The maximumcover available under this benefit is equal to the basic sumassured (subject to a maximum of Rs.10 lakhs)

• Permanent Disability Benefit: This benefit can be added to thebasic life insurance plan to provide financial support in case of permanent disability due to an accident. The amount payableunder this benefit would be paid out as an annuity. Themaximum permanent disability benefit that you can avail of isequal to the basic sum assured (subject to a maximum of Rs.10

lakhs).

Permanent disability is defined as permanent andimmediate inability to work or permanent loss of use of twolimbs or total and permanent loss of sight.

• Critical Illness Benefit: This benefit can be added to the basiclife insurance plan to provide financial support in the event of medical emergencies. On the first occurrence of critical illnessduring the term of the policy, you would receive a portion of thesum assured to reduce your financial burden in this emergency.

• Life Guardian Benefit: This benefit can be availed of, only incase where the life insured and the proposer are two differentindividuals. In case of the unfortunate death of the proposer, thisbenefit keeps the policy alive by waiving all future premiums onthe policy.

• Accidental Disability Guardian Benefit: In case the proposer is permanently disabled as a result of an accident, this benefitkeeps the policy alive by waiving all future premiums on the

policy.

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6. What do you receive on maturity of this plan?

On maturity, you would receive the sum of the Survival benefit,guaranteed addition and Bonus addition. The table below illustrates thesurvival benefit pay out for every Rs.1000 of sum assured.

Survival Benefit Payout for every Rs. 1000 Sum Assured

Payouts (in Rs.)

5th

year

10th

year

15th

year

20th

year

25th year

15-YEAR PLAN

SURVIVAL BENEFIT 250 250 500

GUARANTEED ADDITION - - 200*

20-YEAR PLAN

SURVIVAL BENEFIT 200 200 200 400

GUARANTEED ADDITION - - - 300*

25-YEAR PLAN

SURVIVAL BENEFIT 150 150 150 150 400

GUARANTEED ADDITION - - - - 400*


In the unfortunate event of the death during the term of the plan, thebeneficiary would receive the death benefit. The death benefit increases by7% of the sum assured each year. This increasing amount has been designedkeeping in mind the rising inflation.

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Death Benefit payout for every Rs. 1000 Sum Assured

Payouts (in Rs.)

Term 1styear

2ndyear

3rdyear

5th

year 7thyear

10thyear

15thyear

20thyear

25thyear

15YEARS 1000 1070 1140 1280 1420 1630 1980

20YEARS

1000 1070 1140 1280 1420 1630 1980 2330

25YEARS

1000 1070 1140 1280 1420 1630 1980 2330 2380


Section 80C, 10(10D) of Income Tax Act would apply. Premiums paid for Critical Illness Benefit qualify for benefits under Section 80D. These benefitsare as per the currently prevailing tax regulations and you are advised toconsult your tax advisor for details.

KOTAK ENDOWMENT PLAN

1. What is Kotak Endowment Plan?

Kotak Endowment Plan is a protection plan that covers your life and atthe same time ensures that your money does not lie idle. It invests a portion of your premium in financial instruments and ensures a considerable growth insavings. This is a participating plan (with profits).

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10-30 years


75 years


On maturity, you would receive the sum assured plus the bonusaddition. Bonus addition is the amount in the Accumulation Account*, inexcess of the sum assured.

Accumulation Account is your personal account, in which thepremiums that you pay are deposited, the return declared every year isadded and risk and expense charges are deducted.

The amount available in the Accumulation Account is invested invarious financial instruments (as per IRDA regulations) so your moneyworks harder for you.

The Automatic Cover Maintenance facility ensures the policyremains in force even if you miss premium payments. This facility isavailable after the first three years of the term.

You can take a loan against your policy, after the policy has been inforce for at least three years.

You have the option of paying premiums quarterly, half yearly or yearly. You also have the flexibility to pay premiums through the full termof the policy or pay it for a fixed term of 3, 5, 7, 10 or 15 years.

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You have the benefit of a 15-day free look period.


You may avail of the following value-adds for a nominal premium at thetime of taking the plan, subject to the aggregate premium on all value-addsnot exceeding 30% of the basic plan premium.

• Term Benefit / Preferred Term Benefit: In the event of deathduring the term of this benefit, the beneficiary would receive anadditional death benefit amount, which is over and above thesum assured. The maximum term benefit you can avail of isequal to the basic sum assured. Where the Term Benefit cover applied for is more than Rs.10 lakhs, better rates may apply,subject to meeting eligibility requirements.

• Accidental Death Benefit: This benefit provides an additionalamount (over and above the basic sum assured) to thebeneficiary in the event of the accidental death of the lifeinsured. The maximum cover available under this benefit is

equal to the basic sum assured (subject to a maximum of Rs.10lakhs).

• Permanent Disability Benefit: This benefit provides financialsupport in case of your permanent disability due to an accident.The amount payable is over and above the basic sum assuredand would be paid out as an annuity. The maximum PermanentDisability Benefit that you can avail of is equal to the basic sumassured (subject to a maximum of Rs.10 lakhs).Permanent disability is defined as a permanent and immediateinability to work, the permanent loss of use of two limbs or a

total and permanent loss of sight.

• Critical Illness Benefit: This benefit can be taken with the basiclife insurance policy to provide financial support in the event of medical emergencies. On the first occurrence of critical illnessduring the term of the policy, you would receive a portion of thesum assured to reduce your financial burden in this emergency.The maximum Critical Illness Benefit that you can avail of isequal to half the basic sum assured subject to maximum of Rs.20 lakhs.

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• Life Guardian Benefit: This benefit can be availed of, only in a

case where the life insured and the proposer are two differentindividuals. In case of the unfortunate death of the proposer, thisbenefit keeps the policy alive by waiving all future premiums onthe policy.

• Accidental Disability Guardian Benefit: In case the proposer is permanently disabled as a result of an accident, this benefitkeeps the policy alive by waiving all future premiums on thepolicy. This benefit is available also where the life insured is theproposer.


In the event of death of the life insured during the term of the plan, thebeneficiary would receive the sum assured or the amount in the AccumulationAccount, whichever is higher.


Section 80C, 10(10D) of Income Tax Act would apply. Premiums paid for Critical Illness Benefit qualify for benefits under Section 80D. These benefits

are as per the currently prevailing tax regulations and you are advised toconsult your tax advisor for details

KOTAK PREFERRED TERM PLAN:

1. What is Kotak Preferred Term Plan?

The Kotak Preferred Term Plan is designed to provide you with reducedpremium rates for a sum assured of Rs.10 lakhs and above.

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2. Who is eligible for Kotak Preferred Term Plan?

1) Males over the age of 18 years, who do not use tobacco in any form.

2) Females over the age of 18 years.


• It is a low-cost insurance plan.

• You can choose between a regular premium payment option and asingle premium payment option. In case you opt for the regular premium payment option, you may pay your premiums either annually,or in half yearly or quarterly installments.

• Your Kotak Term Plan can be converted into any other plan offered byKotak Life Insurance (except for another Term plan) provided there areat least 5 years before cover ceases

• In case you forget to pay your premium by the due date, you areentitled to a grace period of 30 days from the date of unpaid premiums.

• In case of a financial emergency, you have the option to surrender thepolicy provided you have taken the single premium payment option.


You may avail of the following non-participating value-adds for a

nominal premium at the time of taking your policy, subject to aggregatepremium on all value-adds (except Critical Illness Benefit) not exceeding 30%of the basic Kotak Term Plan premium.

• Accidental Death Benefit: This benefit provides an additional amount(over and above the basic sum assured) to the beneficiary in the eventof the accidental death of the life insured. The maximum cover available under this rider is equal to the basic sum assured (subject toa maximum of Rs.10 lakhs).

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• Permanent Disability Benefit: This benefit can be added to your

basic life insurance policy to provide financial support in case of disability due to an accident. The amount payable under this benefitwould be paid out as an annuity. The maximum permanent disabilitybenefit that you can avail of is equal to the basic sum assured (subjectto a maximum of Rs.10 lakhs).Permanent disability is defined as permanent and immediate inability towork or permanent loss of use of two limbs or total and permanent lossof sight.

• Critical Illness Benefit: This benefit can be added to your basic lifeinsurance policy to provide financial support in the event of a medicalemergency. On the first occurrence of critical illness during the term of the policy, you would receive a portion of the sum assured to reduceyour financial burden in this emergency.

4. What do you receive on maturity of the policy?

Since this is a pure risk cover plan, there are no maturity benefits.


In the event of death during the term of the policy, the beneficiarywould receive the sum assured.


Section 80C, 10(10D) of Income Tax Act would apply. Premiums paidfor Critical Illness Benefit qualify for benefits under Section 80D. Thesebenefits are as per the currently prevailing tax regulations

94



KOTAK CHILD ADVANTAGE PLAN:

1. What is Kotak Child Advantage Plan?

The Kotak Child Advantage Plan is an investment plan designedto meet your child's future financial needs. It's a plan that gives your child

the "azaadi" to realize his dreams. The plan is a participating plan with a15-day free look period.


• How old does the child have to be to avail of this plan?

Minimum age - 0 yearsMaximum age -17 years


10 to 30 years

• What is the maximum sum assured allowed under this plan?

Rs. 25, 00,000


• On Maturity, you would receive the sum assured plus thebonus addition. Bonus addition is the amount in theAccumulation Account, in excess of the sum assured.

• The balance available in the Accumulation Account isinvested in various financial instruments (as per IRDAregulations) so your money works hard to earn more for your child.

95



• The Automatic Cover Maintenance facility ensures the

policy remains in force even if you miss premium payments.This facility is available after the first three years of the Term.

• You can take a loan against this plan, after the policy hasbeen in force for at least three years.

• You have the option of paying premiums quarterly, half yearly or yearly.

• Accumulation Account is your personal account in which

the premiums that you pay are deposited, the return declaredevery year is added and risk and expense charges arededucted.

• You have the benefit of a 15 day free look period.


You may avail of these value adds for a nominal premium at the

time of taking the plan. The aggregate premium of the value-adds should notexceed 30% of the basic policy premium.

• Life Guardian Benefit: In case of the unfortunate death of the premium payer, this benefit keeps the policy alive bywaiving all future premiums on the policy.

• Accidental Disability Guardian Benefit: In case thepremium payer is permanently disabled as a result of accident, this benefit keeps the policy alive by waiving allfuture premiums on the policy.


Section 80C, 10(10D) of Income Tax Act, 1961 would apply. Youare advised to consult your tax advisor for details.

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KOTAK RETIREMENT INCOME PLAN:

1. What is the Kotak Retirement Income Plan?

The Kotak Retirement Income Plan is a savings plan designed to

meet your post-retirement needs. It is a plan that gives you "Jeene kiazaadi". It gives you the choice to remain independent even after retirement. The Kotak Retirement Income Plan is a participating plan.The plan comes in two forms:

(i) With Cover,

(ii) Without Cover.


• How old do you have to be avail of this plan?


• For what term can you choose to pay the premiums?

5 yrs - 30 yrs

• How old you have to be to receive your annuity?

Minimum Age - 45 yrsMaximum Age - 65 yrs

• At what intervals can you pay the premium?

QuarterlyHalf YearlyAnnually

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• You can choose to retire at any age between 45 yrs and 65

yrs.

• On Retirement:You may take a lump sum in cash of up to a third of your Basic Sum Assured or Accumulation Account*, whichever is

higher; and the balance of the benefit you are eligible for willbe used to buy an annuity of your choice.

• Annuity Options:You may buy an annuity either from Kotak Life Insurance(subject to the choice and rates available at that time)**, or from any other insurer.

• Early Retirement Benefits:You may opt to retire early, i.e. at any age before the normalretirement date (subject to the policy being in force for 3

years or your attaining a minimum age of 45 yrs, whichever is later). You can then secure benefits with your Accumulation Account, net of an early retirement charge of 5%.If the early retirement is due to ill health, then you may retirebefore attaining the age of 45. You can then secure benefitswith your full Accumulation Account.

• Late Retirement Benefits: You may opt to retire after the retirement date originallyselected, and select a new retirement date (subject to amaximum of 65 years). No further premiums will be payableand the death benefit will be equal to the balance inAccumulation Account. (However, all riders will cease at theoriginal retirement date).

• You can make lump-sum injections into your policy at anytime before retirement (such lump-sum injections during ayear may not exceed 25% of the Basic Sum Assured). ASupplementary Accumulation Account will be created for this, and will be paid out in the same manner as other

benefits.

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• You may exercise the option of paying premiums from theSupplementary Accumulation Account, created for "lump-sum injections", if the need arises.

• For a "With Cover" plan, you have the facility of AutomaticCover Maintenance, which ensures that the cover remains inforce even when you miss the premium payments. Thisfacility is available after the first three years of the term.

• You have the option of paying premiums in quarterly, half-

yearly or yearly installments.

• You have the facility of a 15-day free look period.


You may avail of the following value-adds for a nominal premium atthe time of taking the policy, subject to the aggregate premium on the value-adds not exceeding 30% of the premium on the basic benefit.

• Term/ Preferred Term Benefit: In the event of death during theterm of this benefit, the beneficiary would receive an additionalDeath Benefit amount, which is over and above the SumAssured. The maximum amount of benefit you can avail of isequal to the Basic Sum Assured. Where the Term Benefit cover applied for is more than Rs.10 lakhs, better rates may apply,subject to meeting eligibility requirements.

• Accidental Death Benefit: In the event of death as a result of an accident during the term of this benefit, your beneficiary will

receive an additional benefit, which is over and above the BasicSum Assured. The maximum Accidental Death Benefit you canavail of is equal to the Basic Sum Assured (subject to amaximum of Rs. 10 lakhs).

• Critical Illness Benefit: In case of the first occurrence of acritical illness during the term of this benefit, the Critical IllnessBenefit Sum Assured will be added to the SupplementaryAccumulation Account. Once the addition is made to theSupplementary Accumulation Account, the Basic Sum Assured

would reduce by the Critical Illness Benefit Sum Assured, theBasic Accumulation Account would reduce in the same

99





(i) Sum Assured less all the premiums due but not paid, and

(ii) Accumulation Account.

This is used to buy an annuity, and provide commutation benefit, inaccordance with the beneficiary's choice.

For the "Without Cover" Plan:

The benefits to the beneficiary will be, greater of:

(i) Return of premiums (without interest), and

(ii) Accumulation Account.

This will be used to buy an annuity, and provide commutation benefit, inaccordance with the beneficiary's choice.

KOTAK PREMIUM RETURN PLAN:

This plan is a sure and secure insurance option without the hassles or worries of a conventional insurance plan. With minimal paperwork andprocedures, you get the dual benefit of a risk cover and savings. At the end of the term, a minimum of the premiums paid by you will be returned dependingon the option you choose. In other words, this is a term plan that makesfinancial sense by offering maturity benefits as well

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1. The Kotak Premium Return Plan is ideal for you…..

• If you do not have a life insurance cover or are underinsuredand would like to protect your family in the eventuality of younot being around yet receive all your premiums back onmaturity

• If you would like to cover your life without any elaboratepaper-work and medical tests and with premiums beingautomatically deducted from your account


• Enter age:

Minimum age - 18 years

Maximum age - 50 years

• Term:

10, 15 or 20 years

• Maturity Age:

Maximum- 60 years for term 10 years

65 years for term 15 years

70 years for term 20 years

3. Key Features:

• Return of premiums

This is a non-participating plan that covers you throughout the term

and on maturity returns all the premiums paid by you. The amount of premiumreturned will depend on term of the plan and the premium chosen by you.

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• Hassle-free

With a simple application procedure, no medical tests and automaticdebit of premiums: you can have an insurance plan without any worries.

• Death BenefitThe beneficiary will receive the death benefit (Sum assured

less premium unpaid during the year of death) in case of theunfortunate death of the life insured.

• Maturity BenefitOn maturity, the premiums paid by you will be returned. The

amount payable to you on maturity will depend on the term of thepolicy chosen by you.

The table below shows you the Maturity and Death Benefit for differentpremium* and term options

3. Advantages:• Twin benefit of risk cover and savings

• Affordable premiums

• Hassle free premium payments

• No medical examinations

5. Tax Benefit

Section 80C, 10(10D) of Income Tax Act, 1961 would apply. You areadvised to consult your tax advisor for details.

103



FOR GROUP:KOTAK GRATUITY GROUPPLAN:

Gratuity is not just a statutory obligation but also a very importanttool today to retain and attract talented employees. A comprehensive andeffective gratuity plan can reduce your business cost and corporate tax. AtKotak Life Insurance, we understand this. We have therefore designed agratuity management solution that not only manages your retirement liability

effectively but also helps you release resources for your core businessactivities.

1. Key Highlights of Kotak Gratuity Grouplan (KGGP):

• Market-linked returns and long term investment growth (Unit-Linked Non-Participating Scheme)

• Choice of eight investment fund options

• Switching facility amongst the available funds

• An in-built life cover (flat cover of minimum Rs. 1,000 per member or equivalent to Future Service Gratuity) thatinsures your employees’ lives and provides security to their families

• Critical Illness cover at half of accelerated additional deathcover at a nominal cost

2. Who can opt for KGGP?

• Employer- employee groups that fall under the purview of Payment of Gratuity Act, 1972.

• Minimum group size: 10 members

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• Minimum entry age: 18 years

• Maximum cover age: Retirement age as specified in theTrust Rules of the employer or 65 years whichever is lower

3. How does KGGP help me as an employer?

• Contribution to an approved gratuity fund is deductible under section 36(1) (v) of the Income Tax Act, 1961.

• Income earned from investments by an approved gratuity

fund is tax-exempt under section 10(25) (IV) of the IncomeTax Act, 1961.

4. How does KGGP help my employees?

• The gratuity settlement for retirement/resignation/withdrawal(as the case may be) will be settled as per the Trust Rules.Gratuity receipts are tax-exempt in the hands of the

employee up to the limit of Rs. 3, 50,000 under section 10(10) of the Income Tax Act, 1961.

• The death benefit will be equal to Future Service Gratuity or a flat cover (as agreed by the employer) plus gratuitysettlement as per the Trust Rules. Death benefits payable tothe employee are exempt from tax.

• In the event of Critical Illness, a benefit equal to rider amount, if opted will be paid. The death benefit for theremaining term to retirement will be reduced by the rider benefit paid.

5. What are the other Services to look for?

• Switching facility between different fund options free of charge

• Facility to pay the gratuity contribution in installments

• Annual Statement of Account with monthly newsletter

105



• Daily disclosure of Net Asset Value (NAV) of units

• Life cover is available 24 hours a day, 7 days a week,anywhere in the world

4. How will the contributions be made?

Fresh contributions may be made into the plan at the employer’sconvenience. At the end of the year, the contribution payable will be

determined on the basis of the accumulated asset value and the actuarialvaluation.

The premium for life cover (compulsory) and critical illness cover (if selected)is payable annually in advance.

106



SUPERANNUATION GROUPPLAN:

In today’s time when the prospect of out-living retirement savings islarger than ever, few employees take the time to plan their long-term financialgoals or have the discipline to systematically save for their retirement years.As an employer of choice, you can help your employees tremendously byassisting in their retirement planning and in turn increase employee retention.The solution lies in the Kotak Life Insurance’s Superannuation Grouplan

1. How does the Group Superannuation plan work?

The Kotak Superannuation Grouplan (KSGP) is a uniquely flexibleproduct that addresses the needs of both the employers and the employees.Under this plan, individual employee accounts are invested in one of the manyinvestment portfolios on a unitized basis as per each employee’s choice.Parameters such as eligibility criteria for fund membership, vesting guidelines,contribution rates, transfer rules and voluntary contributions are all designed

as per each employer’s unique needs.

2. How will KSGP help me as an employer?

You know that your employees are your most valuable assets. Byhelping to provide for retirement, you help increase employee retention andmotivation. Moreover:

• to the Finance Act’ 2006, annual contributions made by anapproved superannuation trust up to Rs. 1,00,000 per

employee can be claimed as deductible business expensesunder section 115 WB (1C) read with section 115 WC (1)(b)of the Income Tax Act, 1961. Any contribution beyond theprescribed limit will qualify for Fringe Benefit Tax

.• Income earned on investments by an approved

superannuation trust is tax-exempt under section 10 (25) (iii)of the Income Tax Act, 1961.

107



• The amount of deduction available on initial as well asordinary annual contribution to an approved superannuation

fund shall not exceed 27% (including the contribution toProvident Fund) of the employee’s annual basic salary for each year of his service under section 36 (1)(iv) of theIncome Tax Act, 1961.

4. How does KSGP help my employees?

KSGP gives your employees unparalleled flexibility and peace of mind.

• Any employee contribution towards an approvedsuperannuation fund qualifies for tax deduction under section80 C of the Income Tax Act, 1961.

• At the time of retirement or death, employee or employee’snominee (as the case may be) can commute part of theaccumulated fund amount as a tax-free lump sum under section 10 (10A) and section 10 (13) of the Income Tax Act,1961. The balance amount must be used to buy annuity fromeither Kotak Life Insurance or any other insurer in the marketat the then prevailing rates.

• At the time of withdrawal from service, employee has anoption to either transfer his superannuation account tohis/her new employer (if the latter provides for that) or leavehis account with the trust or commute part of theaccumulated fund and buy an annuity from the balanceamount from either Kotak Life Insurance or any other insurer in the market at the then prevailing rates.

5. How do I know if my company is eligible for KSGP?

• Minimum group size: 10 members • Minimum entry age: As specified in the Trust Rules or18

years, whichever is higher.

• Maximum cover age: As specified in the Trust Rules, or 65years whichever is lower.

• Minimum Term: One year. This is an annually renewable

plan.

108



SECTION: II

PROFILE FOR POTENTIAL LIFE ADVISOR

109



RESEARCH OBJECTIVE:

For the purpose of Research, I have chosen the area of insurancesector. The topics under the study understand the insurance business and Astudy report to find out from where most of the clients come.

MAIN OBJECTIVE OF THE TOPICS:

The main objective behind this topic was to understand all the conceptof life insurance, which plays important role in insurance business like:

• Proposal form

• Underwriting

• Actuarial valuation

• Death and Maturity claim

• Riders

• Role of Life Advisor

• Revival, Lapsation and Foreclosure

• Nomination and Assignment

• Calculation of age (Nearer, Next, Last)

• Calculation of Premium

• Calculation of Bonus

• Calculation of Present Value

• Calculation of Surrender Value etc.

110



This entire thing plays very important role in life insurance business. Assuch, Understanding and Learning the Insurance Business depends wholly onone own self, there was no need of any research to be made.

A STUDY REPORT TO FIND OUT FROM WHERE THE

MOST OF THE CLIENTS COME:

• The main objective behind this topic was to find out that segment of people who are joining the insurance industry as clients.

• For the purpose of research, meaning of ‘Segment’ include,

o Employee ( private or Government)o Businesso Professionalo Farmer

o House wifeo Other

111



RESEARCH DESIGN:

PURPOSE OF THE STUDY:

Here, people who are engaged in the insurances business come fromdifferent segment. Any people take the policy of Life Insurance Company buthe/she has to fulfill all the term and conditions. Like, children below the 18year age can not take policy and can not enter into contract with insurance

company but parent has insurable interest in his son so they can take thepolicy of his/her son.

Different occupations indicate different segment of people in themarket. Now these various segment are:

• Employee (With Private or Government)• Business• Professional

• Farmer • House wife• Other

Now, from the company’s point of view, in order to increase their business,they have to provide different type of better service and return to their client ascompared to other company and give proper training to the Life Advisor so,they can give better plan to the client as per their need and requirement.

The Research wholly was ‘Descriptive’ in nature. It serve the purpose of Who, What, Where, How many etc. The Research is basically designed togive the description regarding a particular phenomenon.

112





8. Why you prefer Kotak Life Insurance Company?

Better service

Early claim payment Transference of plan

Good Returns Other

9. Are you aware about any plan of Kotak Life Insurance Company? If yes

Kotak Safe Investment Plan Kotak Head Start Plan

Kotak Retirement Income Plan Kotak Guaranteed Growth Plan Other

10. Would you like to know about any popular plan of Kotak Life InsuranceLtd.? If yes,

Kotak Safe Investment Plan Kotak Head Start Plan Kotak Retirement Income Plan

Kotak Guaranteed Growth Plan

11. Would you like to know about Kotak’s Business Partner’sOption? (From which you can earn extra money along withYour profession.)

Yes No

12. Reference: - 1)….................................................................

2)…………………………………………………

114



SAMPLING DESIGN:

SAMPLING UNIVERSE:

The sampling universe, under the concept of sampling plan, for thisResearch can be best understood as the various segments of peopleaccording to their occupation in whole of the Baroda city. Here for the purposeof survey, I have taken all people, except minors & Lunatics as our sampling

universe.

SAMPLING SITE:

Baroda city as a whole was considered to be the sampling site. Nobiness toward any area in the Baroda city was entertained.

SAMPLING SIZE:

The sample size selected at random can be denoted into numbers as200.

OCCUPATION COUNT

EMPLOYEE 84BUSINESS 31

PROFESSIONAL 29

FARMER 11

HOUSE WIFE 18

OTHER 27

TOTAL 200

115



SAMPLING UNIT:

The ‘Individual’ and not the ‘Groups’ were the sampling units for outresearch.

FINDING OF THE SURVEY AND ITS ANALYSIS:

1. kindly indicate your age group

From the above date, it can become be analyzed that around 109 of our sample population belong to the youngest age group i.e. 18 to30 years. Thesecond highest age group in our sample population is 46 - 60 Years, whichcomprises 28.5 %, followed by the age group of 31 – 45 years with 15.5 %.

The lowest rate is 1.5 % which comprises of the oldest age group that is 61and above.

AGE GROUP N

18 - 30 109

31 - 45 31

46 - 60 57

61 & Above 3

116



117



The following pie chart gives clears picture of our finding:

2. Occupational Detail

OCCUPATION COUNT

EMPLOYEE 84

BUSINESS 31

PROFESSIONAL 29

FARMER 11

HOUSE WIFE 18

OTHER 27

TOTAL 200

118

31 – 4516%

46 – 60

28%



The following chart gives clears picture of our finding

42%

15.50% 14.50%

5.50%9%

13.50%

0%

5%10%

15%

20%

25%

30%

35%

40%

45%

% of

Respondents

Employee BusinessProfessional Farmer H.W. Other

Occupation

The above area of our survey was one of the main important subjectsto derive any conclusion. If we try to find out the mean of the above variables,then it comes to around 33. It mean that the number of sample respondentsbelonging to all the above 6 categories come to 33, except employee becauseit include both Private and Government employee. Data wise finding can beseen from the above two angles i.e. tabular and graphical means, with countand percentage values respectively.

The maximum outcome is the respondents working in company and thelowest one is the farmer. The share of business, professional and other is

approximately equal.

119



3. Income Group

For every analysis, the income group plays a very vital role, for our analysis to be interpreted, this part is very essential. From the data’scollected, there are around 53.5 % of respondents who are below 2 lakhsyearly income & 30.5 % of respondents are earning between 2 to 5 lakhs p.a.

There are16 % respondents, whose yearly income are more than 5 lakhs. Thechart for data is:

INCOMEGROUP

% OF TOTALRESPONDENTS

N

LESS THAN 2LAKH

53.5 107

2 TO 5 LAKHS 30.5 61

5 LAKH ANDABOVE

16 32

120

5 3 . 5

3 0 . 5

1 6

1 0 7

6 1

3 2

0 20 40 60 80 100 120 140 160 180

LESS THAN 2 LAKH

2 TO 5 LAKHS

5 LAKH AND ABOVE

I n c o m e

No. of respondent



4. Interested to join business partner option of Kotak life insurance.

This was one of the most crucial categories of questions in thequestionnaire. Most of the interpretations followed by the suggestions will bedepend on this analysis. The data shows that out of the total samplerespondents i.e. 200, there are 136 respondents who are interested to joinBusiness Partner option of Kotak life insurance. And rest of the respondents isnot interested to do any type of work with their occupation. If we takepercentage wise, then 68 % of our respondents are interested and other 32 %are not interested. The table above shows the same figures followed by theCumulative chart.

INTERESTED TO JOIN BUSINESSPARTNER OPTION OF KOTAK LIFEINSURANCE

YES NO

136 64

TOTAL 200

121



0 20 40 60 80 100 120 140

No. of respondent

INTERESTED TO JOIN BUSINESS PARTNER

OPTION OF KOTAK LIFE INSURANCE

122



BETTER SERVICE

26

GOOD RETERN, 2

OTHER, 15

BETTER SERVIC

GOOD RETERN

OTHER

5. Preference of respondents

There are total 70 people in our sample who have invested in Kotak lifeinsurance. These entire 70 people have different preference for their investment. Out of total 70 people 26 people has given more preference toBetter Service and 29 people has given more preference to Good Return. Soit means that out to total investor, most of the investor comes because of theKotak life insurance’s Better Service and Good Return. The figure shows dataof above table.

PREFERANCE N

BETTER SERVICE 26

GOOD RETERN 29

OTHER 15

123



CHI-SQUARE HYPOTHESIS TESTING

1. Interest of Respondents to join the business partner option of kotak life insurance with respect to their income.

Ho = Interest of Respondents to join the business partner

option and their income are independent.

H1 = Interest of Respondents to join the business partner option and their income are dependent.

INCOME GROUPINTERESTED LESS THAN

2 LAKH2 LAKH TO< 5 LAKH

5 LAKH ANDABOVE

TOTAL

YES 80 39 17 136

NO 27 22 15 64

TOTAL 107 61 32 200

Calculation of chi-square

Fo Fe Fo – Fe ( Fo – Fe )2 ( Fo – Fe )2 /Fe

80 72.76 7.24 52.4176 0.72

27 34.24 -7.20 51.8400 1.53

39 41.48 -2.48 06.1504 0.15

22 19.52 2.48 06.1504 0.32

17 21.76 -4.76 22.6576 1.04

15 10.24 4.76 22.6576 2.21

TOTAL 5.97

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Calculated chi-square = 5.97

To find out tabulated chi-square, it is necessary to find out Degree of Freedom(d. f.).

So, d. f. = (r-1) x (c-1)d. f. = (2-1) x (3-1)d. f.= 1 x 3 = 3

The level of significance is assumed as 1%

Hence, the tabulated value at 1% significance level with d.f. = 5, is 9.21

Summarizing,


Tabulated chi-square = 9.21

Calculated chi-square is lesser than Tabulated chi-square

i.e. 5.97 < 9.21

So, our Null Hypothesis is accepted.

It means that interest of respondents to join business partner option of Kotaklife insurance and their income are independent of each other.

2. Interest of Respondents to join the business partner option of

kotak Life insurance with respect to their age group.

Ho = Interest of Respondents to join the business partner

option and their age group are independent.

H1 = Interest of Respondents to join the business partner option and their age group are dependent.

125



AGE GROUP INTERESTED NOTINTERESTED

TOTAL

18-30 80 29 109

31-45 14 17 031

46-60 30 27 057

61 & ABOVE 00 03 003

TOTAL 136 64 200

Calculation of chi-square:


80 74.12 5.88 34.5744 0.47

14 21.08 -7.08 50.1264 2.38

30 38.76 -8.76 76.7376 1.980 02.04 -2.04 04.1616 2.04

29 34.88 -5.88 34.5744 0.10

17 09.92 7.08 50.1264 5.05

27 18.24 8.76 76.7376 4.21

3 00.96 2.04 04.1616 4.34

TOTAL 20.57

126





OCCUPATION INTERESTED NOTINTERESTED

TOTAL

EMPLOYEE 54 30 84

BUSINESS 19 12 31

PROFESSIONAL 11 18 29

FARMER 03 08 11

HOUSE WIFE 07 11 18

OTHER 16 11 27

TOTAL 136 64 200

Calculation of Chi-square:


54 57.12 -3.12 9.7344 0.1719 21.08 2.08 4.3264 0.21

11 19.72 -8.72 76.0384 3.86

3 7.48 -4.48 20.0704 2.68

7 12.24 -5.24 27.4576 2.24

16 18.36 -2.36 5.5696 0.30

30 26.88 3.12 9.7344 0.36

12 9.92 2.08 4.3264 0.44

18 9.28 8.72 76.0384 8.19

8 3.52 4.48 20.0704 5.7011 5.76 5.24 27.4576 4.77

11 8.64 2.36 5.5696 0.64

TOTAL 29.56

128




To find out tabulated chi-square, it is necessary to find out Degree of Freedom( d. f. ).

So, d. f. = (r-1) x (c-1)d. f. = (6-1) x (2-1)d. f.= 5 x 1 = 5



Summarizing




i.e. 29.56 > 15.10

So, our Null Hypothesis is rejected.

It means that interest of respondents to join business partner option of Kotaklife insurance and their occupation are dependent of each other.

4. Interest of Respondents to give more preference to service

withrespect to their occupation.

Ho = Interest of Respondents to give more preference toservice and their occupation are independent.

H1 = Interest of Respondents to give more preference toservice and their occupation are dependent.

129



OCCUPATIONINTERESTED IN

SERVICE

NOTINTERESTED IN

SERVICETOTAL

EMPLOYEE 11 17 28

BUSINESS 5 11 16

PROFESSIONAL 3 5 8

FARMER 2 4 6HOUSE WIFE 2 1 3

OTHER 3 6 9

TOTAL 26 44 70

Calculation of Chi-square

Fo Fe Fo – Fe ( Fo – Fe )

2

( Fo – Fe )

2

/Fe

11 10.40 0.60 0.3600 0.03

5 05.94 -0.94 0.8836 0.15

3 02.97 0.03 0.0009 0.00

2 02.23 -0.23 0.0529 0.02

2 01.11 0.89 0.7921 0.71

3 03.34 -0.34 0.1156 0.03

17 17.60 -0.60 0.3600 0.02

11 10.06 0.40 0.1600 0.02

5 05.03 -0.03 0.0009 0.00

4 03.77 0.23 0.0529 0.01

1 01.89 -0.89 0.7921 0.42

6 05.66 0.34 0.1156 0.02

TOTAL 1.43

130





So, d. f. = (r-1) x (c-1)d. f. = (6-1) x (2-1)d. f.= 5 x 1 = 5



Summarizing




i.e. 1.43 < 15.10


It means that interest of respondents to give more preference to better serviceand their occupation are independent of each other.

5. Interest of Respondents to give more preference to good

return withrespect to their occupation.

Ho = Interest of Respondents to give more preference to goodreturn and their occupation are independent.

H1 = Interest of Respondents to give more preference to goodreturn and their occupation are dependent.

131



OCCUPATION INTERESTED INGOOD RETURN

NOT

INTERESTED INGOOD RETURN

TOTAL

EMPLOYEE 16 12 28

BUSINESS 5 11 16

PROFESSIONAL 3 5 8

FARMER 1 7 6

HOUSE WIFE 1 2 3

OTHER 3 6 9

TOTAL 29 41 70

Calculation of Chi-square


16 11.6 4.4 19.36 1.67

5 6.63 -1.63 2.6569 0.40

3 3.31 -0.31 0.0961 0.03

1 2.49 -1.49 2.2201 0.89

1 1.24 -0.24 0.0576 0.05

3 3.73 -0.73 0.5329 0.14

12 16.4 -4.4 19.36 1.18

11 9.37 1.63 2.6569 0.28

5 4.69 0.31 0.0961 0.02

7 3.51 3.49 12.1801 3.47

2 1.76 0.24 0.0576 0.03

6 5.27 0.73 0.5329 0.10

TOTAL 8.26

132





So, d. f. = (r-1) x (c-1)d. f. = (6-1) x (2-1)d. f.= 5 x 1 = 5



Summarizing




i.e. 8.26 < 15.10


It means that interest of respondents to give more preference to good returnand their occupation are independent of each other.

133



Conclusion:

• Here after private company come into the market there are total 16 life

insurance company and more 11 company is coming so even thoughthe hypothesis of Better Service and Good Return is acceptedcompany has to give more important to Better Service and GoodReturn because when these 11 company come into the market,competition will increase more and more and company has to provideall these facility. So company has to provide these facilities from todayso company will get more benefit when there will be cut throughcompetition.

• People who want to join business partner option of Kotak LifeInsurance are dependent on Age Group and Occupation so company

has to more emphasis on Age Group and Occupation to cover moreand more life Advisor.

134



BIBLIOGRAPHY:

• www.kotaklifeinsurance.com• www.kotak.com• IRDA Book• Booklet of different plan of Kotak life insurance company

• Gupta and Gupta, Business Statistic• Secondary data from Kotak life insurance company• Magazine of insurance (published by icfai)

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Documents

Kotak Life Ad