Project-Comparative Analysis of ULIPs With Traditional Plans

A PROJECT REPORT

ON

Comparative Analysis

Between

ULIPs and Traditional Plans

Submitted in Partial Fulfillment for the Award of the Degree of

Master of Business Administration

Guided By: Submitted by: Ms. Urvashi Sahitya Gaurav Kumar Lecturer, MBA Roll No.: 00920803909

Bhagwan Parshuram Institute of Technology (Aff. to Guru Gobind Singh Indraprastha University)

Bhagwan Parshuram Institute of Technology Page II

DECLARATION

I, Gaurav Kumar , hereby declare that the project report entitled “Comparative

Analysis of ULIPs with Traditional Plans” is an authenticated work carried out by

me at MetLife India Insurance Company Ltd., under the guidance of Ms. Urvashi

Sahitya, Lecturer, BPIT for the summer internship of MASTERS OF BUSINESS

ADMINISTRATION and this work has not been submitted for similar purpose

anywhere else except to BPIT, BHAGWAN PARSHURAM INSTITUTE OF

TECHNOLOGY, ROHINI, affiliated to GURU GOBIND SINGH

INDRAPRASTHA UNIVERSITY, DELHI.

Date:

Place:

GAURAV KUMAR

Bhagwan Parshuram Institute of Technology Page III

ACKNOWLEDGEMENT

I would like to express my sincere gratitude to my company guide Mr. Nikhil Kak ,

Agency Manager MetLife India Insurance Company Ltd., Delhi for guiding me

throughout my summer internship. His encouragement, time and effort are greatly

appreciated. I would also like to thank my project manager Mr. Yoginder Kumar ,

MetLife. I would then like to thank my faculty guide, Ms. Urvashi Sahitya, for all

his valuable inputs and constant support towards me throughout my project and

providing me an opportunity to learn outside the class room. It was a truly wonderful

learning experience. I would like to thank the training heads Mr. Nitin Pathak , and

Sales Manager Mr. Surinder Kumar for helping me with the training and other

activities and constantly motivating me to give my best. I would like to thank all my

friends who did their SI from MetLife India Insurance Co. Ltd. for their valuable

suggestions and support.

GAURAV KUMAR

Bhagwan Parshuram Institute of Technology Page IV

Executive Summary

This project was completed with MetLife India Insurance Co. Ltd. for the duration

of 8 weeks. This project is accomplished under the title of “Comparative Analysis

between ULIPs and Traditional Plans”

The study is mainly focused on understanding the basics of Insurance and to study

the comparison of different investment avenues & ULIP of MetLife India Insurance

Co. Ltd. The objective of the study indicates the comparison of ULIPs with other

investment avenues.

People generally invest their money in government deposits and bank deposits, and it

is being proved by the research work, as they consider it more reliable as compared

to private companies though they agreed that the services offered by private

companies are better. Major reason of their investment is to save tax, and they want

higher returns on their money, yet 50 % people are not satisfied with their current

investments, due to many reasons like, they are not getting as much return as they

expected and they are not satisfied with the services and/or reliability of the

investment company.

ULIPs are slowly gaining acceptance due to attractive features they offer. ULIPs

provide the flexibility in investment, transparency, liquidity and various fund

options.

But people are not fully aware of the various features and characteristics of Unit

Linked Insurance Plan (ULIPs), and they prefer savings and protection plan rather

than pension and child plan. Most people look for the company’s brand name/image

and the amount of return they will get while investing in the Insurance Company.

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Traditional Plans:

These are the oldest types of plans available. These plans cater to customers with

a low risk appetite. Some of the common features of traditional plans are:

� Steady Investment

� Various Features

Traditional policies are advisable where:

• The objective is only Risk cover and not savings, thus cost of insurance is

minimum.

Unit Linked products are advisable where:

• The intention is to provide security with a purpose.

Some of the recommendations to the company are:

The company should emphasis on advertisements to promote their products; should

increase the advisor’s commission and launch various attractive schemes so as to

motivate them; currently MetLife offers services from around 600 locations across

India, so the company should focus on opening up of new offices so as to make it

more accessible. Currently most of the ULIP plans demands high premiums (min Rs.

40,000), they should launch some products with similar feature but with low initial

premium. Administration charges should be reduced; currently it is up to 40% of

premium, so as to compete with other investment avenues like Mutual Funds, NSS,

etc. Market surveys should be conducted regularly to know about customer demands

and changing needs; and should be regular training for the employees.

Bhagwan Parshuram Institute of Technology Page VI

List of Illustrations Title Name Page Nos.

3.1 Growing need for Insurance with Age 12 3.2 Division of Premium 17 3.3 Breakup of Premium charges in ULIPs 18 3.4 Advantage of Unit Linked Insurance Plans 20 3.5 Choices of Funds Available 21 6.1 Number of People make Investments 37 6.2 Preferred Investment Sector 38 6.3 Reasons of Investment 39 6.4 Number of People satisfied with their Investments 40 6.5 Number of People who have taken LI Policy 40 6.6 Preferred Sector of Investment 41 6.7 Services of Private sector 42 6.8 Reliability of Private LI Companies 42 6.9 Awareness about ULIPs 43 6.10 Degree of Awareness of ULIPs regarding working of ULIPs 44 6.11 Degree of awareness of ULIPs regarding criteria for returns 44 6.12 Degree of awareness of ULIPs regarding different plans 45 6.13 Degree of awareness of ULIPs regarding fund investment 45 6.14 Degree of awareness of ULIPs regarding Switching Option 45 6.15 Number of People Invested in ULIPs 46 6.16 Investments in Different Plans 47 6.17 Reasons of Investment in ULIPs 48 6.18 Name of Insurer 49 6.19 Expectations of Return from ULIPs 50 6.20 Factors influencing in purchasing the Insurance Plan 51 6.21 Riskiness of ULIPs 52 6.22 Number of People plans to buy ULIPs 52 6.23 Reasons of not purchasing ULIPs 54 6.24 Suggestions to make ULIPs more popular 55 6.25 Source of taking Insurance 56 6.26 Views about Insurance Policy 57 6.27 Awareness of FMC 58 6.28 Riskiness of Insurance Products 59 6.29 Name of Popular Companies 60 6.30 Views about MetLife Company 61

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List of Tables Title Name Page Nos.

4.1 List of Insurance Companies in India 28 4.2 List of Non-Life Insurers 29 5.1 Management Team 32 5.2 Met Health Care Plan 36 5.3 Monthly Income Plan 36 6.1 Number of People make Investments 37 6.2 Preferred Investment Sector 38 6.3 Reasons of Investment 39 6.4 Number of People satisfied with their Investments 39 6.5 Number of People who have taken LI Policy 40 6.6 Preferred Sector of Investment 41 6.7 Services of Private sector 42 6.8 Reliability of Private LI Companies 42 6.9 Awareness about ULIPs 43 6.10 Degree of awareness of ULIPs 44 6.11 Number of People Invested in ULIPs 45 6.12 Investments in Different Plans 46 6.13 Reasons of Investment in ULIPs 48 6.14 Name of Insurer 48 6.15 Expectations of Return from ULIPs 49 6.16 Factors influencing in purchasing the Insurance Plan 50 6.17 Riskiness of ULIPs 51 6.18 Number of People plans to buy ULIPs 52 6.19 Reasons of not purchasing ULIPs 53 6.20 Suggestions to make ULIPs more popular 55 6.21 Source of taking Insurance 56 6.22 Views about Insurance Policy 57 6.23Awareness of FMC 58 6.24 Riskiness of Insurance Products 59 6.25 Name of Popular Companies 59 6.26 Views about MetLife Company 60 8.1 Comparison of ULIPs with Traditional Policy 64 8.2 Comparison of ULIPs with other Investment Modules 66

Bhagwan Parshuram Institute of Technology Page VIII

Table of Contents Title Name Page Nos.

Declaration II

Acknowledgement III

Executive Summary IV

List of Illustrations VI

List of Tables VII

Chapter 1. Introduction 1 – 2

Chapter 2. Objective of the Study 3

Chapter 3. Research Methodology 4 – 5

2.1 Scope of the Study 4

2.2 Research Design 4

2.3 Tools Techniques 6

Chapter 3. Literature Review 7 – 21

3.1 Insurance 7

3.1.1 Purpose and Need of Insurance 6

3.2 Article Review 8

3.3 Functions of Insurance 9

3.4 Life Insurance 10

3.4.1 Why Life Insurance 11

3.4.2 Benefits of Life Insurance 9

3.5 Unit Linked Insurance Plan (ULIPs) 15

3.5.1 The things we must know about ULIPs 16

3.6 Advantages of ULIPs 19

3.7 Choices of funds Available 21

Chapter 4. Industry Profile 22 – 29

4.1 History 22

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4.2 Industry Structure 27

4.3 Capital Requirements and Foreign Participation 28

4.4 List of Insurance Companies in India 28

Chapter 5. Company Profile 30 – 36

5.1 MetLife (India) 30

5.2 Company’s Values 31

5.3 Management Team 32

5.4 Services offered by MetLife Company 33

5.5 Plans of MetLife Insurance 33

Chapter 6. Data Analysis and Interpretation 37 – 61

Chapter 7. Limitations of the Study 62

Chapter 8. Findings and Conclusion 63

8.1 Comparison of ULIPs with Traditional Plans 63

8.2 Comparison of ULIPs with other Investment Modules 66

8.3 Conclusion 66

Chapter 9. Recommendations 68

Bibliography

Annexure

Comparative Analysis of ULIPs with Traditional Plans Page 1

Chapter 1

INTRODUCTION

In the commercial arena, the choice of an effective strategy is perhaps the most

important and the toughest decision to take. The decision to select among the grand

strategies and deciding upon which strategy will best meet the enterprise’s objectives

is rendered complex by multiple considerations. The same is also true with the

insurance companies in India who are constantly revamping their strategies and

coming out with innovative options to stay in the competition. There were days when

Life Insurance Corporation of India (LIC) was the only insurance company available

to people in India and where people synonymised Insurance to LIC. Also since it was

a Public Sector Undertaking (PSU) it has a great support from people. But now times

have changed a lot of private players have entered into the fray. There have been a

lot of Indian companies collaborating with foreign insurance giants like ICICI

Prudential, Bajaj Allianz etc who have already made their presence felt in the Indian

Insurance industry. Even though LIC is still the market leader with more than over

60% of the market share, the private players are giving it a tough time. Since the last

decade the market share of LIC had fallen down by about more than 20%. The new

private players have started offering a variety of unlimited schemes. Also the private

companies have started creating the importance and need of insurance in today’s life.

They have started positioning their brands and are marketing their products in such a

way the people have started feeling the need of security in their lives. Taking into

account the huge population and growing per capita income besides several other

driving factors, a huge opportunity is in store for the insurance companies in India.

According to the latest research findings, nearly 80% of Indian population are

without life insurance cover while health insurance and non-life insurance continues

to be below international standards. And this part of the population is also subjected

to weak social security and pension systems with hardly any old age income security.

As per our findings, Insurance in India is primarily used as a means to improve

personal finances and for income tax planning; Indians have a tendency to invest in

properties and gold followed by bank deposits. They selectively invest in shares also

but the percentage is very small (4-5%). This in itself is an indicator that growth

potential for the insurance sector is immense. It's a business growing at the rate of


15-20% per annum and presently is of the order of around more than $55 billion.

India is a vast market for life insurance that is directly proportional to the growth in

premiums and an increase in life density. With the entry of private sector players

backed by foreign expertise, Indian insurance market has become more vibrant.

Competition in this market is increasing with company’s continuous effort to lure the

customers with new product offerings. However, the market share of private

insurance companies remains low in the 25-35% range. Even to this day, Life

Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy

hand of government still dominates the market, with price controls, limits on

ownership, and other restraints. Private players are coming up with new and

innovative ideas. Since the last decade the life insurance industry in India has been

growing very fast and many new companies have entered this business insurance.

The Indian life insurance industry has recorded a robust growth and it is expected to

grow at an amazing rate of 20%. Also in the present scenario the most sought after

insurance plans are the Unit Linked insurance Plans (ULIPs). A ULIP is a life

insurance policy which provides a combination of risk cover and investment. ULIPs

have gained high acceptance due to attractive features they offer like flexibility,

transparency, liquidity and a vast variety of fund option. Unit linked plans are

suitable for all customer profiles; however as a general belief the risk averse

investors tend to choose traditional plans and an informed customer prefers a ULIP.

ULIPs offer the kind of flexibility that no insurance product can. ULIPs essentially

combine the benefits of an insurance policy and a market-linked investment.

Investors can select a ULIP with an equity-debt combination that is in line with their

risk profile. A risk-taking investor would typically select one with a high equity

component, while a risk-averse investor would opt for a debt-heavy one. Simply put,

ULIPs are structured in such a way that the protection element and the savings

element are distinguishable, and hence managed according to your specific needs. In

this way, the ULIP plan offers unprecedented flexibility and transparency. So with

many players around for a company to really be successful it has to really be very

efficient on all fronts. It has to constantly adapt to the changing consumer

preferences with a lot of new innovations and implementing new technology try to

different from the lot. Especially if it is a new player in the market the company has

to really work very hard to get into the completion and stay afloat.


Chapter 2 Objective of the Study

OBJECTIVES OF THE STUDY

1. To understand the insurance concept deeply.

2. To study the ULIP plans of MetLife India Insurance Company

Ltd.

3. Find out the advantages & disadvantages of ULIP plans.

4. To compare ULIP plans with traditional plans.


Chapter 3 Research Methodology

Research Methodology deals with, the procedure adopted to carry out the study.

“A research design is the specification of methods and procedures acquiring the

information needed. It is the overall operational pattern or framework of the project

that stipulates which information is to be collected from which sources by what

procedures’’. For conducting the study, the researcher has adopted both primary as

well as secondary method of data collection.

2.1 SCOPE OF THE STUDY

• Scope of the study extends to Delhi city.

• Insurance industry study was taken as a market research.

• The study involved comparison of ULIP plan with other traditional plans.

2.2 RESEARCH DESIGN (1) SAMPLING TECHNIQUES: Mainly Simple Random Sampling and Convenience Sampling techniques are used in the research.

1. SAMPLE SIZE : The total samples for this study is of 50 respondents.

2. SAMPLE AREA: Delhi and NCR respondents were chosen for the study.


Data Collection Sources/Techniques

DATA SOURCES

PRIMARY DATA SECONDARY DATA (2) DATA CLLECTION SOURCES/TECHNIQUES: The data collection for this study was obtained from primary & secondary sources. (A) PRIMARY DATA: It is the first hand information collected directly from customer. The primary data are those, which are collected for the first time for the specific purpose of the study. Primary data are collected by:

• QUESTIONNAIRE: It is a set of definite questions formed to collect the required facts or opinions from others. While preparing questionnaire the attention was given at the objective. Various questions were asked to the respondents to conduct the survey.

• PERSONAL INTERVIEW: In personal Interview various questions are asked in a face-to-face meeting. The respondents were asked certain unstructured questions to obtain the important information on knowledge, attitudes and opinions about insurance.

B) SECONDARY DATA The secondary data are those which have already been collected by someone else & which have been already through the statistical process & useful to study. It was collected from various insurance books, reports of MetLife India Insurance Co. Ltd. and various websites. Secondary data was collected from

1. Internal sources


2. Libraries 3. Magazines/Journals 4. Internet

2.3 Tools Techniques

Percentage refers to a special kind of ratio and is used in making comparisons

between two or more series of data, and it also helps to describe the relationships

with other factors. Percentage technique was used in data analysis and Interpretation.


Chapter 3 Literature Review

3.1 INSURANCE

Insurance may be described as a social device to reduce or eliminate risk of loss to

life and property. Under the plan of insurance, a large number of people associate

themselves by sharing risks attached to individuals. The risks which can be insured

against include fire, the perils of sea, death and accidents and burglary. Any risk

contingent upon these, may be insured against at a premium commensurate with the

risk involved. Thus collective bearing of risk is insurance.

3.1.1 PURPOSE AND NEED OF INSURANCE

As said earlier that the making is exposed to many serious perils which risk the

security of their belongings. The risk here means that there is a possibility of

occurrence of loss or damage to the property, it may happen or may not happen.

Insurance is relevant only in the contingency of uncertainty. If there is no uncertainly

about the occurrence of the loss it can’t be insured against:

� Assets are likely to be destroyed or made non-functional due to perils like

firefloods, breakdowns, lightning and earthquake.

� Damage to assets caused by any perils is the risk that assets are exposed to.

� Insurance become relevant only if there is uncertainly of occurrence of event

leading to loss.

� No uncertainty No insurance.

� We can say that the human life value is an ongoing generating asset, which

can be lost on early death or disability caused by accidents.

� Insurance doesn’t protect the assets but only compensates the economic or

financial loss.

� Basically insurance covers tangible assets but the concept can be extended to

intangible also.


3.2 Review of Articles

3.2.1 Financial Express: Investors still perplexed about ULIPs, dated April 16, 2010 Most holders of unit-linked insurance plans, or ULIPs, say their insurance agent

informed them about the commission upfront, though very few know, or were

informed, that it is often upwards of 20 to 30%. Although a majority of policyholders

are satisfied with the performance of their ULIPs, under a fourth bought them for

insurance reasons, reveals a four-city FE-Synovate Ulip Survey conducted on 14th

April.

Though the life insurance firms may love to find succor in these figures, truth be

told, such confusion amongst policyholders is an ominous sign for the industry,

caught in a bitter, week-old regulatory tug-of-war over Ulips between Insurance

Regulatory Authority of India and the Securities and Exchange Board of India. Ulips

account for over three-fourths of all insurance premiums collected every year by

about two dozen life insurers in the country.

“The damage is done,” rues Kolkata-based architect Manoj Bhattacharya, who had

bought Ulips a few years ago. “Now I find that the surrender value of my policies is

almost 80% of what I have paid so far. I cannot even get out as I will lose

financially,” he adds.

Bhattacharya’s story of a confused and mis-sold consumer resonates with the over

seven crore Ulip-holders who collectively forked out over Rs 1 lakh crore as

premium for these hybrid insurance-cum-investment products last fiscal; a fact borne

by the survey, which points that, more people bought it as a mutual fund-type

product (26%) than an insurance-led scheme (23%).

Low financial literacy, even amongst rich investors, and the fact that Ulips have been

hawked as ‘horses for courses’ products by insurance agents for all manner of

financial needs––from insurance, investment to tax planning––give credence to the

call for tighter regulation of Ulips and whittling or even scrapping of high agent

commissions here a la mutual funds. It is instructive for the industry that over a third

of the FE-Synovate survey respondents were unaware of the Ulip commission


structure, and the rest unclear on what portion of their funds was apportioned as

agent commission and administrative charges by the insurer.

Says Banglorean Naveen Prasad, who works for a consultancy firm; “I was

convinced by my agent that as a long-term investment, Ulip is the best bet. But

during the first year of fund allocation, I realised that 24% of what I was paying went

as fund management charges, which I feel is ridiculous. There should be a system

where only a minimum amount can be charged for fund maintenance and not such a

huge percentage.”

Many Ulip-holders, however, look at the silver lining in the current Irda-Sebi

imbroglio. Says Mumbai-based entrepreneur Sandeep Desai: “As a Ulip investor, I

expect these controversies to bring out more stringent rules for private players, which

will help establish transparency and ensure that they sell Ulips with proper

disclosures and responsibility towards their clients.” The FE-Synovate Ulip Survey

was conducted amongst 206 Ulip-holders spread across four cities––Delhi, Mumbai,

Kolkata and Bangalore.

3.3 FUNCTIONS OF INSURANCE The functions of Insurance can be bifurcated into two parts:

1. Primary Functions

2. Secondary Functions

The primary functions of insurance include the following:

Provide Protection - The primary function of insurance is to provide protection

against future risk, accidents and uncertainty. Insurance cannot check the happening

of the risk, but can certainly provide for the losses of risk. Insurance is actually a

protection against economic loss, by sharing the risk with others.

Collective bearing of risk - Insurance is a device to share the financial loss of few

among many others. Insurance is a mean by which few losses are shared among

larger number of people.


Assessment of risk - Insurance determines the probable volume of risk by evaluating

various factors that give rise to risk. Risk is the basis for determining the premium

rate also

Provide Certainty - Insurance is a device, which helps to change from uncertainty

to certainty. Insurance is device whereby the uncertain risks may be made more

certain.

The secondary functions of insurance include the following:

Prevention of Losses - Insurance cautions individuals and businessmen to adopt

suitable device to prevent unfortunate consequences of risk by observing safety

instructions; installation of automatic sparkler or alarm systems, etc. Prevention of

losses causes lesser payment to the assured by the insurer and this will encourage for

more savings by way of premium. Reduced rate of premiums stimulate for more

business and better protection to the insured.

Small capital to cover larger risks - Insurance relieves the businessmen from

security investments, by paying small amount of premium against larger risks and

uncertainty.

Contributes towards the development of larger industries - Insurance provides

development opportunity to those larger industries having more risks in their setting

up. Even the financial institutions may be prepared to give credit to sick industrial

units which have insured their assets including plant and machinery.

3.4 Life Insurance

Life insurance is a contract where the person requiring and insurance pays a

consideration / premium to maintain a policy and the insurer promises to pay a sum

assured or a guaranteed amount on the happening of an eventuality. If no eventuality

occurs then the insured may be eligible for some bonus also.

Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against.


The contract is valid for payment of the insured amount during:

• The date of maturity, or

• Specified dates at periodic intervals, or

• Unfortunate death, if it occurs earlier.

Among other things, the contract also provides for the payment of premium

periodically to the Corporation by the policyholder. Life insurance is universally

acknowledged to be an institution, which eliminates 'risk', substituting certainty for

uncertainty and comes to the timely aid of the family in the unfortunate event of

death of the breadwinner.

By and large, life insurance is civilisation's partial solution to the problems caused by

death. Life insurance, in short, is concerned with two hazards that stand across the

life-path of every person:

1. That of dying prematurely leaves a dependent family to fend for itself.

2. That of living till old age without visible means of support.

3.4.1 Why life Insurance:

1. Protection of the interest of the family member.

2. Provision for education and marriage of the children.

3. Post retirement income for self and dependents

4. Special needs for medical expenses.

5. Provision for health /illness.

6. Provision for housing.

7. Provision for income tax rebate.


Fig: 3.1 Growing need for Insurance with Age.

3.4.2 Benefits of life Insurance:

Insurance not only serves the ends of individuals or of special groups of individuals

but also is advantageous to the society as a whole.

(1) Benefits to the Individual

� Superior to any other saving plans:

Unlike any other saving plan, a life insurance policy affords full protection against

risk of death. In the event of death of a policy holder, the insurance company makes

available the full sum assured to the near and dear of policy holder. In comparison,

any other saving plan would amount the total saving accumulated till date. If the

death occurs prematurely, such saving can be much lesser than sum assured.

Evidently, the potential financial loss of the family of the policy holder is sizable.

� Encourages and forces thrift:

A saving deposit can easily be withdrawn. The payment of Life insurance premiums,

however, is considered sacrosanct and is viewed with the same seriousness as the


payment of interest on a mortgage. Thus, a life insurance policy in effect brings

about compulsory saving.

� Easy Settlement And Protection Against Creditors:

A life insurance policy is the only financial instrument, the proceeds of which can be

protected against the claims of a creditor of the assured by affecting a valid

assignment of the policy.

� Administering the legacy for beneficiaries:

Speculative or otherwise, expenses can quickly cause the proceeds to be squandered.

Several policies have foreseen this possibility and provide for payment over a period

of years or in a combination of installments and lump sum amounts.

� Ready marketing and suitability for quick borrowing:

A life insurance policy can, after a certain period (generally Three years ), is

surrendered for a cash value. The policy is also acceptable as a security for

commercial loans, for example, a student loan.

� Disability benefits:

Death is not only hazard that is insured; many policies may include disability

benefits. Typically, these provide for waiver of future premiums and payment of

monthly installment periods.

� Accidental death benefits:

Many policies can also provide for an extra sum to be paid (typically equal to the

sum assured) if death occurs as a result of accident.

� Tax relief:

Under the Indian income tax act, the following tax relief is available

1. 20% of premium can be deducted from total income tax liability.

2. 100% of the premium paid is deductible from your total taxable income.

When these benefits are factored in, it is found that most Policies offer returns that

are comparable /or even better than other saving modes such as PPF, NSC etc.

moreover, the cost of insurance is a very negligible.


(2) Benefits to business:

Insurance results in business continuation and welfare of employees. Uncertainty of

business losses is reduced by insurance.

(3) Benefits of society:

The welfare of the society is protected. Insurance results in economic growth of the

country and reduction in inflation.

� Protection:

Savings through life insurance guarantee full protection against risk of death of the

saver. Also, in case of demise, life insurance assures payment of the entire amount

assured (with bonuses wherever applicable) whereas in other savings schemes, only

the amount saved (with interest) is payable.

� Aid to Thrift:

Life insurance encourages 'thrift'. It allows long-term savings since payments can be

made effortlessly because of the 'easy installment' facility built into the scheme.

(Premium payment for insurance is either monthly, quarterly, half yearly or yearly).

For example: The Salary Saving Scheme popularly known as SSS, and it provides a

convenient method of paying premium each month by deduction from one's salary.

In this case the employer directly pays the deducted premium to LIC. The Salary

Saving Scheme is ideal for any institution or establishment subject to specified terms

and conditions.

� Liquidity:

In case of insurance, it is easy to acquire loans on the sole security of any policy that

has acquired loan value. Besides, a life insurance policy is also generally accepted as

security, even for a commercial loan.

� Tax Relief:

Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax.

This is available for amounts paid by way of premium for life insurance subject to

income tax rates in force.


Assessees can also avail of provisions in the law for tax relief. In such cases the

assured in effect pays a lower premium for insurance than otherwise.

3.5 UNIT LINKED INSURANCE PLAN (ULIPs)

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

with the benefits of protection and flexibility in investment. It is a solution which

provides for life insurance where the policy value at any time varies according to the

value of the underlying assets at the time. The investment is denoted as unit and is

represented by the value that it has attained called as Net Asset Value (NAV). ULIPs

are a category of goal-based financial solutions that combine the safety of insurance

protection with wealth creation opportunities. In ULIPs, a part of the investment goes

towards providing a life cover. The residual portion of the ULIP is invested in a fund

which in turn invests in stocks or bonds; the value of investments alters with the

performance of the underlying fund opted by the customer. Simply put, ULIPs are

structured in such that the protection element and the savings element are

distinguishable, and hence managed according to your specific needs. In this way,

the ULIP plan offers unprecedented flexibility and transparency. ULIPs came into

play in 1960s and became very popular in Western Europe and America. The reason

that is attributed to the wide spread popularity of ULIP is because of the transparency

and the flexibility which it offers to the clients.

As time progressed the plans were also successfully mapped along with life

insurance needs to retirement planning .In today’s times ULIP provides solution for

all the needs of a client like insurance planning, financial needs, financial planning

for children’s future and retirement planning.

A unit linked insurance policy is one in which the customer is provided with a life

insurance cover and the premium paid is invested in either debt or equity products or

a combination of the two. In other words, it enables the buyer to secure some

protection for his family in the event of his untimely death and at the same time

provides him an opportunity to earn a return on his premium paid. In the event of the


insured person's untimely death, his nominees would normally receive an amount

that is the higher of the sum assured (insurance cover) or the value of the units

(investments).However, there are some schemes in which the policyholder receives

the sum assured plus the value of the investments.

Every insurance company has four to five ULIPs with varying investment options,

charges and conditions for withdrawals and surrender. Moreover, schemes have been

tailored to suit different customer profiles and, in that sense, offer a great deal of

choice.

The advantage of ULIP is that since the investments are made for long periods, the

chances of earning a decent return are high.

Just as in the case of mutual funds, buyers who are risk averse can buy into debt

schemes while those who have an appetite for risk can opt for balanced or equity

schemes. However, the charges paid in these schemes in terms of the entry load,

administrative fees, underwriting fees, buying and selling charges and asset

management charges are fairly high and vary from insurer to insurer in the quantum

as also in the manner in which they are charged.

3.5.1 The things we must know about ULIPs:

ULIPs offered by different insurers have varying charge structures. Broadly the

different types of fees and charges are given below. However the insurers have the

right to revise or cancel the fees and charges over a period of time.

� First-year charges: Usually, a minimum of 15 per cent. However, high

premiums attract lower charges and vice versa. Charges can be as high as 70 per

cent if the scheme affords a lot of flexibility. Subsequent charges: Usually lower

than first-year charges. However, some insurers charge higher fees in the initial

years and lower them significantly in the subsequent years.

� Policy/ Administration Charges These are the fees for administration of the

plan and levied by cancellation of units. This could be flat throughout the policy

term or vary at a pre-determined rate.


� Mortality Charges These are charges to provide for the cost of insurance

coverage under the plan. Mortality charges depend on number of factors such as

age, amount of coverage, state of health etc.

Fig: 3.2 Division of Premium

� Premium Allocation charges This is a percentage of the premium appropriated

towards charges before allocating the units under the policy. This charge

normally includes initial and renewal expenses apart from commission expenses.

� Fund Management Charges These are fees levied for management of the

fund(s) and are deducted before arriving at the Net Asset Value (NAV).

� Surrender Charges A surrender charge may be deducted for premature partial

or full encashment of units wherever applicable, as mentioned in the policy

conditions.

Insurers levy certain charges if the policy is surrendered prematurely. This levy

varies between insurers and could be around 75 per cent in the first year, 60 per

cent in the second year, 40 per cent in the third year and nil after the fourth year.

� Fund Switching Charge Generally a limited number of fund switches may be

allowed each year without charge, with subsequent switches, subject to a charge.

But now a day’s many insurers offer fund switching free of cost.


Some insurers allow 4-12 free switches in every year but link it to a minimum

amount. Others allow just one free switch in each year and charge Rs 100 for

every subsequent switch. Some insurers don't charge anything.

Fig: 3.3 Breakup of Premium charges in ULIPs

� Service Tax Deductions Before allotment of the units the applicable service tax

is deducted from the risk portion of the premium.

� Risk charges: The charges are broadly comparable across insurers.

� Asset management fees: Fund management charges vary from 0.6 per cent to

0.75 per cent for a money market fund, and around 1.5 per cent for an equity-

oriented scheme. Fund management expenses and the brokerage are built into the

daily net asset value.

� Top-ups: Usually attracts 1 per cent of the top-up amount. Top-up normally goes

directly into your investment account (units) unless you specifically ask for an

increase in the risk cover.

� Fund performance: You could check out the performance of similar schemes

(balanced with balanced; equity with equity) across insurance companies.

Look at NAV performance over a period of at least two to three years. This can only

give you some indication about the credibility of the fund manager because past

performance is no guarantee to future returns, especially in insurance products where

the emphasis is on long-term performance (10 years or more).

ULIP Structure

Invested Amount

Premium Allocation

Charges

Administration Charges

Mortality Charges

Fund Management

Charges


Since insurance is a product, which entails a long-term commitment on the part of

the insurer, it is important not to go only by the features or the cost advantages of

schemes but by the parentage of the insurer as well.

Comparing schemes based on costs is a fairly complex exercise. As a rule, the higher

the initial years' expenses the longer it takes for the policy to outperform its peers

with low initial years' costs and slightly higher subsequent year expenses.

3.6 ADVANTAGES OF ULIPS

ULIP distinguishes itself through the multiple benefits that it provides to the

consumer. The plan is a one stop solution for everything the customers want. Unit

Linked Insurance Plans (ULIPs) are different from traditional plans purely because,

they are much more transparent, various charges are shared with the customer before

the sale of the product, so as to enable the customer to make an informed decision.

Customers have the flexibility to choose their life cover. Also the customers have the

choice of multiple fund options based on their risk appetite, thereby enabling an

investor to make the desired returns from the investment.

The following are some of the advantages of Unit linked plans:

1. Life protection

2. Investment and Savings

a) Market linked fund based on risk profile

b) Switch option

c) Premium redirection

d) Automatic Transfer Plan(ATP)

3. Tax Planning

The premiums paid for ULIPs are eligible for tax rebates under section 80

which allows a maximum of Rs. 1,00,000 premiums paid for taxable income

below Rs 8,50,000 and Proceeds from ULIPs are tax-free under section


10(10D) unlike those from a mutual fund which attract short term capital

gains tax.

4. Flexibility of cover continuance

5. Transparency

6. Extra protection with riders

a) Death due to accident

b) Disability

c) Critical illness

d) Liquidity

e) Partial withdrawals during the term

f) At maturity

g) Variable investment options

h) Premium holiday

i) Allow Top-ups

Fig: 3.4 Advantage of Unit Linked Insurance Plans


3.7 Choice of Funds Available:

Fig: 3.5 Choices of Funds Available


Chapter 4 Industry Profile

4.1 History

Insurance in India has its history dating back until 1818, when Oriental Life

Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of

European community. The pre-independence era in India saw discrimination

between the lives of foreigners (English) and Indians with higher premiums being

charged for the latter. In 1870, Bombay Mutual Life Assurance Society became the

first Indian insurer.

At the dawn of the twentieth century, many insurance companies were founded. In

the year 1912, the Life Insurance Companies Act and the Provident Fund Act were

passed to regulate the insurance business. The Life Insurance Companies Act, 1912

made it necessary that the premium-rate tables and periodical valuations of

companies should be certified by an actuary. However, the disparity still existed as

discrimination between Indian and foreign companies. The oldest existing insurance

company in India is the National Insurance Company Ltd., which was founded in

1906. It is in business. Before that, the industry consisted of only two state insurers:

Life Insurers (Life Insurance Corporation of India, LIC) and General Insurers

(General Insurance Corporation of India, GIC). GIC had four subsidiary companies.

With effect from December 2000, these subsidiaries have been de-linked from the

parent company and were set up as independent insurance companies: Oriental

Insurance Company Limited, New India Assurance Company Limited, National

Insurance Company Limited and United India Insurance Company Limited.

The insurance sector in India has completed all the facets of competition –from being

an open competitive market to being nationalized and then getting back to the form

of a liberalized market once again. The history of the insurance sector in India

reveals that it has witnessed complete dynamism for the past two centuries

approximately.

With the establishment of the Oriental Life Insurance Company in Kolkata, the

business of Indian life insurance started in the year 1818.


In India, insurance has a deep-rooted history. It finds mention in the writings of

Manu (Manusmrithi), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ).

The writings talk in terms of pooling of resources that could be re-distributed in

times of calamities such as fire, floods, epidemics and famine. This was probably a

pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest

traces of insurance in the form of marine trade loans and carriers’ contracts.

Insurance in India has evolved over time heavily drawing from other countries,

England in particular.

1818 saw the advent of life insurance business in India with the establishment of

the Oriental Life Insurance Company in Calcutta. This Company however failed in

1834. In 1829, the Madras Equitable had begun transacting life insurance business in

the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in

the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental

(1874) and Empire of India (1897) were started in the Bombay Residency. This era,

however, was dominated by foreign insurance offices which did good business in

India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe

Insurance and the Indian offices were up for hard competition from the foreign

companies.

In 1914, the Government of India started publishing returns of Insurance Companies

in India. The Indian Life Assurance Companies Act, 1912 was the first statutory

measure to regulate life business. In 1928, the Indian Insurance Companies Act was

enacted to enable the Government to collect statistical information about both life

and non-life business transacted in India by Indian and foreign insurers including

provident insurance societies. In 1938, with a view to protecting the interest of the

Insurance public, the earlier legislation was consolidated and amended by the

Insurance Act, 1938 with comprehensive provisions for effective control over the

activities of insurers.


The Insurance Amendment Act of 1950 abolished Principal Agencies. However,

there were a large number of insurance companies and the level of competition was

high. There were also allegations of unfair trade practices. The Government of India,

therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance

sector and Life Insurance Corporation came into existence in the same year. The LIC

absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245

Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the

Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west

and the consequent growth of sea-faring trade and commerce in the 17th century. It

came to India as a legacy of British occupation. General Insurance in India has its

roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in

Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up.

This was the first company to transact all classes of general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance

Associaton of India. The General Insurance Council framed a code of conduct for

ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum

solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation) Act,

general insurance business was nationalized with effect from 1st January, 1973. 107

insurers were amalgamated and grouped into four companies, namely National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd and the United India Insurance Company Ltd. The General

Insurance Corporation of India was incorporated as a company in 1971 and it

commence business on January 1sst 1973.


This millennium has seen insurance come a full circle in a journey extending to

nearly 200 years. The process of re-opening of the sector had begun in the early

1990s and the last decade and more has seen it been opened up substantially. In

1993, the Government set up a committee under the chairmanship of RN Malhotra,

former Governor of RBI, to propose recommendations for reforms in the insurance

sector. The objective was to complement the reforms initiated in the financial

sector. The committee submitted its report in 1994 wherein , among other things, it

recommended that the private sector be permitted to enter the insurance industry.

They stated that foreign companies be allowed to enter by floating Indian companies,

preferably a joint venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the

Insurance Regulatory and Development Authority (IRDA) was constituted as an

autonomous body to regulate and develop the insurance industry. The IRDA was

incorporated as a statutory body in April, 2000. The key objectives of the IRDA

include promotion of competition so as to enhance customer satisfaction through

increased consumer choice and lower premiums, while ensuring the financial

security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application

for registrations. Foreign companies were allowed ownership of up to 26%. The

Authority has the power to frame regulations under Section 114A of the Insurance

Act, 1938 and has from 2000 onwards framed various regulations ranging from

registration of companies for carrying on insurance business to protection of

policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India

were restructured as independent companies and at the same time GIC was converted

into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries

from GIC in July, 2002.


Today there are 14 general insurance companies including the ECGC and

Agriculture Insurance Corporation of India and 14 life insurance companies

operating in the country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.

Together with banking services, insurance services add about 7% to the country’s

GDP. A well-developed and evolved insurance sector is a boon for economic

development as it provides long- term funds for infrastructure development at the

same time strengthening the risk taking ability of the country.

Important milestones in the Indian life insurance business

• 1912: The Indian Life Assurance Companies Act came into force for

regulating the life insurance business.

• 1928: The Indian Insurance Companies Act was enacted for enabling the

government to collect statistical information on both life and non-life

insurance businesses.

• 1938: The earlier legislation consolidated the Insurance Act with the aim of

safeguarding the interests of the insuring public.

• 1956: 245 Indian and foreign insurers and provident societies were taken over

by the central government and they got nationalized. LIC was formed by an

Act of Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5

crore and that too from the Government of India.

• Insurance companies in India

IRDA has till now provided registration to 23 private life insurance

companies and 23 general insurance companies including public sector

companies. General Insurance Corporation has been sanctioned as the "Indian

reinsurer" for underwriting only reinsurance business.

With a huge population base and large untapped market, insurance industry is a big

opportunity area in India for national as well as foreign investors. India is the fifth


largest life insurance market in the emerging insurance economies globally and is

growing at 32-34% annually. This impressive growth in the market has been driven

by liberalization, with new players significantly enhancing product awareness and

promoting consumer education and information. The strong growth potential of the

country has also made international players to look at the Indian insurance market.

Moreover, saturation of insurance markets in many developed economies has made

the Indian market more attractive for international insurance players, according to

"Booming Insurance Market in India (2008-2011)”.

• Total life insurance premium in India is projected to grow Rs 1,230,000 crore

by 2010-11.

• Total non-life insurance premium is expected to increase at a CAGR of 25%

for the period spanning from 2008-09 to 2010-11.

• With the entry of several low-cost airlines, along with fleet expansion by

existing ones and increasing corporate aircraft ownership, the Indian aviation

insurance market is all set to boom in a big way in coming years.

• Home insurance segment is set to achieve a 100% growth as financial

institutions have made home insurance obligatory for housing loan approvals.

• Health insurance is poised to become the second largest business for non-life

insurers after motor insurance in next three years.

• A booming life insurance market has propelled the Indian life insurance

agents into the ‘top 10 country list’ in terms of membership to the Million

Dollar Round Table (MDRT) — an exclusive club for the highest performing

life insurance agents.

4.2 INDUSTRY STRUCTURE

Currently, a $41 billion industry, India is the world's fifth largest life insurance

market and growing at a rapid pace of 32-34% annually as per Life Insurance

Council studies.

Currently, in India only two million people (0.2 % of the total population of 1

billion) are covered under Mediclaim, whereas in developed nations like USA about

75 % of the total population are covered under some insurance scheme. With more

and more private companies in the sector, the situation may change soon.


4.3 CAPITAL REQUIREMENTS AND FOREIGN PARTICIPATION

Minimum capital requirement for direct life and Non-life Insurance company is INR

100 crore and that for reinsurance company is INR 200 crore. A maximum 26%

foreign equity stake is allowed in direct insurance and reinsurance companies.

4.4 LIST OF INSURANCE COMPANIES IN INDIA Table: 4.1 List of Insurance Companies in India

S No. Name of Life Insurer 1 IDBI Fortis Life Insurance Company Ltd. 2 DLF Pramerica Life Insurance Co. Ltd. 3 AEGON Religare Life Insurance Company Limited 4 Star Union Dai-ichi Life Insurance Company Ltd. 5 India First Life Insurance Company Ltd. 6 Bharti AXA Life Insurance Co. Ltd. 7 Future Generali India Life Insurance Co. Ltd. 8 Canara HSBC Oriental Bank of Commerce Life Insurance

Co. Ltd. 9 Aviva Life Insurance Co. India Ltd.

10 Sahara India Life Insurance Co. Ltd. 11 Shriram Life Insurance Co. Ltd. 12 SBI Life Insurance Co. Ltd. 13 Tata AIG Life Insurance Company Limited 14 Reliance Life Insurance Company Limited 15 Max New York Life Insurance Co. Ltd 16 Met Life India Insurance Company Ltd. 17 Kotak Mahindra Old Mutual Life Insurance Limited 18 ICICI Prudential Life Insurance Co. Ltd 19 ING Vysya Life Insurance Company 20 Life Insurance Corporation of India 21 Bajaj Allianz Life Insurance Co. Ltd. 22 Birla Sun Life Insurance Co. Ltd 23 HDFC Standard Life Insurance Co. Ltd


Table: 4.2 List of Non-Life Insurers

S.NO NAME OF THE Non Life Insurers

1 Bajaj Allianz General Insurance Co. Ltd.

2 ICICI Lombard General Insurance Co. Ltd.

3 IFFCO Tokio General Insurance Co. Ltd.

4 National Insurance Co.Ltd.

5 The New India Assurance Co. Ltd.

6 The Oriental Insurance Co. Ltd.

7 Reliance General Insurance Co. Ltd.

8 Royal Sundaram Alliance Insurance Co. Ltd

9 Tata AIG General Insurance Co. Ltd.

10 United India Insurance Co. Ltd.

11 Cholamandalam MS General Insurance Co. Ltd.

12 HDFC ERGO General Insurance Co. Ltd.

13 Export Credit Guarantee Corporation of India Ltd.

14 Agriculture Insurance Co. of India Ltd.

15 Star Health and Allied Insurance Company Limited

16 Apollo Munich Health Insurance Company Limited

17 Future Generali India Insurance Company Limited

18 Universal Sompo General Insurance Co. Ltd.

19 Shriram General Insurance Company Limited,

20 Bharti AXA General Insurance Company Limited

21 Raheja QBE General Insurance Company Limited,

22 SBI General Insurance Company Limited

23 Max Bupa Health Insurance Company Ltd.


Chapter 5 Company Profile

5.1 MetLife (India)

MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc.

and was incorporated as a joint venture between MetLife International Holdings,

Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and other

private investors. MetLife is one of the fastest growing life insurance companies in

the country. It serves its customers by offering a range of innovative products to

individuals and group customers at more than 600 locations through its bank partners

and company-owned offices. MetLife has more than 50,000 Financial Advisors, who

help customers achieve peace of mind across the length and breadth of the country.

MetLife, Inc., through its affiliates, reaches more than 70 million customers in the

Americas, Asia Pacific and Europe. Affiliated companies, outside of India, include

the number one life insurer in the United States (based on life insurance inforce),

with over 140 years of experience and relationships with more than 90 of the top one

hundred FORTUNE 500® companies. The MetLife companies offer life insurance,

annuities, automobile and home insurance, retail banking and other financial services

to individuals, as well as group insurance, reinsurance and retirement and savings

products and services to corporations and other institutions.

With a 140-year-old parentage, MetLife today is one of the fastest growing life

insurance companies in the country. Positioned as a long term player, the company

has developed a strong corporate governance model based on the core values of

personal responsibility, people count, partnership, integrity and honesty, innovation

and financial strength.

The last 8 years of its presence in India, have seen MetLife evolve into a strong

brand, serving its customers through a diversified distribution approach. The

company offers a range of innovative products ranging from individuals to group

customers across the length and breadth of the country through its various bank


partners and company-owned offices.

In line with its vision to be the most formidable player in the Indian life insurance

industry, MetLife aims to grow faster than the industry. The strategy is to clearly

establish itself as India’s trusted life insurance specialist, wherein the brand will

stand for peace of mind, financial strength and fair dealings with the customer. They

are also committed to creating a workplace that attracts, engages, develops

committed professionals, and rewards excellent performance.

5.2 Company’s Values

� Personal Responsibility

"Coming into your own", performs as a Leader to be really effective and successful

by acting and making decisions independently to get results.

� People Count

It's all about People, MetLife's key resource. MetLife will succeed because we are

winning from within.

� Partnership

Functioning productively in teams towards a common purpose; realising the

collective power of diverse work-groups.

� Financial Strength

Operating with an intense dedication to managing monetary resources for strong

business results.

� Integrity and Honesty

Conducting all business endeavours with truth, sincerity and fairness.

� Innovation

Continuously creating and introducing new and original ideas and ways of doing

things.


Celebrating 140 years, MetLife, Inc. is a leading provider of insurance and financial

services with operations throughout the United States and the Latin America, Europe,

and Asia Pacific regions. Through its domestic and international subsidiaries and

affiliates, MetLife, Inc. reaches more than 70 million customers around the world

and MetLife is the largest life insurer in the United States (based on life insurance in-

force).

The MetLife companies offer life insurance, annuities, auto and home insurance,

retail banking and other financial services to individuals, as well as group insurance

and retirement & savings products and services to corporations and other institutions.

5.3 Management Team Table: 5.1 Management Team

Rajesh has twenty years experience in the

financial services sector, of which he has

spent ten years in the Indian Life

Insurance industry. Visualizing the scope

and growth, he became a part of this

sunrise industry in 1999, much before it

was opened to the private players. Over

these years, he has contributed

significantly through his strategic vision

to the development of the private life

insurance industry in areas like regulatory

& policy formulation, product

development, policyholders’ protection

and distribution models. He is widely

recognized for the pivotal role he played

towards three different life insurance ventures in the country. In the first, he played a

critical role as a key project team member that led to the successful formation of the

JV. With the second life insurance company, a start-up, he was one amongst the first

five employees instrumental in launching and growing its Indian operations. Finally,

Rajesh Relan Managing Director

MSVS Phanesh Appointed Actuary

Sameer Bansal Director- Agency

Balachander Sekhar Director –Marketing

Nitish Asthana Director- Bancassurance & Business Partnerships

Gaurav Sharma Director - Customer Service and Operations

Joydeep Mukherji Chief Financial Officer

KS Raghavan Chief Administrative Officer

KR Anil Kumar Director - Legal & Risk and Company Secretary

P. S. Sankaran Director – Compliance & Internal Controls

Shilpa Vaid Deputy Director- Human Resources


in his third stint he has been leading another life insurance company – MetLife, of

which he is the Managing Director for India for the last three and a half years. Rajesh

joined MetLife India in 2006 and has transformed the organization since then. With

exceptional skills in business strategy & planning, he has laid the foundation for

MetLife’s success in the Indian market.

5.4 Services offered by the MetLife companies:

• Life insurance

• Annuities

• Automobile and home insurance

• Retail banking

• Other financial services to individuals

• Group insurance

• Reinsurance

• Retirement and savings products and services

5.5 Plans of MetLife Insurance

� Child Plan:

Every parent would dream of fulfilling the child's need. Expenses are on the rise

every day, thus ensuring a good future for the child in increasingly becoming

difficult. The child insurance plans of Metlife secure the future of the child such that

you do not have to think tomorrow.

• Met Bhavishya

• Met Junior Endowment

• Met Little Star

• Met Junior Money Back


• Met Magic

� Retirement Plan:

New beginnings, new joys and the opportunity to explore the unfulfilled dreams of

the past - these are the essential elements of a post retirement life. Financial

independence is very important at this stage. The exhaustive retirement plans of

Metlife guarantee a financially secure retirement.

• Met Growth

• Met Advantage Plus

• Met Pension-Par

� Savings Plan:

Everybody dreams. And dreams can take any shape - be it the wedding of your child,

buying a house or a car and anything. The savings plans of MetLife help realize the

dreams and secure the future.

• Met Sukh

• Met Suvidha

• Met Saral

• Met 100

� Protection Plan:

The protection plans of Metlife Insurance relieve you from the burden of home loans,

EMIs and similar responsibilities.

• Met Suraksha

• Met Suraksha TROP

• Met Mortgage Protector

• Met Suraksha Plus


� Rural Plan:

The rural plans of Metlife Insurance shield your loved ones against financial

obligations and also assist you to save for tomorrow. The rates of premium are quite

affordable.

• Met Vishwas

• Met Suvidha-Rural

� Investment Plan:

The Unit-Linked Insurance Plans of Metlife guarantees that your wealth is enhanced.

Offering protection and wealth optimization at the same time, they are customized to

meet your requirements.

• Met Easy

• Met Smart Gold

• Met Smart Plus-Regular Pay

• Met Smart Premier- Regular Pay

• Met Smart Plus- Single Pay

• Met Smart Premier- Single Pay

� Health Plan:

Get yourself a health insurance plan from Metlife to meet the contingencies during ill

health or ill financial health consequently. The Met Health Care, an elementary

health insurance policy has unique advantages associated for you and your family.

Family comprises of spouse and two children.

Met Health Care is a long term health insurance plan from MetLife which covers the

following:

1. Against Hospitalisation disbursements by offering you a Daily Cash benefit

2. Against 10 major vital illnesses by giving you a lump sum benefit.


3. Against Total & Permanent Disability due to accident by allowing you a

lump sum benefit.

Met Health Care Plan at a glance

Table: 5.2 Met Health Care Plan

Maximum/ Minimum age of entry

18 years-55 years (At first entry, for the Principal insured) 3 months-55 years (For Secondary Insured lives)

Cover ceasing age 65 years

Maturity/Death Benefit

No Maturity/Death Benefit payable

Benefits Offered

1. Daily Hospitalisation Cash Benefit 2. Daily ICU Cash Benefit 3. Recuperation Benefit 4. Critical Illness Benefit 5. Accidental Total & Permanent Disability benefit

Premium paying frequency

Yearly. Half-Yearly mode is available only if each of the persons insured select a daily cash benefit of Rs. 3000 or more.

Modal factor Half-yearly -0.5131. Multiply the tabular premium by the modal factor to get to the figure as premium payable.

Monthly Income Plan:

MetLife's Monthly Income Plan' ensures a monthly fixed income for you and your

family.

Monthly Income Plan - plan at a glance

Table: 5.3 Monthly Income Plan

Entry Age (Last Birthday) Min - 18 years Max - 60 years

Maximum Maturity Age 85 years

Minimum Monthly Income Rs. 2,000 p.m.

Sum Assured (fixed) 180 times the Monthly Income

Premium Payment Term 5 years/10 years

Policy Term 20 years/25 years


Chapter 6

Data Analysis and Interpretation

Analysis of data is a process of inspecting, cleaning, transforming, and modeling data

with the goal of highlighting useful information, suggesting conclusions, and

supporting decision making. Data is analysed using percentage technique.

Q. 1 Do you Make Investments? Table: 6.1 Number of People make Investments CATEGORY NO.OF PEOPLE Percentage

YES 44 88

NO 6 12

Fig: 6.1 Number of People make Investments

Interpretation:

Majority of the persons are interested in making investments for many purposes like,

appreciation of money, tax benefits etc.

YES

88%

NO

12%

Do you Make Investments?


Q. 2 If yes, then to which sector you will give preference while investing at present? Table: 6.2 Preferred Investment Sector CATEGORY NO.OF

Respondents Percentage

Insurance Investment Plan

8 18.18182

Mutual Fund 3 6.818182 Stock Market 2 4.54545455 Real Estate 0 0 Bank Deposits 19 43.1818182 Govt. Deposits 12 27.2727273 Gold 0 0

Fig: 6.2 Preferred Investment Sector

Interpretation:

Majority of the persons (About 70 %) are still believing in investing their money in

banks and government deposits. Now people are becoming aware of various new

investment options like Insurance, Mutual Funds etc.

Insurance

Investment Plan

18% Mutual Fund

7%

Stock Market

5%

Real Estate

0%

Bank Deposits

43%

Govt. Deposits

27%

Gold

0%

Which sector you will give preference while

investing at present?


Q. 3 What are the reasons to make Investments? Table: 6.3 Reasons of Investments CATEGORY NO.OF

PEOPLES % Tax Saving 15 34.09091 Capital Appreciation

6 13.63636

Life Covers 6 13.63636 Return 9 20.45455 Secure Investment 8 18.18182

Fig: 6.3 Reasons of Investments

Interpretation:

About one third of Persons are investing their money as it is essential to save Income

tax. Only one seventh persons are really invested their money to cover their life risk

and this number is increasing day by day as more and more persons are becoming

aware of the benefits of Insurance.

Q. 4 Are you satisfied with your Investments? Table: 6.4 Number of People satisfied with their Investments CATEGORY NO.OF PEOPLES

% Yes 21 47.72727273 No 23 52.27272727

Tax Saving

34%

Capital

Appreciation

14%

Life Covers

14%

Return

20%

Secure

Investment

18%

What are the reasons to make Investments?


Fig: 6.4 Number of People satisfied with their Investments

Interpretation:

About fifty percent people are not satisfied with their investments either they are not

getting that much return/appreciation which they expected or they want more

transparency and benefits with their investments.

Q. 5 Have you ever taken a Life Insurance Policy from any Company? Table: 6.5 Number of People who have taken a LI Policy CATEGORY NO.OF PEOPLES %

Yes 17 38.63636364 No 27 61.36363636

Fig: 6.5 Number of People who have taken a LI Policy

Yes

48% No

52%

Are you satisfied with your Investments?

Yes

39%

No

61%

Have you ever taken a Life Insurance

Policy from any Company?


Interpretation:

Majority of the people are not having any Insurance policy. It simply means that the

Insurance companies have a vast scope in India and the Insurance sector can remain

on boom for the next 10 – 15 years or so.

Q. 6 In which Sector do you prefer to invest your money? Table: 6.6 Preferred Sector of Investment CATEGORY NO.OF

PEOPLES % Private Sector 15 34.0909091 Government Sector

29 65.9090909

Fig: 6.6 Preferred Sector of Investment

Interpretation:

Still majority of people believe in investing their money in Government sectors over

the private sectors. The private Insurance companies should have to increase their

credibility in the minds of the customers.

Private Sector

34%

Government

Sector

66%

In which Sector do you prefer to invest your

money?


Q. 7 Do you think services provided by private sector will be better than public sector? Table: 6.7 Services of Private sector CATEGORY NO.OF PEOPLES % Yes 29 58 No 21 42

Fig: 6.7 Services of Private sector

Interpretation:

Majority of persons believe that the services offered by private companies are better

than the government sector. It is a good sign for private insurance companies.

Q. 8 Are Private Life Insurance Companies reliable for Investment? Table: 6.8 Reliability of Private LI Companies CATEGORY NO.OF PEOPLES

% Yes 14 28 No 36 72

Fig: 6.8 Reliability of Private LI Companies

Yes

58%

No

42%

Do you think services provided by private

sector will be better than public sector?

Yes

28%

No

72%

Are Private Life Insurance Companies

reliable for Investment?


Interpretation:

About three fourth of the people believe that the private Life Insurance companies

are not reliable for investment. The companies should increase their credibility and

transparency in the minds of customers so as to attract more and more persons to

invest in Life Insurance.

Q. 9 (a) Are you aware of Unit Linked Insurance Plans (ULIP)?

Table: 6.9 Awareness about ULIPs CATEGORY NO.OF

PEOPLES % Yes 31 62 No 19 38

Fig: 6.9 Awareness about ULIPs

Interpretation:

About two third people are aware of ULIPs, this is a good sign for Insurance

companies, but this number should keep on increasing.

(b) If Yes, Do you, FULLY AWARE, LITTLE AWARE, UNAW ARE with The

working of ULIP, Criteria for returns, Different Pl ans, Where your fund

invested by insurer, Switching Option.

Yes

62%

No

38%

Are you aware of ULIPs?


Table: 6.10 Degree of Awareness of ULIPs CATEGORY FULLY

AWARE LITTLE AWARE UNAWARE

The working of ULIP 11 27 12 Criteria for returns, 22 19 9 Different Plans 13 22 15 Where your fund invested by insurer 24 22 4 Switching Option 20 22 8

Fig: 6.10 Degree of Awareness of ULIPs regarding working of ULIPs

Fig: 6.11 Degree of awareness of ULIPs regarding criteria for returns

FULLY AWARE

22%

LITTLE AWARE

54%

UNAWARE

24%

Are you aware of the working of ULIP?

FULLY AWARE

44%

LITTLE AWARE

38%

UNAWARE

18%

Are you aware of Criteria for returns?


Fig: 6.12 Degree of awareness of ULIPs regarding different plans

Fig: 6.13 Degree of awareness of ULIPs regarding fund investment

Fig: 6.14 Degree of awareness of ULIPs regarding Switching Option

FULLY

AWARE

26%

LITTLE

AWARE

44%

UNAWARE

30%

Are you aware of Different Plans?

FULLY

AWARE

48%

LITTLE

AWARE

44%

UNAWARE

8%

Are you aware of Where your fund

invested by insurer?

FULLY

AWARE

40% LITTLE

AWARE

44%

UNAWARE

16%

Are you aware of Switching Option?


Interpretation:

Only few persons (less than one-fourth) are fully aware about the working of ULIPs.

Less than fifty percent people are aware of about the criterion of returns in ULIPs.

Companies should focus on spreading the awareness about the working of ULIPs,

criterion of return, different plans and the switching options so that more and more

persons are attracted towards ULIPs.

Q. 10 (a) Have you ever invested in ULIP plans?

Table: 6.11 Number of People Invested in ULIPs CATEGORY NO.OF

PEOPLES %

Yes 35 70 No 15 30

Fig: 6.15 Number of People Invested in ULIPs

Interpretation:

Majority of the people who took participate in the survey have invested in ULIP

plans. This helps us to know what actually customer wants.

(b) If yes, please specify Plan Name:

Saving plan Protection plan

Pension plan Children’s plan

Yes

70%

No

30%

Have you ever invested in ULIP plans?


Table: 6.12 Investment in Different Plans Category NO.OF

PEOPLES % Saving plan 18 51.428571 Protection plan 11 31.428571 Pension plan 4 11.428571 Children’s plan 2 5.7142857

Fig: 6.16 Investments in Different Plans

Interpretation:

Majority of the people are interested in saving plans. Then about one third people are

investing their money in protection plans. Company should focus on various saving

plans and should offer variety of schemes to suit the needs of customers.

(c) What are the reasons for investment in ULIP?

Life protection Investment and Savings

Flexibility Transparency

Liquidity Tax planning

Table: 6.13 Reasons of Investment in ULIPs Category NO.OF

PEOPLES % Life protection 11 31.42857 Investment and Savings 21 60 Flexibility 0 0 Transparency 0 0 Liquidity 0 0 Tax planning 3 8.571429

Saving

plan

52% Protection

plan

31%

Pension plan

11%

Children’s plan

6%

If yes, please specify Plan Name:


Fig: 6.17 Reasons of Investment in ULIPs

Interpretation:

Majority of the people invest their money for saving & investment purpose. About

one third people invest their money for the purpose of Life protection. The

companies should encourage people to invest their money to protect their life and

invest in life insurance policies.

Q. 11 From which company you have got insured?

Life Insurance Corporation of India

Reliance Life Insurance

HDFC Standard Life Insurance

MetLife India Insurance

SBI Life

Table: 6.14 Name of Insurer Category NO.OF

PEOPLES % Life Insurance Corporation of India 12 34.2857143 Reliance Life Insurance 6 17.1428571 HDFC Standard Life Insurance 5 14.2857143 MetLife India Insurance 7 20 SBI Life 2 5.71428571 ICICI Prudential 3 8.57142857

Life

protection

31%

Investment

and Savings

60%

Flexibility

0%

Transparency

0%

Liquidity

0%

Tax planning

9%

Reasons for investment in ULIP?


Fig: 6.18 Name of Insurer

Interpretation:

Most of the people are still like to prefer LIC to invest their money as they consider it

safe and reliable. Private insurance companies should focus on giving good services

and attractive offers so as to increase their credibility and brand image.

Q. 12 How much return you are expecting from your ULIP?

10-15% 15-20%

20-30% 30 +

Table: 6.15 Expectations of Return from ULIPs CATEGORY NO.OF

PEOPLES % 10-15% 11 31.42857 15-20% 18 51.42857 20-30% 5 14.28571 30 + 1 2.857143

Life Insurance

Corporation of

India

34%

Reliance Life

Insurance

17%

HDFC Standard

Life Insurance

14%

MetLife

India

Insurance

20%

SBI Life

6%

ICICI Prudential

9%

From which company you have got insured?


Fig: 6.19 Expectations of Return from ULIPs

Interpretation:

Majority of the persons are expecting their return between 15 to 20 %. People wants

more and more return from their investments, so companies should focus on those

plans which gives high return to the customers.

Q. 13 Which of the following factors will influence you the most while

purchasing the Insurance plan?

Name and reputation of the company

RETURN

Tax Savings

Risk covered

Agent

Table: 6.16 Factors influencing in purchasing the Insurance Plan CATEGORY NO.OF

PEOPLES % Name and reputation of the co.

18 36

RETURN 14 28 Tax Savings 8 16 Risk covered 6 12 Agent 4 8

10-15%

31%

15-20%

52%

20-30%

14%

30 +

3%

How much return you are expecting from

ULIP?


Fig: 6.20 Factors influencing in purchasing the Insurance Plan

Interpretation:

More persons are influenced by the name and reputation of the company than the return, so companies should increase their credibility among the customers.

Q. 14 Do you think ULIP is a risky investment? Very Risky Risky Less Risky Safe Very Safe Don’t Know

Table: 6.17 Riskiness of ULIPs CATEGORY NO.OF

PEOPLES % Very Risky 12 24 Risky 15 30 Less Risky 9 18 Safe 7 14 Very Safe 4 8 Don’t Know 3 6

Name and

reputation of

the co.

36%

RETURN

28%

Tax Savings

16%

Risk covered

12% Agent

8%

Factors will influence the most while

purchasing the Insurance plan?


Fig: 6.21 Riskiness of ULIPs

Interpretation:

More than fifty percent people consider ULIP as a risky investment as their money is

invested in stock market.

Q. 15 Do you have any plan to buy ULIP plans in near future?

Table: 6.18 Number of People plans to buy ULIPs CATEGORY NO.OF

PEOPLES % Yes 16 32 No 34 68

Fig: 6.22 Number of People plans to buy ULIPs

Very Risky

24%

Risky

30%

Less Risky

18%

Safe

14%

Very Safe

8%

Don’t Know

6%

Do you think ULIP is a risky investment?

Yes

32%

No

68%

Do you have any plan to buy ULIP plans in

near future?


Interpretation:

Majority of the persons are not interested in buying ULIPs as they consider it a risky

investment. The companies should increase the transparency about the working of

ULIPs, criterion of return and other options so as to attract more and more

customers.

Q. 16 If you are not taking any ULIP plans, please tell us the reasons why?

We couldn’t afford.

We don’t see any benefit with the system.

We don’t want insurance.

We don’t understand how ULIP works.

We are not too much aware of ULIP plans.

Table: 6.19 Reasons of not purchasing ULIPs CATEGORY NO.OF

PEOPLES %

We couldn’t afford. 9 18


10 20

We don’t want insurance. 11 22


12 24


8 16


Fig: 6.23 Reasons of not purchasing ULIPs

Interpretation:

About fifty percent of persons who says “we don’t see any benefit”, and those who

are not much aware of ULIP and with their working can be the potential customers

for the life insurance companies. So, company should focus on these customers.

Q. 17 What steps do you suggested to the companies to make their ULIP plans

more popular?

Give more advertisements.

Arrange more workshops.

Arrange more seminars.

Reduce charges.

Create awareness through advisors.

We couldn’t

afford.

18%

We don’t see

any benefit with

the system.

20%

We don’t want

insurance.

22%

We don’t

understand how

ULIP works.

24%

We are not too

much aware of

ULIP plans.

16%

Reasons of not purchasing ULIPs


Table: 6.20 Suggestions to make ULIPs more popular CATEGORY NO.OF

PEOPLES % Give more advertisements. 18 36 Arrange more workshops. 8 16 Arrange more seminars. 7 14 Reduce charges. 11 22

Create awareness through advisors. 6 12

Fig: 6.24 Suggestions to make ULIPs more popular

Interpretation:

From the mind of the customers, the insurance companies should focus on giving the

advertisements, should reduce the charges and create more and more awareness

among the customers through advisors, seminars, workshops.

Give more

advertisements.

36%

Arrange more

workshops.

16%

Arrange more

seminars.

14%

Reduce charges.

22%

Create

awareness

through

advisors.

12%

What steps do you suggested to the companies to

make their ULIP plans more popular?


Q. 18 What is your source of information for taking a insurance plan?

Agents

Friends

Family

Own research

Table: 6.21 Source of taking Insurance CATEGORY NO.OF

PEOPLES % Agents 18 36 Friends 14 28 Family 8 16 Own research 6 12

Fig: 6.25 Source of taking Insurance

Interpretation:

Most of the people purchase their policy by influencing from agents or friends.

Companies should focus on increasing their base of large advisors so as to cover

more and more people from different areas.

Agents

39%

Friends

31%

Family

17%

Own

research

13%

Source of information for taking a

insurance?


Q. 19 According to you, Insurance policies are for?

Necessity for protection security

Imposition of a burden of expenses

A compulsory tool for tax saving

Good Investment Option

Wastage of Money

Table: 6.22 Views about Insurance Policy CATEGORY NO.OF

PEOPLES %


18 36


8 16


7 14


15 30

Wastage of Money 2 4

Fig: 6.26 Views about Insurance Policy

Necessity for

protection

security

36%

Imposition of a

burden of

expenses

16%

A compulsory

tool for tax

saving

14%

Good

Investment

Option

30%

Wastage of

Money

4%

Insurance policies are for?


Interpretation:

About two third of the people think that insurance is a good investment option and it

is a necessity for protection. About one-seventh percent people thinks that it is a

compulsory tool for tax saving.

Q. 20 Are you aware of the charge FMC?

Table: 6.23 Awareness of FMC CATEGORY NO.OF

PEOPLES %

Yes 31 62

No 19 38

Fig: 6.27 Awareness of FMC

Interpretation:

More than one third of the people are not aware of the Fund Management Charges.

There should be a transparency about the various charges among the customers.

Q. 21 Do you agree that Insurance products are susceptible to very low risk

when compared to the other options for investment?

Yes

No

Yes

62%

No

38%

Are you aware of the charge FMC?


Table: 6.24 Riskiness of Insurance Products CATEGORY NO.OF

PEOPLES %

Yes 23 46

No 27 54

Fig: 6.28 Riskiness of Insurance Products

Interpretation:

Majority of the persons believe that the insurance products are susceptible to low risk

as compared to the other investment options like stock markets, mutual funds etc.

Q. 22 Name three insurance companies that come to your mind:

Table: 6.25 Name of Popular Companies Category NO.OF

PEOPLES %

Life Insurance Corporation of India 20 57.142857 Reliance Life Insurance 6 17.142857 HDFC Standard Life Insurance 4 11.428571 MetLife India Insurance 5 14.285714 SBI Life 8 22.857143 ICICI Prudential 7 20

Yes

46% No

54%

Do you agree that Insurance products are

susceptible to very low risk investment?


Fig: 6.29 Name of Popular Companies

Interpretation:

LIC is still the very popular company in the minds of the customers; other insurance

companies like SBI Life, ICICI Prudential, Reliance Life, and MetLife are also

becoming popular these days.

Q. 23 With the different variety of schemes and unbelievable plans offered by MetLife India Insurance Company Ltd., Do you think MetLife India is one of the best?

Yes

No

Table: 6.26 Views about MetLife Company CATEGORY NO.OF

PEOPLES %

Yes 8 16 No 42 84

Life Insurance

Corporation of

India

40%

Reliance Life

Insurance

12% HDFC Standard

Life Insurance

8%

MetLife India

Insurance

10%

SBI Life

16%

ICICI Prudential

14%

Name three insurance companies that come

to your mind:


Fig: 6.30 Views about MetLife Company

Interpretation:

Only 16 % people think that the MetLife India is one of the best Insurance Company.

The company should focus on increasing the more and more satisfied customers so

as to increase the credibility and brand image among the customers.

SUMMARY








investment company.



options.




and the amount of return they will get while investing in the Insurance company.

Yes

16%

No

84%

Do you think MetLife India is one of the best?


Chapter 7

LIMITATIONS OF THE STUDY

1. TIME FACTOR:

• The time allotted for doing the project was a limiting factor.

2. LACK OF DATA DUE TO CONFIDENTIAL NATURE:

• It was difficult to collect all information as & when necessary for the purpose of the study.

3. LACK OF SUPPORT:

• It was difficult to do survey due to lack of support of people.

4. LIMITED AREA:

• The area of study is chosen as per the convenience and it is limited to

Delhi region.

5. TECHNIQUE USED:

• Only Percentage method has been used in the study to analyse the responses given by respondents.


Chapter 8 FINDINGS AND CONCLUSION

8.1 COMPARISION OF ULIPs WITH TRADITIONAL PLANS

Unit Linked Insurance Plan:

ULIPs have gained high acceptance due to attractive features they offer. These

include:

� Flexibility

o Flexibility to choose Sum Assured.

o Flexibility to choose premium amount.

o Option to change level of Premium /Sum Assured even after the plan

has started.

o Flexibility to change asset allocation by switching between funds

� Transparency

o Charges in the plan & net amount invested are known to the customer

o Convenience of tracking one’s investment performance on a daily

basis.

� Liquidity

o Option to withdraw money after few years (comfort required in case

of exigency)

o Low minimum tenure.

o Partial / Systematic withdrawal allowed

� Fund Options

o A choice of funds (ranging from equity, debt, cash or a combination)

o Option to choose your fund mix based on desired asset allocation

Traditional Plans :

These are the oldest types of plans available. These plans cater to customers

with a low risk appetite. Some of the common features of traditional plans are:


� Steady Investment

o Major chunk of investible funds are in debt instruments

o Steady and almost assured returns over the long term

� Features

o Death benefit is Sum Assured + guaranteed & vested bonus

o Helps in asset creation as they are for a long tenure

o Premium to Sum Assured ratios are fixed for each plan and age.

o Generally withdrawals are not allowed before maturity.

Table: 8.1 Comparison of ULIPs and Traditional Policy

Point of difference ULIP Traditional Policy

Investment

Market related (May be

stock market or debt

market)

IRDA ? Determined

investments

Transparency in costs Yes No

Flexibility in payment Yes No

Assured Bonus No Yes

Assured Sum on survival No Yes

Option to increase

investment/premium Yes No

ULIPs are better than traditional policies in following respects:

Until a couple of years ago, when ULIPs were a rare commodity, nobody knew how

life insurance companies charged policyholders for expenses. And nobody seemed to

want to know either, and then came the ULIPs with good intentions to make

policyholders aware of how much they would pay as expenses. But that move

backfired. Policyholders were taken aback by the high amount of fees that ULIPs

charged.


While the charge structure on ULIPs is something that is open to debate, the issue is

that ULIPs alone cannot be isolated. Traditional policies too charge high

administrative and management expenses. In ULIPs, the first year charges range

from 20-70%, one does not know how much traditional policies charge.

This can have a bearing on returns as well. A ULIP may charge you upfront but

thereafter, all the returns on the fund are yours while a traditional policy may charge

less but share a smaller portion of returns with you.

So if you were substituting a traditional endowment with a ULIP, you would be

better off with the latter since you would know your charges and your returns.

Traditional policies are advisable where:

• The objective is only Risk cover and not savings, thus cost of insurance is

minimum.

Unit Linked products are advisable where:

• The intention is to provide security with a purpose.

• The purpose is to make the savings grow at a better rate seeking the best

solution.

• It is a market linked investment where the premium paid is invested in funds

• Different options are available, like 100% Equity, Balanced, Debt, Liquid etc

and according to the fund selected, the risks and returns vary.

• The costs are upfront and are transparent, the investment made is known to

the investor (As he is the one who decides where his money should be

invested).

• There is a greater flexibility in terms of premium payments ie. A premium

holiday is possible.

• You can also invest surplus money by way of top ups which will increase

your investment in the fund and thereby provide a push to returns as well.

• There is no assured Sum on survival, the higher of the Sum Assured or Fund

Value is paid at the maturity or incase of death.


8.2 Comparison of ULIP with other Investment Modules

Table: 8.2 Comparison of ULIPs with Other Investment Modules OTHER INSTRUMENT

RATE OF RETURN

TIME PERIOD

RISK MIN. INVESTMENT

MAX INVESTMENT

TAX FREE RETURN

TAX BENEFIT

NSC 8% 6years No 100 No limit No Yes PPF 8% 15years No 500 70000 Yes Yes ELSS Market

return 3years Risky 500 No limit Yes Yes

ULIP Market return

5years Risky Module

500 No limit Yes Yes

FD 9.50% 5years No 10000 No limit No Yes MUTUAL FUND

Market Return

Open Ended

High 500 No limit Capital gain @10% for time less than 1year

Only in ELSS Funds

STOCK Variable No time frame

Very high

Variable No limit Capital gain @10% for time less than 1 year

No

8.3 CONCLUSION








investment company.




options.




and the amount of return they will get while investing in the Insurance company.

The company should emphasis on advertisements to promote their products; should

increase the advisor’s commission and launch various attractive schemes so as to

motivate them; currently MetLife offers services from around 600 locations across

India, so the company should focus on opening up of new offices so as to make it

more accessible. Currently most of the ULIP plans demands high premiums (min Rs.

40,000), they should launch some products with similar feature but with low initial

premium. Administration charges should be reduced, currently it is up to 40% of

premium, so as to compete with other investment avenues like Mutual Funds, NSS,

etc. Market surveys should be conducted regularly to know about customer demands

and changing needs; and should be regular training for the employees.


Chapter 9

RECOMMENDATIONS

1. Emphasis on advertisement: Company should emphasis on insurance plan

advertisement, because at present company’s main focus on recruiting

financial advisors.

2. Increase in commission: Company should also change the commission

structure of F.A., because in initial year commission is very high as compare

to remaining year. So F.A. does not focus on remaining year and many

policies lapsed.

3. Making MetLife more accessible: Here I mean that as 80% of the

population of India is rural therefore MetLife must have their branches in

important towns so it not only this will increase the awareness among people

more over it will help the company to acquire local market and cater to their

needs effectively.

4. There should be a product with similar features and low initial premium:

A product like Met Gold Plus is suitable for all but the initial premium is on

the higher side, therefore the company should derive a product with similar

features but with low initial premium so that it is affordable to normal service

class.

5. Administration charges should be low as in comparison with mutual

funds, national saving certificate (N.S.C), etc.: The Company should lessen

down the administration charges so that this product can have an edge over

other investment modules like N.S.C, P.P.F etc.

6. Market surveys should be conducted regularly so that to know about

customer demands and changing needs: The Company should know about

the customers changing needs and demands by conducting market surveys

which are helpful in innovating a product which suits the customer’s

requirements.

7. There should be Training batches on weekends: It is advised that the

company should have training batches for the already serving class on

weekends, so that the willing candidates can opt it as a part time business

opportunity.


Bibliography

Books and Journals:

1. Sharma, D. D., Marketing Research, Principles, Applications and Cases:

Sultan Chand & Sons, 2004

2. IC-33, Life Insurance, By Insurance Institute of India

3. MetLife Sales Kit, By MetLife India Insurance Co. Ltd.

Websites:

1. http://www.metlife.co.in/

2. http://en.wikipedia.org/wiki/Insurance_in_India

3. http://business.mapsofindia.com/insurance/brief-history-of-insurance-

sector.html

4. http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?pa

ge=PageNo4&mid=2

5. http://www.marketsmonitor.com/Report/IM588_related.htm

6. www.irdaindia.org

7. http://www.metlife.co.in/MetLifeAboutUs_MetLifeIndia.aspx

8. http://www.indiainfoline.com/PersonalFinance/Insurance/ULIP-

Performance.aspx

9. http://business.mapsofindia.com/insurance/metlife-insurance.html

10. http://www.financialexpress.com/news/investors-still-perplexed-about-

ulips/607042/0


ANNEXURE

Questionnaire

Dear Respondent,

The questionnaire is designed to seek information for the execution of the research

study. Confidentiality would be maintained. I shall be grateful if you kindly spare

some of your valuable time to response to following:

General information:

Respondent Name ______________________________

Gender: Male Female

Specific Information:

1. What is your Occupation?

Business Agriculture

Employee Professional

2. Do you make Investments?

Yes No

3. If yes, then to which sector you will give preference while investing at present?

Insurance Investment Plan Bank Deposits

Mutual Fund Govt. Deposits

Stock market Gold

Real Estate Others, Please Specify _ _ _ _ _ _ _ _ _


4. What are the reasons to make Investments?

Tax Saving Return

Capital Appreciation Secure investment

Life covers Other

5. Are you satisfied with your Investment? Yes No

6. Have you ever taken a Life Insurance Policy from any Company?

Yes No

7. In which sector do you prefer to invest your money?

Private Sector Government Sector

8. Do you think services provided by private sector will be better than public sector

companies?

Yes No

9. Are private life insurance companies reliable for Investment?

Yes No

10. (a) Are you aware of Unit Linked Insurance Plans (ULIP)?

Yes No

(b) If Yes, are you FULLY AWARE LITTLE AWARE UNAWARE

The working of ULIP

Criteria for returns

Different Plans

Where your fund invested by insurer

Switching Option


11. (a) Have you ever invested in ULIP plans?

Yes No

(b) If yes, please specify Plan Name:

Saving plan Protection plan

Pension plan Children’s plan

(c) What are the reasons for investment in ULIP?

Life protection Investment and Savings

Flexibility Transparency

Liquidity Tax planning

12. From which company you have got insured?

Life Insurance Corporation of India

Reliance Life Insurance

HDFC Standard Life Insurance

MetLife India Insurance

SBI Life

Any other, Please Specify _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

13. How much return you are expecting from your ULIP?

10-15% 15-20%

20-30% 30 +

14. Which of the following factors will influence you the most while purchasing the

Insurance plan?

Name and reputation of the company

RETURN

Tax Savings

Risk covered

Agent

Others, Please specify _ _ _ _ _ _ _ _ _ _ _


15. Do you think ULIP is a risky investment?

Very Risky

Risky

Less Risky

Safe

Very Safe

Don’t Know

16. Do you have any plan to buy ULIP plans in near future?

Yes No

17. If you are not taking any ULIP plans, please tell us the reasons why?

We couldn’t afford.


We don’t want insurance.



18. What steps do you suggest to the companies to make their ULIP plans more

popular?

Give more advertisements.

Arrange more workshops.

Arrange more seminars.

Reduce charges.

Create awareness through advisors.

Others ………………………………………..

19. What is your source of information for taking an insurance plan?

Agents

Friends

Family

Own research


20. According to you, Insurance policies are for?





Wastage of Money

21. Are you aware of the charge FMC?

Yes

No

22. Do you agree that Insurance products are susceptible to very low risk when

compared to the other options for investment?

Yes

No

Don’t know

23. Name three insurance companies that come to your mind:

1. _ _ _ _ _ _ _ _ _ _ _ _ _ _

2. _ _ _ _ _ _ _ _ _ _ _ _ _ _

3. _ _ _ _ _ _ _ _ _ _ _ _ _ _

24. With the different variety of schemes and unbelievable plans offered by

MetLife India Insurance Company Ltd., Do you think MetLife India is one of

the best?

Yes

No

Why? _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Documents

Project-Comparative Analysis of ULIPs With Traditional Plans