Project Sandesh

8/3/2019 Project Sandesh

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TITLE - “WEALTH CREATION THROUGH INSURANCE ”

COMPANY - HDFC Standard Life

LOCATION - HDFCSL, Pune

NAME - SANDESH DADABHAU KHILARI

ROLL No - 41029

PROJECT - Prof. VIKAS BARBATE

GUIDE



Jayawant institute of computer applications

Tathawade, pune.

SUMMER PROJECT

INDEX

Chapter No. Topics Page no.

Executive summary

1. Introduction

1.1 Project introduction

1.2 Objectives of the study

1.3 Scope & limitations

2. Company profile

2.1 Name, address & location of company

2.2 Vision , mission

2.3 History

2.4 Different product profiles of the company

2.5 Awards

3. Theoretical background

3.1 Review of literature

3.2 Fundamental concepts4. Research methodology

4.1 Research conceptual clarification

4.2 Sources of data collection

4.3 Sample description

5. Data analysis

6. Findings

6.1 Findings based on analysis6.2 Recommendations / suggestions

6.3 Conclusion

Bibliography

Annexure



COMPANY PROFILE

2.1. History about HDFC

HDFC Standard Life is one of India’s leading private life insurance companies,

which offers a range of individual and group insurance solutions.

It is a joint venture between Housing Development Finance Corporation Limited

(HDFC), India’s leading housing finance institution, Standard Life policy provider

and a leading provider of financial services in the United Kingdom. HDFC

Standard Life’s product portfolio comprises solutions, which meet various

customer needs such as Protection, Pension, Savings, Investment, and Health.

Customers have the added advantage of customizing their Plans, by adding

optional benefits called riders, at a nominal price. The company currently has 25

retail and 4 group products in its portfolio, along with five optional rider benefits

catering to the savings, investment, protection and retirement needs of customers.

HDFC Standard Life continues to have one of the widest reaches among new

insurance companies through a network of 595 offices serving over 720 cities and

towns across the country. The company has also increased its depth in existing

markets with a strong base of more than 207,000 Financial Consultants.



2.2. HDFC Limited

HDFC Limited has set benchmarks for the Indian housing finance industry.

Recognition for the service to the sector has come from several national and

international entities including the World Bank that has lauded HDFC as a model

housing finance company for the developing countries. HDFC has undertaken a lot

of consultancies abroad assisting different countries including Egypt, Maldives,

and Bangladesh in the setting up of housing finance companies. Customer Service

and satisfaction has been the mainstay of the organization.

HDFC Limited has assisted more than 3.3 million families to own a home, since its

inception in 1977 across 2400 cities and towns through its network of over 250

offices. It has international offices in Dubai, London and Singapore with service

associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRIs and PIOs to

own a home back in India.

2.3. Standard Life Group

The Standard Life group has been looking after the financial needs of customers

for over 180 years. It currently has a customer base of around 7 million people who

rely on the company for their insurance, pension, investment, Banking and health-

care needs. Its investment managers are currently administers £125 billion in



assets. It is a leading pensions provider in the UK, and is rated by Standard & Poor

as ‘strong’ with a rating of A+ and as ‘good’ with a Rating of A1 by Moody’s

Market Share

HDFC Ltd. Holds 72.43% and Standard Life (UK Holding) Ltd. holds 26.00% of

equity in the joint venture, while the rest is held by others.



HDFC’s Vision

‘The most successful and admired life insurance company, which means that it is

the most trusted company, the easiest to deal with, offer the best value for money,

and set the standards in the Industry’.

HDFC’s Values

Values that they observe while working:

Integrity

Innovation

Customer centricity

People Care “One for all and all for one”

Team work

Joy and Simplicity



History

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 nationalizing 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

Association 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 (Nationalization) 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 are 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 24 general insurance companies including the ECGC and

Agriculture Insurance Corporation of India and 23 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.

Major players in insurance of India

Insurance industry in India comprised mainly of only two state insurers as follows

Life Insurers

Life Insurance Corporation of India (LIC)

General Insurers

General Insurance Corporation of India (GIC)



GIC had four subsidiary companies, are as follows.

1. The Oriental Insurance Company Limited

2. The New India Assurance Company Limited

3. National Insurance Company Limited

4. United India Insurance Company Limited

In addition to above the following companies have been entered into Insurance

business.

Life Insurers

Public sector

Life Insurance Corporation of India

Private sector

1. Bajaj Allianz Life Insurance Company Limited

2. Birla Sun Life Insurance Co. Ltd

3. HDFC Standard Life Insurance Co. Limited

4. ICICI Prudential Life Insurance Co. Limited

5. ING Vysya Life Insurance Company Limited

6. Max New York Life Insurance Co. Limited

7. MetLife Insurance Company Limited

http://www.nationalinsuranceindia.com/

http://www.nationalinsuranceindia.com/



8. Om Kotak Mahindra Life Insurance Co. Ltd.

9. SBI Life Insurance Company Limited

10. TATA AIG Life Insurance Company Limited

11. Reliance Life Insurance Co. Ltd.

12. Aviva Life Insurance Co.

13.

General Insurers

Public Sector

1. National Insurance Company Limited

2. New India Assurance Company Limited

3. Oriental Insurance Company Limited

4. United India Insurance Company Limited

Private Sector

1. Bajaj Allianz General Insurance Co. Limited

2. ICICI Lombard General Insurance Co. Ltd.

3. IFFCO-Tokio General Insurance Co. Ltd.

4. Reliance General Insurance Co. Limited

5. Royal Sundaram Alliance Insurance Co. Ltd.

6. TATA AIG General Insurance Co. Limited



7. Cholamandalam General Insurance Co. Ltd

8. Export Credit Guarantee Corporation

9. HDFC Chubb General Insurance Co. Ltd.

Reinsurer

General Insurance Corporation of India

Ranking of HDFC Life Insurance in Indian insurance sector

Life Insurance

1. Life Insurance Corporation of India (LIC)

2. HDFC Standard Life

3. ICICI Prudential

4. Bharti AXA Life Insurance

5. SBI Life Insurance

6. Aviva Life Insurance

7. IDBI Fortis Life Insurance

General Insurance



1. Apollo Munich Health Insurance

2. ICICI Lombard General Insurance

3. Bharti AXA General Insurance

4. Reliance General Insurance

5. HDFC ERGO General Insurance

6. SBI General Insurance

7. L&T General Insurance

Departments

A business is normally organized by its function and its aspects are divided into

smaller departments in order to operate effectively. They have departments at

HDFC Life that specialize and employ people with expertise in their areas. They

communicate well with each other and with suppliers and customers, to operate

effectively.

The departments of company are as follows:

Actuarial , ERP , Business & service Excellence, Agency Channel , Finance &

Accounts , Medical, Audit & Risk Management, Group Sales , Operations, Banc

assurance & Alliances, HR & Administration , RSBD, Business System &



Technology , Investment, Strategy & product, Channel Development, Legal &

compliance, Underwriting, Claims, Marketing and Direct Channels.

Organization Chart-

Chairperson

C.E.O

M.D.

Agency Head Operation Head

Underwriter Agency Team Operation HR Head

ZM Senior HR

AVP AVP

TM TM TM

BM BM BM

Manager



Agent

AWARDS WON

• The recent awards won by the company are:

• Best companies to work for in India 2010

• 'Young Star Super' Voted 'Product of the Year 2010'

• 'The Ingenious 100 2009' Award

• Diamond EDGE Award 2009.



Literature Review

Insurance

What is insurance?

Insurance is a contract whereby, in returns for the payment of premium by the

insured, the insurers pay the financial losses suffered by the insured as a result of

the occurrence of unforeseen events. The term “risk” is used describe all the

accidental happenings, which produce a monetary loss.



Insurance is the method in which large number of people exposed to a similar risk

makes contribution to a common fund out of which the losses suffered by the

unfortunate few, due to accidental events, are made good. The sharing of risk

among large groups of people is the basic of insurance. The losses of an individual

are distributed over a group of individuals.

• The risk becomes insurable if the following requirements are complied with:

• The insured must suffer financial loss if the risk operates.

• The loss must be measurable in money.

• The objective of the insurance contract must be legal.

• The insurer should have sufficient knowledge about the risk he accepts.

Types of insurance

• Life insurance: it covers individual only, to be more precise their death

only.

• Non life insurance (general insurance): it covers individuals as well as non-

living things. Except death it indemnifies a person for any damages to his

health or to the property belonging to him.



Benefits of life insurance Replacement of income: life insurance products can

provide support to the family and take care of the family’s financial requirements.

It provides a lump sum or periodic payments to help replace the income stream, in

case of an unfortunate event or an untimely death of the bread earner.

• Coasts of education: to support your child with a sound

educational background, and to help him/ her to achieve his/her

dreams, Life insurance products provide you with a solution,

whether you are there or not.

• Retirement expenses: retirement is an age when an individual has

fulfilled almost all his responsibilities and looks forward to

relaxing. Life insurance products can help you lead a secure and

tension free retired life by assuring that you get guaranteed

pension.

• Mortgage and Debt protection: with increasing consuming and

ever rising demands, loans and debts are now part of life. Life

insurance products help you ensure that your family is not duly

burdened with their repayments, in case of an unfortunate events

or an untimely demise of the breadwinner.

• Hardships protection: life insurance provides a sense of security

to the income earner and to his/her family. Buying life insurance



frees the individual from various unnecessary financial burdens

that can otherwise make one spend sleepless nights.

Growth of HDFC Standard Life

HDFC Life registers highest growth in individual new business in 2010-11; only

company to register positive growth in new regime (H2, 2010-11). HDFC Life is

continues to be the fastest growing company with 26% year on year growth and the

only one among the top 5 private players to be on positive year on year growth;

Strongest market share gain of 4.2% in private space in 2010-11. HDFC Life

recorded 36% growth in renewal premium and 29% growth in total premium in the

financial year 2010-11.

HDFC Life is ranked 1st in FY2010- 11 in individual business in the industry and

they are one of the very few private insurers to achieve positive growth in FY2010-

11. Our consistent focus on creating awareness about life insurance as long-term

financial instruments has resulted in our customers exhibiting renewed focus on

life insurance reflected in our high conservation ratio of 81%.”

Key Financial and Operational Highlights (2010-11):

• Robust growth of 29% in total premium income to Rs. 9004 crore from Rs.

7005 crore in 2009-10



• 26% growth in individual new business (regular and single) to Rs. 3488

crore from Rs. 2753 crore in 2009-10

• High quality of existing policies & continuous focus on persistency lead to

36% increase in renewal premium of Rs. 4924 crore from Rs. 3627 crore last

year

• Strongest market share gain of 4.2%* in private space in 2010-11 over same

period last year; Market share increased to 12.9% in private space in 2010-

11 from 8.7% in 2009-10; Overall market share increased to 5.9% in 2010-

11 from 4.6% in 2009-10

• With growth of 1.6%* in H2, 2010-11, stood first in the industry in

individual business; Stood 3rd in the private space in 2010-11 in total

premium

• Conservation ratio (individual business) improved substantially to 81% in

2010-11 from 72% in 2009-10

• 31% growth in Assets Under Management over March 31, 2010 to Rs.

27,177 crore from Rs. 20,767 crore same period last year

• Solvency ratio as on March 31st, 2011 was 172% as against regulatory

requirement of 150%

• Claim repudiation ratio for FY 2010-11 is 3.97%, which means we have

settled 96.03% claims



• Distribution mix - 66% from Banassurance, 31% from Agency and rest from

others including Direct Sales

ULIP

ULIP is a market-linked life insurance plan, which invests the premium money in

various proportions in the equity and debt markets. In effect, this ensures that the

returns on such plans are linked to the performance of the markets while also

offering the individual an insurance cover at the same time. This also provides a

handy instrument to the investor to save money as and when he wants.

ULIP came into play in the 1960s and became very popular in Western Europe and

Americas. The reason that is attributed to the wide spread popularity of ULIP is

because of the transparency and the flexibility which it offers.

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

insurance planning, financial needs, financial planning for children’s future and

retirement planning.

Features of ULIP

ULIP is different from other insurance and investment plans as it offers the

following distinguishing features:



• Investment and savings

• Flexibility

• Investment options

• Transparency

• Option to take additional cover against

• Death due to accident

• Surgeries

• Liquidity

• Tax Planning

How Unit- Linked Insurance Plans do against?

Unit-linked insurance plans, ULIPs, are distinct from the more families ‘with

profits’ policies sold for decades by the Life Insurance Corporation. ‘With profits’

policies are called so because investment gains are distributed to policyholders in

the form of a bonus announced every year. ULIPs also serve the same function of

providing insurance protection against death and provision of long-term savings,

but they are structured differently. In ‘with profits’ policies, the insurance company

credits the premium to a common pool called the ‘life fund’ after setting aside

funds for the risk premium on life insurance and management expenses. Every

year, the insurer calculates how much has to be paid to settle death and maturity



claims. The surplus in the life fund left after meeting these liabilities is credited to

policyholder’ accounts in the form of a bonus.

In a ULIP too, in a fund that invests money in stocks or bonds. The value of the

unit is determined by the total value of all the investments made by the fund

divided by the number of units. If the insurance company offers a range of funds,

the insured can direct the company to invest in the fund of his choice. Insurance

usually offer three choices- an equity fund, balanced fund and a fund which invests

in bonds. In both ‘with profits’ policies as well as unit- linked policies, a large part

of the first year premium goes towards paying the agents’ commissions.

How ULIP is different from term insurance?

A term plan is a pure risk cover plan without any maturity benefits. This is because

there is no savings element in the premium being charged to the individual; hence

maturity benefits do not accrue. The insured gets the benefits only in case of death

before maturity of policy. Also a term insurance plan does not give any option to

the person insured for saving and earn returns as he pays the premium only

sufficient for his life cover, and he does not get any returns on it. A term insurance

plan also requires the premium to be paid for a particular term, which is to be fixed

at the time of taking policy.



The investor keeps getting returns on compound basis according to the market

movement along with an insurance cover. ULIP also provides flexibility of

choosing the term of payment of premium and varying as per the requirement of

the investor.

Working of a Unit Linked insurance plan

As an ULIP earns returns for investor on the money he has paid as premium and

also provides life coverage; the premium paid is treated in the following ways;

• Mortality charges: the insurance company to cover the risk of an

eventuality to the individual incurs mortality charges. The mortality

expenses differ depending on the age of the individual and the sum assured

they are higher for a higher age and sum assured.

• Sale and administration expenses: these expenses are incurred by the

insurance company for operational purposes and recovered from the

premium that the individual pays towards costs incurred to run the insurance

business on a daily basis are example of such expenses.

• Savings or investment component: this portion of the premium is invested

by the life insurance company in various investment avenues like

government securities, bonds, money market instrument and equities in

varying proportions. The savings component is what helps generates the



returns which insurance companies pay to the policy holder by way of

bonuses and the maturity amount.

Tem plans are pure risk cover plans. The premium charged by term plans cover

only the mortality charges, sales and administration expenses. This is no saving

element in the premium; hence no maturity amount accrues. It is also due to this

reason that term plans are the cheapest form of life cover available.

NAV

The net asset value of the fund or investment is the cumulative market value of the

assets fund net of its liabilities. In the other words if fund is dissolved or liquidated,

by selling off all the assets in the fund, this is the amount that the shareholders

would collectively own. This gives rise to concept of net assets value per unit,

which is the value, represented by the ownership of the unit in the fund. It

calculated simply by dividing net assets value of fund by the numbers of the unit.

Calculation of NAV

The most important part of calculation is the valuation of the assets owned by the

fund. Once it is calculated, the NAV is calculated simply by dividing the net assets

value by the number of the unit outstanding. The detailed methodology for the

calculation of the asset value is given below.



NAV= Market value of investment + Receivables + other accrued income +other

assets – accrued expenses- other payable – other liabilities / no of units outstanding

as on date.

Formula for NAV

NAV = Net Assets / No. of units outstanding

The NAV will fluctuate from day to day:

•

Due to changes in the value of the assets constituting the portfolio

• Due to income from the assets held by the fund

• Due to expenses incurred by the fund.

Factors Affecting the NAV

The NAV is affected by four sets of factors:

• Purchase and sale of investment securities.

• Valuation of the investment securities.

• Other assets and liabilities.

• Units sold or redeemed.

Product of HDFC Standard Life

HDFC SL Crest



Any uncertainty should not affect your plans. Be it of life, or of markets. You

want to secure happiness for yourself and your loved ones. We present HDFC SL

Crest - Insurance cum investment plan that provides valuable financial protection

to your family when needed the most along with an investment option for certainty

of highest NAV along with a guarantee on returns. So that when you reap the

returns of life, they are on crests not on lows. In this plan you can choose to invest

in either of two investments options- highest NAV guarantee fund or free asset

allocation option.

Features

;

Advantages



• Choice of two investment options - highest NAV guarantee fund or free

asset allocation option.

• Benefit of minimum guaranteed NAV of Rs. 15 at maturity.

• On maturity you will receive the fund value as per the investment option

selected.

• This plan provides valuable protection to your family in case you are not

around. In case of your unfortunate demise during the policy term, we will

pay the amount higher of your sum assured (less partial withdrawals) or your

total fund value to your family. Please refer to product brochure for details.

• This plan can be taken by filling short medical questionnaire, which may not

require you to go for medicals. Kindly refer to the product brochure for

details.

•

Tax benefits are offered under section 80c and 10(10d) of the income tax

1. HDFC Life Sampoorn Samridhi Insurance Plan

Sukh aur Samridhi. Joy, happiness and prosperity are your ultimate desire, not only

for yourself but also for your loved ones. Life insurance plans not only let you

secure financial future of your loved ones, they also assist you in attaining

prosperity.

With HDFC Life Sampoorn Samridhi Insurance Plan, you can be financially

prepared for the future and can fulfill your dreams & aspirations. This plan offers



financial protection to your loved ones when they need it the most, enabling you

and your family live life with peace of mind and sar utha ke!

Advantages

•

Financial protection to your loved ones by way of a lump sum payment in

case of your unfortunate demise during the policy term. Sum assured plus

attached bonuses will be paid to the nominee. In case of death due to



accident, an additional Sum Assured will be paid. The policy will terminate

and no further benefits will be payable.

• Choice of Maturity Benefit Option- on survival till maturity , you can

choose maturity benefit option

• Enhanced Cash Option â“Sum Assured + Reversionary Bonus +any interim

bonus + any terminal bonus + Enhanced Terminal Bonus. Policy terminates

and no further benefits are payable.

• Enhanced Cover Option - Sum Assured + Reversionary Bonus + any Interim

bonus + any Terminal Bonus payable on maturity + Additional Sum Assured

on unfortunate death of life assured upto age of 99 years.

• Tax benefits under sections 80C and 10(10D) of the Income Tax Act, 1961

subject to the provision contained therein

For more details on risk factors, terms and conditions, please read the

Product Brochure carefully and/or consult Financial Consultant before

taking a decision.

3. HDFC Endowment Assurance Plan

As a judicious family man, your priority is to secure the well-being of those who

depend on you. Not just for today, but also for the long term. With our HDFC

Endowment Assurance Plan, you can start building your savings today and ensure



that your family remains financially independent, even when you are not around.

This 'With Profits' plan is designed to secure your family's future by giving your

family a guaranteed lump sum on maturity or in case of your unfortunate demise,

early into the policy term.

Features

Advantages



• Ideal way to secure your long-term financial goals and your family's

financial independence by giving a lump sum payment (basic Sum Assured

plus any Bonus Additions) on survival up to Maturity date

• Provides invaluable protection to your family by way of lump sum payment

in case of unfortunate demise within policy term

• Gives you the flexibility to customize your policy according to your needs

by adding any one of the 3benefit options available

• You can choose to pay your premium as either Annually, Half-Yearly or

Quarterly depending on your convenience. You also have a range of

convenient auto premium payment options

• Tax benefits under sections 80C, 80D and 10(10D) of Income Tax Act, 1961

The insurance companies had launched “Innovative” product in the market.

They’re called Highest NAV Guaranteed Plans .These products have come in, after

the recent crash in the market. Investors are looking for some kind of a safe

investment equity product. Hence, they’ve launched these Highest NAV Return

ULIP’s which gives investors highest return from the Stock market in long run

generally the tenure is 7 yrs, for these plans.

How Highest NAV Guarantee Policy Works?



These plans use strategies like Dynamic Hedging and CPPI (Constant proportion

portfolio insurance), which are advanced strategies used in Derivatives world. A

simplified version of the whole process of NAV Guarantee policy is as under with

an example.

Supposing a policy starts today and is guaranteed to give highest NAV in next 7

years and we can control how money moves to debt and equity.

In the beginning, let’s assume a NAV of Rs 10, and the Asset allocation is 100% in

equity and 0% in debt. Now suppose, the market moves up and NAV goes up to Rs

15 by the end of the first year, at this point, what Insurance company has to

provide is to make sure, that they provide at least Rs 15 as the return after 6 years.

Now in order to achieve this, all they keep X amount in debt instruments which

will mature in next 6 years and provide Rs 15 at the end of 6 years, so assuming

the debt return at 7%, they need to put around Rs 10 in Bonds, so that the maturity

of the bond is Rs 15 at the end of 6 years.

=> 10*(1.07)^6

=> 15.007

They can now invest the rest Rs 5 in Equity as Rs 10 is allocated to Debt. So, now

they make sure that whatever happens to the market, they get Rs 15 for sure at the

end of 6 years. Now, there are two possibilities



Case 1: Market Goes down : If market goes down, the NAV will go down

correspondingly, but as per the strategy, the maturity value will be at least Rs 15.

Case 2: Market Goes up again : If market goes up at this point and the NAV rises

above 15, for example say to Rs. 18, now again they pull out money from Equity

and allocate such an amount to debt, that the maturity at the end of total 7 years

would be Rs 18 and so on…

Note:

• These highest guaranteed schemes do not provide wide range of product

categories, such as equity-oriented growth funds, balance funds and debt

funds.

• Guarantee on highest NAV is available only if you survive the term. If you

die during the term, your nominees will get the prevailing value of the fund.

This is inferior to even a regular debt product because of the high cost

structure involved.

CONTRIBUTION IN INDIAN ECONOMY-

Insurance is of Rs. 400 billion business in India, and together with banking

services adds about 7% to India’s GDP.



Gross premium collection is about 2% of GDP and has been growing by 15-20%

per annum. India also has the highest number of Life insurance policies in force in

the world, and total investible funds with LIC are almost 8% of GDP.

RESEARCH METHODOLOGY

Introduction



Insurance is a contract between two parties whereby one party agrees to

undertake the risk of another in exchange for a consideration. A well-

developed and evolved insurance sector is a backbone for economic

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

the same time strengthening the risk taking ability of the country. This study

attempts to trace the growth of the Insurance sector in general and how to

create wealth from insurance with HDFC Standard Life Ltd in particular.

Title of the study

Wealth creation through insurance and study of trends in NAV of its major

policies.

Objective

1. To study how does insurance helps in wealth creation

2. To study the growth of Insurance sector in general after liberalization of the

Indian economy.

3. To understand growth of private insurance companies in India in last five

years.



4. To understand the growth of HDFC Standard Life in the last five years.

5. To study the trend of NAVs of various Unit Linked policies of HDFC

Standard Life.

6. To understand investor perception of HDFC Standard Life as an option for

investment.

Hypothesis

1. Life Insurance is one of the Taxes saving device in India.

2. Life Insurance is an Investment option in India

3. HDFC Standard Life is an insurance company with very good fundamentals.

Limitations

1) Limited time

2) Lack of accurate data

Sources of data

The study derives data both from primary data and secondary data.

1. Primary data regarding investors perception of Insurance shall be collected

from a structured questionnaire administered to a randomly selected



population whose sample size will be 50 numbers from across different

demographic background.

2. Secondary data for the study shall be collected from web sites of HDFC

Standard Life and other competitor Insurance companies and IRDA.

Besides, News paper articles and reference books related to insurance shall

also be studied.

Data collection method -

Sample size 50

Sampling type exploratory

Method used questionnaire

Scope of the study

The project is related Insurance, Wherein investors can invest their money to

get the good returns. An investment has to be planned according to their risk

bearing capacity and as well as other factors like investment objectives, returns

expected, taxation, age factor, etc.

Project consists of case studies in the form of individual profile. Wherein the

various aspects of the individual’s current status are taken into consideration



and an effort is done to provide him with the best investment solution for his

current state of finances.

DATA ANALYSIS AND INTERPRETATION

Deduction and Exemption

Income Tax

Section

Gross

Annual

Salary

How Much Tax can You Save? HDFC Standard Life Plans

Sec. 80c Across allincome slabs

Up to Rs. 30,900/- saved oninvestment of Rs. 1,00,000/-

All our Life insurance Plans

Sec. 80CCC Across allincome slabs

Up to Rs. 30,900/- saved oninvestment of Rs. 1,00,000/-

All our Life insurance Plans

Sec. 80D Across allincome slabs

Up to Rs. 9,270/- saved oninvestment of Rs. 30,000/-

(inclusive of Rs. 15,000/- towardshealth insurance of parents)•

All our Health insurance

Plans

• All theHealth insuranceriders available

with our Conventional Plans

Upto Rs. 10,815/- saved oninvestment of Rs. 35,000/-

(inclusive of Rs. 20,000/- towardshealth insurance of parents whosenior citizens)

TotalSavings

Possible

Rs. 41,715/-

• Rs.30,900/- under Sec. 80C and Sec.80CCC

• Rs.9,270/- or Rs.10,815/- under Sec.80D

• Above figures calculated for a male with gross annual income exceeding Rs.5,00,000/-

Sec.10 Under Sec.10(10D), the benefits received by you are completely tax-free



• Applicable to premium paid for all Health insurance Plans, Critical illness Benefit, accelerated sum

Assured and waiver of premium Benefit.

** These calculations are illustrative and based on our understanding of current tax legislations.

Source: http://www.hdfclife.com/KnowledgeCentre/TaxCenter.aspx

Strong growth in total premiums and higher share of renewals

5 years CAGR: 59%

Interpretation

Rs. Cr. 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 CAGRRegular premium

New 2984 2539 2280 1317 818 382 51%

Renewal 3748 2861 2173 1210 530 200 80%

Single 273 165 405 332 225 104 21%



Total Premium 7005 5565 4858 2859 1573 686 59%

EPI 2561 2552 2425 1328 854 403 45%

Assets under management as on March 31, 2010 have nearly doubled



Total AUM 5 years CARG of 92%

Premiums are growing and average case size is high

New business premiums (EPI)



5 years CARG: 45%

Renewal premiums exceed new business premiums for the first time

Performance of financial products studied

HDFC SL Crest





NAV trend of Crest policy since inception

Interpretation: The continuous growth was recorded in NAV of Crest policy

since its inception. Except the value of NAV fall in year 2007-09 due to inflation.

The Balanced fund has recorded 242.85% growth in NAV since its inception.

Progrowth flexi



NAV trend of Progrowth Flexi policy since inception

Interpretation: 6.25% decrease is recorded in NAV since its inception

Pension Plan



NAV trend of Pension Plan policy since inception

Interpretation: The fund has recorded 2% growth in NAV since its inception

Young star plus balanced fund



NAV trend of Young star plus policy since inception

Interpretation: The fund has recorded 147.61% growth in NAV since its

inception.

Endowment plan



NAV trend of Endowment plan policy since inception

Interpretation: The fund has recorded 136.36% growth in NAV since its

inception

FINDINGS AND SUGETIONS



Findings

1. HDFC Life recorded 36% growth in renewal premium and 29% growth in

total premium in the financial year 2010-11.

2. New ULIP regulations have impacted growth in H2 FY11

3. In H2 the HDFC Standard Life has grown 1.6%.

4. HDFC has adapted well post September 1, 2010 regime and ranked 1 st in H2

FY11 amongst private insurance companies.

5. During the same period of last year the company had highest market share

gain of 4.2% in private space in financial year 2011

6. The operating expense ratio reduced over the last 3 years from 29.1% in

FY09 to 14.4% in FY11. Comparing with last year operating expenses have

increased marginally by 4% against individual new business growth of 27%.

7. HDFC Standard Life Co. Ltd is company with good fundamental and a

secure sector for investment.



Key Financial and Operational Highlights (2010-11):

• Robust growth of 29% in total premium income to Rs. 9004 crore from Rs.

7005 crore in 2009-10

• 26% growth in individual new business (regular and single) to Rs. 3488

crore from Rs. 2753 crore in 2009-10

• High quality of existing policies & continuous focus on persistency lead to

36% increase in renewal premium of Rs. 4924 crore from Rs. 3627 crore last

year.

NAV trends of HDFC Standard Life

1. There is continuous growth recorded in its policy’s since inception of

its policy.

2. The Crest policy had recorded the highest growth among its leading

policies. The growth is due to demand for the policy as an investment

plan and guarantee of Rs. 15 was given by company.

3. The main factors that affected on NAV were demand and sales of the

policy, changes in value of investment, up and down in the share

market and inflation.



RECOMMENDATIONS / SUGGESTIONS

• Provide and adopt such policies from which customers get maximum

benefits

• Increase the distribution network

• Provide a proper training to the workforce

• Provide lower premium policies so that we could target middle class people

and generate good cash flow for further growth

• Company should more oriented towards rural market



CONCLUSION

HDFC Standard Life insurance company is performing well in insurance sector of

India. The total premium collection of company has increased comparing with past

years and it had contributed in to the growth of companies fundamentals, even the

new ULIP regulation have impacted on it.

Considering the fundamentals of the HDFC Standard life it is concluded that the

company is fundamentally strong and it is growing rapidly in insurance sector.

As well as taking into consideration the financial factors and its performance in its

NAV throughout last few years it can be concluded that HDFC Standard life is

secured company for investment with good returns.



Bibliography

Books:-

• Kothari C.R. Research Methodology & Techniques

• Insurance Principles and Practice

Websites:

• Hdfclife.com

• irda.com



Annexure

SURVEY QUESTIONNAIRE – INSURANCE AWARENESS

Name of person:

Age: Sex: Male /Female

Address:

Status: Married/Unmarried:

Education:

Occupation:

1) What is your average monthly income?

Less than 5000 5000-15000 15000 – 30000



30000 – 50000 50000 & above.

2) Do you save regularly?

Yes No

3) If ‘Yes’, which of the following pattern of savings do you use? Recurring

Deposit Fixed Deposit PPF

Postal Savings Insurance

4) Do you have any Insurance on your life?

Yes No

5) What are viewpoints on life insurance?

Protection Tool Tax Savings Instrument

Saving Option Others (please specify)

6) What plan you have taken & reasons of buying them?



7) Do you know that life insurance can protect your family against the burden

of repayment of any outstanding loans?

Yes No

8) Do you know that life insurance can help you to create wealth for yourself &

your Family?

Yes No

9) Do you know that the investment insurance can contribute in country’s

economic development, which will indirectly help in your economic

development?

Yes No

10) If you don’t have any policy would you like to invest in insurance?

Yes No

Documents

Project Sandesh