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WHAT IS INSURANCE
The business of insurance is related to the protection of the ECONOMIC VALUES OF ASSETS. Every asset has a value. The asset would have been created through the efforts of the owner. The asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefits form it. It is a benefit because it meets some of his needs. The benefit may be an income or in some other form. In the case of a factory or a cow, the product generated by it is sold and income is generated. In the case of a motor car, it provides comfort and convenience in transportation. There is no direct income. Both are assets and provide benefits.
Every asset is expected to last for a certain period of time during which it will provide the benefits. After that, the benefit may not be available. There is a life-time for a machine in factory or a cow or a motor car. None of them will last for ever. The owner is aware of this and he can so manage his affairs that by the end of that period or life-time, a substitute is made available. Thus he makes sure that the benefit is not lost. However, the asset may get lost earlier. An accident or some other unfortunate event may destroy it or make it incapable of giving the benefits. An epidemic may kill the cow suddenly. In that case, the owner and those enjoying the benefits therefore, would be deprived of the benefits. The planned substitute would not have been ready. There is an adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the effects of such adverse situations. It promises to pay to the owner or beneficiary of the asset, a certain sum if the loss occurs.
HISTORY OF INSURANCE
Insurance has been known to exist in some form or other since 3000 BC. The Chinese traders, traveling treacherous river rapids would distribute their goods among several vessels, so that the loss form any one vessel being lost, would be partial and shared, and not total. The Babylonian traders would agree to pay additional sums to lenders, as the price for writing off the loans, in case of the shipment being stolen. The inhabitants of Rhodes adopted the principle of general average of general average, whereby, if goods are shipped together, the owners would bear the losses in proportion, if loss occurs, due to jettisoning during distress. {Captains of ships caught in storms, would throw away some of the cargo to reduce the weight and restore balance. Such throwing away is called jettisoning} The Greeks had started benevolent societies in the late 7 th century AD, to take care of the funeral and families of members ho died. The great fire of London in 1666,in which more than 13000 house were lost, gave a boost to insurance and the first fire insurance company, called the fire office, was started in 1680.
The origins of insurance business as in vogue at present, is traced to the Lloyds Coffee House in London. Traders, who used to gather in the Lloyds coffee house in London, agreed to share the losses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas of because of bad weather spoiling the goods or sinking the ship. In India, insurance began in 1818 with life insurance being transacted by an English company, the Oriental Life Insurance Co. in 1870 in Mumbai. This was followed by the Bharat Insurance co. in 1896 in Delhi, the Empire of India in 1897 in Mumbai, The United India in Chennai, the National, the National Indian and Hindustan Cooperative in Kolkata.
Later, were established the cooperative Assurance in Lahore, the Bombay Life (originally called the swadeshi life), the India Mercantile, the new India and the Jupiter in Mumbai and the Lakshmi in New Delhi. These were all Indian companies started as a result of the Page 2
swadeshi movement in the early 1900s. By the year 1956, when life insurance business was nationalized and the life Insurance Corporation of India (LIC) was formed on1st September 1956, there were 170 companies and 75 provident fund societies transacting life business in India. After the amendments to the relevant laws in 1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31.8.2007, sixteen new life insurers had been registered and were transacting life insurance business in India.
The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.
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Life insurance is a contract providing for payment of a sum of money to the person assured or, failing him, to the person entitled to receive the same, on the happening of certain event.
A family is generally dependent for its food, clothing and shelter on the income brought in at regular intervals by the bread winner of the family. So long as the he lives and the income is received steadily, that family is secure; but should death suddenly intervene the family may be left in a very difficult situation and sometimes, in stark poverty.
Uncertainty of death is inherent in human life. It is this uncertainty that is risk, which gives rise to the necessity for some form of protection against the financial loss arising from death; insurance substitutes this uncertainty by certainty.
This is so because unlike other saving plans, it affords full protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy; whereas under other savings schemes the total accumulated savings alone will be available. The latter will be considerably less than the sum assured, if death occurs during early years.
A savings deposit can be too easily withdrawn. Many may not be able to resist the temptation of using the balance for some less worthy purpose. On the other hand, the payment of life insurance premiums becomes a habit and comes to be viewed wit the same seriousness as the payment of interest on a mortgage. Thus insurance, in effect brings about compulsory saving.
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The life assured can name a person or persons to whom the policy moneys would be payable in the event of his death. The proceeds of a life insurance policy can be protected against.The claims of the creditors of the life assured by effecting a valid assignment of the policy. A married womens property act policy constitutes a trust in favor of the wife and children and no separate assignment is necessary. The beneficiaries are fully protected from creditors except to the extent of any interest in the policy retained by the assured.
It often happens that a provision which a husband or father has made through insurance is quickly lost through speculative or unwise investment or by unnecessary expenditure on luxuries. These contingencies can be provided against in the case of insurance. The policyholder can arrange that in the in the event of his death the beneficiary should receive, instead of a single sum (a). payment of the net claim amount by equal installments over a specified period of years, or (b).payment of the claim amount by smaller monthly installments over the selected period followed by a lump sum at the end thereof.
After an initial period, if the policy holder finds himself unable to continue payment of premiums he can surrender the policy for a cash sum. Alternatively he can tide over a temporary difficulty by taking loan on the sole security of the policy without delay. Further a life insurance policy is sometimes acceptable as security for a commercial loan.
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6. Tax relief:
For computing income tax (especially in India the Indian income tax act) follows deduction from income tax payable, a certain percentage of a portion of the taxable income of individuals which is diverted to payment of insurance premiums. When this tax relief is taken into account it will be found that the assured is n effect paying a lower premium for his insurance.
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Thus insurance encourages commercial and industrial development and there by contributes to a vigorous economy and increased national productivity. Present day organization of industry, commerce and trade depend entirely on insurance for their operation, banks and financial institutions lend money to industrial and commercial undertakings only on the basis of the collateral security of insurance. No bank or financial institution would advance loans on property unless it is insured against loss or damage by insurable perils. Insurers are closely associated with several agencies and institutions engaged in fire loss prevention, cargo loss prevention, cargo loss prevention, industrial safety and road safety. Before acceptance of a risk, insurers arrange survey and inspection of the property to be insured, by qualified engineers and other experts. The object of these surveys is not only to assess the risk for rating purposes but also to suggest and recommend to the insured, various improvements in the risk, which will attract lower rates of premium and what is more important , reduce the loss potential. For example, burglary surveyors make recommendation in regard to security measures such as better locking system, appointment of Watchman, etc. Engineering surveys play a most useful part in accident prevention as valuable technical advice is provided in respect of plant and machinery. Insurance ranks with export trade, shipping and banking services as earner of foreign exchange to the country. It helps to earn foreign exchange and represent invisible exports.
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15.11.2000
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03.01.2002 14.05.2002
Reliance Life Insurance company Ltd. Aviva Life Insurance Co. India Pvt. Ltd.
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Future general Indai life Insurance Co.Ltd IDBI Fortis Life Insurance Company Ltd.
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27.06.2008
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Chapter
The company launched national operations in December 2006. Today, company have over 8000 employees across over 12 states in the country and a national footprint of distributors trained to provide quality financial advice and insurance solutions to the large Indian customer base. Open first branch office in Hyderabad. Introduces 2 unit linked products- future confident and wealth confident
As we further expand our presence across the country with a large network of distributors, we continue to provide innovative product and service offerings to cater to specific insurance and wealth management needs of customers. Whatever your plans in life, you can be confident that Bharti AXA Life will offer the right financial solutions to help you achieve them.
Bharti-AXA perform over following cities Hyderabad Mumbai Delhi Bangalore Kolkata Chennai Ahmedabad Ludhiana Page 12
Lucknow Surat Kochi Indoor Chandigarh Vadodra Bhubneshwar Jaipur Mohali Vision To be a leader and the preferred company for financial protection and wealth management in India
professionalism
Team Spirit
Innovation
values
Pragmatism
Integrity
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Strategy To achieve a top 5 market position in India through a multi-distribution, multi-product platform To adapt AXA's best practice blueprints as a sound platform for profitable growth To leverage Bharti's local knowledge, infrastructure and customer base To deliver high levels of shareholder return To build long term value with our business partners by enhancing the proposition to their customers To be the employer of choice to attract and retain the best talent in India To be recognised as being close and qualified by our customers
Bharti Group
Bharti Airtel Ltd Bharti Airtel Ltd is one of Asia's leading telecommunications service provider. The Company is Indias largest integrated telecom company in terms of customer base and offers Mobile Services, Fixed Line services, Broadband & IPTV, DTH, Long Distance and Enterprise services. Airtel also offers mobile services in Sri Lanka on a state-of-the art 3.5 G network.
Bharti TeleTech Ltd Bharti Teletech is Indias leading telecom & allied products company. It is one of the largest manufacturers of landline telephones in the world. With a strong distribution network across the country, the company is also the primary distributor of IT and Telecom products from interntional brands such as Motorola, Blackberry, Thomson, Polycom, Transcend, and Logitech.
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Telecom Seychelles Ltd A subsidiary of Bharti, Telecom Seychelles Ltd provides comprehensive telecom services including 3G mobile services in Seychelles, under the Airtel brand.
Comviva Technologies Ltd Comviva is the leading provider of integrated VAS solutions for mobile operators in emerging markets. Among the top 3 global providers of integrated VAS solutions in rapidly growing markets, Comviva has deployed solutions for over 100 mobile operator customers in over 80 countries worldwide.
FieldFresh Foods Pvt. Ltd. FieldFresh Foods Pvt. Ltd., is a venture between Bharti Enterprises and Del Monte Pacific Limited, to offer fresh and processed fruits and vegetables in the domestic as well as international markets, including Europe and the Middle East.
Bharti Retail Pvt Ltd Bharti Retail is a wholly owned subsidiary of Bharti Enterprises. Bharti Retail operates a chain of multiple format stores that offer consumers affordable prices, great quality and wider choice. Page 15
The companys neighbourhood format stores operate under the "Easyday" brand and the compact hypermarket format under the Easyday market brand.
Bharti AXA General Insurance Company Bharti AXA General Insurance is a joint venture between Bharti Enterprises and AXA, world leader in financial protection and wealth management. The company was incorporated in July 2007 and offers a full suite of general insurance solutions to meet the needs of businesses and individuals alike.
Bharti AXA Life Insurance Company Bharti AXA Life Insurance Company Ltd is a joint venture between Bharti Enterprises and AXA, world leader in financial protection and wealth management. The company offers a range of life insurance and wealth management products with an endeavour to help customers lead a confident life.
Bharti AXA Investment Managers Pvt. Ltd. Bharti AXA Investment Managers Pvt. Ltd., an asset management company in India, is a joint venture between Bharti Enterprises, AXA Investment Managers (AXA IM) and AXA Asia Pacific Holdings (AXA APH).
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Centum Learning Limited Centum Learning Limited provides end-to-end learning and skill-building solutions to several large corporates. It provides solutions that impact business performance through enhanced employee productivity, customer profitability and effective talent transformation.
Jersey Airtel Ltd Jersey Airtel, a subsidiary of Bharti, offers world-class mobile services in Jersey (Channel Islands) over its full 2G, 3G and HSDPA enhanced network. The Company brings marketleading products and services to its customers under Airtel-Vodafone brand.
Bharti Foundation Bharti Foundation was set up in 2000, with the vision, To help underprivileged children and young people of our country realize their potential. It aims to create and support programs that bring about sustainable changes through education and the use of technology and information.
Bharti Realty
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Bharti Realty Limited is a young, vibrant and dynamic realty company with expanding interests in commercial, retail and residential real estate. Bharti Realty aims to be amongst the most admired real estate players in India and aspires to attain highest degree of customer trust through superior product design and maintaining an uncompromising stand towards environmental responsibility, ethics and safety
Bharti Infratel Bharti Infratel, a wholly owned subsidiary of Bharti Airtel, provides passive infrastructure services on a non-discriminatory basis to all telecom operators in India. Bharti Infratel also holds approximately 42% stake in Indus Towers, a joint venture between Bharti, Vodafone and Idea to offer passive infrastructure services.
Bharti Enterprises
Bharti Airtel Ltd: Bharti Airtel Ltd is Indias leading provider of telecommunications service. The company has 4 distinct Business divisions- mobile and telephone services, broadband services, long distance services and enterprise services, Bharti Teletech Ltd Bharti Teletech Ltd manufactures and exports world-class telecom equipment under the brand Beetel. Telecom Seychelles Ltd Telecom Seychelles ltd provides telecom services in Seychelles, under the brand Airtel. Bharti AXA Life Insurance Page 18
Bharti AXA Life Insurance is a joint venture between Bharti, one of Indias leading business groups with interests in telecom, agri business and retail, and AXA, world leader in financial protection and wealth management. The joint venture company has a 74% stake from Bharti and 26%stake of AXA. Bharti Telesoft Ltd
Bharti Telesoft Ltd delivers best-in-class, Revenue-critical Vas products and service to telecom carriers, Tele Tech Service Ltd
Tele Tech Service (India) Ltd is Joint venture with Tele Tech Inc., U.S.A. It offers a range of Customer Management Services. Field Fresh Foods Pvt Ltd Field Fresh Foods Pvt Ltd is Bhartis Venture with EL Rothschild Group owned ELRO holding India Ltd., to export fresh Agricltural products exclusively to markets in Europe and USA. AXA AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Western Europe, North America and the Asia/Pacific area. AXA had Euro 1,315 billion in assets under management as of December 31, 2006. For full year 2006, IFRS revenues amounted to Euro 79 billion, IFRS underlying earnings amounted to Euro 4,010 million and IFRS adjusted earnings to Euro 5,140 million. The AXA ordinary share is listed and trades under the symbol AXA on the Paris Stock Exchange. The AXA American Depository Share is also listed on the NYSE under the ticker symbol AXA. Page 19
AXA Asia Pacific Holdings AXA Asia Pacific Holdings Ltd (AXA APH) is listed on the Australian stock exchange and is 52.3% owned by AXA SA. AXA APH is responsible for AXA SAs life insurance and wealth management businesses in the Asia-Pacific region. It has operations in Australia, New Zealand, Hong Kong, Singapore, Indonesia, Philippines, Thailand, China, India and Malaysia. AXA APH had A$106.4 billion in total funds under management and administration at 30 June 2007 and reported a profit after tax before non-recurring items of A$374.0 million for the six months ended 30 June 2007.
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70 years minus policy benefit period chosen. E.G: for policy benefit period of 17 years, the maximum age at entry is 53 years.
70 years Rs.15,000 p.a. for annual & semi-annual modes Rs18,000 p.a for monthly mode
Annual, semi-annual and monthly 7 years,10 years,15 years, 17 years and 20 years Rs. 2,500
Spot suraksha
Introduction Spot Suraksha is a unit liked insurance product, which offers you an instant insurance protection and benefit of wealth creation in the long-term.
Main Advantages of Spot Suraksha Understand the product:(Read and understand the product brochure) Answering the simple health related questions, Sign up the simple application form, submit photograph, proofs for identity, address and age. A cover note is issued to policy holder and insurance cover starts instantly. 100% allocation of premium- Full allocation of premium to the Investment Fund, according to policy holder choice from 2nd year onwards. A guaranteed special addition equal to 130% of annualized premium in the first policy year is added in the policy fund at maturity or death, which is earli Page 21
PARAMETER Minimum age at entry Maximum age at entry Maximum age at maturity Minimum premium Premium Modes Policy term Minimum top up premium
ELIGIBILITY 5 years 55 years 70 years Rs. 12,000 p.a Annual, Semi-annual and monthly 15 years Rs. 5,000
Let you live your retired life king-size This plan is made for old persons and to make them self independent and live a life of dignity and self-respect. Today you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. The bharti AXA Life Dream life pension gives you: A post retirement income for life. Policy holder choose the age at which he/she would like to retire (vesting age), which determines your premium paying term. Alternatively you can opt for single premium payment.
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,Quarterly and monthly Minimum premium Annual Regular Premium: Rs.12, 000p.a. Minimum policy term Minimum top-up premium 10 years Rs.2, 500 and no maximum limit on topup premium and top up allowed only after first policy year.
MERIT PLUS
This is a regular premium unit-linked insurance policy which offers you the twin benefits of protection against financial loss in the unfortunate event of the death and helping you to create wealth systematically over the long-term. Hence this product is suitable for your long-term objective like retirement planning, childrens future and giving a total protection to you and your family.
PARAMETER
ELIGIBILITY
0 year 60 years (For death benefit option A) 55 years (For death benefit option b)
Maturity age
80 years (for death benefit option A) 75 years (for death benefit option B) Page 23
80 year less age at entry (for death benefit option A) 75 years less age at entry (For death benefit option B)
Benefits of Bharti AXA Life merit plus In merit plus the policy holder must have to choice one option out of the two. 1.Sum assured(less all partial withdrawals made form the basic policy fund during the 12 months prior to the date of death of life assured) or the policy Fund Value as on the date of intimation of death, which is higher, will be paid.
2.The sum of sum assured and the policy fund value as on the date of intimation of death will be paid.
Future confident
Future confident is a suitable product for you, if your objective is long-term targeted wealth creation over 15-20 year, either for your own retirement or for your childrens future, while at the same time providing your family enhance financial protection.
PARAMETER
ELIGIBILITY
70 years 70 year less age at entry Yearly, Monthly Half-Yearly, quarterly and
Minimum premium
Rs.10,000 for yearly, 5,000 for half-yearly 2,500 for quarterly and Rs.834 for monthly premium
500
Secure Confidence
Provide complete financial protection to your family, even when you are not there. Secure confident is suitable to you if your objective is to protect your family against any financial loss caused due to unfortunate death, disability due to an accident or critical illnesses which may deprive them of a secured future. Parameter Minimum age at entry Maximum age at entry Minimum sum assured Minimum premium Eligibility 18 years 55 years Rs.5 ,00,000 RS.1,500 for yearly,Rs.780 for half-yearly, Rs.405 for quarterly and Rs.135 for monthly premium Policy benefit period Maximum age at maturity. Premium paying term On death 5,10,15,20 and 25 years 60 years Equal to the policy benefit period. On survival
A sum assured is paid to the policy holder The policy shall be terminated and no or nominee and the policy shall be monies shall be payable to the policy Page 25
terminated.
holder.
Strategic differentiators
Strong partner Bharti - provides access to customer base of more than 20 million Multi channel execution capability Current Asia product range which is a strong match to products sold to the mass and mass affluent Global scale providing cost effective and speedy re-use of systems, products and business capability Strong AXA and Bharti brands which can be leveraged to attract and retain a high quality management team.
Weakness Late entrant in the insurance sector Thin distribution network all over the nation Very less number of product offering in comparison to its competitors Lack of confidence among the customers as parent company does not have a financial background. Opportunities Strong growth of unit linked market at the mass affluent end. Page 26
Potentially with 20% insurance cross sale only to new telecom customers, this network can yield 48 lac policies per year with sum assured of nearly Rs 58000 crores.
Threats Many more companies are lining up to enter into Indian Insurance Industry. Consumers preference is still more towards public sector insurance companies.
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Vision To be a leader and the preferred company for financial protection and wealth management in India
Strategy
To achieve a top 5 market position in India through a multi-distribution, multi-product platform. To adapt AXA's best practice blueprints as a sound platform for profitable growth. To leverage Bharti's local knowledge, infrastructure and customer base. To deliver high levels of shareholder return. To build long term value with our business partners by enhancing the
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proposition to their customers. To be the employer of choice to attract and retain the best talent in India. To be recognized as being close and qualified by our customers
To understand the behavior dynamics and need state. To develop value-based offerings and services to re design their own product. To determine the strategies for customer retention and expansion.
RESEARCH METHODOLOGY
Research methodology is the way to systematically solve the problem. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. Thus, When we talk about research methodology we not only talk of the research methods but also consider the logic behind the methods we used in the context of our research study and explain why we are using a particular method or technique and why we are not using others so that research results are capable of being evaluated either by the researcher himself or by others.
Methodology: An exploratory research was carried out to understand the behavior dynamics and need states and also understands the messages and experience the consumer is exposed to both from within the product/service category as well as across categories. Both qualitative and quantitative techniques are applicable although exploration relies more heavily qualitative techniques. Correlation is used to find out the relation between various variables.
As the research is based on study to exhibit relation between life cycle stage of an individual and the type of insurance policy required at different stages, a stratified sampling technique was adopted and a sample size of 80 individuals were taken. The survey has been conducted within the geographic area of Meerut. The time period for which survey has been undertaken is June- July 2009.
Sampling techniques: A stratified sampling technique was adopted because of the nature of the study and for higher statistical efficiency requirement to come to an analysis. The sample was carefully drafted. A lot of care was taken and 20 samples from each age group were taken. There are total 80 Questionnaire. The age groups discussed in the study are 21-30, 31-40, 41-50 and 51-60. The sample was designed in the above stated manner to make the analysis easier. Open ended and close ended questions are used in the questionnaire.
DATA COLLECTION
Primary data: A questionnaire was drafted which included sample rating scales like simple category scale, multiple- choice single-response scale, multiple- choice multiple- response scale , multiple- rating list scale, and constant sum scale, and open ended questions.
The questionnaire contains 12 questions which helps us to analyze the dependence of type of insurance policy required on the life cycle stage of the individual.
It will also clearly show the customers perception towards insurance compared with the other investment options and financial instruments, and as to how we can make it better.
Secondary data:
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The secondary data was collected through the web sites of different organizations, news papers. The secondary data is collected through the Websites related to insurance sectors, Journals & Books on Research Methodology.
CHAPTER 4 SCOPE OF STUDY Geographic area: This research has been conducted in Meerut region. Duration: It took two months to complete. Characteristics of respondent: People between the age of 21 to 61, both male and female.
LIMITATIONS Project was undertaken in the Meerut region only .So it might not be a true Representation of the views of the insured of other places. The project is based on survey of population related to Bharti Axa only. The time factor; I have limited time to conduct our survey and to meet the people according to the sample size. All the responses taken are personal opinions & perception of the respondents that are subjective. The area covered was too large in a time of 8 weeks.
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CHAPTER 5 DATA ANALYSIS & INTERPRETATION Table-1 Why would you take a life insurance policy
18 16 14 12 10 8 6 4 2 0 Cover Tax benefit Investment future cash instrument needs Angle of mercy As a hedge against old
21-30
31-40 41-50 51-60
21-30
31-40
41-50
51-60
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Cover future cash needs Tax benefit Investment instrument Angle of mercy As a hedge against old 2 5 14 17 3 10 10 15 6 15 3 7 12 8 17 12 6 14 2 7
Table-2
18 16 14 12 10 8 6 4 2 0 21-30 31-40 41-50 51-60 asset building needs old age need children need family need
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21-30 asset needs old age need children need family need 2 8 7 building 4
31-40 10
41-50 13
51-60 7
5 15 16
12 7 15
17 3 15
Table-3
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12
31-40 7
41-50 9
51-60 7
10 T
a bl
e-4
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5 and above
21-30
0 Policies
10
12
14
31-40 6 5 3 3
41-50 2 8 7 5
51-60 0 2 9 10
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Table-5
60 50 40 30 20 10 0 1 2 3 4 5
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TABLE- 6
Personal referance
10
15
20
Flexibility Diversification Security Return investment Requirement funds Transparency Liquidity Control financial future
32 53 0 on 16
48 34 0 22
20 13 26 28
0 0 43 19
0 0 31 15
of 21
27
33
13
7 42 over 0
18 32 8
21 13 23
35 7 37
14 4 32 Page 38
In table- 5, Correlation is applied to find out the level of correlation between different variables. The various variables are as follows: a) Flexibility b) Diversification c) Security d) Return on investment e) Requirements of funds f) Transparency g) Liquidity h) Control over financial future Correlations are shown in the Graph below:-
1 0.5 0
31-40 10 10 0
41-50 7 10 0
51-60
-0.5
15
-1
5 0
0 Page 39
Highly Correlated variables are: Flexibility & Diversification Flexibility & Return on investment Security & Transparency Return on investment & Requirement of funds Less Correlated variables are: Flexibility & security Diversification & Security Transparency & liquidity Liquidity & Control over financial future Control over financial future & Diversification
On the basis of correlation between various variables, interpretation can be done that: 1) The highly correlated variables are dependent on each other. They have a direct effect on each other. If one variable will increase another variable will also automatically increase. 2) The less correlated variables have an inverse effect on each other. If one variable will increase then another will automatically decrease.
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On age group 21-30 After analyzing the findings derived from the questionnaire we come across to some interesting facts. 60% of the respondents from the age group 21-30 do not hold any life insurance policy at all and also none of them hold more than 5 policies. (Table-4) This age group is more attracted towards share market with 55% and mutual funds with 35%. (Table-3) The various needs at this age group are very low. (Table-2)
The primary reason being maximum percentage of this age group are not married and do not have children so do not have any kind of a responsibility towards family. Secondly most of them are still parasites and dependent on their parents for living. A small extent is working but do not have sufficient fund to take a life insurance policy. They have high risk takers and want to earn quick money so are more interested in the share market. They have a notion that they will live long and no unavoidable circumstances can hamper their life.
On age group 31-40 Again moving towards the age group 31-40 we can observe that 40% of the respondents hold 3-5 policies and 25% have 0-3 policies and 10% have more than 5 policies. (Table-4) From table-3 we can analyze that the number of people favoring insurance over other investment instruments have increased.
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Table-2 exhibits that the various needs have also increased to a great extent. The major needs in this age group have been children need and family need. Asset building need has also shown a tremendous increase.
There has been a growth of about 100% in each need in this age group.
The reasons for these shifts may be: The mass populations in this age group are married and even have a child or two. They now being the bread earners for their family have a sense of responsibility towards them. People at this stage generally start earning a good living and can afford to invest in policies Since they are earning well so they can invest in policies to save tax to some extent.
On age group 41-50 Now in age group 41-50, 45% have over 5 policies and 35% have 3-5 policies. (Table-4) Table-3 clearly shows that there has been a shift of interest from other financial instrument to insurance. About 45% believe investing in insurance. There has been a 140% increase in the old age policy need as compared to age group 3140. ( table-2) About 50% fall in the children need policies can be observed.(Table-2)
This may be for the following reason: The offsprings are already grown up and investment for their benefit has already been made in the previous stage. They start thinking about their old age and after retirement financial solution.
On age group 51-60 In the age group 51-60, 50% of them hold more than 5 policies. (Table-4) The primary needs being old age and family need and critical illness. Children need has fallen by 80%.(table-2) The asset building need has fallen by 50% from the previous age group Page 42
The various reasons may be: He wants to secure his financial future when he retires from his job or takes leave from his business so that he is self dependent. Their children are already grown up and self dependent with their own family. They want to secure themselves towards any kind of critical illness. The risk taking ability decreases and want safe and secure returns
SUMMARY
The age group 41-50 takes most of the insurance policies Requirement of Old age need policies increase in number with the increasing age. The age groups 31-40 and 41-50 are most interested in asset building needs and family needs. The age group 31-40 is most interested in children need and family need and maximum in covering future cash needs. The age groups 31-40 and 41-50 also take insurance to take the benefit of tax relaxation. Comparing the amount of investment different age groups would like to make in different financial instruments i.e. mutual funds insurance policy and shares, given 100000/-. The mean value of all the respondents in different age group were taken
47% of the respondents like to take decision on various financial instruments by consulting a financial advisor.
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37% of the respondents feel personal reference most reliable source to take an investment decision A very large proportion of the respondents perceive insurance to be less flexible compared to mutual funds and shares. They also feel it gives the least scope to diversify. They are also not satisfied with the liquidity aspect of insurance. Insurance scores high on attributes like security and control over financial future and scores average on attributes like requirement of fund, rate of return and transparency.
CHAPTER 7 SUGGESTIONS
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To retain customer, company should design such insurance policies that contain the composition of the features having high correlation. Due to this, customer will attract more towards insurance rather than other investment. A few of the innovations should be based on specific needs at certain life stages. Consumers are often migrated to these newer policies. The Critical Illness Plan should be introduced as a response to a stated need of consumers. The differentiator here is clearly different in the number of illnesses it includes Unlike other categories, customer retention in the insurance business has not yet been under serious consideration. Insurance as an industry till date has adopted a strategy of one time customer, and is the same with Bharti Axa, but the concept should be revised and life time customer Strategy should be adopted for long term sustainability and growth of the company. The company has to begin a huge database monitoring exercise with annual statements / mailers to the customers and updating their databases. This can also be used for cross selling of different policies at different life stage of the customer
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CHAPTER 8 APPENDIX
BIBLIOGRAPHY Times of India Skees, J., Hazell, P., Miranda, M.. 1999. New Approaches to Crop Yield Insurance in Developing Countries. Business Research Methods, Cooper & Schindler S. Balchandran, IRDA, IC-33 LIFE INSURANCE Financial Express Business Today
WEBSITE REFERENCE http://www.irdaindia.org/ http://www.licindia.com/ http://www.bharti-axalife.com/ http://www.lifeinscouncil.org/ www.iinvestor.com www.google.com www.insure.com www.financialexpress.com
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Address: _______________________________ Age: Gender: Income: 1.5-3 21-30 Male 3-5 5-10 31-40 41-50 Female 10 above 51-60
2) If no, why have you not taken any life insurance policy? Not aware I dont require it Have other investment options Lack of fund Planning in near future
3) Now being aware of life insurance why would you take a life insurance policy? (Can give multiple choices) Page 47
To cover Future cash needs Tax benefit As an investment instrument As an angel of mercy As a hedge against old age
4) If yes how many life insurance policies do you hold at present? ___________
5) If yes what was your main concern for taking a life insurance policy? Investment Tax benefit Purely insurance
6) What were your needs when you had taken life insurance policies? (Can tick multiple choices) Family need Children need Old age need Asset building need
Assuming that life insurance policy is purely an investment option please answer the following questions
7) If you hold a policy please rate the benefits in insurance policy compared to investing in shares market and mutual funds on scale of 1-5 (where 1 being the least and 5 being the most?)
1 1 1 1
2 2 2 2
3 3 3 3
4 4 4 4
5 5 5 5 Page 48
1 1 1 1
2 2 2 2
3 3 3 3
4 4 4 4
5 5 5 5
8) Given a certain amt of money where would you invest, assuming that insurance is purely an investment option? Life insurance Mutual funds Share market
9) Suppose you have 100000/- of rupees in spare, how much would you invest in the investment options state below? Life insurance Mutual funds Share market __________ __________ __________
10) What would be the reason for above decision? (30 Words Max)
11) Which medium do you find more suitable to gain knowledge about different financial instruments? Personal reference Financial advisors Telephonic Advertisement (T.V, newspaper)
12) Please give a few suggestions as to how we can make life insurance a better investment option compared to mutual funds and share market
BIBLIOGRAPHY S. Balachandran, (2009), IC-33 Life Insurance, Shri S.J Gidwani Publishers, Mumbai Page 49
www.irdaindia.org
www.bhart-axalife.com
www.wikipedia.org
www.ibef.org
The opportunity About 2/3 of the Indian population is insurable High % of population is uninsured or underinsurance. We Indian are natural savers Indians save the maximum in the world. Those insured are underinsured.
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