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A study on the customer perception towards

the ULIP offered by
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Many may not be aware that the life insurance industry of India is as old as it is in
any other part of the world. The first Indian life insurance company was the
Oriental Life Insurance Company, which was started in India in 1818 at Kolkata.

A number of players (over 250 in life and about 100 in non-life) mainly with
regional focus flourished all across the country. However the government of India,
concerned by the unethical standard adopted by some player against the
consumers, nationalized the industry in two phases in 1956(life) and in 1972(non-
life).The insurance business of the country was then brought under two public
sector companies, Life Insurance Corporation of India (LIC) and General insurance
Corporation of India (GIC).

In line with the economic reforms that were ushered in India in early nineties, the
Government set up a committee on reforms (popularly called the Malhotra
Committee) in April 1993 to suggest reforms in the insurance sector. The
Committee recommended throwing open the sector to private player to usher in
competition and bring more choice of the consumers. The objective of the
insurance to penetration of insurance as a percentage of GDP, which remains low
in India even compared to Insurance Regulatory and Development Authority
(IRDA) Bill in 1999. IRDA was set up as an independent regulatory, which has put
in place regulations in line with global norms. So far it is not made public.
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Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory
body in April 2000 has fastidiously stuck to its schedule of framing regulations and
registering the private sector insurance companies

The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the insurance companies was the launch of the
IRDA¶s online services for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured that
the insurance companies would have a trained workforce of insurance agents in
place to sell their products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a
framework of globally compatible regulations. In the private sector 12 life
insurance and 6 general insurance companies have been registered.


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Assets are insured, because they are likely to be destroyed, through accidental
occurrences. Such possible occurrences are called perils. Fire, flood, breakdown,
lightening, earthquake, etc. are perils. If such perils can cause damage to the assets,
we say that the asset is exposed to that risk. Perils are the events. Risks are the
consequential losses or damages.

The risk to an owner of a building, because of the peril of earthquake, may be a

few crores of rupees, depending on the cost of the building and the contents in it.

Insurance does not protect the asset. It does not prevent its loss due to the peril.
The peril cannot be avoided through insurance. The peril can sometimes be
avoided, through better safety and damage control management. Insurance only
tries to reduce the impact of risk on the owner of the asset and those who depend
on that asset. It only compensates the losses- and that too, not fully. Only economic
consequences can be insured. If the loss is not financial, insurance may not be
possible. Examples of non- economic losses are love and affection of parents,
leadership of managers, sentimental attachments to family heirlooms, innovative
and creative abilities, etc.



  
1.c Life insurance as ³Investment´

´c Insurance is an attractive option for investment. Which most

people recognize the risk hedging and tax saving potential of
insurance, many are not aware of its advantages as an investment
option as well. Insurance products yield more compared to regular
investment options.
 ´c Àou cannot compare an insurance product with other investment
schemes for the simple reason that it offers financial protection
from risks, something that is missing in non-insurance products. In
fact, the premium you pay for an insurance policy is an investment
against risk. Thus before comparing with other schemes, you must
accept that a part of the total amount invested in life insurance goes
towards providing for the risk cover, while the rest is used for
savings.

2.c Life insurance as ³Risk cover´

pc First and foremost, insurance is about risk cover and protection ±

financial protection, to be more precise ± to help outlast life¶s
unpredictable losses. By buying life insurance, you buy peace of
mind and are prepared to face any financial demand that would hit
the family in case of an untimely demise.
pc To provide such protection, insurance firms collect contributions
from many people who face the same risk. A loss claim is paid out
of the total premium collected by the insurance companies, who
act as trustees to the monies.
pc Insurance also provides a safeguard in the case of accidents or a
drop in income after retirement.

3. Life insurance as ³Tax planning´

pc Insurance serves as an excellent tax saving mechanism too. The

Government of India has offered tax incentives to life insurance
products in order to facilitate the flow of funds into productive assets.
Under section 80(c) of Income Tax Act 1961,an individual is entitled to
a rebate of Rs.1Lakh on the annual premium payable on his/her life
and life of his/her children or adult children. The rebate is deductible
from tax payable by the individual or a Hindu Undivided Family
(HUF), the rebate is deductible from the tax liability of an individual or
a Hindu Undivided Family.

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Life insurance has no competition from any other business. Many people think that
life insurance is an investment or a means of saving. This is not a correct view.
When a person saves, the amount of funds available at any time is equal to the
amount of money set aside in the past, plus interest. If the money is invested in
buying shares and stocks, there is the risk of the money being lost in fluctuation of
the stock market even if there is no loss, the available money at any time is the
amount invested plus appreciation. In life insurance, however the fund available is
not the total of the savings already made (premium paid),but the amount one
wished to have at the end of the saving period (which is the next 20 or 30
years).the final fund is secure from the very beginning. One has to pay for it only
as long as one life or for a lesser period if so chosen.

There is no other scheme which provides this kind of benefit therefore life
insurance has no substitute. Even so, a comparison with other form of saving will
show that life insurance has the following advantages:-

pc In the event of death, the settlement is easy. The heirs can collect the
moneys quicker, because of the facility of nomination and assignment.
pc The facility of nomination is now available for some bank accounts.
pc There is a certain amount of compulsion to go through the plan of savings.
pc In other forms, if one changes the original plan of savings, there is no loss.
pc Creditor can not claim life insurances moneys. They can be protected against
attachment by courts.
pc There are text benefits, both in income tax and capital gains. Marketability
and liquidity are better. A life insurance policy is property and can be
transferred or mortgaged. Loan can be raised against the policy.

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The following tenets help agent to believe in benefit of life insurance. Such faith
will enhance there determination to sell and their perseverance.

pc Life insurance is not only the best possible way for family protection. There
is no other way.
pc Insurance is the only way to safeguard against the unpredictable risks of the
future. It is unavoidable.
 pc The value of human life is far greater than the value of property only
insurance can preserve it.
pc Life insurance is not surpassed by many other savings or investment
instruments, in terms of security, marketability, stability of value or
liquidity.
pc Insurance, including life insurance, is essential for the conservation of many
businesses, just as it is in the preservation of homes.
pc Life insurance enhances the existing standards of living.
pc Life insurances help people live financially solvent lives.
pc Life insurance perpetuates life, liberty and the pursuit of happiness.

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A plan which gives complete clarity about the various charges deducted and
why it¶s being deducted and so how your fund will grow over time.

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to

mutual funds in terms of their structure and functioning. As is the case with
mutual funds, investors in ULIPs is allotted units by the insurance company
and a net asset value (NAV) is declared for the same on a daily basis.

Similarly ULIP investors have the option of investing across various schemes
similar to the ones found in the mutual funds domain, i.e. diversified equity
funds, balanced funds and debt funds to name a few. Generally speaking,
ULIPs can be termed as mutual fund schemes with an insurance component.

However it should not be construed that barring the insurance element there is
nothing differentiating mutual funds from ULIPs.

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 you 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 you.

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.
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It is critical that you understand how your money gets invested once you
purchase a ULIP:

When you decide the amount of premium to be paid and the amount of life
cover you want from the ULIP, the insurer deducts some portion of the ULIP
premium upfront. This portion is known as the Premium Allocation charge,
and varies from product to product. The rest of the premium is invested in the
fund or mixture of funds chosen by you. Mortality charges and ULIP
administration charges are thereafter deducted on a periodic (mostly
monthly) basis by cancellation of units, whereas the ULIP fund management
charges are adjusted from NAV on a daily basis.

Since the fund of your choice has an underlying investment ± either in equity
or debt or a combination of the two ± your fund value will reflect the
performance of the underlying asset classes. At the time of maturity of your
plan, you are entitled to receive the fund value as at the time of maturity. The
pie-chart below illustrates the split of your ULIP premium:

One of the big advantages that a ULIP offers is that whatever be your
specific financial objective, chances are that there is a ULIP which is just
right for you. The figure below gives a general guide to the different goals
that people have at various age-groups and thus, various life-stages.

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³Max New Àork Life wants people to view insurance as a financial protection and
wealth creation instrument and not just a tax-saving tool.´

Max New Àork Life Insurance Company Ltd. is a joint venture between New Àork
Life, a Fortune 100 company and Max India Limited, one of India's leading multi-
business corporations. The company has positioned itself on the quality platform.
In line with its vision to be the most admired life insurance company in India, it
has developed a strong corporate governance model based on the core values of
excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to
establish itself as a trusted life insurance specialist through a quality approach to
business.

New Àork Life is a Fortune 100 company that has over 160 years of experience in
the life insurance business. Max India Limited is a multi-business corporate
dealing in Clinical Research, IT and Telecom Services, and Specialty Plastic
Products businesses.

Max New Àork Life Insurance started its operations in India in 2000. It is the first
life insurance company in India to be awarded the IS0 9001:2000 certification.
Max New Àork offers customized products tailored to suit individual's needs. With
its various Products and Riders, there are more than 400 product combinations to
choose from. Today, Max New Àork Life Insurance has a network of 57 offices
spread over 37 cities all over India.

In line with its values of financial responsibility, Max New Àork Life has adopted
prudent financial practices to ensure safety of policyholder's funds. The Company's
paid up capital is Rs. 657 crore, which is more than the norm laid down by IRDA.

Max New Àork Life has identified individual agents as its primary channel of
distribution. The Company places a lot of emphasis on its selection process, which
comprises four stages - screening, psychometric test, career seminar and final
interview. The agent advisors are trained in-house to ensure optimal control on
quality of recruitment.

Max New Àork Life invests significantly in its recruitment program and each agent
is trained for 152 hours as opposed to the mandatory 100 hours stipulated by the
IRDA before beginning to sell in the marketplace. Recruitment is a continuous
process for agents at Max New Àork Life and ensures development of skills and
knowledge through a structured program spread over 500 hours in two years. This
focus on continuous quality recruitment has resulted in the company having
amongst the highest agent pass rate in IRDA examinations and the agents have the
highest productivity among private life insurers.
It has established a wide agency distribution network with 172 offices and
representatives across 120 cities in India. The company has established additional
channel with 22 banc assurance relationships, corporate tie-ups and a strong Direct
Sales Team. Through its wide network of highly competent life insurance agent
advisors, flexible product solutions and strong customer focus, Max New Àork life
is creating a partnership for life with its customers in India.

Max New Àork Life, one of India¶s leading life insurance companies, expanded its
presence in the southern region by opening its first general office in the city of
Mysore. Max New Àork Life now has established a countrywide network of 172
offices and representatives across 120 cities in India.

Max New Àork Life, which has till date sold over 1.53 million policies and
recorded a sum assured of over Rs. 46,000 crore, has positioned itself on the
quality platform. The company has developed a strong corporate governance
model based on defined core values of caring, knowledge, excellence and honesty.
Its strategy is to establish itself as a trusted life insurance specialist on the bedrock
of quality of advice. The company has over 25,300 agent advisors, who are widely
considered the best in the business.

Max New Àork Life aspires to be the "life insurance brand of first choice" amongst
Indian consumers. To achieve this the company will draw on New Àork Life's
demonstrated competence in developing and managing a superior personal sales
network. For the last 46 years consecutively, the largest number of agents
qualifying for membership to the Million Dollar Round Table (MDRT) have been
from New Àork Life. The MDRT is the industry's most prestigious organization
comprising the world's most successful insurance agents. Max New Àork Life, a
merit oriented and equal opportunities employer, is looking for a few good men
and women who will spearhead the effort to realize this vision.

³Max New Àork Life wants people to view insurance as a financial protection and
wealth creation instrument and not just a tax-saving tool. Since the launch of our
operations, our focus has always been on providing risk protection and long-term
wealth creation solutions to our customers. With a diverse product portfolio to
meet customer requirements, it is evident that we are setting benchmarks in the
marketplace and are well on course of realizing our vision to become India¶s most
admired Life Insurance Company.´

³An ever expanding presence of Max New Àork Life offices across India
reinforces our commitment to serving the nation. We are extremely pleased with
our progress in the region and feel that opening an office in Mysore would help us
educate people about the true potential and benefits of life insurance. As life
insurance specialists, Max New Àork Life will continue to help consumers make
the right choices to meet their financial goals, both for the short and long-term,
through sound quality advice offered by our agent advisors and a right mix of
product offerings.´ he added.

Max New Àork Life has been instrumental in changing the paradigm of life
insurance in India. It is the first life insurance company in India to introduce cause
related marketing.

Children are at the very heart of Max New Àork Life's strategy. SOS Children's
Villages of India is internationally recognized for its work in giving
underprivileged children a wholesome life. The mission of SOS is "to help
orphaned and abandoned children, by providing them with a family, a permanent
home, education and strong foundation for an independent life." It's mission ties in
with Max New Àork Life's philosophy of helping people secure the future of their
near and dear ones.
!)

Vision statement is ³M .$(.

#(!,!-($%!&!!./

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pc Become one of the top quartile life insurance companies in India

pc Be a national player
pc Be the brand of first choice
pc Be the employer of choice
pc Become principal of choice for agents

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"In every aspect of work ranging from the in-house training institute to the detailed
Personal Insurance Plan. Max New Àork Life is focused on achieving the highest
standards of quality in every aspect of their business".

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"Is the heart of the Life Insurance business. Max New Àork believes that above all,
Life Insurance is based on trust. Transparency, Dependability and Integrity will
form the cornerstones of the Max New Àork Life experience."

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"Is what makes experts. Max New Àork Life is focused on the Life Insurance
business. Perfectly combining global expertise with local knowledge, Max New
Àork Life is the Indian Life Insurance specialist."

!"

"For the customer. Max New Àork Life is redefining the Life Insurance
paradigm to focus on the needs of the customers. The Max New Àork
service process is responsive, personalized, humane and empathetic."

,',()

Our "in house culture recipe" has some of the finest ingredients going into its
making. Some of the more prominent aspects of our culture are stated below:

pc Customer comes first

pc Do it right the first time
pc Bias for result oriented action
pc Financial strength and discipline
pc Clarity of purpose
pc International quality standards
pc Inclusive Meritocracy
pc Learning opportunities
pc Fun at work
pc Commitment to published value system
.,-#M*(+ 
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Max New Àork Life Insurance offers an inangible product that is an insurance
cover. Max New Àork Life offers a suite of flexible products. It now has 43 life
insurance products and 8 riders that can be customized to over 800 combinations
enabling customers to choose the policy that best fits their need. The products that
are offered by Max New Àork Life are broadly divided into:

,&%(#'#(!,!-(%'-()1

§c !.+$(!%'-()This type of policy covers risk for a specified period,

and at the end of the maturity sum assured is paid back to policyholder with
the bonuses during the term of the policy.
§c M!(& 2-  %'-()  This type of policy is for periodic payments of
partial survival benefits during the term of the policy as long as the policy
holder is alive.
§c ,% !,!-()  This type of insurance offers life insurance protection
under group policies to various groups such as employers-employees,
professionals, co-operatives etc it also provides insurance coverage for
people in certain approved occupations at the lowest possible premium cost.
§c ($ '#( !,!-( %'-() This type of insurance covers risk only
during the selected term period. If the policy holder survives the term, risk
cover comes to an end. These types of policies are for those people who are
unable to pay larger premium required for endowment and whole life
policies. No surrender, loan or paid up values are in such policies.
§c '( '#( !,!-( %'-() This type of policy runs as long as the
policyholder is alive and is covered for the entire life of the policyholder. In
 this policy the insured amount and the bonus is payable only to nominee on
the death of policy holder.
§c Õ! '#( !,!-( %'-() These policies are similar to endowment
policies in maturity benefits and risk cover, but joint life policies cover two
lives simultaneously such as married couples. Sum assured is payable on the
first death and again on the death of survival during the term of the policy.
§c (!! %'!) a pension plan or annuity is an investment over a certain
number of years but does not provide any life insurance cover. It offers a
guaranteed income either for a life or certain period.
§c ! '! (. !,!-( %'!) ULIP is a kind of insurance plan which
provides life cover as well as return on premium paid over a certain period
of time. The investment is denoted as units and represented by the value
called as net asset value (NAV).



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Max New Àork Life Shiksha Plus - ULIP

+'!

Max New Àork Life Fortune Builder Plan - ULIP

Max New Àork Life SMART Xpress - ULIP

(!!'!

Max New Àork Life SMART InvestŒ Pension Super - ULIP

 (%.,-##((.2&M*(+ ()

§c Life Partner Plus Plan §c 20 year Endowment (Par) Plan

§c Life Gain Plus 20 Participating §c Life Gain Plus 25 Participating

Plan Plan
§c Life Gain Endowment Plan §c Endowment to Age 60 (Par) Plan

§c Children Plan §c Whole Life Participating Plan

§c SMART Invest Pension Plan §c Five Àr Renewable and

Convertible Plan (Non - Par)

§c Level Term Plan §c LifeLine MediCash Plus Plan

§c LifeLine Wellness Plan §c LifeLine MediCash Plan

§c LifeLine-Safety Net Plan §c Life Pay Money Back

§c Life Maker Gold Plan §c Smart Assure

§c Smart Assure §c Life Invest Plan

§c Life Maker Premium §c SMART EXPRESS

Investment Plan

The latest product that MNLÀ has come up with is known as the SMART
EXPRESS where the minimum premium is 50,000 but the benefit of this policy if
taken on a yearly mode is since it being a ULIP product and the markets trend not
looking too great the value of the fund freezes when the stock price increases
hence it to an extent offers a fixed return it can say that one who invest in this plan
is assured of a positive return. This product was introduced since it had to
discontinue its very famous product Life Invest again this was due to the guidelines
of IRDA when it says if the plan crosses a certain limit of sum assured offered it
has to close the product.

M 

Max New Àork Life is the first life insurance company in India to be awarded the
IS0 9001:2000 certifications.

Max New Àork Life was among the top 25 companies to work with in India,
according to 2003 Business World magazine, "Great Workplaces in India", Max
New Àork Life was ranked at the 20th position. This survey is the local version of
the "Great Places to Work" survey carried out every year in 22 countries.

Been among top five most respected private life insurance companies in India
according to a 2004 and 2006 Business World survey.

Have truly built an enviable sales force. With 345 agents becoming members of the
MDRT in 2006, Max New Àork Life has moved up to 21st rank in MDRT global
list.
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Premium

Acquisition and Savings Death Cash

maintenance benefit & value
expenses amount

Insurance cost

Cannot Change

Black box Cannot Change

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Premium Can Change

Can Change

Distribution cost
Customer
Expenses
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(like a bank a/c)
returns mortality
charges

Partial withdrawal Death Benefit

or surrender Can Change
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pc Research methodology is a careful investigation for inquiring in a systematic

method and finding solution of a problem. It comprises the defining and
redefining of problem formulating hypothesis, collection and evaluating
data, making detection and reaching conclusion

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pc Decision regarding what, when, where, how much, by what mean,

concerning an enquiry, constitute a research design. In this study the
research design is of descriptive type.

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pc Collection, population, or set of entities, items, or quantities (grouped

together on the basis of common or defining characteristics or features) from
which a representative sample is drawn for comparison or measurement. So
the existing customers of MNÀL are our sample.

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pc In the survey the convenience sampling method is followed

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of 100.

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Primary data is one which is collected first time and original in nature. This can
be done in following ways:

pc Observation

pc Personal interview

pc Telephonic discussion

pc ƒuestionnaire

pc E-mail discussion

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pc Concerned Data

pc Internet

The data was collected through questionnaires which had opened ended and
multiple choice questions.

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In this survey, weighted average capital method has been used.

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The collected data were then tabulated converted in to percentage for the further
analysis.
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pc In ULIP plans customers are giving more importance to return
over a period of time.

pc Customers are less sensitive towards paying premium term and

login period.

pc The company should make more ULIP product on the basis of

tax benefit.

pc The company facing the problem of credibility.


pc A very good percentage of people are not aware of ULIP.

pc Around half of the people consider insurance as a good area for
investing their funds.

pc Safety returns and tax saving ability of a ULIP influence the

decision making ability of customers.


pc A major no of people are in favor of lowering the minimum
premium size and fixing some guaranteed return.
   cc
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pc If MNÀL increase the returns level then they will get more
customers in future.

pc MNÀL should go for industrial client by some contracts with

different organization and industries, where they can get bulk
customers.

pc Need based services & loyalty or association bonus facilities to be

offered to old MNÀL customers.

pc There should be a minimum fix return on ULIP.

pc MNÀL to improve up on the contact for awareness.

pc In order to increase the sales of ULIP product; company may

organize program for public to give the knowledge about the
company & its products.

pc ULIPs minimum premium payment should be minimized.





 

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c
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pc There are around 13 life insurance companies, which are providing

ULIP. However the market share of MNÀL is only 8% in whole
life insurance sector & 27% in private life insurance sector. The
main reason for this participation is problem of contacts, lack of
knowledge among people about company and ULIP & commercial
terms.

pc It is recommended to initially tap the valuable industries, groups &

enter in to contracts.

pc The key staff has to establish good contacts at every office level &
take suitable means for improves the customer contacts & relation
with them.

pc Focus on the increasing credibility among the people & take

suitable action for that.

 
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