Introduction

Insurance is an upcoming sector, in India the year 2000 was a

landmark year for life insurance industry, in this year the life insurance
industry was liberalized after more than fifty years.

Insurance sector was once a monopoly, with LIC as the only

company, a public sector enterprise. But nowadays the market opened up
and there are many private players competing in the market. There are
fifteen private life insurance companies has entered the industry.

After the entry of these private players, the market share of LIC
has been considerably reduced. In the last five years the private players is
able to expand the market (growing at 30% per annum) and also has
improved their market share to 18%.

For the past five years private players have launched many
innovations in the industry in terms of products, market channels and
advertisement of products, agent training and customer services etc.

In 2003, the Indian insurance market ranked 19th globally and

was the fifth largest in Asia. Although it accounts for only 2.5% of
premiums in Asia, it has the potential to become one of the biggest
insurance markets in the region. A combination of factors underpins
further strong growth in the market, including sound economic
fundamentals, rising household wealth and a further improvement in the
regulatory framework. The insurance industry in India has come a long
way since the time when businesses were tightly regulated and
concentrated in the hands of a few public sector insurers. Following the
passage of the Insurance Regulatory and Development Authority Act in
1999, India abandoned public sector exclusivity in the insurance industry
in favor of market-driven competition. This shift has brought about major

1
changes to the industry. The inauguration of a new era of insurance
development has seen the entry of international insurers, the proliferation
of innovative products and distribution channels, and the raising of
supervisory standards. The insurance sector in India has come with a full
circle from being an open competitive market to nationalization and back
to a liberalized market again. Tracing the developments in the Indian
insurance sector reveals the 360 degree turn witnessed over a period of
almost two centuries. Insurance in India used to be tightly regulated and
monopolized by state-run insurers. Following the move towards
economic reform in the early 1990s, various plans to revamp the sector
finally resulted in the passage of the Insurance Regulatory and
Development Authority (IRDA) Act of 1999.

Significantly, the insurance business was opened on two fronts. Firstly,

domestic private-sector companies were permitted to enter both life and
non-life insurance business. Secondly, foreign companies were allowed
to participate, albeit with a cap on shareholding at 26%. With the
introduction of the 1999 IRDA Act, the insurance sector joined a set of
other economic sectors on the growth march. During the 2003 financial
year1, life insurance premiums increased by an estimated 12.3% in real
terms to INR 650 billion (USD 14 billion) while non-life insurance
premiums rose 12.2% to INR 178 billion (USD 3.8 billion). The strong
growth in 2003 did not come in isolation. Growth in insurance premiums
has been averaging at 11.3% in real terms over the last decade.

The various life insurers entered India:-

1. HDFC Standard Life Insurance Company Ltd.

2. Max New York Life Insurance Co. Ltd.

2
3. ICICI Prudential Life Insurance Company Ltd.

4. Kotak Mahindra Old Mutual Life Insurance Limited.

5. Birla Sun Life Insurance Company Ltd.

6. Tata AIG Life Insurance Company Ltd.

7. SBI Life Insurance Company Limited.

8. ING Vysya Life Insurance Company Private Limited.

9. Met life India Insurance Company Ltd.

10. Royal Sundaram Life Insurance Company Limited.

11. Aviva Life Insurance Co. India Pvt. Ltd.

12. Sahara India Insurance Company Ltd.

13. Shriram Life Insurance Company

14. Life Insurance Corporation of India.

15. Reliance Life Insurance Company Limited.

16. Bharti AXA Life Insurance Company Limited.

3
The Insurance Industry in India

An Overview

With the largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India. It’s a business
growing at the rate of 15-20 per cent annually and presently is of the
order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together
with banking services, it adds about 7% to the country’s Gross Domestic
Product (GDP). The gross premium collection is nearly 2% of GDP and
funds available with LIC for investments are 8% of the GDP.
Even so nearly 65% of the Indian population is without life insurance
cover while health insurance and non-life insurance continues to be below
international standards. A large part of our population is also subject to
weak social security and pension systems with hardly any old age income
security. This in itself is an indicator that growth potential for the
insurance sector in India is immense.
A well-developed and evolved insurance sector is needed for economic
development as it provides long term funds for infrastructure
development and strengthens the risk taking ability of individuals. It is
estimated that over the next ten years India would require investments of
the order of one trillion US dollars. The Insurance sector, to some extent,
can enable investments in infrastructure development to sustain the
economic growth of the country.

4
Historical Perspective

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

5
insurance societies. In 1938, with a view to protecting the interest of the
Insurance public, the earlier legislation was consolidated and amended by
the Insurance Act, 1938 with comprehensive provisions for effective
control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies.

However, there were a large number of insurance companies and the level
of competition was high. There were also allegations of unfair trade
practices. The Government of India, therefore, decided to nationalize
insurance business.

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

Insurance sector and Life Insurance Corporation came into existence in
the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as
also 75 provident societies—245 Indian and foreign insurers in all. The
LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution

in the west and the consequent growth of sea-faring trade and commerce
in the 17th century. It came to India as a legacy of British occupation.
General Insurance in India has its roots in the establishment of Triton
Insurance Company Ltd., in the year 1850 in Calcutta by the British. In
1907, the Indian Mercantile Insurance Ltd, was set up. This was the first
company to transact all classes of general insurance business.

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

6
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 be allowed to
enter by floating Indian companies, preferably a joint venture with Indian
partners.

Following the recommendations of the Malhotra Committee report, in

1999, the Insurance Regulatory and Development Authority (IRDA) was
constituted as an autonomous body to regulate and develop the insurance
industry. The IRDA was incorporated as a statutory body in April, 2000.
The key objectives of the IRDA include promotion of competition so as
to enhance customer satisfaction through increased consumer choice and
lower premiums, while ensuring the financial security of the insurance
market.

7
The IRDA opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed ownership
of up to 26%. The Authority has the power to frame regulations under
Section 114A of the Insurance Act, 1938 and has from 2000 onwards
framed various regulations ranging from registration of companies for
carrying on insurance business to protection of policyholders’ interests.

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

of India were restructured as independent companies and at the same time
GIC was converted into a national re-insurer. Parliament passed a bill de-
linking the four subsidiaries from GIC in July, 2002.

Today there are 14 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 14 life insurance
companies operating in the country.

The insurance sector is a colossal one and is growing at a speedy rate of

15-20%. Together with banking services, insurance services add about
7% to the country’s GDP. A well-developed and evolved insurance sector
is a boon for economic development as it provides long- term funds for
infrastructure development at the same time strengthening the risk taking
ability of the country.

Key Milestones

1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and
non-life insurance businesses.

8
1938: Earlier legislation consolidated and amended by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were
taken over by the central government and nationalized. LIC was
formed by an Act of Parliament- LIC Act 1956- with a capital
contribution of Rs. 5 crore from the Government of India.

Insurance Sector Reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and

RBI Governor R.N. Malhotra, was formed to evaluate the Indian
Insurance Industry and recommend its future direction.

The Malhotra committee was set up with the objective of complementing

the reforms initiated in the financial sector.

The reforms were aimed at 'creating a more efficient and competitive

financial system suitable for the requirements of the economy keeping in
mind the structural changes currently underway and recognizing that
insurance is an important part of the overall financial system where it was
necessary to address the need for similar reforms...'.

In 1994, the committee submitted the report and some of the key
recommendations included:

I) Structure

1 Government stake in the insurance companies to be brought

down to 50%.

2 Government should take over the holdings of GIC and its

subsidiaries so that these subsidiaries can act as independent
corporations.

9
 3 All the insurance companies should be given greater freedom to
operate.

II) Completion

4 Private Companies with a minimum paid up capital of Rs. 1bn

should be allowed to enter the industry.

5 No Company should deal in both Life and General Insurance

through a single entity.

6 Foreign companies may be allowed to enter the industry in

collaboration with the domestic companies.

7 Postal Life Insurance should be allowed to operate in the rural

market.

8 Only one State Level Life insurance company should be

allowed to operate in each state.

III) Regulatory Body

9 The Insurance Act should be changed.

10 An Insurance Regulatory body should be set up.

11 Controller of Insurance (Currently a part from the Finance

Ministry) should be made independent.

IV) Investments

12 Mandatory Investments of LIC Life Fund in government

securities to be reduced from 75% to 50%.

13 GIC and its subsidiaries are not to hold more than 5% in any
company (There current holdings to be brought down to this

10
 level over a period of time).

V) Customer Service

14 LIC should pay interest on delays in payments beyond 30 days.

15 Insurance companies must be encouraged to set up unit linked

pension plans.

16 Computerization of operations and updating of technology to be

carried out in the insurance industry.

The committee emphasized that in order to improve the customer services

and increase the coverage of the insurance industry should be opened up
to competition. But at the same time, the committee felt the need to
exercise caution as any failure on the part of new players could ruin the
public confidence in the industry.

Hence, it was decided to allow competition in a limited way by

stipulating the minimum capital requirement of Rs. 100 crores. The
committee felt the need to provide greater autonomy to insurance
companies in order to improve their performance and enable them to act
as independent companies with economic motives. For this purpose, it
had proposed setting up an independent regulatory body.

Present Scenario – Life Insurance Industry in India

The life insurance industry in India grew by an impressive 47.38%, with

premium income at Rs. 1560.41 billion during the fiscal year 2007-2008.
Though the total volume of LIC's business increased in the last fiscal year
(2007-2008) compared to the previous one, its market share came down
from 85.75% to 81.91%.

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The 17 private insurers increased their market share from about 15% to
about 19% in a year's time. The figures for the first two months of the
fiscal year 2008-09 also speak of the growing share of the private
insurers. The share of LIC for this period has further come down to 75
percent, while the private players have grabbed over 24 percent.
With the opening up of the insurance industry in India many foreign
players have entered the market. The restriction on these companies is
that they are not allowed to have more than a 26% stake in a company’s
ownership.
Since the opening up of the insurance sector in 1999, foreign investments
of Rs. 8.7 billion have poured into the Indian market and 19 private life
insurance companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have
enabled fledgling private insurance companies to sign up Indian
customers faster than anyone expected. Indians, who had always seen life
insurance as a tax saving device, are now suddenly turning to the private
sector and snapping up the new innovative products on offer. Some of
these products include investment plans with insurance and good returns
(unit linked plans), multi – purpose insurance plans, pension plans, child
plans and money back plans.

Insurance Regulatory and Development Authority

Reforms in the Insurance sector were initiated with the passes of the
IRDA Bill in Parliament in December 1999. The IRDA since its
incorporation as a statutory body in April 2000 has fastidiously such to its
schedule of framing regulations and registering the private sector
insurance companies.

12
The other decision taken simultaneously to provide the supporting
systems to the insurance sector and in particular the life insurance
companies was the launch of the IRDA online service for issue and
renewal of licenses to agents.

Section 14 of IRDA Act, 1999 lays down the duties, powers and
functions of IRDA.
(1) Subject to the provisions of this Act and any other law for the time
being in force, the Authority shall have the duty to regulate, promote and
ensure orderly growth of the insurance business and re-insurance
business.
(2) Without prejudice to the generality of the provisions contained in sub-
section (1), the powers and functions of the Authority shall include,
(a) Issue to the applicant a certificate of registration, renew, modify,
withdraw, suspend or cancel such registration;
(b) protection of the interests of the policy holders in matters concerning
assigning of policy, nomination by policy holders, insurable interest,
settlement of insurance claim, surrender value of policy and other terms
and conditions of contracts of insurance;
(c) Specifying requisite qualifications, code of conduct and practical
training for intermediary or insurance intermediaries and agents;
(d) Specifying the code of conduct for surveyors and loss assessors;
(e) Promoting efficiency in the conduct of insurance business;
(f) Promoting and regulating professional organisations connected with
the insurance and re-insurance business;
(g) Levying fees and other charges for carrying out the purposes of this
Act;
(h) calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of the insurers,

13
intermediaries, insurance intermediaries and other organisations
connected with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions
that may be offered by insurers in respect of general insurance business
not so controlled and regulated by the Tariff Advisory Committee under
section 64U of the Insurance Act, 1938 (4 of 1938);
(j) Specifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by insurers and
other insurance intermediaries;
(k) Regulating investment of funds by insurance companies;
(l) Regulating maintenance of margin of solvency;
(m) Adjudication of disputes between insurers and intermediaries or
insurance intermediaries;
(n) Supervising the functioning of the Tariff Advisory Committee;
(o) Specifying the percentage of premium income of the insurer.

Research Design

Introduction
A Research Design is the framework or plan for a study which is used as
a guide in collecting and analyzing the data collected. It is the blue print
that is followed in completing the study. The basic objective of research
cannot be attained without a proper research design. It specifies the
methods and procedures for acquiring the information needed to conduct
the research effectively. It is the overall operational pattern of the project
that stipulates what information needs to be collected, from which
sources and by what methods.

14
Title of Study

“Comparative analysis of HDFC standard life insurance company limited

with other insurance company for HDFC standard life insurance company
ltd.”

Statement of the Problem

This study was undertaken by HDFC SLIC to identify which type of

insurance plans HDFC SLIC should market to beat other insurance
company in India. A survey was undertaken to understand the preferences
of Indian consumers with respect to insurance. While marketing policies
the sole duty of an advisor/ agent is to provide insurance plans as per
customer requirements.

In effect plans (insurance products) should be flexible to suit individual

requirements. This research tries to analyze some key factors which
influence the purchase of insurance like the term of the policy, the type of
company, the amount of annual premium payable (capacity and
willingness to spend), risk taking ability and the influence of advertising.
Solutions and recommendations are made based on qualitative and
quantitative analysis of the data.

Objectives of the Study

1) To analysis the product details of HDFC Standard life Insurance

Company limited and other insurance company.

15
 2) To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC
Standard Life Insurance Company Limited and other insurance
company.
3) To find out factors that influence customers to purchase insurance
policies and give suggestions for further improvement.

Research Methodology

Type of Data Collected

There are two types of data used. They are primary and secondary data.
Primary data is defined as data that is collected from original sources for
a specific purpose. Secondary data is data collected from indirect sources.

Primary Sources
These include the survey or questionnaire method, telephonic interview
as well as the personal interview methods of data collection.

Secondary Sources
These include books, the internet, company brochures, product brochures,
the company website, competitor’s websites etc, newspaper articles etc.

Plan of Analysis

Tables were used for the analysis of the collected data. Percentages and
averages have also been used to represent data clearly and effectively.
Study Area:
The study of area of my project is depended upon the secondary data
which is collected from the internet, magazines and books which are
mentioned in Bibliography.

16
 Company Profile
of
HDFC Standard Life Insurance Company LTD.

Introduction:
HDFC Standard Life Insurance Company Limited. is one of India's
leading private insurance companies, which offers a range of individual
and group insurance solutions. It is a joint venture between Housing
Development Finance Corporation Limited (HDFC Limited), India's
leading housing finance institution and a Group Company of the Standard
Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and
Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in
the joint venture, while the rest is held by Others.
As a joint venture of leading financial services groups, HDFC Standard
Life has the financial expertise required to manage your long-term
investments safely and efficiently.
HDFC SLIC have a range of individual and group solutions, which can
be easily customised to specific needs. Group solutions have been
designed to offer complete flexibility combined with a low charging
structure.
The gross premium income, for the year ending March 31, 2009 stood at
Rs. 5,564.69 crores.
The company has covered over 8,33,070 lives as on March 31, 2009.
HDFC Standard Life believes that establishing a strong and ethical
foundation is an essential prerequisite for long-term sustainable growth.
To ensure this, we have concentrated our focus on expansion of branch
network, organising an efficient and well trained sales force, and setting
up appropriate systems and processes with optimum use of technology.

17
As all these areas form the basic infrastructure for establishing the highest
possible customer service standards.
Our core values are drilled down to all levels of employees, as these are
inviolable. We continue to promote high integrity in business practices
and shun short cuts and unethical practices, as we wish to be perceived as
an institution with high moral standing. Since our inception in 2000,
when the Indian insurance space was opened for private participation, we
have consistently focused on setting benchmarks in all aspect on
insurance business. Being the first private player to be registered with the
IRDA and the first to issue a policy on December 12, 2000, our
differentiators are:

Strong promoter
HDFC Standard Life is a strong, financially secure business supported by
two strong and secure promoters – HDFC Ltd and Standard Life. HDFC
Ltd’s excellent brand strength emerges from its unrelenting focus on
corporate governance, high standards of ethics and clarity of vision.
Standard Life is a strong, financially secure business and a market leader
in the UK Life & Pensions sector.

Preferred and Trusted Brand

Our brand has managed to set a new standard in the Indian life insurance
communication space. We were the first private life insurer to break the
ice using the idea of self-respect instead of ‘death’ to convey our brand
proposition (Sar Utha Ke Jiyo). Today, we are one of the few brands that
customers recognize, like and prefer to do business. Moreover, our brand
thought, Sar Utha Ke Jiyo, is the most recalled campaign in its category.

18
Investment Philosophy

We follow a conservative investment management philosophy to ensure

that our customer’s money is looked after well. The investment policies
and actions are regularly monitored by a formal Investment Committee
comprising non-executive directors and the Principal Officer & Executive
Director.
As a life insurance company, we understand that customers have invested
their savings with us for the long term, with specific objectives in mind.
Thus, our investment focus is based on the primary objective of
protecting and generating good, consistent, and stable investment returns
to match the investor’s long-term objective and return expectations,
irrespective of the market condition.

Need-Based Selling Approach

Despite the criticality of life insurance, sales in the industry have been
characterized by over reliance on tax benefits and limited advice-based
selling. Our eight-step structured sales process ‘Disha’ however, helps
customers understand their latent needs at the first instance itself without
focusing on product features or tax benefits. Need-based selling process,
'Disha', the first of its kinds in the industry, looks at the whole financial
picture. Customers see a plan not piecemeal product selling.

Risk Control Framework

HDFC Standard Life has fully implemented a risk control framework to
ensure that all types of risks (not just financial) are identified and
measured. These are regularly reported to the board and this ensures that
the company management and board members are fully aware of any
risks and the actions taken to ensure they are mitigated

19
Focus on Training
Training is an integral part of our business strategy. Almost all employees
have undergone training to enhance their technical skills or the softer
behavioural skills to be able to deliver the service standards that our
company has set for itself. Besides the mandatory training that Financial
Consultants have to undergo prior to being licensed, we have developed
and implemented various training modules covering various aspects
including product knowledge, selling skills, objection handling skills and
so on.

Focus on Long-Term Value

HDFC Standard Life do not focus in the business of ramping up the
topline only, but to create maximisation of stakeholder's value. Today, we
are extremely satisfied with the base that we have created for the long-
term success of this company.

Transparent Dealing
We are one of the few companies whose product details, pricing, clauses
are clearly communicated to help customers take the right decision.

Strict Compliance with Regulations

We have initiated and implemented many new processes, some of which
were found useful by the IRDA and later made mandatory for the entire
industry. The agents who successfully completed this training only, were
authorized by the company to sell ULIPs. This has now been made
compulsory by IRDA for all insurance companies under the new Unit

20
Linked Guidelines.

Diversified Product Portfolio

HDFC Standard Life’s wide and diversified product portfolio help
individuals meet their various needs, be it:
1) Protection: Need for a sound income protection in case of your
unfortunate demise
2) Investment: Need to ensure long-term real growth of your money
3) Savings: Save for the milestones and protect your savings too
4) Pension: Need to save for a comfortable life post retirement
5) Health: Cover for health related exigencies

Board Members

Brief Profile of The Board of Directors

1. Mr. Deepak S. Parekh is the Chairman of the Company. He is

also the Executive Chairman of Housing Development Finance
Corporation Limited (HDFC Limited). He joined HDFC Limited in a
senior management position in 1978. He was inducted as a whole-time
director of HDFC Limited in 1985 and was appointed as its Executive
Chairman in 1993. He is the Chief Executive Officer of HDFC Limited.
Mr. Parekh is a Fellow of the Institute of Chartered Accountants
(England & Wales).

2. Sir Alexander M. Crombie joined the Board of Directors of the

Company in April, 2002. He has been with the Standard Life Group for
34 years holding various senior management positions. He was
appointed as the Group Chief Executive of the Standard Life Group in

21
March 2004. Sir Crombie is a fellow of the Faculty of Actuaries in
Scotland.
3. Mr. Keki M. Mistry joined the Board of Directors of the
Company in December, 2000. He is currently the Managing Director of
HDFC Limited. He joined HDFC Limited in 1981 and became an
Executive Director in 1993. He was appointed as its Managing Director
in November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered
Accountants of India and a member of the Michigan Association of
Certified Public Accountants.

4. Ms. Marcia D. Campbell is currently the Group Operations

Director in the Standard Life group and is responsible for Group
Operations, Asia Pacific Development, Strategy & Planning, Corporate
Responsibility and Shared Services Centre. Ms. Campbell joined the
Board of Directors in November 2005.

5. Ms. Renu S. Karnad is the Executive director of HDFC Limited,

is a graduate in law and holds a Master's degree in economics from
Delhi University. She has been employed with HDFC Limited since
1978 and was appointed as the Executive Director in 2000. She is
responsible for overseeing all aspects of lending operations of HDFC
Limited.

6. Mr. Norman K. Skeoch is currently the Chief Executive in

Standard Life Investments Limited and is responsible for overseeing
Investment Process & Chief Executive Officer Function. Prior to this,
Mr. Skeoch was working with M/s. James Capel & Co. holding the
positions of UK Economist, Chief Economist, Executive Director,
Director of Controls and Strategy HSBS Securities and Managing
Director International Equities. He was also responsible for Economic

22
and Investment Strategy research produced on a worldwide basis. Mr.
Skeoch joined the Board of Directors in November 2005.

7. Mr. Gautam R. Divan is a practising Chartered Accountant and is

a Fellow of the Institute of Chartered Accountants of India. Mr. Divan
was the Former Chairman and Managing Committee Member of
Midsnell Group International, an International Association of
Independent Accounting Firms and has authored several papers of
professional interest. Mr. Divan has wide experience in auditing
accounts of large public limited companies and nationalised banks,
financial and taxation planning of individuals and limited companies
and also has substantial experience in structuring overseas investments
to and from India.

8. Mr. Ranjan Pant is a global Management Consultant advising

CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002
was a Partner & Vice-President at Bain & Company, Inc., Boston,
where he led the worldwide Utility Practice. He was also Director,
Corporate Business Development at General Electric headquarters in
Fairfield, USA. Mr. Pant has an MBA from The Wharton School and
BE (Honours) from Birla Institute of Technology and Sciences.
9. Mr. Ravi Narain is the Managing Director & CEO of National
Stock Exchange of India Limited. Mr. Ravi Narain was a member of the
core team to set-up the Securities & Exchange Board of India (SEBI)
and is also associated with various committees of SEBI and the Reserve
Bank of India (RBI).

10. Mr. Gerald E. Grimstone was appointed Chairman in May 2007,

having been Deputy Chairman since March 2006. He became a director

23
 of The Standard Life Assurance Company in July 2003. He is also
Chairman of Candover Investments plc and was appointed as one of the
UK’s Business Ambassadors by the Prime Minister in January 2009.
Gerry held senior positions within the Department of Health and Social
Security and HM Treasury until 1986. He then spent 13 years with
Schroders in London, Hong Kong and New York, and was Vice
Chairman of Schroders’ worldwide investment banking activities from
1998 to 1999. He is the Alternate Director to Sir Alexander Crombie.

11. Mr. Paresh Parasnis is the Principal Officer and Executive

Director of the company since November 14, 2008. A fellow of the
Institute of Chartered Accountants of India, he has been associated with
the HDFC Group since 1984. During his 16-year tenure at HDFC
Limited, he was responsible for driving and spearheading several key
initiatives. As one of the founding members of HDFC Standard life, Mr.
Parasnis has been responsible for setting up branches, driving sales and
servicing strategy, leading recruitment, contributing to product launches
and performance management system, overseeing new business and
claims settlement, customer interactions etc.

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC

has since emerged as the largest residential mortgage finance institution
in the country. The corporation has had a series of share issues raising its
capital to Rs. 119 Crores. The gross premium income for the year ending
March 31, 2007 stood at Rs. 2,856 Crores and new business premium
income at Rs. 1,624 Crores. The company has covered over 8,77,000
lives year ending March 31, 2007.

24
HDFC operates through almost 450 locations throughout the country with
its corporate head quarters in Mumbai, India. HDFC also has an
International Office in Dubai, UAE with service associates in Kuwait,
Oman and Qatar. HDFC is the largest housing company in India for the
last 27 years.

Snapshot - I
1) Incorporated in 1977 as the first specialized Mortgage Company in
India.
2) Almost 90% of initial shareholding in the hands of domestic institutes
and retail investors. Current 77% of shares held by foreign
institutional investors.
3) Besides the core business of mortgage HDFC has evolved into a
financial conglomerate with holdings In:
a) HDFC Standard Life insurance Company- HDFC holds 78.07
%.
b) HDFC Asset Management Company – HDFC holds 50.1%
c) HDFC Bank- HDFC holds 22.25%.
d) Intelenet Global (Business Process Outsourcing) – HDFC holds
50%.
e) HDFC Chubb General Insurance Company – HDFC holds 74%.

Snapshot-II
1).Loan Approvals Rs. 805 billion.
(Up to Dec 2007) (US $ 18.30 bn.)
2).Loan Disbursements Rs.669 billion
(Up to Dec. 2007) (US $ 15.20 bn)
3).Housing Units Financed 2.5 million.
4).Distribution

25
 a. Offices 181
b. Outreach Programs 90

Key Players

Mr. Deepak S Parekh is the Chairman of the Company. He is also the

Executive Chairman of Housing Development Finance Corporation
Limited (HDFC Limited). He joined HDFC Limited in a senior
management position in 1978. He was inducted as a whole-time director
of HDFC Limited in 1985 and was appointed as its Executive Chairman
in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh
is a Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the

Company since November, 2000. Prior to this, he was the Managing
Director of HDFC Limited since 1993. Mr. Satwalekar obtained a
Bachelors Degree in Technology from the Indian Institute of Technology,
Bombay and a Masters Degree in Business Administration from The
American University, Washington DC.

Group Companies

HDFC Bank: World Class Indian Bank- among the top private banks in
India.
HDFC AMC: One of the top 3 AMCs in India- Preferred investment
manager.
Intelenet Global: BPO services for international customers.
CIBIL: Credit Information Bureau India Limited.

26
HDFC Chubb: Upcoming Private companies in the field of General
Insurance.
HDFC Mutual Fund
HDFC reality.com: Helps to search properties in all major cities in India
HDFC securities

Standard Life

Standard Life is Europe’s largest mutual life assurance company.

Standard Life, which has been in the life insurance business for the past
175 years is a modern company surviving quite a few changes since
selling its first policy in 1825. The company expanded in the 19th century
from kits original Edinburgh premises, opening offices in other towns and
acquitting other similar businesses.

Standard Life Currently has assets exceeding over £ 70 billion under its
management and has the distinction of being accorded “AAA” rating
consequently for the six years by Standard and Poor.

Snapshot
1) Founded in 1875, company supporting generation for last 179 years.
2) Currently over 5 million Policy holders benefiting from the services
offered.
3) Europe’s largest mutual life insurer.

27
Joint Venture

HDFC Standard Life Insurance Company Limited was one of the first
companies to be granted license by the IRDA to operate in life insurance
sector. Reach of the JV player is highly rated and been conferred with
many awards. HDFC is rated ‘AAA ’ by both CRISIL and ICRA.
Similarly, Standard Life is rated ‘AAA’ both by Moody’s and Standard
and Poor’s. These reflect the efficiency with which HDFC and Standard
Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr.
respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th

August 2000. HDFC is the majority stakeholder in the insurance JV with
81.4% staple and Standard of as a staple 18.6% Mr. Deepak Satwalekar
is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. 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 Ltd.) India’s leading
housing finance institution and the Standard Life Assurance Company, a
leading provider of financial services from the United Kingdom. Both the
promoters are will known for their ethical dealings and financial strength
and are thus committed to being a long-term player in the life insurance
industry- all important factors to consider when choosing your insurer.

Business Growth:
The gross premium income of HDFC, for the year ending March 31,
2007 stood at Rs. 2,856 crores and new business premium income at Rs.
1,624 crores.

28
The company has covered over 8,77,000 lives year ending March 31,
2007. Company also declared our 5th consecutive bonus in as many years
for our ‘with profit’ policyholders.

Key Strength

Financial Expertise
As a joint venture of leading financial services groups. HDFC standard
Life has the financial expertise required to manage long-term investments
safely and efficiently.

Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be
easily customized to specific needs. These group solutions have been
designed to offer complete flexibility combined with a low charging
structure.

Strong Ethical Values:

HDFC SLIC is an ethical and Cultural Organization. False selling or false
commitment with the customers is not allowed.

Most respected Private Insurance Company

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by
the World Class Magazine Business World for Integrity, Innovation and
Customer Care.

29
Corporate objective
Vision
'The most successful and admired life insurance company, which means
that we are the most trusted company, the easiest to deal with, offer the
best value for money, and set the standards in the industry'.
'The most obvious choice for all'.

Values
.Integrity .Innovation
.Customer centric .People Care One for all
.Teamwork .Joy and Simplicity

Products and Services

The right investment strategies won't just help plan for a more
comfortable tomorrow -- they will help you get “Sar Utha ke Jiyo”. At
HDFC SLIC, life insurance plans are created keeping in mind the
changing needs of family. Its life insurance plans are designed to provide
you with flexible options that meet both protection and savings needs. It
offers a full range of transparent, flexible and value for money products.
HDFC SLIC products are modern and contemporary unitized products
that offer unique customer benefits like flexibility to choose cover levels,
indexation and partial withdrawals.

30
Plans that are offered by HDFC SLIC

1) Individual Products
Protection Plans
A person can protect his family against the loss of his income or
the burden of a loan in the event of his unfortunate demise, disability or
sickness. These plans offer valuable peace of mind at a small price.
Protection range includes our
Term Assurance Plan & Loan Cover Term Assurance Plan.

Investment Plans
HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet
long term investment needs. This provides attractive long term returns
through regular bonuses.
Pension Plans
Pension Plans help to secure financial independence even after
retirement. Pension range includes Personal Pension Plan, Unit Linked
Pension, Unit Linked Pension Plus.
Savings Plans
Savings Plans offer a flexible option to build savings for future needs
such as buying a dream home or fulfilling your children’s immediate and
future needs.
Savings range includes Endowment Assurance Plan, Unit Linked
Endowment, Unit Linked Endowment Plus, Unit Linked Endowment
Plus II, Money Back,
Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked
Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus
II.

31
2) Group Products
One-stop shop for employee-benefit solutions
HDFC Standard Life has the most comprehensive list of products for
progressive employers who wish to provide the best and most innovative
employee benefit solutions to their employees. It offers different products
for different needs of employers ranging from term insurance plans for
pure protection to voluntary plans such as superannuation and leave
encashment.
HDFC SLIC offers the following group products to esteemed corporate
clients:
A) Group Term Insurance
B) Group Variable Term Insurance
C) Group Unit-Linked Plan
An investment solution that provides funding vehicle to manage corpuses
with Gratuity, Defined Benefit or Defined Contribution Superannuation
or Leave Encashment schemes of your company
Also suitable for other employee benefit schemes such as salary saving
schemes and wealth management schemes.

3) Social Product
Development Insurance Plan
Development Insurance plan is an insurance plan which provides life
cover to members of a Development Agency for a term of one year. On
the death of any member of the group insured during the year of cover, a
lump sum is paid to those member beneficiaries to help meet some of the
immediate financial needs following their loss.

32
Eligibility
Members of the development agency and their spouses with:
Minimum age at the start of the policy 18 years last birthday
Maximum age at the start of policy 50 years last birthday
Employees of the Development Agency are not eligible to join the group.
The group to be covered is only eligible if it contains more than 500
members.

Premium Payments
The premium to be paid will be quoted per member in the group and will
be the same for all members of the group.
The premium can only be paid by the Development Agency as a single
lump sum that includes all premiums for the group to be covered. Cover
will not start until the premium and all the member information in our
specified format has been received.

Benefits
On the death of each member covered by the policy during the year of
cover a lump sum equal to the sum assured will be paid to their
beneficiaries or legal heirs. Where the death is as a result of an accident,
an additional lump sum will be paid equal to half the sum assured. There
are no benefits paid at the end of the year of cover and there is no
surrender value available at any time.

The role of the Development Agency

Due to the nature of the groups covered, HDFC Standard Life will be
passing certain administrative tasks onto the Development Agency. By
passing on these tasks the premium charged can be lower. These tasks
would include:

33
 a) Submission of member data in a specified computer format
b) Collection of premiums from group members
c) Recording changes in the details of group members
d) Disbursement of claim payments and the mortality rebate (if any)
to group members
These tasks would be in addition to the usual duties of a policyholder
such as:
a) Payment of premiums
b) Reporting of claims
c) Keeping policy holder information up to date
Training and support will be available to give guidance on how to
complete the tasks appropriately. Since these additional tasks will impose
a burden on the Development Agency, the Development Agency may
charge a Rs. 10 administration fee to their members.

Prohibition of rebates
Section 41 of the Insurance Act, 1938 states
No person shall allow or offer to allow, either directly or indirectly, as an
inducement to any person to take out or renew or continue an insurance in
respect of any kind of risk relating to lives or property in India, any rebate
of the whole or part of the commission payable or any rebate of the
premium shown on the policy, nor shall any person taking out or
renewing or continuing a policy accept any rebate, except such rebate as
may be allowed in accordance with the published prospectus or tables of
the insurer
If any person fails to comply with sub regulation (previous point) above,
he shall be liable to payment of a fine which may extend to rupees five
hundred

34
 Introduction of Unit Linked Plans

Unit linked plans are based on the component of the premium or the
contribution of the customer towards the plan. This contribution can be in
different modes like yearly, half yearly, quarterly and monthly. Unit
linked plans have multiple benefits like life protection, rider protection,
savings, transparency, investment choices, liquidity and planning for
taxes. These plans work like mutual funds.
The premium is collected from the policy holder. He is allotted a certain
number of units based of his contribution. The Net Asset Value is the
value of each unit of the fund. It is found by subtracting the charges and
current liabilities from the current assets and investments and dividing
this number by the total number of outstanding units.
Let us take an example. There are 100 investors and each invests Rs. 10
in a fund. The total value of the fund is Rs. 1000 and each person is
allotted 1 unit of Rs 10. Now the money (Rs. 1000) is invested in the debt
or equity market. Suppose the fund value increased by 20%. As a result
the Rs. 1000 invested became Rs. 1200. Hence the value of every
investor is now Rs. 12 and not Rs. 10.
Unit Linked Versus Other Financial Instruments
Parameters RBI Bonds Fixed Mutual Unit linked
Deposits Funds
Safety High High Medium High
Liquidity None High High High

Returns Low Low High High

Life Cover 1 time 1 time 1 time 10 times

amount amount amount

35
We find that life insurance unit linked plans is a good area to invest
money in as it provides liquidity, safety, high returns, life cover and tax
benefits in a single plan. HDFC SLIC offers the option of indexation to
beat inflation. Risk is reduced to a large extent as the company invests in
a diversified portfolio of stocks.

Tax Benefits

Income Tax Gross Annual How Much Tax HDFC Standard

Section Salary Can You Save? Life Plans
Sec. 80C Across All income Upto Rs. 33,990 All the life
Slabs saved on insurance plans.
investment of
Rs. 1,00,000.
Sec. 80 CCC Across all income Upto Rs. 33,990 All the pension
slabs. saved on plans.
Investment of
Rs.1,00,000.
Sec. 80 D Across all income Upto Rs. 3,399 All the health
slabs saved on insurance riders
Investment of available with the
Rs. 10,000. conventional plans.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely
tax-free, subject to the conditions laid down therein.

36
HDFC SLIC ULIPs Vs Mutual Funds: Who's better?

HDFC SLIC Unit Links Insurance Plan (ULIP) and Mutual Fund (MF)
are the two most preferred options for a part time investor to invest into
equity. But how do we decide which one should we go for. Though it is
very easy to decide, people tend to confuse themselves most of the time.
This article talks about some points that you need to consider while
deciding which option we want to take.

Mutual Fund is pure investments. ULIP are combination of Insurance and

Investment.

First question that we need to answer while buying ULIP is - Do I need to

buy insurance?

1) Does the person seeking insurance have any financial liabilities?

2) If something happens to the person, is there someone who can be in a

financial crisis?

If the answer to the above two question is yes, I need to buy Insurance.

Now let us compare ULIP and MF based on certain well known facts:

1) Insurance

ULIPs provide you with insurance cover.

MFs don’t provide you with insurance cover.

37
A point in favor of ULIPs. But let me tell you that you don’t get this
insurance cover for free. Mortality charges (i.e. the price you pay for the
insurance cover) get deducted from your investment.

2) Entry Load

ULIPs generally come with a huge entry load. For different schemes, this
can vary between 5 to 40% of the first year’s premium.

MFs have a small entry load of a maximum of 2.5% which can also be
waved off if you apply directly (i.e. not through an agent).

Here MFs have a huge advantage. If we consider a conservative market

return of about 10-15% you may get a zero percent return in the first year.

3) Maturity

ULIPs generally come with a maturity of 5 to 20 years. That what ever

money you put in, most of it will be locked-in till the maturity.

Taxes saving MF (Popularly called as Equity Linked Saving Scheme or

ELSS) come with a lock-in period of 3 years. Other MFs don’t have a
lock-in period.

Again MFs have advantage over ULIPs. ULIPs do allow you to take
money out prematurely but they also put penalties on you for doing that.

4) Compulsion of Investing

ULIPs would generally make you pay at least first three premiums.

MFs don’t have any compulsion on future investments.

If you have invested in a MF this year, and in the next year you don’t
have enough income or money to do investments you can decide not to
make any investments’. Also if you notice that the MF that you invested

38
in is not giving good returns as compared to some other Funds scheme,
you can decide to invest in some other MF.

5) Tax Saving

Both the ELSS and ULIP come under 80C and can save you tax. Returns
in the both form of investments are tax free.

6) Market exposure

ULIPs give you both moderate and aggressive exposure to equity market

Debt and Liquid MF let invest with low risk, but don’t give you tax
benefit.

ULIPs need not be aggressive in equity exposure. That is ULIPs need not
keep more that 60% of their funds in equity market. ULIPS also allow
changing your equity market exposure. Thus it can help you time the
market and still give you tax savings.

If a MF has a less than 60% exposure to equity market the returns from it
are not tax free. Thus you don’t get to take a conservative stand on
returns.

7) Flexibility of time of redemption

ULIP will get redeemed on maturing. Premature redemption is allowed

with some penalty.

In MF premature redemption is not allowed. For a open ended scheme

one can redeem the MF anytime after maturity

39
This is mainly useful if the market is down at the maturity time of the
investment. In case of ELSS you can wait till the market comes up again
and then redeem them. ULIP scheme won’t allow you to wait.

Thus, according to my opinion

1) If you wish to take an aggressive exposure to equity market, go ahead

any buy MF. ULIP won’t be able to give you similar returns.

2) If you think you are not disciplined enough to make regular

investments and need a whip to make you invest, invest in ULIP.

3) If you want to take a low exposure to equity market and still get tax
free returns, invest in ULIP but make sure that fund you are invested is
conservative fund.

4) If you want Insurance cover and also good return on investment. I

would suggest that you invest in MFs and take a term plan.

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

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

40
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.

How ULIPs can make you RICH!

Despite the seemingly comparable structures there are various factors

wherein the two differ. In this we evaluate the two avenues on certain
common parameters and find out how they measure up.

1. Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum
investments or investing using the systematic investment plan (SIP) route
which entails commitments over longer time horizons. The minimum
investment amounts are laid out by the fund house.

ULIP investors also have the choice of investing in a lump sum (single
premium) or using the conventional route, i.e. making premium payments
on an annual, half-yearly, quarterly or monthly basis. In ULIPs,
determining the premium paid is often the starting point for the
investment activity.

41
This is in stark contrast to conventional insurance plans where the sum
assured is the starting point and premiums to be paid are determined
thereafter.

ULIP investors also have the flexibility to alter the premium amounts
during the policy's tenure. For example an individual with access to
surplus funds can enhance the contribution thereby ensuring that his
surplus funds are gainfully invested; conversely an individual faced with
a liquidity crunch has the option of paying a lower amount (the difference
being adjusted in the accumulated value of his ULIP). The freedom to
modify premium payments at one's convenience clearly gives ULIP
investors an edge over their mutual fund counterparts.

2. Expenses

In mutual fund investments, expenses charged for various activities like

fund management, sales and marketing, administration among others are
subject to pre-determined upper limits as prescribed by the Securities and
Exchange Board of India.

For example equity-oriented funds can charge their investors a

maximum of 2.5% per annum on a recurring basis for all their expenses;
any expense above the prescribed limit is borne by the fund house and not
the investors. Similarly funds also charge their investors entry and exit
loads (in most cases, either is applicable). Entry loads are charged at the
timing of making an investment while the exit load is charged at the time
of sale.

Insurance companies have a free hand in levying expenses on their ULIP

products with no upper limits being prescribed by the regulator, i.e. the
Insurance Regulatory and Development Authority. This explains the
complex and at times 'unwieldy' expense structures on ULIP offerings.

42
The only restraint placed is that insurers are required to notify the
regulator of all the expenses that will be charged on their ULIP offerings.

Expenses can have far-reaching consequences on investors since higher

expenses translate into lower amounts being invested and a smaller
corpus being accumulated. ULIP-related expenses have been dealt with in
detail in the article "Understanding ULIP expenses".

3. Portfolio disclosure

Mutual fund houses are required to statutorily declare their portfolios on a

quarterly basis, albeit most fund houses do so on a monthly basis.
Investors get the opportunity to see where their monies are being invested
and how they have been managed by studying the portfolio. There is lack
of consensus on whether ULIPs are required to disclose their portfolios.
During our interactions with leading insurers we came across divergent
views on this issue.

While one school of thought believes that disclosing portfolios on a

quarterly basis is mandatory, the other believes that there is no legal
obligation to do so and that insurers are required to disclose their
portfolios only on demand.

Some insurance companies do declare their portfolios on a

monthly/quarterly basis. However the lack of transparency in ULIP
investments could be a cause for concern considering that the amount
invested in insurance policies is essentially meant to provide for
contingencies and for long-term needs like retirement; regular portfolio
disclosures on the other hand can enable investors to make timely
investment decisions. As was stated earlier, offerings in both the mutual
funds segment and ULIPs segment are largely comparable. For example
plans that invest their entire corpus in equities (diversified equity funds),

43
a 60:40 allotment in equity and debt instruments (balanced funds) and
those investing only in debt instruments (debt funds) can be found in both
ULIPs and mutual funds. If a mutual fund investor in a diversified equity
fund wishes to shift his corpus into a debt from the same fund house, he
could have to bear an exit load and/or entry load.

On the other hand most insurance companies permit their ULIP inventors
to shift investments across various plans/asset classes either at a nominal
or no cost (usually, a couple of switches are allowed free of charge every
year and a cost has to be borne for additional switches).

Effectively the ULIP investor is given the option to invest across asset
classes as per his convenience in a cost-effective manner.

This can prove to be very useful for investors, for example in a bull
market when the ULIP investor's equity component has appreciated, he
can book profits by simply transferring the requisite amount to a debt-
oriented plan.

4. Flexibility in altering the asset allocation

As was stated earlier, offerings in both the mutual funds segment and
ULIPs segment are largely comparable. For example plans that invest
their entire corpus in equities (diversified equity funds), a 60:40 allotment
in equity and debt instruments (balanced funds) and those investing only
in debt instruments (debt funds) can be found in both ULIPs and mutual
funds.

If a mutual fund investor in a diversified equity fund wishes to shift his

corpus into a debt from the same fund house, he could have to bear an
exit load and/or entry load.

44
On the other hand most insurance companies permit their ULIP inventors
to shift investments across various plans/asset classes either at a nominal
or no cost (usually, a couple of switches are allowed free of charge every
year and a cost has to be borne for additional switches).

Effectively the ULIP investor is given the option to invest across asset
classes as per his convenience in a cost-effective manner. This can prove
to be very useful for investors, for example in a bull market when the
ULIP investor's equity component has appreciated, he can book profits by
simply transferring the requisite amount to a debt-oriented plan.

5. Tax benefits

ULIP investments qualify for deductions under Section 80C of the

Income Tax Act. This holds well, irrespective of the nature of the plan
chosen by the investor. On the other hand in the mutual funds domain,
only investments in tax-saving funds (also referred to as equity-linked
savings schemes) are eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax free. In case of equity-oriented

funds (for example diversified equity funds, balanced funds), if the
investments are held for a period over 12 months, the gains are tax free;
conversely investments sold within a 12-month period attract short-term
capital gains tax @ 10%.

Similarly, debt-oriented funds attract a long-term capital gains tax @

10%, while a short-term capital gain is taxed at the investor's marginal tax
rate.

Despite the seemingly similar structures evidently both mutual funds and
ULIPs have their unique set of advantages to offer. As always, it is vital

45
for investors to be aware of the nuances in both offerings and make
informed decisions.

Life Insurance is now being regarded as a versatile financial planning

tool. Research indicates that Indians have four basic financial needs
during their life time:

1. Asset accumulation such as buying a house or a car.

2. Protecting their family
3. Securing their children’s education
4. Planning for their retirement.
India being a country of vast population of over one billion with only
33.2% of the insurable population in India possessing Life insurance, the
country has a vast potential which has been left untapped now.

Till some years back, most of the people used to invest in traditional
market (i.e. Equity, Bonds, Mutual funds, Government securities and
bonds etc.), but with the emergence and popularity of Unit Linked
Insurance products, the mindset has changed. One can see that insurance
is a better choice while making investment decisions because of features
like:

1. Tax savings
2. Better returns
3. Protection from any miss happening.
The need of the hour is recognize the power of the Financial Planning.
One who can draw out a well defined financial plan according to his
needs would expect good returns from the market in the long run. How
ever the awareness of financial planning among the consumers is still low
but with the increase in purchasing power of the customers and with
coming up of new innovative products customers has started to plan for

46
their financial needs and in coming years the awareness is expected to
increase.

Thus insurance industry has tremendous growth opportunities provided

that it meets the expectations of the customers. The changing products of
insurance with changing needs of the customers can be a major cause for
the growth of the insurance industry.

Awards & Accolades

Sept, 2008
Received 2008 CIO Bold 100 and CIO Security Awards
HDFC Standard Life has received the 2008 CIO Bold 100 Award. This
annual award recognizes organizations that exemplify the highest level of
operational and strategic excellence in information technology. This
year's award theme, ‘The Bold 100,’ recognized those executives and
organizations that embraced great risk for the sake of great reward.
HDFC Standard Life has also been one of the five recipients of the
Special 2008 CIO Security Award aimed at CIOs, whose pioneering
implementations have taken their enterprise security to the next level.
This award category identifies innovative and groundbreaking
deployment of technologies aimed at creating a secure business
infrastructure.
The company received the 2008 CIO Bold Award for its mobile
workforce portal and the CIO Security Award for its initiatives for a
secure computing environment, including identity management.

47
May, 2008
Received PCQuest Best IT Implementation Award 2008
HDFC Standard Life received the PCQuest Best IT Implementation
Award 2008 for Consultant Corner, the applications for its financial
consultants, providing centralized control over a vast geographical spread
for key business units such as inventory, training, licensing, etc. Read
more about the ‘Consultant Corner’ tool in the ‘HDFCSL in News’
Section.
HDFC Standard Life has won the PCQuest Best IT Implementation
Award for two years consequently. Last year, the company received the
award for Wonders, its path-breaking implementation of an enterprise-
wide workflow system.

March, 2008
Silver Abby at Goafest 2008
HDFC Standard Life's radio spot for Pension Plans won a Silver Abby in
the radio writing craft category at the Goafest 2008 organised by the
Advertising Agencies Association of India (AAAI). The radio
commercial ‘Pata nahin chala’ touched several changes in life in the blink
of an eye through an old man’s perspective. The objective was drive
awareness and ask people to invest in a pension plan to live life to the
fullest even after retirement, without compromising on one’s self-respect

March, 2008
Unit Linked Savings Plan Tops Mint Best TV Ads Survey
The Unit Linked Savings Plan advertisement of HDFC Standard Life, one
of the leading private insurance companies in India, has topped Mint’s
Top Television Advertisement survey conducted, for February 2008.
HDFC Standard Life’s Unit Linked Savings Plan advertisement was

48
ranked 4th in terms of a combined score of ad awareness and brand recall
and 3rd in terms of ad diagnostic scores (likeability, enjoyment,
believability, and claim). The respondents were between 18 and 40 years.
Mint’s exclusive report, ‘New voices in a makeover’ outlines the survey
in detail.

February, 2008
Deepak M Satwalekar Awarded QIMPRO Gold Standard Award
2007
Mr Deepak M Satwalekar, Managing Director and CEO, HDFC Standard
Life, received the QIMPRO Gold Standard Award 2007 in the business
category at the 18th annual Qimpro Awards function. The award
celebrates excellence in individual performance and highlights the quality
achievements of extraordinary individuals in an era of global competition
and expectations.

January, 2008
Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments
HDFC Standard Life’s advertising slogan honoured as one of ‘60
Glorious Advertising & Marketing Moments' over the last 60 years in
India,’ by 4Ps Business and Marketing magazine. The magazine said that
HDFC Standard Life is one of the first private insurers to break the ice
using the idea of self respect (Sar Utha Ke Jiyo) instead of 'death' to
convey its brand proposition. This was then, followed by others including
ICCI Prudential, thus giving HDFC Standard Life the credit of bringing
up one such glorious advertising and marketing moment in the last 60
years.

49
Distribution Strategy

Why HDFC is better …?

1) Investment returns: investment returns and business growth
provided by HDFC is validated by bajaj Capital report. HDFC pacify
the need of invertors up to healthy level and make the strong
relationship with them.
2) Financial Background and Experience: HDFC existing in the
market since 1977. It has a very handsome experience in the field of
finance because it completely involved in finance Sector only where
as the others are running in many other field also like Reliance
(Petroleum, Textile, Telecom etc.)
3) Ethics and Values: HDFC is an ethical and cultural organization
which prevents the false selling and prohibit the false commitment to
the customer.
4) Sales Force: Properly trend licensed and Educated People are the
strength of the company. So that they could give the best customer
service.
5) Huge branch network HDFC is having 450 branches in all over the
country.
6) Online accessibility: It makes the process faster and make the
customer delighted.

Who can be the financial consultant: ?

Section 42(4) of the amended Insurance Act, 1938 states an agent to be

one who is not: A minor.
a) Found to be sound mind by a court of competition jurisdiction.
b) Found guilty of criminal background.

50
 c) Found guilty of having knowingly participated in or connived at
any fraud /dishonesty or misrepresentation against an insured.
Work of financial consultant:
The FC is the interface between the customer and insurance company.
The agent should be able to accomplish the following service.
a) Assessing and analyzing the clients risk profile.
b) Finding the best product or products available in the market.
c) Negotiating the best deal available.
d) Continuity of service throughout the period of insurance.

Objective of FC:
Recruitment of Financial consultant (FCs) of a excellent profile and their
retention strategies and what are their benefit that company going to
provided for retention of their FCs.
1). What type of people are we looking for ?
a). Committed people who have the drive, determination and ability to
become professional financial consultants.
b). Ability to sell a range of financial products.
2). What do We Expect from financial Consultant?
a). Devote a time and energy during training.
b). Sell at least 5 policies each month once after licensed with company.
c). We look forward to a long term mutually beneficial relationship.

3). Why should financial consultant choose HDFC standard life ?

Brand value and the reputation of the partners (HDFC Limited) Market
leader in housing finance:
a. 15 lakhs home financed.
b. lakhs retail deposits customer base.

51
 1) Reputation for providing the higher standards of customer
service.
2) Financial Strength of the partners.
3) Brand value and the reputation of the partners standard life:
4) 175 years experience in life insurance.
5) Largest mutual life insurer in Europe.
6) Product innovation.
Strategies for recruitment of FC:
Strategies Employed to achieve the target are as follows:-
1) Telecalling
2) Contacting the person directly (interview)
3) Collect references.
Some important steps to make effective telecalling:-
Open the call in a friendly and positive way.
State the name, position and company name.
Check the prospect has time to speak.
State the reason for the call.
Clearly succinctly explain how the meeting will be benefiting the
prospect.
Achievements:
Recruited eight financial consultants for company.
Increase in confidence level.
Got the knowledge about, how to differentiate our product form that of
LIC.
Made more and more people aware about my companies Products
(Policies)
Taken some appointments for policies and got positive response from 8
persons with the help of my BDM.

52
 Limitations:-
So though the study aim to achieve the above mentioned Objective in full
earnest and accuracy, it may be hampered due to certain limitation. Some
of the limitations are as follows:
To cover the various section for the society.
Respondents may not be at home and may have to re-contacted or
replaced by others.
Getting accurate response form the respondents due to their inherent problem
is difficult.
Limited response from client.
Here is a time limitation it is not possible to study whole thing I covered
some special aspect as well as some topics.

Competitive Analysis

Life Insurance Corporation of India (LIC)

LIC has an excellent money back policy which provides for periodic
payments of partial survival benefits as long as the policy holder is alive.
20% of the sum assured is payable after 5, 10, 15 and 20 years and the
balance 40% is payable at the 20th year along with accrued bonus.
(www.lic.com)
For a 25 years term , 15% of the sum assured becomes payable after
5,10,15 and 20 years and the balance 40% plus the accrued bonus
becomes payable at the 25th year. An important feature of these types of
policies is that in the event of the death of the policy holder at any time
within the policy term the death claim comprises of full sum assured
without deducting any of the survival benefit amounts which have
already been paid. The bonus is also calculated on the full sum assured.

53
HDFC SLIC does not have a money back policy. It could offer a money
back plan and capture some portion of this market. While marketing
insurance products I found that many customers wanted to purchase these
plans.
LIC offers 66 different plans; plans are formulated for specific occasions
– whole life plans, term assurance plans, money back plan for women,
child plans, plans for the handicapped individuals, endowment assurance
plans, plans for high worth individuals, pension plans, unit linked plans,
special plans, social security schemes – diversified portfolio of products.
HDFC SLIC could diversify its product portfolio. It could add more plans
for high worth individuals and women.

ICICI Prudential

ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a

merger between ICICI Bank which is the biggest private bank in India
and Prudential Plc which is a global life insurance company.
The company has an investment plan which is market related – Invest
Shield Life. In this plan even if the market falls, the premium will be
returned to investors. It is a guaranteed plan which ensures the company
carefully invests your money. The stock market performance of ICICI
Prudential is much better than HDFC SLIC. The returns on the growth
fund were 46.28% compared to the 42.70% offered by HDFC SLIC.
Customers are attracted by higher returns and this is a plus point for
Prudential.
The company is very well advertised. The advertisements are showcased
in movies, television, newspapers, magazines, bill boards, radio etc. The
company has an excellent brand ambassador – Mr. Amitabh Bacchan. His

54
promotion of the company builds trust and faith in the minds of our
people.
However the charges are very high in the plans offered by ICICI
Prudential. It is 35% during the first year, 15% in the next year and 3%
from the third year onwards. Also a higher minimum premium of Rs.
8000 is charged. Hence the policies are not accessible to the lower strata
of the society.

Birla Sun Life

Birla Sun Life Insurance Company Limited is a joint venture between

The Aditya Birla Group, one of the largest business houses in India and
Sun Life Financial Inc., a leading international financial services
organization. The local knowledge of the Aditya Birla Group combined
with the expertise of Sun Life Financial Inc., offers a formidable
protection for your future. (Source: www.birlasunlife.com)
The Aditya Birla Group has a turnover close to Rs. 33000 crores with a
market capitalization of Rs. 53400 crores (as on 31st March 2007). It has
over 72000 employees across all its units worldwide. It is led by its
Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations
within the group are Hindalco and Grasim.
Sun Life Financial Inc. and its partners today have operations in key
markets worldwide, including Canada, the United States, the United
Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China
and Bermuda. It had assets under management of over US$343 billion, as
on 31st March 2007. The company is a leading player in the life
insurance market in Canada.
Being a customer centric company, BSLI has invested heavily in
technology to build world class processing capabilities. BSLI has covered

55
more than a million lives since inception and its customer base is spread
across more than 1000 towns and cities in India. All this has assisted the
company in cementing its place amongst the leaders in the industry in
terms of new business premium income. The company has a capital base
of 520 crores as on 31st July, 2007.
Its Flexi Life Line Plan offers life long insurance cover till the policy
holder is 100 years of age. There are guaranteed returns of 3% p.a. net of
policy charges after every 5 years from the eleventh policy year onwards.
However the charges are very high. The initial charges for the first year
are 65%. Hence the fund value is greatly reduced.

Bajaj Allianz

Bajaj Allianz is a joint venture between Allianz AG with over 110 years
of experience in over 70 countries and Bajaj Auto, a trusted automobile
manufacturer for over 55 years in the Indian market. Together they are
committed to offering you financial solutions that provide all the security
you need for your family and yourself. Bajaj Allianz is the number one
private life insurer for the year 2005 – 2006. It is leading by 78 crores. It
has experienced a whopping growth of 216% in the last financial year.
The company has sold 13, 00,000 policies and is backed by 550 offices
across India. It offers travel insurance, motor insurance, home insurance,
health and corporate insurance. The mortality charges are lower than
HDFC SLIC. The entry age could be zero years which allow even new
born babies to be insured.

56
Tata AIG

Tata Aig is a joint venture between the Tata group and American
International Group Inc. In one of the plans the company offers hospital
cash benefit wherein it will pay Rs. 2500 per day in case of
hospitalization and Rs.12.5 lakhs in case the person suffers from any
critical illness. Annual premium is much less (about Rs. 6712) to avail
such a good benefit. Charges are relatively low compared to HDFC SLIC
for some policies.
The company offers high coverage plans at low cost. There is a plan even
for a policy term of 1 year. Your family can continue to enjoy their
current lifestyle even in the case of something happening to you. These
plans are very flexible and HDFC SLIC could adopt this idea of insuring
individuals for short periods of time. For example; there is a family of
four. The only earning member is the father.
He has just taken a loan from a bank of 20 lakhs to purchase a new home.
He is able to repay the loan with his current salary in 15 years. The
problem arises if something were to happen to him within these fifteen
years. Not only will the family face the emotional and financial loss of
their father but they will also have to repay the home loan or risk being
homeless.

Marketing Problems

The old and out dated technique of tele marketing is used to prospect
customers. More modern techniques must be adopted. The company must
sponsor shows and give presentations in corporate houses. The financial
health check must be performed for every prospect to assess his/her true
financial position and needs. Some of the advisors skip this vital step and

57
the prospect ends up with a plan they do not appreciate and soon
surrender or discontinue.
1) Some of the main problems in marketing the policies are:
2) Large amount of competition (18 players in the market)
3) Other brands are well advertised and have higher recall value
4) LIC is considered a safer option
5) Face competition from banks and mutual funds
6) High premium policies are difficult to market
7) Incorrect perception about insurance
8) Interested prospects might have a lack of time and postpone
investments
9) Customers get defensive if you cold call.
10) Short term plans are available only at large premium
11) Customers do not have risk appetite to invest in shares
12) Some prospects have already invested and are not interested
in further investments
13) Consumers don’t want to undertake medical examinations
14) Large amount of documentation
15) Customers do not like their money locked up for many years
16) Lack of awareness about the unit linked funds in the market
17) No money back plan present in the product portfolio

Suggestions for Improvement

1) Advertise about the company and its products – it motivates

individuals to purchase insurance
2) Create a positive perception about insurance

58
3) Speak about the good features a plan offers like high returns, life
cover, tax benefits, indexation, accident cover while prospecting
customers
4) Try to sell the product/plan which the consumer requires and not
the plan where the advisors benefit is higher
5) Improve the efficiency in operations
6) Bring out policies with small premiums payable for short periods
of time – Rs. 5000 – Rs. 10000 per annum for 10 years
7) Attract the youth of India with higher returns on investment as
returns are the motivating factor which influence purchase of
insurance
8) Promote insurance in colleges and corporate houses
9) Promote HDFC SLIC as an Indian Company to build trust
10) HDFC SLIC could have a brand ambassador or a mascot to
promote its services
11) Should have partial withdrawals from the first year onwards
12) Tap the rural market where there is large potential
13) Diversify product portfolio
14) Make products more straight forward – reduce complexities

59
 Analysis & Interpretation
“A Survey on the Life Insurance Industry in India”
BY HDFC SLIC

1) Age Group of Surveyed Respondents

TABLE 1:

Age group No. of Respondents

18 - 25 years 127

26 - 35 years 67

36 - 49 years 46

50 - 60 years 24

More than 60 years 6

Analysis:

From the table above we find that 47% of the respondents fall in the age
group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and
17% fall in the age group of 36 – 49 years.

60
Therefore most of the respondents are relatively young (below 26 years
of age). These individuals could be induced to purchase insurance plans
on the basis of its tax saving nature and as an investment opportunity with
high returns.
Individuals at this age are trying to buy a house or a car. Insurance could
help them with this and this fact has to be conveyed to the consumer. As
of now many consumers have a false perception that insurance is only
meant for people above the age of 50. Contrary to popular belief the
younger you are the more insurance you need as your loss will mean a
great financial loss to your family, spouse and children (in case the
individual is married) who are financially dependent on you

2) Customer Profile of Surveyed Respondents

TABLE 2:
Customer profile No. of respondents
Student 62
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 14

Analysis:

From the table above it can clearly be seen that 43% of the respondents
are working professionals, 23% are students and 18% are into business.
Therefore the target market would be working individuals in the age
group of 18 – 25 years having surplus income, interested in good returns
on their investment and saving income tax.

61
3) No. of Respondents who have Life Insurance Policy in their own
name
TABLE 3:
Person who have life insurance policy
Yes 103
No 167

Analysis:

This table shows that out of total 270 respondents only 103 or 38%
respondents have life insurance policy in their name. Rest all don’t have a
single policy in their name. So there is a very big scope for life insurance
companies to cover these people. So in future business of life insurace
will gro further.

4) Market Share of Life Insurance Companies

Table 4:

Life Insurer Number of Policies

HDFC Standard Life 4
Birla Sun Life 3
AVIVA Life Insurance 6
Bajaj Allianz 7
LIC 55
Tata AIG 6
ICICI Prudential 12
ING Vysya 6
Bharti AXA 2
Others 2

Analysis:

62
In India, the largest life insurance company is Life Insurance Corporation
of India. It has been in existence in India since 1956 and is completely
owned by the Government of India. Today the organization has grown to
2048 offices serving 18 crore policies and has a corpus of over 340000
crore INR.

5) Annual Premium Paid by Individuals for Life Insurance

Table 5:

Premium paid (p.a.) No. of respondents

Rs. 5000 - Rs. 10000 40
Rs. 10001 - Rs. 15000 26
Rs. 15001 - Rs. 24900 18
Rs. 25000 - Rs. 50000 10
Rs. 50001 - Rs. 60000 4
Rs.60001 - Rs. 80000 2
Rs. 80001 - Rs. 100000 3

Analysis:

From the table above we find that, 39% of the respondents surveyed pay
an annual premium less than Rs. 10001 towards life insurance. 25% of
the respondents pay an annual premium less than Rs. 15001 and 17% pay
an annual premium less than Rs. 25000. Hence we can safely say that
HDFC SLIC would be able to capture the market better if it introduced
products/plans where the minimum premium starts at Rs. 5000 per
annum.

63
Only 19% of the respondents pay more than Rs. 25000 as premium and
most products sold by HDFC SLIC have Rs.12000 as the minimum
annual premium amount. They should introduce more products like Easy
Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a.
and Rs. 12000 p.a. respectively. This would definitely increase their
market share as more individuals would be able to afford the
policies/plans offered.
6) Popular Life Insurance Plans
TABLE 6:

Type of Plan No. of Respondents

Term Insurance Plans 105
Endowment Plans 122
Pension Plans 16
Child Plans 8
Tax Saving Plans 19

Analysis:

From the table given above we can clearly see that 45% of the
respondents hold endowment plans and 39% of the respondents hold term
insurance plans. Endowment plans are very popular and serve two
purposes – life cover and savings.
If the policy holder dies during the policy term the nominee gets the death
benefit that is, sum assured and accumulated bonus. On survival the
policy holder receives the survival benefit with a bonus.
A term plan is a pure risk cover plan wherein the insured pays a lower
premium for a higher sum assured. Term insurance is the cheapest form

64
of insurance and helps the policy holder insure himself for a relatively
low premium. For the returns sensitive investor term plans do not find
favor as they do not offer a return in case the individual does not die
during the policy term.

7) Awareness of Unit Linked Insurance Plans

Table 7:
Awareness of Unit Linked Plans No. of Respondents
Yes 154
No 116

Analysis:

From the table given above we find that 57% of the respondents are
aware of unit linked life insurance plans and 43% are not aware of such
plans. These plans should be promoted through advertising. The company
can advertise through television, radio, newspapers, bill boards and
pamphlets. This would increase awareness and arouse curiosity in the
minds of the consumer which would enable the company to market its
products more effectively.
Unit – linked plans are those where the benefits are expressed in terms of
number of units and unit price. They can be viewed as a combination of
insurance and mutual funds. The number of units a customer would get
would depend on the unit price when they pay the premium.
When the policy matures the individual gets his fund value. The value of
his fund is calculated by multiplying the net asset value and number of
units held by them on that day.

8) Consumer Willingness to Spend on Life Insurance Premium

65
Table 8:

Willingness to spend on No. of

premium respondents Percentage
Less than Rs. 6,000 41 15%
Rs. 6,001 - Rs. 10,000 73 27%
Rs. 10,001 - Rs. 25,000 110 41%
Rs. 25,001 - Rs. 50,000 41 15%
Rs. 50,001 - Rs. 1,00,000 5 2%

Analysis:

From the table above, we can clearly see that 41% of the respondents
would be willing to spend between Rs. 10001 – Rs. 25000 for life
insurance. 27 % would be willing to spend between Rs. 6001 – Rs. 10000
per annum. Only 15% would be willing to spend more than Rs. 25000 per
annum as life insurance premium.
We could say that the maximum premium payable by most consumers is
less than Rs. 25000 p.a. This is further reduced as most customers have
already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz
etc.
HDFC SLIC is faced with a large amount of competition. There are 18
insurance companies in India inclusive of LIC. Hence to capture a larger
part of the market the company could introduce more reasonable plans
with lesser premium payable per annum.

9) Table Showing Ideal Policy Term

Table 9:

66
Ideal policy term No. of respondents
3 - 5 years 51
6 - 9 years 41
10 - 15 years 95
16 - 20 years 38
21 - 25 years 24
26 - 30 years 5
More than 30 years 3
Whole life Policy 13

Analysis:

From the table given above it can be seen that 35% of the respondents
prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years
and 15% prefer a term of 6 – 9 years. This means that HDFC SLIC could
introduce more plans wherein the premium paying term is less than 15
years.
The outlook of insurance as a product should be changed from something
which you pay for your whole life (whole life policy) and do not receive
any benefit (the nominee only receives the benefit in case of your death)
to an extremely useful investment opportunity with the prospects of good
returns on savings, tax saving opportunities as well as providing for every
milestone in your life like marriage, education, children and retirement.

10) Factors That Motivate Respondents to Purchase Insurance

Table 10:

Parameter No. of Respondents

Advertisements 35
High returns 84
Advice from friends 46

67
Family responsibilities 89
Others 16

Analysis:

From the table above it can be seen that 33% of the respondents purchase
life insurance to secure their families, 33% take life insurance to get high
returns, 17% purchase insurance on the advice of their friends and 13%
purchase insurance because of the influence of advertisements.
The main purpose of insurance is to cover the financial or economic loss
that occurs to the family in case of the uncertain death of the policy
holder. But now a days this trend is changing. Along with protection (life
cover), a savings element is being added to insurance.
With the introduction of the new unit linked plans in the market, policy
holders get the option to choose where their money will be invested. They
can invest their money in the equity market, debt market, money market
or a combination of these. The debt and money markets usually have low
risk attached whereas the equity market is a high risk investment option.

11) Preferred Company Type of The Respondents

Table 11:

Type of Company No. of Respondents Percentage

Government Owned
Company 127 47%
Public Limited
Company 62 23%
Private Company 49 18%

68
 Foreign Company 32 12%

Analysis:

From the table above we find that 60% of the respondents preferred to
purchase insurance from a government owned company, 29% of the
respondents preferred to purchase insurance from a public limited
company and only 4% of the respondents preferred a foreign based
company. Heavy advertising through television, newspapers, magazines
and radio is required.

12) Minimum Expected Return on Investment

Table 12:
Expected Returns No. of respondents
Less than 5% 5
5% - 10% 39
11% - 15% 46
16% - 20% 49
21% - 25% 46
26% - 30% 27
31% - 40% 22
41% - 50% 14
More than 50% 22

Analysis:

From the chart above it can clearly been seen that 18% of the respondents
would like 16 – 20% returns, 17% would like returns between 21 – 25%
and 17% would like returns of 11 – 15% on their investments. Therefore
the average return on investment should be at least 16 – 20 %.

69
Most consumers are willing to adapt to some amount of risk but still want
some guaranteed returns. Therefore the bulk of investment should be
made in the balanced fund with 50% debt and 50% equity. The returns on
the Secure Fund are guaranteed as these involve investment is
government securities and the debt market. But the returns on these
instruments are low (8 – 10%). If the company invests in shares, returns
are higher (39%) but correspondingly risk borne by the policy holder is
also higher. Therefore a good combination of the two instruments is often
a wise choice.

70
 Summary

HDFC Standard Life insurance is the oldest life insurance company in the
world. It is the largest insurer in the UK and is the 28th largest company in
the world. In India, the company is marketing life insurance products and
unit linked investment plans. From my research at HDFC SLIC, I found
that the company has a lot of competition from other private insurers like
ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition
from LIC. To compete effectively HDFC SLIC could launch cheaper and
more reasonable products with small premiums and short policy terms
(the number of year’s premium is to be paid). The ideal premium would
be between Rs. 5000 – Rs. 25000 and an ideal policy term would be 10 –
20 years.

HDFC must advertise regularly and create brand value for its products
and services. Most of its competitors like Aviva, ICICI, Max, Reliance
and LIC use television advertisements to promote their products. The
Indian consumer has a false perception about insurance – they feel that it
would not benefit them if they do not live through the policy term.
Nowadays however, most policies are unit linked plans where a customer
is benefited even if their death does not occur during the policy term.
This message should be conveyed to potential customers so that they
readily invest in insurance.

Family responsibilities and high returns are the two main reasons people
invest in insurance. Optimum returns of 16 – 20 % must be provided to
consumers to keep them interested in purchasing insurance.

On the whole HDFC standard life insurance is a good place to work at.
Every new recruit is provided with extensive training on unit linked

71
funds, financial instruments and the products of HDFC. This training
enables an advisor/sales manager to market the policies better. HDFC
was ranked 13 in the Best Places to Work survey. The company should
try to create awareness about itself in India. In the global market it is
already very popular. With an improvement in the sales techniques used,
a fair bit of advertising and modifications to the existing product
portfolio, HDFC would be all set to capture the insurance market in India
as it has around the globe.

72
 Findings

1) Customers are less aware about the private insurance company in

market.
2) Some customer likes to join HDFC as FCs because it is a Part-time
job.
3) Many professions like CA, tax planner wants corporate agency
rather than to be a financial consultant.
4) HDFC is too selective in making a FC rather than to appoint any
one like LIC.
5) Customers don’t want to join as financial consultant because it’s on
commission basis and they want the job on salary basis.
6) Educated customers are now vending towards private insurance
Companies, due to the attractive packages and services provided by
various new insurance companies.
7) LIC has created a branded image in 3-4 decades, due to which new
insurance companies are facing trouble in capturing market share.
8) If the customers are joining HDFC the segment is more of tax
consultant, investment for consultant and other people who are
engaged in investment business that is because they want to
diversity their portfolio.
9) HDFC SLIC is having good retention strategies for their financial
consultant.

73
 Suggestion

1) Customers should be made aware of the brand name of Insurance

Company through advertisement.

2) The fear in the customer mind should be removed by company.

3) The insurance companies should try to nurture their brand name

timely and attractive facility provide to customer.

74
 Conclusion

HDFC standard life insurance is first life insurance Company in India. It

has businesses spread out across the globe. It was registered on 23rd
December 2000. It currently ranks number 4 amongst the insurers in India
(Source: annual premium provided by the company)
The company faces a large amount of competition. To sustain itself it
must promote its products through advertising and improve its selling
techniques. Consumers must be aware of the new plans available at
HDFC SLIC. The medium of advertising used could be television since
most of its competitors use this tool to promote their products. The
company must be promoted as an Indian company since consumers seem
to have more trust in investing in Indian firms.
The unit linked concept must be specifically promoted. The general
perception of life insurance has to change in India before progress is
made in this field. People should not be afraid to invest money in
insurance and must use it as an effective tool for tax planning and long
term savings.
HDFC SLIC could tap the rural markets with cheaper products and
smaller policy terms. There are individuals who are willing to pay small
amounts as premium but the plans do not accept premiums below a
certain amount. It was usually found that a large number of males were
insured compared to females. Individuals below the age of 30 (mostly
male) were interested in investment plans. This was a general conclusion
drawn during prospecting clients.

75
 Bibliography

1) Web-Site :
a) www.hdfcslic.com
b) www.tata-aig-life.com
c) www.irdaindia.com
d) www.lic.com
e) www.money control.com
f) www.bajajallianz.com
g) www.icici.prulife.com
h) www.indiacore.com
i) www.bajajallianz.com
j) www.iciciprulife.com
k) www.tataaig.com
2) Magazine –
a) Insurance World
b) The Outlook Money
c) Secrets of Successful Insurance Sales by Mr. Jack Kinder

76