THE ROLE OF FINANCIAL CONSULTANT (FC) IN ORGANIZATIONAL GROWTH

IN CONTEXT TO

Submitted in the fulfillment of the Degree of Masters of Finance and Control, 2009-11 at Kurukshetra University Kurukshetra

Submitted By: Neha Patlan Roll No:58372

Session 2009-2011

PREFACE There is a vast difference between theory and practice. The practical training program is designed with the purpose of bridging gap between theory and practice. As such I am fortunate to have an opportunity to undergo my project and thus my practical training with HDFC Standard Life Insurance Company Private Limited, Panipat to Summer training was an exposure corporate functional environment. It was opportunity & great pleasure for me to be in Corporate Environment and having interaction with concerned people. This project is based on a brief study of ten weeks of training period. Efforts have been made to present all authentic information as far as possible.

ACKNOWLEDGEMENT With a sense of great pleasure & satisfaction I present this report entitled as the The Role of Life Insurance financial consultant in Organizational Growth in context to HDFC Standard Life Insurance culmination of my efforts of last ten weeks. Completion of this project, is no doubt, is a product of invaluable support & contribution of a number of people. I wish to express my gratitude to those who generously helped me in completing this research work with their knowledge & expertise. A project of this nature calls for intellectual nourishment, professional help & encouragement from various quarters. I present my gratitude to project guide Mr. Vikram Singh, Sales development Manager for giving me the opportunity to work for hdfc standard Life Insurance Company Pvt. Ltd., for being constant guiding force & a source of Illumination throughout this entire period .I would also extend my gratitude to Mr. Vikram Singh for his useful suggestions. My special thanks to the employees of Hdfc standard Life Insurance Company Pvt. Ltd, Panipat, who extended their precious cooperation & for the patience they showed while entertaining my queries I am immensely thankful to all agents who took out time from their busy schedule and enthusiastically responded to my queries and provided me with all the valuable information.

CONTENTS 1. Insurance- A Brief Introduction General Malhotra Committee Report i. Structure ii. Competition iii. Regulatory Body iv. Investments v. Customer Service 2. Purpose & need of Life Insurance in India 3. IRDA Regulations pertaining to Financial Consultant in brief Short Title & Commencement Definitions Issue or renewal of license IRDA guidelines for Financial Consultant 4. Training and Development {IRDA Defined} Qualification Practical Training Examination Fees Payable Cancellation of License The issue of duplicate license Non application to existing Insurance Financial Consultant 5. Financial consultant Procedures, Rules & Functions Insurance Financial consultant as a career Procedure of becoming an Financial consultant Regulation Authority of an Financial Consultant Other Intermediaries Methods of remunerating Financial Consultant Financial Consultant- A Professional 6. Role of Insurance Financial Consultant Role Prerequisites for Success Selling Insurance o Pre approach o Approach

o o o o o o

Interview Objections Closure Motivation After Sales Service Ethical behavior of an Financial Consultant

7. HDFC Standard Life Insurance in India General Overview Corporate Objectives Mission 8. HDFC Standard Life Business (Products) & Future Plans Our Plans Product Centered Protection Savings Investments Retirement 9. HDFC Standard Life- Function & Scope of Authority of Financial Consultant 10. Duties & Obligations of HDFC Standard Life Financial Consultant Duties & Obligations Proposal Forms Collections of Premium or Premium deposits Reporting Settlement of Claims Marketing & Advertisement Other Obligations of the Financial Consultant 11. Eligibility, Recruitment & Development of an Financial Consultant 12. Recommendations 13. Conclusion 14. Bibliography

INTRODUCTION

TO

INSURANCE

INSURANCE - A BRIEF INTRODUCTION

INTRODUCTION
Life is a roller coaster ride and is full of twists and turn; we cannot take anything for granted in life. Insurance policies are a safeguard against the uncertainties of life. The year 2000 saw a plethora of insurance companies entering into the insurance sector. Of the to segments of Life and Non Life, Life Insurance is considered more lucrative owing to the high rate of returns. Moreover, with this has emerged a tough challenge to LIC, the monolith of the insurance industry. In 1999, the global insurance market, measured as a sum of annual premium, collections, was placed at $2324 billion, $1412 billion of which was life premiums and the rest non- life. US has a large non life market whereas in India there is a dominance of life insurance products. As more and more companies turn competitors, it will be essential for each to form a distinct and strong identity for them. Over the years, the name of LIC has become as synonymous to Life Insurance as Amul has to butter. This inedible impression needs to be erased by the new players through an agile exercise in branding and positioning where they can catch the customers attention and cause him to divert the new insurers. In this context advertising will play a very crucial role. This is because companies will find it very difficult to differentiate their products and services in term of product attributes.

The insurance sector in India has come 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.

A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:

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. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs 5 corer 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. In 1994, the committee submitted the report and some of the key recommendations included:

General The business of insurance started with marine business. Traders, who used to gather in the Lloyds coffee house in London, agreed to share the losses of their goods while being carried by ships. The losses use to occur because of pirates who robbed on the high seas or because of the bad weather spoiling the goods or sinking the ships. The first insurance policy was issued in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first insurance co was the Bombay Mutual Assurance Ltd. In the wake of Swadeshi Movement in India in early 1900s, quite a good number of Indian companies were formed in the various parts of the country to transact insurance business. To name a few :: Hindustan Cooperative and National Insurance in Kolkatta; United India in Chennai; Bombay Life, New India and Jupiter in Mumbai and Lakshmi Insurance in New Delhi. In 1956, life insurance business was nationalized and LIC of India came into being 0n 1.09.1956. The Government took over the business of 245 companies (including 75 provident fund societies) who were transacting life insurance business at that time. There after, LIC got the exclusive privilege to transact life insurance business in India. Malhotra Committee Report 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 Government stake in the Insurance Companies to be brought down to 50%

Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations All the insurance companies should be given greater freedom to operate

ii) Competition Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry No Company should deal in both Life and General Insurance through a single entity Foreign companies may be allowed to enter the industry in collaboration with the Domestic companies Postal Life Insurance should be allowed to operate in the rural market Only one State Level Life Insurance Company should be allowed to operate in Each state.

iii) Regulatory Body Insurance Regulatory and Development Authority is the regulatory body responsible for Indian insurance. The Insurance Act should be changed An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be Made independent.

iv) Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There Current holdings to be brought down to this level over a period of time).

v) Customer Service LIC should pay interest on delays in payments beyond 30 days Insurance companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology to be carried out in the Insurance industry.

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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 minimu !m 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. Relevant laws were amended in 1999 and LICs monopoly rights to transact the insurance business in India came to an end. At the close of financial year ending 31 March 2004 twelve new companies were registered with the Insurance Regulatory and Development Authority (IRDA) to transact life insurance business in India.

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2. PURPOSE AND NEED OF INSURANCE IN INDIA Assets are insured because they are likely to be destroyed through accidental occurrences called perils. Few examples of perils are fire, floods, lightening, breakdowns, earthquakes, etc. perils are the events. Risks are the consequential losses or the damages. The risk only means that there is only possibility of loss or damages. The damage may or may not happen. Insurance is done against the contingency that it may happen. There has to be an uncertainty about the risk. Insurance is relevant if there are uncertainties. If there are no uncertainties about the occurrence of any event it cannot be insured against. In the case of human being, death is certain, but the time of death is uncertain. In the case of a person who is terminally ill, the time of death is not uncertain, though exactly not known. He cannot be insured. Insurance does not protect the asset. It does not prevent its loss due to the perils. The perils cannot be avoided through insurance. The perils can sometimes be avoided, through better safety and the damage control management. Insurance only tries to reduce the impact of the risk on the owner of the asset and those who depend on the asset. It only compensates the losses and that too, not fully. Only economic consequences can be insured. If the loss is not financial, insurance may not be possible. Example of non- economic losses are love and affection of parents, leadership of managers, sentimental attachments to family heirloom, innovative and creative abilities, etc. Life insurance should ideally be bought for what it was always intended to do indemnify the nominees in case of an eventuality. Keeping this in mind all individuals should have a term plan in their insurance portfolio, irrespective of their profile. To take care of the investment and the tax-saving elements, individuals can consider investing in tax saving mutual funds and NSC/PPF. Unit linked insurance plans (ULIPs), which can invest up to 100% of the premium in market-linked instruments, is also an option, which individuals can opt for. Hence, while buying insurance do not compare the returns from insurance with investments such as mutual funds, etc,

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WHAT IS LIFE INSURANCE

Life Insurance is an insurance policy that provides an agreed amount of cover over an agreed term, so that should you die during the policy term, a lump sum is paid out. Life insurance is considered as the cornerstone of financial planning. It is a cost effective way to provide for your family after you are gone. Many of us will at some stage in our lives have the need for life insurance. Life insurance is an agreement between you and an insurer and under the terms of a life insurance contract, the insurer promises to pay a certain sum to a designated beneficiary when you die, in exchange for your premium payments. This may give you peace of mind that, should you die during the policy term, your family would have some financial security. The most common reason for buying life insurance is to replace the income lost when you die. For example, say that you work, and that your income is used to support yourself and your family. When you die and your income stops the life insurance proceeds can be used to continue to support the family members you've left behind. If you have dependants or your income is needed to maintain your family's standard of living you may need life insurance. If you died your family could use the money to pay off some outstanding bills or perhaps towards a mortgage. There may also be extra costs to deal with that were not there before; such as the cost of extra childcare. To decide if you need life insurance you will need to consider whether financially without you and for how long. your family could cope

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WHY DO WE NEED INSURANCE

Why is insurance necessary? The question contains the answer within itself. After all life is fraught with tensions and apprehensions regarding the future and what it holds for the individuals. Despite all the planning and preparation one might make, no one can accurately guarantee or predict how or when death might result and the circumstances that might ensue in its aftermath. People invest in life insurance owing to a few key reasons, mainly

dependants.

Insurance creates financial provisions for the decreased Insurance provides for the policyholders old age after

his earning power diminishes. After all, interest rates may fall and invested holdings may lose value and stop gaining dividends, but the value of an insurance policy once set, never reduces. Insurance also provides a legally authorized way to reduce the incidence of Income Tax.
With a view to promote savings and increase awareness regarding insurance, Government has provided certain benefits through the income tax act for taxpayer if they choose to opt for life insurance policies. If the plan for his future in a prudent manner, one can maximize the returns on his insurance portfolio. People generally regard insurance as a scheme when and where you have to loose a lot to gain a little. Nevertheless, insurance is still the most reliable tool an individual can use to plan for his future.

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Mechanism of Insurance The concept of insurance is that people exposed to the same risk come together and agreed to share a loss collectively if any of their members suffers it from that risk. Insurance companies play the role of implementing this concepta) They bring together people exposed to the similar risk b) They collect members contribution in advance in the shape of premiums and create a fund out of which the losses are paid The life insurance covers contingencies (death, retirement) and provides relief to the family in the event of death or retirement of the breadwinner. Variable needs of life insurance can be a) Providing financial security to the family b) Provision for education, marriage, etc of the children c) Post-retirement income for self and dependents d) Special needs like Medical expenses

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WHY WE NEED INSURANCE

Wealth Creation

Childrens Marriages and Education

Dying too soon

Living Death Gap

Living too long

Why we need insurance? For passing a happy life we nee to full fill some basic needs. Without fulfill these needs no one can survive, these basic needs these are: Air Water Food Cloths Shatter Safety

For making the future safe a sensible person invest their money or take insurance plans to cover themselves or their family members and dependents. You dont know when a casualty is happen and if you are not having any safety cover what will you do and what will happen then. 16

IRDA REGULATIONS

PERTAINING TO

FINANCIAL CONSULTANT

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3. IRDA REGULATIONS PERTAINING TO FINANCIAL CONSULTANT IN BRIEF In exercise of the powers conferred by sub-section (6) of the section 42 and clauses (k), (l), (m), (n), (o) and (p) of sub-section (2) of the section 114 A of the Insurance Act, 1938, the Authority, in consultation with the Insurance Financial Consultant Committee, hereby makes the following regulations: 1. Short title and commencement These regulations may be called Insurance Development Authority (Licensing of Insurance Financial Consultant) Regulation 2000. They shall come into force on the date of their publication in the Official Gazette.

2. Definitions- in these regulations, unless the context otherwise requires: Act means the Insurance Act, 1938 (4 of 1938); Approved institution means an Institution engaged in education and / or training particularly in the area of insurance sales, service and marketing, approved and notified by the Authority; Authority means the Insurance Regulatory and Development Authority established under the provisions of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); Composite insurance Financial Consultant means an insurance agent who holds a license to act as an insurance Financial Consultant for a life insurer and a general insurer; Corporate Financial Consultant means a person other than an individual as specified in clause (i); Designated person means an officer normally in charge of marketing operations, as specified by an insurer and authorized by the Authority to issuer renew licenses under these regulations; Examination Body means an Institute, which conducts per-recruitment tests for insurance agents and which is duly recognized by the Authority; License means a certificate of license to act as an insurance agent issued under these regulations; Person means a) An individual, b) A firm or c) A company formed under the Companies Act, 1956 (1 of 1956), and includes a banking company as defined in clause (4A) of section 2 of the Act;

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Practical Training includes orientation, particularly in area of insurance sales, service and marketing, through training modules as approved by the Authority; Proposal Form means an application for purchase of an insurance product which shall be the basis of insurance contract; Prospect means a potential purchaser of an insurance product; Recognized Board or Institution means such board or institution as may be recognized by any State Government or the Central Government.

3. Issue or renewal of license A person desires to obtain or renew a license (hereinafter referred to as the applicant) to act as an insurance agent or a composite insurance agent shall proceed as followsa) The applicant shall make an application to a designated person o In Form IRDA- Financial Consultant-VA, if the applicant is an individual; o In Form IRDA- Financial Consultant-VC, if the applicant is a firm or a company. Provided that the applicant, who desires to be a composite insurance agent, shall make two separate applications. The designated person may, on receipt of the application along with the evidence of payment of fees to the Authority, and on being satisfied that the applicanta) Possesses the qualifications as specified under Regulation 4; b) Possesses the practical training as specified under Regulation 5; c) Has passed the examination as specified under Regulation 6; d) Has the perquisite knowledge to solicit and procure insurance business; e) Is capable of providing the necessary services to the policyholders; Grant or renew, as the case may be, a license in Form IRDA-Agent-VB, along with identity card in Form IRDA-VZ: Provided further that such identity card from one life insurer and such identity card from one general insurer shall be provided to the Applicant seeking license to act as a composite insurance Financial Consultant. Provided further that in the case of a firm or a company, all of its partners or directors, as the case maybe, shall fulfill the requirements of sub-clause (i) to (iii).

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Provided further a license issued in accordance with this regulation shall entitle the applicant to act as insurance Financial Consultant for one life insurer or one general insurer or both, as the case may be. If the designated person refuses to grant or review the license under this regulation, he shall give reasons therefore to the applicant.

IRDA Guidelines for Financial Consultant The Insurance agent is required to comply with the provisions of the IRDA (Licensing of Insurance Financial Consultant) Regulations, 2000 and other Insurance Law in force at all relevant times. In particular, the Financial Consultant shall adhere to the code of Conduct as specified in the said Regulation, which is produced below for reference: Every insurance Financial Consultant shall: 1. Identify himself and the insurance company of whom he is an insurance agent; 2. Disclose his license to the prospect on demand; 3. Disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan; 4. Disclose the scales of the commission in respect of the insurance product offered for sale, if asked by the prospect; 5. Indicate the premium to be charged by the insurer for the insurance products offered for sale; 6. Explain to the prospect the nature of the information required in the proposal form by the insurer, and also the importance of the disclosure of the material Information in the purchase of an insurance contract; 7. Bringing to the notice of the insurer any adverse habits or income inconsistency of the prospect, in the form of a report (called Insurance Financial Consultants Confidential Report) along with every proposal submitted to the insurer and any material facts that may adversely affect the undertaking decision of the insurer as regards acceptance of the proposal, by making all reasonable enquiries about the prospect; 8. Inform promptly the prospect about the acceptance or rejection of the proposal by the insurer; 9. Obtain the requisite documents at the time of filing the proposal form with the insurer; and other documents subsequently asked by the insurer for the completion of the proposal; 10. Render necessary assistance to the policy holders or claimants or beneficiaries in complying with the requirements for settlements of claims by the insure;

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11. Advice every individual policy holder to effect nomination or assignment or change of address or exercise of options, as the case may be, and offer necessary assistance in this behalf, wherever necessary.

No insurance Financial Consultant shall: 1. Solicit or procure business without holding a valid license; 2. Induce the prospect to omit any material information in the material form; 3. Induce the prospect to submit wrong information in the proposal form or document submitted to the insurer for acceptance with the prospect; 4. Behave in discourteous manner with the prospect; 5. Interfere with any proposal introduced by any other insurance agent; 6. Offer different rates, advantages, terms and conditions other than those offered by his insurer; 7. Demand or receive a share of proceeds from the beneficiary under an insurance contract; 8. Force a policyholder to terminate an existing policy and to effect a new proposal from him within three years from the date of such termination; 9. Have, in case of a corporate agent, a portfolio of insurance business under which the premium is in excess of fifty percent of the total premium procured, in any year, from one person (who is not an individual) or one organization or one group of organizations; 10. Apply for fresh license to act as an insurance agent, if his license was earlier cancelled by the designated person, and a period of five years has not lapsed from the date of such cancellation; 11. Become or remain a director of any insurance company; Every insurance Financial Consultant shall, with a view to conserve the insurance business already procured through him, make every attempt to ensure remittance of the premium by the policy holders within the stipulated time, by giving notice to the policyholder orally or in writing.

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4. TRAINING & DEVELOPMENT OF AN FINANCIAL CONSULTANT {IRDA DEFINED} Qualification The applicant shall possess the minimum qualification of pass in 12th standard or equivalent examination conducted by any recognized Board/Institution, where an applicant resides in a place with a population of five thousand or more as per the last census, and a pass in the 10th standard or equivalent examination for a recognized Board/Institution if the applicant resides in any other place. Practical training: 1. The applicant shall have completed from an approved institution, at least, one hundred hours practical training in life or general insurance business, as the case may be, which may be spread over three or four weeks, where such applicant is seeking license for the first time to act as insurance agent. Provided that the applicant shall have completed from an approved institution, at least, one hundred fifty hours practical training in life or general insurance business which may be spread over six to eight weeks, where such applicant seeking license for the first time to act as a composite insurance Financial Consultant. 2. Where the applicant referred to under sub-regulation (1) is: An Associate/Fellow of the Insurance Institute of India, Mumbai. An Associate/Fellow of the Institute of Chartered Accountants of India, New Delhi. An Associate/Fellow of the Institute of Costs and Work Accountants of India, Kolkatta An Associate/Fellow of the Institute of Companies Secretaries of India, New Delhi. A Master of Business Administration of any Institution/ University recognized by any Institute/ University recognized by any State Government or the Central Government; or Possessing any professional qualification in marketing from any Institution/ University recognized by any State Government or the Central GovernmentHe shall have completed at least fifty hours practical training from an approved institution.

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Provided that such applicant shall have completed from an approved institution, at least seventy hours practical training in life and general insurance business, where such applicant is seeking license for the first time to act as a composite insurance Financial Consultant. 3. An applicant who has been granted a License after the commencement of these regulations, before seeking renewal of license to act as an insurance agent, shall have completed, at least twenty-five hours practical training in life or general insurance business, as the case may be, from an approved institution Provided that such applicant before seeking renewal of license to act as a composite insurance agent shall have completed from an approved institution, at least, fifty hours practical training in life and general insurance. Examination The applicant shall have passed the pre-recruitment examination in life or general insurance business, or both, as the case may be, conducted by the Insurance Institute of India, Mumbai or any other examination body. Fees payable The fees payable to the Authority for issue or renewal of license to act as insurance Financial Consultant or a composite insurance Financial Consultant shall be rupees two hundred and fifty. The additional fees payable to the Authority, under the circumstances mention in subsection (3) of the section 42 of the Act, shall be rupees one hundred. Cancellation of license The designated person may cancel a license of an insurance Financial Consultant, if the Financial Consultant suffers, at any time during the currency of the license, from any of the disqualifications mentioned in sub-section (4) of section 42 of the Act, and recover from him the license and the identity card issued earlier. The issue of duplicate license The Authority may issue a duplicate license replace a license lost, destroyed, or mutilated on payment a fee of rupees fifty. Non- application to existing insurance Financial Consultant Nothing contained in Regulation 4 to 6 of these Regulations shall apply to the existing Financial Consultant before the commencement of these Regulations.

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5. FINANCIAL CONSULTANT PROCEDURES, RULES & FUNCTIONS Insurance Agency as a career FC : Defined An FC is one who acts on behalf of another. The another, on whose behalf the Financial Consultant acts, is called the principal. This is the simple definition. The lawyer is the Financial Consultant of the client, when he argues the case in court. An ambassador is an Financial Consultant of his country. It is the function, which determines the relationship of agency not the designation. According to Section 182 of the Indian Contract Acts, an FC is a person employed to do any act for another or to represent another in dealing with a third person. The person for whom such act is done or who is so represented is called the principal. In the insurance industries, the term agent is ordinarily applied to a person engaged by the insurer to procure new business. The Insurance Act defines an insurance FC as one who is licensed under Section 42 of that Act and is paid by way of commission or otherwise, in consideration of his soliciting or procuring insurance business, including business relating to the continuance, renewal or revival of policies of insurance. He is for all purposes, an authorized salesman for insurance. There is a legal maxim qui facit alium, facit perse, which means that he who acts through others, acts to himself. The principal is bound by what the FC does, therefore contracts entered into through an Financial Consultant, and obligations arising from acts done by FC, maybe enforced in the same manner and will have the same legal consequences, as if the contracts have been entered into and the acts done, by the principal himself. Under Section 183 of the Contract Act, any person who is a major, according to the law to which he is subject, and who is of sound mind, can employ an FC. Section 184 provides that as between the principal and the third persons, any person may become an FC. Thus, though a minor may be employed as an FC and the principal would be bound by his actions, the minor himself will not be liable to his principal. Unlike other contracts, no consideration is necessary to create an agency contract. Procedure of becoming a Financial consultant The Insurance Act, 1938 lies down that an insurance FC must possess a license under section 42 of that Act. The license is to be issued by IRDA. The IRDA has authorized designated persons, in each insurance company, to issue the license on behalf

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the IRDA. The fee for the license, the manner of making an application, etc., have been described in the IRDA Regulations. A license issued by the IRDA will be valid for three years. The, license may be to act as an FC for a life insurer, for a general insurer or as a composite insurance FC working for a life insurer as well as a general insurer. No FC is allowed to work for more than one life insurer or more than one general insurer. The qualification necessary before a license can be given are that the person (individual or corporate insurance executive) must be: At least 18 years old Have passed at least the 12th standard or equivalent examination, if he is to be appointed in a place with a population of 5000 or more or 10th standard otherwise. Have undergone practical training for at least 100 hours in life or general insurance business, as the case may be, from an institute, approved and notified by the IRDA. In case of a person wanting to become a composite insurance Financial Consultant, the applicant should have completed at least 150 hours practical training in life and general insurance business, which may be spread over to six to eight weeks. Have passed the per-recruitment examination conducted by the Insurance Institute of India or any other examination body recognized by the IRDA.

A person with the following qualification is debarred form holding a license: He has found to be of unsound mind by the court of competent jurisdiction. He has been found guilty of the criminal breach of trust, misappropriation, cheating, forgery or abetment or attempt to commit any such offence

The license once issued can be cancelled whenever the person acquires a disqualification. Application of the renewal have to be made at least thirty days before the expiry of the license, along with the renewal fee of 250.if the application is not made at least thirty days before the expiry, but is made before the date of expiry of the license, an additional fee of 100 is payable. If the application is made after the date of expiry, it would normally be refused. Prior to the renewal of the license, the FC should have completed at least 25 hours practical training in life or general insurance business or at least 50 hours practical training in life and general insurance business in case of a composite insurance FC. Insurers, who select FC for appointment, make arrangements for training, for appearing in the prescribed examinations, and obtaining the license form the IRDA. The procedure has been streamlined and there is little loss of time for any step in the process.

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FCs Regulation The Insurance Regulatory and Development Authority (IRDA), constituted by the IRDA Act of 1999, issued the IRDA (licensing of insurance FC) Regulations, 2000. These Regulations deal with the issue of licenses under Section 42 of the Insurance Act, 1938 and other matters relating to Financial Consultants. By another notification in October 2002, these Regulations were made ineffective for corporate Financial Consultants and the new IRDA (Licensing of Corporate FC ) Regulations, 2002 were issued. These Regulations deal with the issue of license and the matters relating to corporate FC. In terms of these Regulations, a license will not be given if a person is: A minor, Found to be of unsound mind Found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence Found guilty of or knowingly participating in or conniving at any fraud, dishonesty or misrepresentation against an insurer or an insured Not possessing the requisite qualifications and specified training Not passed such examinations as are specified by the Regulations Found violating the code of conduct as specified by the Regulations

It is not only an individual who can become an FC. Collectives like companies, firms, banks, cooperative societies, etc can also become FC. These collectives will designate one or more persons as Corporate Insurance Executive, who will require obtaining licenses. Other, who may also work for the corporate FC, will be called Specified Persons and they will be required to obtain certificates. The fee for grant of the license is 250 for individuals as well as corporate FC. A license is granted for three years. It may be renewed after three years. It can be cancelled, if the FC acquires any of the disqualifications. The fee for the certification of the specified person is 600. This is also valid for three years. Authority of an Financial consultant While the maxim citied above makes the principal liable for all the acts done by the FC, he can restrict his liability by specifying the extent of authority granted to the FC. The authority may be expressed or implied. An authority is said to be expressed when it is stated by words, spoken or written. It is implied hen it is to be inferred from the circumstances of the case.

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The LIC does not authorize its FCs to collect premium (except first premium along with the proposal) or other amounts from policyholders. But if the Financial Consultant collects such amounts, remits them to the insurer and gets receipts to be handed over back to the policyholder, implied authority can be inferred or construed.

Other intermediaries Brokers arrange to place the business of their clients with insurers on terms that are standard or negotiated this becomes necessary when the needs of the proposes are unique and not met by the benefits under the standard plans of insurance. Brokers understand the nuisances of the business well and also know the policies of the insurer. A broker usually does business with more than one insurance company. He collects commission from the insurer with whom the business is placed and does not charge the prospect. In India, till October 2002, only insurance FC licensed by the IRDA were permitted to procure and solicit life insurance business. Brokers dealt only with reinsurance business. The law was amended in September 2002, and the IRDA has issued (Insurance Brokers) Regulations, 2002 providing for the licensing of direct brokers reinsurance brokers and composite brokers, the last being authorized to deal with direct business as well as reinsurance business. The details of these provisions are given Annexure. Insurance consultants. They render service t the insured in the same way as brokers do but they dont get fee from the insurer- rather they get reward from the insured. They may not be licensed.

Methods of remunerating Financial consultant A life insurance FC works on commission basis. He is paid a stated percentage of the premium collected through his agency. Section 40A(1) of the Insurance Act stipulates that the maximum amount which can be paid to a life insurance FC, by way of commission or remuneration in any from, shall be 20% of the first years premium, 5 % of the second and third years renewal premium and 5 % of subsequent renewal premium. There is some exception to this. During the first ten years of the insurers business, he may pay 40% instead of 20% of first years premium. Under certain circumstances, commission of 6% can be paid on the renewal premium even beyond the

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third year. Within these limits, the insurer will determine the manner of remunerating the FC. Normally, under term assurance plans, commission rates are less. Similarly, for shorter duration policies, commission rates are lesser than under longer duration plans. Under single premium plans, rate of commission is very small. New FC may be paid stipend to be adjusted against the commission to be earned; as and when the business begins to come in. brokers are paid on a totally different basis. Financial consultant - A Professional The insurance FC is bound by the term of appointment of the insurer and is expected to procure business for the insurer. It is not a job that he has to do fixed hours, in prescribed ways and under close supervision. Once licensed and appointed he is an independent professional. He is the master of his time. He is not prevented from pursuing any other interest or vocation. Many agents see an agency as a means of earning a living. They may spend only a part of their time in insurance, being busy on other work the rest of the time. Some FC, however, try to understand the business in fact detail and to improve their skills. They are trying to become best in the profession. They would be recognized as expert in the field. To most people, life insurance is just one of the many avenues for financial outlays. When an FC approaches a prospect with the proposal for life insurance, the chances are that the prospect will not know much about the benefits of various plans. He may be vaguely familiar with the alternatives available, but is unlikely to be sure of the details of all of them. He would need experts advice. If he sees the life insurance FC as one who is keen to divert his money to life insurance to the exclusion of other alternatives, then the FCs intention and expertise would be suspect. On the contrary, if he sees the agent as one who is willing to take note of the needs of the prospect, then that Financial Consultant would have a better chance of persuading the prospect one way or the other. In other words, a life insurance FC, while dealing with the prospect, should be thinking of his interests and requirements and the best financial arrangements that would be appropriate in his situation. Thus the life insurance FC is an agent of the prospect also. As an FC of the insurer, the life insurance FC is expected to obtain life insurance business and contribute to the revenues of the insurer. He is also depended upon to bring in business that would be profitable; to report attempts to commit any fraud, to report on relevant features that affect the risk of the subject of insurance. He is in touch of the person to be insured. Having met him at the place of work, or residence and observed his life style and habits, he would be aware of the nature and characteristics of the risk, beyond what is contained in the proposal form. He is therefore called the primary underwriter.

As an FC of the prospect, he is expected to look after the interest of the prospect. Even people, who are generally experts in financial matters, may not be aware of the

28

implications of insurance, in relations to term and conditions, warranties, exclusions, tax provisions, rights of parties, etc. FC have the dual responsibility of being true to the interests of both the parties in the transaction. He is obliged to reveal to the prospect all the important terms and conditions of the policy, even if they are restricted and unpleasant. He is also obliged to report to the insurer all the true facts about the prospect and the subject of insurance. He should not mislead either. To be able to advice the prospect on the best financial arrangements appropriate to his situation, the agent needs to be familiar with the alternatives available in the market. He is also expected to know in full the benefits and a limitation of the various plans being offered by his insurer. A good FC is a good financial planner, taking into account not merely the plans offered by insurers, but the innumerable schemes on offer in the market. This need study on ones own. It also needs conviction that life insurance policies do not meet all the needs of all the people. Other instruments have their own advantages.

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ROLE

OF

FINANCIAL CONSULTANT

30

6. ROLE OF AN INSURANCE FINANCIAL CONSULTANT

ROLE

An insurance FC is defined in the Insurance Act. He requires a license to be able to function as an FC. He is remunerated by way of commissions on the premium paid under policies procured through his efforts. Insurers designate agents differently like consultants, Financial Consultants and so on. The designations do not matter. He is the main component of the distribution channel for the life insurance business. A life insurance agent would be required to solicit and procure new life insurance business, in a manner that is consistent with the interests of the policyholders and of the insurance company. For this purpose, he would have to do the following; Contacts prospects for life insurance study their needs and persuade them to buy. Complete all related formalities, including filling up proposal forms, collecting premium, arranging medical examination, collecting proofs (of age or income), reports and other information required by the underwriter.

After having sold a new insurance policy, the agent has to ensure that the policy, the FC has to ensure that the policy continues, without a lapse, till it becomes a claim. The conservation of the policy is in the interest of all the three persons concerned, the insurer, the policyholder and the FC. For this purpose, he has to; Keep in touch with the policyholders to make sure that renewal premium are paid in time. Ensure that the nominations are made or changed according to changing circumstances. Assist in settlement of the claim, by helping the claimants to complete the necessary formalities and requirements.

PREQUISITES FOR SUCCESS

In order that he may perform all these tasks well, the agent has to be familiar with; The benefits under the various plans of insurance offered by his insurer. The office procedures for various matters including the forms and documents.

FC is looked upon as a knowledgeable person, who can be trusted to give the right advice. To be able to match these expectations, the FC must be familiar with the benefits and advantages of other financial instruments suitable for saving and investments and also the laws, particularly on taxation matters, relevant to these instruments. The variety of instruments available for an individual is very vast and it is difficult for anyone to master the details of all of them. Some agents, who do not have the necessary knowledge, give answers on the basis of guesswork or hearsay. Others admit

31

that they do not know enough and promise to come back after checking out the details. The latter are respected and trusted more.
SELLING INSURANCE

The first requirement is to have a continually expanding list of prospects, persons who can be approached for insurance. These are names of people within reach, obtained from acquaintances, newspapers reports, directories, contacts at parties, meetings, seminars, etc. These names have to be quantified, which means that some preliminary work should be done to collect details about them. These details may indicate whether it may be worth approaching them for insurance. The work of qualifying is done to ensure that the prospect is not apparently unfit for insurance like being sick, or with great moral hazard. Those in the qualified list have to be met. A sale results when the salesman takes the prospect through well defined steps. The steps are not separated and clear-cut but blend into one integrated process. The steps are: Pre-approach Approach Interview Objections Close Motivation After sales services

Pre-approach Pre-approach means preparing to approach the prospect. This requires forming some idea as to how the interview could begin and proceed, for which one requires basic information regarding his income, his habits, his concerns, his interest, his saving capacity, his family position, etc. these facts can be had form a variety of sources and the FC may have to make a personal call to the person himself, and get from him the facts that are required to persuade the customer in taking a decision. If such a call is made, the proposal for insurance is not made at that stage, although in some circumstances a preapproach call may develop further and end with the proposal and the cheque. The information collected during the pre-approach will provide a reasonable idea of the prospects financial position and his needs and concerns and help to make a tentative recommendation of a plan. If the Financial Consultant makes the sales first in their mind, he will find it easy to make the sale to the prospect.

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It is advisable to write down the proposal. The advantages of written proposal are: Details are not missed either by the Financial Consultant or the prospect The impression is more lasting The prospect can go back to the earlier data on his own The prospect can understand, at his own place It is easy to stop at any point, clarify questions and continue further without losing the trend.

Approach The approach that an FC should follow to persuade a prospect should be effective. When an FC knocks on the prospects door, the dynamic phase of sales begins. He should make known to the prospect that he is calling on him for life insurance. There should be no hesitation or feeling of apology. The agent has to believe that he is calling on the prospect to render him the valuable service of ensuring financial security for him and his family. The FC should open his talk by explaining of a call in such a way so as to arouse enough interest. Otherwise, he may not pay attention to the proposal. In most of the cases, the situation may arise where the prospect will come out with a no, at this juncture of approach, when the prospect says no, the agent should not be in a hurry to convert this no into a yes. The purpose of the approach stage in not to sell the insurance, but to sell an interview, which gives him the opportunity to talk about what he wants the prospect to think about. Interview The interview should first of all, make the prospect listen. This happens if the FC refers to things which interest him, his needs, or things that matter to him, without making it appear like patronizing or flattering. Any hint of the prospects decision of the past (relating to insurance or investment) was not appropriate or need to be changed, will have the opposite effect. The proposal being made by the agent should be seen as beneficial and complimentary to the existing arrangements. The FC should follow simple rule: Do not talk more than necessary Ask questions, and make the prospect talk. Make it interactive. Create doubts and make him to ask questions for clarification. Listen to prospects point of view carefully. Do not interrupt, contradict or argue. People feel good when they are listened and then they listen better Make your talk interesting. Tell a true story of how life insurance has helped families in various situations and how families suffered without it. Make the story 33

have a personal appeal. Use names of his children or relatives. That will, make the story more appealing Use pictorial aids, graphics and written presentations. Let the prospect write down figures of his needs, of his liabilities, of benefits of insurance plan and of the premium. This ensures concentrated attention. Advice of the agent should be in the best interest of the prospect.

A prepared sales talk should convey more enthusiasm and conviction. It should ensure a favorable interview. Objections Prospects will raise objections one after another-objections are part of every sale. If prospect did not object, there would be no need for salesman, people would by on their own. Also, if the prospect remained silent, agent will not know how his mind is working. The objection is his way of referring to the future information that prospect needs. The entire selling process is therefore, interspersed with objections. At the stage of approach itself the prospect may say I dont believe in life insurance, I dont need life insurance, and the like. Such objections are not against life insurance but rather against the FC, whom he wants to put off gracefully, or signs of indecision, or a fear of being forced into buying. Then there are objections during the interview, like, I pay more than what I get back, it is advantageous only if I die Such objections that come up during the main discussion are real objections. However, their intentions are not to put the agent off. It is quite the contrary. The prospect wants to convince him with detailed information that will remove his fear and doubts and to back up his latent or unstated desire to buy. Every objection tells a Financial Consultant about the prospects thinking and gives an opportunity to remove his mental blocks. Indeed a prospect, which puts forward an objection, is actually asking to give him one or more reason to buy. A true agent should therefore welcome objections. Then there are objections raised at the closing stage, such as, I will think it over, I will consult my father, see me next month when I get my confirmation/ increment/ promoting, etc. these objections reveal an inability to take a major decision. Objections cannot be treated in a summary manner. The answers must be complete and convincing to the prospect. He needs help to make the decision to buy. His doubts or difficulties need to be removed or clarified. The agent, while answering the objections, should never get into an argument. The yes.but method is most effective. Agree (say, yes) in principal with what the prospect says under circumstances assumed by him; but, say, the actual circumstances are different and then agent should convey his points. The prospect is bound to be receptive to such open give and take, in discussion.

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For example agent may say Mr. Prospect, I agree that conditions are hard and people have difficulty in saving; but imagine how much more difficult it would be if your family has to carry on without you. The secret of successful selling is to make the prospect feel that he has taken the decision- agent only helped him in the process by answering his objections. FC should remember that an objection is a blessing in disguise. It is a stepping-stone to a sale. Closing The close has to be sensed and timed, because very few prospects will, of their own accord, say, I will insure. The FC sensing the close takes the prospects positive decision for granted by asking for his implied (not direct) consent. Will you pay the premium by cash or cheque?, do you have your school certificate at hand now or can give it tomorrow? (Affirmative choice). A positive answer: to any of these question is an indication to go ahead. If the interview does not end with a close and is put off to another time, the interview will have to be gone through all over again. Motivation In selling life insurance, an appeal to the heart of the prospect is more useful than an appeal to the head. Life insurance is bought for the prime reason for protecting the loved ones, affording a good start in life of the children, duty to aged parents, or, perhaps a desire for self-preservation in old age. So a sale can be accomplished only when an appeal is made to one of these motives; an appeal to sentiments of love, of affection and of concern. The agent need not be an expert in psychology to do this. After Sales Services The prospect becomes a policyholder with a sale of a life insurance policy. The FCs relationship with the policyholder there after, depends on the service in life insurance, because unlike other savings or other investment plans, a contract of life insurance is a long-term commitment. People are often too involved in their day today activities that they neglect their obligations till it is too late. If the premium is not paid the policy becomes a useless piece of paper. The agents attention to service (including monitoring premium payments, nominations, revivals, if they become necessary helps in settling claims, etc) will ensure that the insurance policy does not suffer form such neglect. Every servicing call gives an opportunity to the agent to review the insurance programmed. The insurance already sold may become inadequate because of changes in the policyholders financial position or family. Perhaps, he may need more insurance or he may suggest insurance of his relatives and friends. Service benefits the policyholders. But it benefits the agents more by conveying messages about his reliability and

35

trustworthiness. This is his competitive advantage over the other agents over the same insurer and the other insurer. Ethical behavior The Insurance FC is in a position of trust. On his assurance, the policyholders entrust their small savings to an insurer, trusting it to look after these funds and look after their dependence in later years. Issues of propriety and ethics are extremely important in this business of insurance. Unethical behaviors happen when the benefits of self are considered more important than of the other. The code of ethics spells out by the IRDA in the FC Regulation, and referred to earlier, be directed towards ethical behavior. While it is important to know every clause in the code of conduct to ensure that there is no violation of the code, compliance would be automatic if the agent always kept the interest of the prospect in mind. Things go wrong when the agent becomes concern with the commission that he will earn with the policy rather than to the benefits to the prospect. Ethics in life insurance selling consists mainly of putting the interest of the prospect/ policyholder first. The research studies show that such an approach helps the FC through: Improved business and earnings Business remaining in the books longer, without lapsatio Stronger relationships with the clients More referrals and word of mouth recommendations

Some agents think that they are doing the prospect a good turn, when they dont reveal some vital informations in the proposal form, for fear of the underwriter raising awkward queries. In fact they are doing harm to the prospect, because if there happens to be an early claim that can guarantee that this will not happen- the claim may be repudiated. The looser at that time is the prospects family. The commission collected by the agent is not affected. The looser is also the credibility of the entire life insurance industry, both agents and the insurer. Stories will circulate that the insurers dont pay claims, the truth will not be known Some of the characteristics of good ethical behavior are: Placing the beast interest of the client above ones own direct or indirect benefits Holding in the strictest confidence and considering as privileged, all business and personal information pertaining to the clients affairs Making full and adequate disclosure of all facts to enable clients make informed decisions

36

HDFC STANDARD LIFE INSURANCE CO.

COMPANY PROFILE

37

HDFC Standard Life Insurance Company Limited

The Partnership

HDFC Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship. The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team, based in Mumbai.

Incorporation of HDFC Standard Life Insurance Company Limited:

The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Their ambition from the beginning was to be the first private company to re-enter the life insurance market in India. On the 23rd of October 2000, this ambition was realised when HDFC Standard Life was the first life company to be granted a certificate of registration.

38

HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standard Life's existing investment in the HDFC Group, this is the maximum investment allowed under current regulations. HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance companies in India are measured.

39

Corporate Objective HDFC Standard Life strongly believes that as life is different at every stage, life insurance must offer flexibility and choice to go with that stage. They are fully prepared and committed to guide you on insurance products and services through their welltrained financial consultant, backed by competent marketing and customer services, in the best possible way. It is their aim to become one of the top private life insurance companies in India and to become a cornerstone of HDFC SLIC integrated financial services business in India. Mission To set the standard in helping our customers manage their financial future.

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HDFC SLIC Business (Products) & Future Plans

41

PRODUCTS OF HDFC STANDARD LIFE INSURANCE

It offers two kinds of insurance plans.
1. TRADITIONAL PLAN 2. UNIT LINKED INVESTMENT PLAN

TRADITIONAL PLANS: Some of the traditional plans offered by HDFC SLIC are as follows:
1.

MONEY BACK

2. SAVING PLAN 3. CHILDRENs PLAN DOUBLE BENEFIT 4. ENDOWMENT PLAN 5. PERSONAL PENSION PLAN 6. PROTECTION PLAN 7. LOAN COVER TERM PLAN

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UNIT LINKED INVESTMENT PLAN (ULIP)

ULIP is one where A unit linked plan is a part of the premiums you pay is utilized to purchase units in different funds after deducting a small portion towards policy related expenses. The expenses towards cost of insurance and fund management services are deducted from your fund by canceling units a unit linked plan is bought fir its flexibility. One can buy it for any financial needs because it gives liquidity and savings. It can be bought for childs educational expenses/marriage, retirement corpus or any other contingency planning.

This plan gives you age based allocation. This means as your age increases your money is moved to lower risk investment. The idea is to increase the stability for investments as the risk appetite decreases.

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TYPES OF ULIP

1. UNIT LINKED YOUNG STAR PLUS 2. UNIT LINKED YOUNG STAR

3. UNIT LINKED PENSION PLUS

4. UNIT LINKED PENSION 5. UNIT LINKED ENDOWMENT PLUS 6. UNIT LINKED ENDOWMENT

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1. UNIT LINKED YOUNG STAR PLUS

Features An outstanding investment opportunity by providing choice of thoroughly researched and selected investments. Regular loyality units to boost your fund value every year. Valuable protection to your child in case you are not around. Flexibility to switch between funds Option to pay Regular, Single as well as Top-up Premiums Flexible benefit combination and payment options. Pay the sum assured you had chosen to your child. How does unit linked young star plus Plan work? The plan works in two parts: Accumulation period (i.e. the Policy Term): The plan builds up funds during this period. This means HDFC Slic will continue to make your savings on your behalf , in your absence. The fund will be available for your familys use until the original maturity date.

Benefits Premium payments:

45

You can pay your regular premium up to15 days after your cash flow the due date to fit in with your cash flow. Single premium top-up: Have paid all your regular premiums to date. Your total single premium top-ups at any time is not more than 25% of your total regular premium paid to date . Each single premium top-up amount is at least 5000.

Premium change: You can increase or decrease or stop your regular premium at any time as long as your policy maintain the minimum level of life cover.

Changing your investment decisions: You can change you investment fund choice in two ways: Switiching : you can move your accumulated funds from one to another anytime. Premium redirection: you can pay your premium into a different selection of funds as per your need.

Double benefit: Death benefit: we will pay the sum assured to your beneficiary.

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Your family need not pay any further premium on your behalf , at the original level chosen by you. Any critical illness cover terminate immediately. Critical illness benefit: we will pay the sum assured to your beneficiary. Your family need not pay any further premium on your behalf , at the original level chosen by you. The death benefit cover terminates immediately. Choose your investment funds We have 6 funds that gives you: The potential for higher but more variable returns over the term of your policy; or More stable returns with lower long term potential.

What are the different fund options? HDFC Standard Life Insurance Company Limited understands the value of your hard earned money and to help you make your wealth grow we offer two different tailor-made Investment Funds. You also have the option to allocate your premium in different funds in the manner you wish.

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The six different funds offered are: 1. liquid Fund 2. secure managed fund 3. defensive managed fund 4. balanced managed fund 5. Equity managed fund 6. Growth fund 1. Liquid fund: Extremely low capacity risk Very stable returns

2 .Secure managed fund: More capital stability than equity fund . Higher potential return than liquid fund.

3. Defensive managed fund: Asses to better long term returns through equity. Significant bond exposure keep risk down.

. 4 balanced managed fund: Increased equity exposer gives better long term returns . Bond exposer provides some stability.

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5 .Equity managed fund: Further increased exposure to equities to give a greater long term return. A small bond holding will aid diversification and provide a little stability.

6.Growth fund: For those who wish to maximize their returns. 100% investment in high quality Indian equities

Investment Objective: To provide you with investment returns which exceed the rate of inflation in the long term while maintaining a low probability of negative investment returns. Risk Profile: Low to medium. Investments: In this fund, a major portion of your funds are invested in Government Securities and Corporate Bonds while a small percentage is invested in the Equity Market, which is exposed to market movements. Investment would be at least 80% in Government Securities and Corporate Bonds and maximum 20% in Equities.

Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis.

49

Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision Unit Value = Total Number of units on issue (before any new units are allocated/ redeemed)

Flexibilities Flexibility to pay top-ups If you have received a bonus or some lump sum money you can use that as a top-up to increase your investments at any time in your Policy. The minimum top-up amount is 2,500. 95% of any amount paid as top-up is allocated to your funds. Flexibility to pay Single Premium If you do not want to pay premium regularly, you can choose to opt for Single Premium. The minimum Single Premium amount is 10, 000.

Flexibility to switch between funds

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Depending upon the performance of your funds you can switch between them. There will be 24 free switch in a Policy Year and for additional switches; Switching Charge of 100/switch o will be levied.

What is the Policy Term? Minimum Policy Term: Minimum age at entry: Maximum age at entry: Maximum age at maturity: 10 years 18 years 65 years 75 years

1.

Premium Allocation Charge: Year 1 Subsequent years 40% 99%

2.

Fund Management Charges

HDFC Standard life insurance has least FMC i.e 0.80% 3. Switching Charge: 24 free switch is allowed in each Policy Year. Subsequent

switches will attract a charge of 1% of the amount switched subject to a maximum of

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100 per switch. This charge will be recovered by cancellation of units. 4. Surrender Charges: This is the charges we will apply when the policy is

surrendered. Its equal to the 60%of the difference between the regular premiums expected and received in the first year of the contract. 5. Policy administration charges: A charge of 20 per month is covered regular

administration costs. 6. Revival charges : 6 partial withdrawal are requested will be free in a year and 250 per request.

additional partial withdrawal request will be charged

How safe is your investment? The investments made in the funds are subject to market risks that are prevalent at any point in time. The Unit Price' is a reflection of the financial and Equity/Debt Market conditions and can increase or decrease at any time due to this. Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time.

There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units. The name of the funds in no way indicates the returns derived from them.

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2. UNIT LINKED YOUNG STAR

Key Features An outstanding investment opportunity by providing choice of thoroughly researched and selected investments. Valuable protection to your child in case you are not around. Flexibility to switch between funds Option to pay Regular, Single as well as Top-up Premiums Flexible benefit combination and payment options. Pay the sum assured you had chosen to your child.

How does this Plan work? The premium paid by you, net of Premium Allocation Charges is invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units whereas the Fund Management Charge is priced in the Unit Value.

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Benefits Life Cover Benefit: In case of unfortunate loss of life, the Beneficiary will get Sum Assured or Fund Value, whichever is higher. You can choose the basic Sum Assured within the minimum and maximum levels mentioned below:

Minimum Sum Assured: 5 times of first premium Maximum Sum Assured: 40 times of premium is the maximum s.a Maturity Benefit: On survival to maturity the Fund Value on Maturity will be paid out. Rider Benefit: You can add the Accidental Death & Accidental Total and Permanent Disablement Benefit Rider (available only with the regular premium option). This benefit doubles the life coverage in case of accidental death or accidental total and permanent disablement at a very nominal additional cost. The maximum cover is 00,000 per life. In case of accidental death of the Life Assured during the Policy Term, the Accident Benefit Sum Assured will be paid immediately in a lump sum. In case of accidental total and permanent disablement, 1/10th of the Accident Benefit Sum Assured will be paid at the end of each year for ten years. If the total and permanent disablement has commenced, the Accidental Death Benefit Cover ceases. 50,

54

In case of maturity or on death of the Life Assured before payment of all installments of Accidental Total and Permanent Disablement Benefit, the remaining unpaid installments if any will be p-aid in one lump sum along with Death or Maturity Benefit. Accidental total and permanent disablement means disability caused by bodily injury, which causes permanent inability to perform any occupation or to engage in any activities for remuneration or profits. This disability should last for at least 6 months before being eligible for Accidental Total and Permanent Disablement Benefits.

What are the different fund options? HDFC Standard life insurance provides you a six different funds.

They are: Liquid fund: Extremely low capacity risk Very stable returns

2 .Secure managed fund: More capital stability than equity fund . Higher potential return than liquid fund.

4. Defensive managed fund: Asses to better long term returns through equity.

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Significant bond exposure keep risk down.

. 4 balanced managed fund: Increased equity exposer gives better long term returns. Bond exposer provides some stability.

5 .Equity managed fund: Further increased exposure to equities to give a greater long term return. A small bond holding will aid diversification and provide a little stability.

6.Growth fund: For those who wish to maximize their returns. 0% investment in high quality Indian eq

Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis. Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision

Unit Value=

56

 Total Number of units on issue (before any new units a reallocated/redeemed) Flexibility Pay top ups If you have received a bonus or some lump sum money you can use that as a top-up to increase the investments component 'in your Policy. Top-Ups are allowed only if all premiums due till date are paid. There is no restriction on the maximum amount of topup. However top-ups made over and above 25% of the basic regular premium paid till date (or above 25% of the Single Premium) will lead to an increase in Sum Assured to the extent of 125% of the excess top-up premiums. The minimum top up amount is 2,500. 98% of any amount paid as top-up is allocated to your funds. Make partial withdrawals After three years, If your Fund Value is more than the Sum Assured, then the maximum partial 5,000 per withdrawal

withdrawal can be

from the date the top- ups are made, and until then no partial

withdrawals of units from top-up premiums are allowed. This condition is not applicable if the top-up premiums are paid during the last three years of the Policy

57

term. If the Life Assured is minor, - partial withdrawals are allowed on

or after attainment of age 18 years or after 3 years if later Increase the Sum Assured: You are free to increase the Sum Assured. Once Sum Assured is increased, it remains for the entire outstanding policy term. Increase in Sum Assured is subject to underwriting. Switches between different Unit Linked Funds: You may switch some or all of the Fund Value between different unit-linked funds offered under the Market Return Plan.

Who can buy this product? Minimum age at entry: 18 years Maximum age at entry:65 years Maximum age at maturity:75 years

What is the Policy term? Minimum Policy term: Maximum Policy term: 10 years 25 years

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Charges under the Plan: For regular premium policies: Term of the Policy Years Upto 199999 200000-499999 2000000 &above The Premium Allocation Charge for Single Premium & top-ups is 2%. 1st year 70% 80% 95% 2nd year 70% 80% 95% 3rd year onward 99% 99% 99%

2.

Policy Administration Charge: each month.

20 will be deducted from your Unit Account

3.

Fund Management Charges: Annual Rate 0.80%

Unit Linked Funds All funds

Any changes made to the charges under this Policy will be subject to IRDA approval. 4. Partial Withdrawal Charges: Unit Account. 5. Switching Charges: the amount of 100/- per switch. 100 per withdrawal will be deducted from your

59

6.

Mortality Charges: The Mortality Charges, based on your attained age, are determined using 1/12th of the charges mentioned in Appendix 1 and are deducted From the Fund Value monthly.

7.

Surrender Charge: this is the charges will apply when the policy is surrendered .

its equal to the difference between the regular premium expected and those paid in the first year of the contract. How safe is your investment? 1. The investments made in the Unit Funds are subject to investment risks associated with Capital Markets and the NAVs of the units may go up or down based on the performance of the fund and the factors influencing the Capital Market, and the insured is responsible for his/her decisions. 2. The Unit Price is a reflection of the financial and equity/debt market conditions and can increase or decrease at any time due to this. 3. Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time. 4. There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units. 5. The name in the funds in no way indicates the returns derived from them.

What happens if I discontinue paying regular premiums? Within 3 years of the inception: If due premiums have not been paid for the first three consecutive years, the insurance

60

cover will cease immediately. However, you will continue to participate in the performance of Unit Funds chosen by you. The Monthly Administration Charges will be deducted from Fund Value by cancellation of units. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the maturity date of the Policy. In case the Policy is not revived during Revival Period, the Policy shall be terminated and the Surrender Value, if any, shall be paid at the end of the third Policy Anniversary or at the end of the period allowed for revival. After paying of at least 3 full years' premiums: If premiums have been paid for at least three consecutive years and subsequent premiums are unpaid, the Policy will remain in force with Sum Assured intact. The Mortality and Policy Administration charges will be deducted from your account by cancellation of units. You will continue to participate in the performance of the Unit Funds chosen by you. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the maturity date of the Policy. At the end of the allowed Revival Period, if the Policy is not revived, it shall be terminated by paying the Surrender Value. However, you may opt to continue the Policy even beyond the Revival Period (but not beyond the maturity date of the Policy). The Mortality and Administration Charges will be deducted from your account by canceling the units. You will continue to participate in

61

the performance of the Unit Funds chosen by you.

This option will be available until the Fund Value does not fall below an amount equivalent to one full year's premium. If at any point of time, the Fund Value reaches an amount equivalent to one full year's premium, the Policy shall be terminated by paying the Fund Value.

Tax Benefit Premiums paid are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. Provided the premium in any years during the term of the Policy does not exceed 20% of the Sum Assured, maturity and withdrawals are eligible for tax benefit under Section 10(10D). Death Benefit are tax free under Section 10(10) D of the Income Tax Act, 1961. Under Section 80C premiums up to your taxable income. 100,000 are allowed as deduction from

3. UNIT LINKED PENSION PLUS

Features Invest systematically and secure your golden years

62

 A flexible unit-linked pension product that is different from traditional life insurance products with Vesting Age between 50 years and 70 years Choose from six different Investment Funds Flexibility to switch between funds Option to pay Regular, Single as well as Top-up Premiums Choose to propone extend your Vesting Age Tax free commutation up to one third of Fund Value at Vesting Age How does Unit link pension plus Plan work? The plan works in two parts: Accumulation period (i.e. the Policy Term): The plan builds up funds during this period. This period ends-at the Vesting Date. Annuity 'period: After the Vesting Date, the annuity payments begin. Vesting Date: You are free to choose your age of retirement (Vesting between 50years and 75 years)

Benefits At Vesting: 63

On vesting, you can purchase an Annuity Plan for the full Fund Value You may commute up to one third of the Fund Value as tax free lump sum and the balance can be used for the purchase of annuity. Open Market Option: you can purchase an annuity either from HDFC Standard Life Insurance Company Limited or from any other registered Life Insurance Company

At Death: In the unfortunate event of your death during the Policy Term, the nominee will get the Fund Value. This amount can be taken as a lump sum or an annuity can be purchased for the entire lump sum or portion of it. The nominee will have the option to purchase an annuity either from HDFC Standard Life Insurance Company Limited or from any other registered Ute Insurance Company.

LOYALITY UNITS: At the end of every policy year we will increase the number of units in each of your fund by 0.10% as long as your policy is in force or paid up. The compounding effect of these regular additions is expected to boost your final vesting benefits.

64

What are the different fund options? HDFC Standard Life Insurance Company Limited understands the value of your hard earned money and to help you make your wealth grow we offer two different tailor-made Investment Funds. You also have the option to allocate your premium in different funds in the manner you wish. The six different funds offered are: 1. Liquid Fund Extremely low capital risk. Returns: Steady return for very little risk. Risk Profile: Low Investments: Your funds are invested 100% in Bank Deposits, Government Bonds and Debt Investments of less than 180 days duration. 2 .Secure Managed Fund More capital stability than equity fund Higher potential return than liquid fund.

3.

Defensive Managed Fund

Risk Profile: Low to medium.

65

 Significant bond exposure keeps risk down

Investments: In this fund, a major portion of your funds are invested in Government Securities and Corporate Bonds while a small percentage is invested in the Equity Market, which is exposed to market movements. Investment would be at least 80% in Government Securities and Corporate Bonds and maximum 20% in Equities. 4.balanced managed fun : Increased equity exposure gives greater long term return. Bond provide some stability. 5.equity managed fund: Further increased exposure to equities to give a greater long term. A smaller bond holding will aid diversification and provide little stability. 6. growth fund: for those who wish to maximize their returns . 100% investment in high quality Indian equities.

Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis.

66

Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision Unit Value = Total Number of units on issue (before any new units are allocated/ redeemed)

Flexibilities Flexibility to pay top-ups If you have received a bonus or some lump sum money you can use that as a top-up to increase your investments at any time in your Policy. The minimum top-up amount is 5000. 95% of any amount paid as top-up is allocated to your funds. Flexibility to pay Single Premium If you do not want to pay premium regularly, you can choose to opt for Single Premium. The minimum Single Premium amount is 10, 000.

Flexibility to switch between funds

67

Depending upon the performance of your funds you can switch between them. There will be 24 free switch in a Policy Year and for additional switches; additional Switch will be Charge 100 per switch . Flexibility to propone/extend your Vesting Age You may choose to extend the Vesting Date to any later Policy Anniversary provided the Policy vests before the attainment of age 70 years. The request for extending the Vesting Date must be made at least one month before the original Vesting Date. After the Vesting Date, the benefit payable at any time will be the Fund Value. The Policyholder may also choose an earlier Vesting Date, after completion of five years of Policy Term or age 45 years, whichever is later. The request for an earlier Vesting Date should be received at least one month before the proposed Vesting Date. On attainment of the new Vesting Date the Policyholder is eligible to purchase Annuity for the full Fund Value or commute up to one third of the Fund Value as tax free lump sum and the balance can be used for the purchase of annuity. The annuity can also be purchased from us or from any other registered Life Insurance Company.

What is the Policy Term? Minimum Policy Term: Minimum age at entry: Maximum age at entry: 10 years 18 years 65 years

68

Minimum age at vesting: Maximum age at vesting:

50 years 75 years

1.

Premium Allocation Charge: Year 1 Subsequent years Single premium Top-Up premiums 50% 99% 99% 99%

2.

Fund Management Charges

All funds have only 0.80% fund management charges. * The Fund Management Charge is least in insurance industry.

3.

Surrender Charges: This is the charge will be apply when the policy is

surrendered.its equal to 50% of the difference between the regular premiums expected and this paid in the first year of the contract.

How safe is your investment? The investments made in the funds are subject to market risks that are prevalent at any point in time. The Unit Price' is a reflection of the financial and Equity/Debt Market conditions and can 69

increase or decrease at any time due to this. Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units. The name of the funds in no way indicates the returns derived from them.

Please note that HDFC Standard Life Insurance Company Limited is only the name of the Insurance Company and unit linked pension plan is only the name of the Policy and does not in anyway indicate the quality of the Policy or its future prospects or returns. HDFC Standard life insurance co. does not allow partial withdrawals in this plan.

2. UNIT LINKED PENSION

Features Invest systematically and secure your golden years A flexible unit-linked pension product that is different from traditional life insurance products with Vesting Age between 50 years and 70 years Choose from six different Investment Funds

70

 Flexibility to switch between funds Option to pay Regular, Single as well as Top-up Premiums Choose to propone I extend your Vesting Age Tax free commutation up to one third of Fund Value at Vesting Age How does Unit link pension plus Plan work? The plan works in two parts: Accumulation period (i.e. the Policy Term): The plan builds up funds during this period. This period ends-at the Vesting Date. Annuity 'period: After the Vesting Date, the annuity payments begin. Vesting Date: You are free to choose your age of retirement (Vesting between 50years and 75 years)

Benefits At Vesting: On vesting, you can purchase an Annuity Plan for the full Fund Value You may commute up to one third of the Fund Value as tax free lump sum and the balance can be used for the purchase of annuity. Open Market Option: you can purchase an annuity either from HDFC Standard Life Insurance Company Limited or from any other registered Life Insurance Company

At Death:

71

In the unfortunate event of your death during the Policy Term, the nominee will get the Fund Value. This amount can be taken as a lump sum or an annuity can be purchased for the entire lump sum or portion of it. The nominee will have the option to purchase an annuity either from HDFC Standard Life Insurance Company Limited or from any other registered Ute Insurance Company

What are the different fund options? HDFC Standard Life Insurance Company Limited understands the value of your hard earned money and to help you make your wealth grow we offer two different tailor-made Investment Funds. You also have the option to allocate your premium in different funds in the manner you wish. The six different funds offered are: 1. Liquid Fund Extremely low capital risk. Returns: Steady return for very little risk. Risk Profile: Low Investments: Your funds are invested 100% in Bank Deposits, Government Bonds and Debt Investments of less than 180 days duration. 2. Secure Managed Fund More capital stability than equity fund Higher potential return than liquid fund. 72

3.

Defensive Managed Fund

Risk Profile: Low to medium. Significant bond exposure keeps risk down

Investments: In this fund, a major portion of your funds are invested in Government Securities and Corporate Bonds while a small percentage is invested in the Equity Market, which is exposed to market movements. Investment would be at least 80% in Government Securities and Corporate Bonds and maximum 20% in Equities. 4. Balanced managed fun: Increased equity exposure gives greater long term return. Bond provide some stability. 5. Equity managed fund: Further increased exposure to equities to give a greater long term. A smaller bond holding will aid diversification and provide little stability. 6. Growth fund: For those who wish to maximize their returns. 100% investment in high quality Indian equities. 73

Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis. Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision Unit Value = Total Number of units on issue (before any new units are allocated/ redeemed)

Flexibilities Flexibility to pay top-ups If you have received a bonus or some lump sum money you can use that as a top-up to increase your investments at any time in your Policy. The minimum top-up amount is 5000. 95% of any amount paid as top-up is allocated to your funds. Flexibility to pay Single Premium If you do not want to pay premium regularly, you can choose to opt for Single Premium. The minimum Single Premium amount is 10, 000.

74

Flexibility to switch between funds Depending upon the performance of your funds you can switch between them. There will be 24 free switch in a Policy Year and for additional switches; additional Switch will be Charge 100 per switch . Flexibility to propone/extend your Vesting Age You may choose to extend the Vesting Date to any later Policy Anniversary provided the Policy vests before the attainment of age 70 years. The request for extending the Vesting Date must be made at least one month before the original Vesting Date. After the Vesting Date, the benefit payable at any time will be the Fund Value. The Policyholder may also choose an earlier Vesting Date, after completion of five years of Policy Term or age 45 years, whichever is later. The request for an earlier Vesting Date should be received at least one month before the proposed Vesting Date. On attainment of the new Vesting Date the Policyholder is eligible to purchase Annuity for the full Fund Value or commute up to one third of the Fund Value as tax free lump sum and the balance can be used for the purchase of annuity. The annuity can also be purchased from us or from any other registered Life Insurance Company.

What is the Policy Term? Minimum Policy Term: Minimum age at entry: 10 years 18 years

75

Maximum age at entry: Minimum age at vesting: Maximum age at vesting:

65 years 50 years 75 years

1.

Premium Allocation Charge: Year 1 Years 2 Year 3 onwards 70% 70% 99%

2.

Fund management charges: HDFC Standard life insurance have only 0.80% for all funds. * The Fund Management Charge is least in insurance industry

3.

Surrender Charges: This is the charge will be apply when the policy is

surrendered. its equal to 50% of the difference between the regular premiums expected and this paid in the first year of the contract.

How safe is your investment?

76

The investments made in the funds are subject to market risks that are prevalent at any point in time. The Unit Price' is a reflection of the financial and Equity/Debt Market conditions and can increase or decrease at any time due to this. Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time.

There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units. The name of the funds in no way indicates the returns derived from them.

Please note that HDFC Standard Life Insurance Company Limited is only the name of the Insurance Company and unit linked pension plan is only the name of the Policy and does not in anyway indicate the quality of the Policy or its future prospects or returns

5. UNIT LINKED ENDOWMENT PLUS

Key Features An outstanding investment opportunity by providing a choice of thoroughly

researched and selected investment.

77

A Unit Linked Plan, are different from traditional insurance plans and are

subjected to different risk factors. Option to create your own portfolio depending on your risk appetite Choose six different investment funds Flexibility to switch between funds Option to pay regular as well as single premium & top-ups

Option to package your Policy with Accidental rider Flexibility to increase the Sum Assured Liquidity through partial withdrawals

How does this Plan work? The premium paid by you, net of Premium Allocation Charges is invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units whereas the Fund Management Charge is priced in the Unit Value. Benefits

HDFC Standard life gives additional plan benefits 78

 Life option

death Benefit Death benefit + accidental death benefit Death benefit + critical illness benefit death benefit + critical illness benefit + accidental

Extra life option Life & health -

Extra life & health option death benefit

Death Benefit: In case of unfortunate loss of life, the family will get Sum Assured or Fund Value, whichever is higher. You can choose the basic Sum Assured within the minimum and maximum levels mentioned below: Critical illness benefit: company will pay the greater of your sum assured (less any withdrawals you have made in two years before your claim) and your total fund value to your family. The policy will terminate. Accidental death benefit: In addition to the death benefits, we will pay a further sum assured to your family. LOYALITY UNITS: At the end of every policy year we will increase the number of units in each of your fund by 0.10%as long as your policy is in force or paid-up.

Minimum Sum Assured: 4 time of first premium Maximum Sum Assured: 40 times of first premium

79

Maturity Benefit: On survival to maturity the Fund Value on Maturity will be paid out. Rider Benefit: You can add the Accidental Death & Accidental Total and Permanent Disablement Benefit Rider (available only with the regular premium option). This benefit doubles the life coverage in case of accidental death or accidental total and permanent disablement at a very nominal additional cost. The maximum cover is 00,000 per life. In case of accidental death of the Life Assured during the Policy Term, the Accident Benefit Sum Assured will be paid immediately in a lump sum. In case of accidental total and permanent disablement, 1/10th of the Accident Benefit Sum Assured will be paid at the end of each year for ten years. If the total and permanent disablement has commenced, the Accidental Death Benefit Cover ceases. 50,

In case of maturity or on death of the Life Assured before payment of all installments of Accidental Total and Permanent Disablement Benefit, the remaining unpaid installments if any will be p-aid in one lump sum along with Death or Maturity Benefit. Accidental total and permanent disablement means disability caused by bodily injury, which causes permanent inability to perform any occupation or to engage in any activities for remuneration or profits. This disability should last for at least 6 months before being eligible for Accidental Total and Permanent Disablement Benefits. Accidental total and permanent disablement includes loss of both arms and both legs or

80

one arm and one leg or of both eyes. Loss of arms or legs means dismemberment by amputation of the entire hand or foot. Loss of eyes means entire and irrecoverable loss of sight.

What are the different fund options? We understand the value of your hard earned money and in our Endeavour to help you grow your wealth, we offer you 4 different tailor-made investment funds. You have the option to allocate your premium in these funds as you wish.

They are: 1. Liquid Fund: The investment objective of this fund is to maintain the value of all contributions (net of charges) and all interest additions. This fund offers steady return for little risk. The risk profile of this fund is low. Investments would be 100% in Bank Deposits, Government Bonds and debt instruments that offer financial security. Further, allocation in Capital Secure Fund for a Policy is subject to a maximum limit of 20% at any time. 2. Secure Managed Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a low probability of negative investment returns. Here, a major portion of your funds are invested in Fixed Securities while a small percentage is invested in the Equity Market, which is exposed to market movements. The risk 81

profile of this fund is low to medium. Investments would be at least 80% in Fixed Interest Securities and maximum 20% in Equities. Defensive Managed Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a moderate probability of negative investment returns. A Greater portion of your funds are invested in Fixed Securities while a small percentage is

4. Balanced Managed fund: Invested in the Equity Market, which is exposed to market movements. The risk profile of this fund is medium to high. Investment would be at least 60% in Fixed Interest Securities and maximum 40% in Equities. 5. Equity Fund: The investment objective of this fund is to provide Policyholders with high exposure to equities and the possibility of investment returns, which generate a high real rate of return in the long term while recognizing that there is a significant probability of negative investment returns in the short term. This fund offers a totally equity based investment option. Your returns depend entirely upon the performance of the Equity Market. The risk profile of this fund is high. The higher risk of this portfolio means that expected returns would also be higher. Investment would not exceed 30% in Bank Deposits and maybe up to 100% in equities. 6. Growth Fund: this fund provides the maximum returns. All 100% investment 82

in high quality Indian equities. But side by side the risk is very high. Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis. Total Market Value of assets plus/less expenses incurred in the purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision

Unit Value= Total Number of units on issue (before any new units are allocated/ redeemed) Flexibility Pay top ups If you have received a bonus or some lump sum money you can use that as a top-up to increase the investments component 'in your Policy. Top-Ups are allowed only if all premiums due till date are paid. There is no restriction on the maximum amount of topup.However top-ups made over and above 25% of the basic regular premium paid tilldate (or above 25% of the Single Premium) will lead to an increase in Sum Assured to the extent of 125% of the excess top-up premiums.The minimum top up amount is 2,500.

83

98% of any amount paid as top-up is allocated to your funds. Make partial withdrawals After three years, Minimum partial withdrawal will be in one time is 10,000.

the maximum partial withdrawal will be the whole amount accept first premium. Higher amounts of partial withdrawals are allowed, subject to underwriting

Six partial withdrawals are allowed every year. Minimum Fund 10,000

Value after each partial withdrawal should be

For the purpose of partial withdrawals, top-ups would have a lock-

in of three years from the date the top- ups are made, and until then no partial withdrawals of units from top-up premiums are allowed. This condition is not applicable if the top-up premiums are paid during the last three years of the Policy term. If the Life Assured is minor, - partial withdrawals are allowed on

or after attainment of age 18 years or after 3 years if later Sum assured is decided first, it can not change further.. Switches between different Unit Linked Funds: You may switch some or all of the Fund Value between different unit-linked funds offered under the Market Return Plan. Six free switches is available in a Policy Year.

84

Who can buy this product? Minimum age at entry: 18 years Maximum age at entry: 65 years Maximum age at maturity: 75 years

What is the Policy term? Minimum Policy term: Maximum Policy term: 10 years 25 years

Charges under the Plan: For regular premium policies: Term of the Policy Years First Year Second Year Onwards Upto 199999 40% 99% 200000 to 499999 60% 99% 500000 to 1999999 80% 99%

The Premium Allocation Charge for Single Premium & top-ups is 2%.

85

2.

Policy Administration Charge: each month

20 will be deducted from your Unit Account

3.

Fund Management Charges: Annual Rate 0.80%

Unit Linked Funds All Funds

(The Fund Management charges are the least in whole insurance industry.)

Any changes made to the charges under this Policy will be subject to IRDA approval. 4. Partial Withdrawal Charges: Unit Account. 5. 6. Switching Charges: 100 per switch Mortality Charges: The Mortality Charges, based on your attained age, are determined using 1/12th of the charges mentioned in Appendix 1 and are deducted From the Fund Value monthly. 7. Surrender Charge: This charge is equal to the 60% of the difference between the regular premium expected and received in the first year of contract. 250 per withdrawal will be deducted from your

How safe is your investment?

86

1.

The investments made in the Unit Funds are subject to investment risks associated with Capital Markets and the NAVs of the units may go up or down based on the performance of the fund and the factors influencing the Capital Market, and the insured is responsible for his/her decisions.

2.

The Unit Price is a reflection of the financial and equity/debt market conditions and can increase or decrease at any time due to this.

3.

Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time.

4.

There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units.

5.

The name in the funds in no way indicates the returns derived from them.

What happens if I discontinue paying regular premiums? Within 3 years of the inception: If due premiums have not been paid for the first three consecutive years, the insurance cover will cease immediately. However, you will continue to participate in the performance of Unit Funds chosen by you. The Monthly Administration Charges will be deducted from Fund Value by cancellation of units. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the II1aturity date of the Policy. In case the Policy is not revived during Revival Period, the Policy shall be

87

terminated and the Surrender Value, if any, shall be paid at the end of the third Policy Anniversary or at the end of the period allowed for revival. After paying of at least 3 full years' premiums: If premiums have been paid for at least three consecutive years and subsequent premiums are unpaid, the Policy will remain in force with Sum Assured intact. The Mortality and Policy Administration charges will be deducted from your account by cancellation of units. You will continue to participate in the performance of the Unit Funds chosen by you. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the maturity date of the Policy. At the end of the allowed Revival Period, if the Policy is not revived, it shall be terminated by paying the Surrender Value. However, you may opt to continue the Policy even beyond the Revival Period (but not beyond the maturity date of the Policy). The Mortality and Administration Charges will be deducted from your account by canceling the units. You will continue to participate in the performance of the Unit Funds chosen by you.

This option will be available until the Fund Value does not fall below an amount equivalent to one full year's premium. If at any point of time, the Fund Value reaches an amount equivalent to one full year's premium, the Policy shall be terminated by paying the Fund Value. 88

Tax Benefit Premiums paid are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. Provided the premium in any years during the term of the Policy does not exceed 20% of the Sum Assured, maturity and withdrawals are eligible for tax benefit under Section 10(10D). Death Benefit are tax free under Section 10(10) D of the Income Tax Act, 1961. Under Section 80C premiums up to your taxable income. unit linked pension plan is only the name of the Policy and does not in anyway indicate the quality of the Policy or its future prospects or returns. 100,000 are allowed as deduction from

6. UNIT LINKED ENDOWMENT

Key Features An outstanding investment opportunity by providing a choice of thoroughly

researched and selected investment. A Unit Linked Plan, are different from traditional insurance plans and are

subjected to different risk factors. Option to create your own portfolio depending on your risk appetite

89

Choose six different investment funds Flexibility to switch between funds Option to pay regular as well as single premium & top-ups

Option to package your Policy with Accidental rider Flexibility to increase the Sum Assured Liquidity through partial withdrawals

How does this Plan work? The premium paid by you, net of Premium Allocation Charges is invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units whereas the Fund Management Charge is priced in the Unit Value. Benefits

HDFC Standard life gives additional plan benefits Life option death Benefit Death benefit + accidental death benefit

Extra life option -

90

 Life & health

Death benefit + critical illness benefit death benefit + critical illness benefit + accidental

Extra life & health option death benefit

Death Benefit: In case of unfortunate loss of life, the family will get Sum Assured or Fund Value, whichever is higher. You can choose the basic Sum Assured within the minimum and maximum levels mentioned below: Critical illness benefit: company will pay the greater of your sum assured (less any withdrawals you have made in two years before your claim) and your total fund value to your family. the policy will terminate. Accidental death benefit: In addition to the death benefits, we will pay a further sum assured to your family.

Minimum Sum Assured: 4 time of first premium Maximum Sum Assured: 40 times of first premium Maturity Benefit: On survival to maturity the Fund Value on Maturity will be paid out. Rider Benefit: You can add the Accidental Death & Accidental Total and Permanent Disablement Benefit Rider (available only with the regular premium option). This benefit doubles the life coverage in case of accidental death or accidental total and permanent disablement at a very nominal additional cost. The maximum cover is 91 50,

00,000 per life. In case of accidental death of the Life Assured during the Policy Term, the Accident Benefit Sum Assured will be paid immediately in a lump sum. In case of accidental total and permanent disablement, 1/10th of the Accident Benefit Sum Assured will be paid at the end of each year for ten years. If the total and permanent disablement has commenced, the Accidental Death Benefit Cover ceases.

In case of maturity or on death of the Life Assured before payment of all installments of Accidental Total and Permanent Disablement Benefit, the remaining unpaid installments if any will be p-aid in one lump sum along with Death or Maturity Benefit. Accidental total and permanent disablement means disability caused by bodily injury, which causes permanent inability to perform any occupation or to engage in any activities for remuneration or profits. This disability should last for at least 6 months before being eligible for Accidental Total and Permanent Disablement Benefits. Accidental total and permanent disablement includes loss of both arms and both legs or one arm and one leg or of both eyes. Loss of arms or legs means dismemberment by amputation of the entire hand or foot. Loss of eyes means entire and irrecoverable loss of sight.

What are the different fund options?

92

We understand the value of your hard earned money and in our Endeavour to help you grow your wealth, we offer you 4 different tailor-made investment funds. You have the option to allocate your premium in these funds as you wish.

They are: 1. Liquid Fund: The investment objective of this fund is to maintain the value of all contributions (net of charges) and all interest additions. This fund offers steady return for little risk. The risk profile of this fund is low. Investments would be 100% in Bank Deposits, Government Bonds and debt instruments that offer financial security. Further, allocation in Capital Secure Fund for a Policy is subject to a maximum limit of 20% at any time. 2. Secure Managed Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a low probability of negative investment returns. Here, a major portion of your funds are invested in Fixed Securities while a small percentage is invested in the Equity Market, which is exposed to market movements. The risk profile of this fund is low to medium. Investments would be at least 80% in Fixed Interest Securities and maximum 20% in Equities. 4. Defensive Managed Fund: The investment objective of this fund is to provide you 93

with investment returns, which exceed the rate of inflation in the long term while maintaining a moderate probability of negative investment returns. A Greater portion of your funds are invested in Fixed Securities while a small percentage is

4. Balanced Managed fund: Invested in the Equity Market, which is exposed to market movements. The risk profile of this fund is medium to high. Investment would be at least 60% in Fixed Interest Securities and maximum 40% in Equities. 5. Equity Fund: The investment objective of this fund is to provide Policyholders with high exposure to equities and the possibility of investment returns, which generate a high real rate of return in the long term while recognizing that there is a significant probability of negative investment returns in the short term. This fund offers a totally equity based investment option. Your returns depend entirely upon the performance of the Equity Market. The risk profile of this fund is high. The higher risk of this portfolio means that expected returns would also be higher. Investment would not exceed 30% in Bank Deposits and maybe up to 100% in equities. 6. Growth Fund: this fund provides the maximum returns. All 100% investment in high quality Indian equities. But side by side the risk is very high. Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily basis. Total Market Value of assets plus/less expenses incurred in the 94

purchase/sale of assets plus Current Assets plus any accrued income net of Fund Management Charges less Current Liabilities less Provision

Unit Value= Total Number of units on issue (before any new units are allocated/ redeemed) Flexibility Pay top ups If you have received a bonus or some lump sum money you can use that as a top-up to increase the investments component 'in your Policy. Top-Ups are allowed only if all premiums due till date are paid. There is no restriction on the maximum amount of topup. However top-ups made over and above 25% of the basic regular premium paid till date (or above 25% of the Single Premium) will lead to an increase in Sum Assured to the extent of 125% of the excess top-up premiums. The minimum top up amount is 2,500. 98% of any amount paid as top-up is allocated to your funds. Make partial withdrawals After three years, 95

minimum partial withdrawal will be in one time is

10,000

the maximum partial withdrawal will be the whole amount accept first premium. Higher amounts of partial withdrawals are allowed, subject to underwriting

Six partial withdrawals are allowed every year. Minimum Fund 10,000

Value after each partial withdrawal should be

For the purpose of partial withdrawals, top-ups would have a lock-

in of three years from the date the top- ups are made, and until then no partial withdrawals of units from top-up premiums are allowed. This condition is not applicable if the top-up premiums are paid during the last three years of the Policy term. If the Life Assured is minor, - partial withdrawals are allowed on

or after attainment of age 18 years or after 3 years if later Sum assured is decided first ,it can not change further.. Switches between different Unit Linked Funds: You may switch some or all of the Fund Value between different unit-linked funds offered under the Market Return Plan. Six free switches is available in a Policy Year.

Redirect future premiums: Redirection is retaining the allocation of units you have already invested and purchasing units using subsequent premium payments in an alternative allocation of your choice. The units you have already purchased with your

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premiums remain as they are while you redirect your future premium payments to other funds of your choice. (Applicable with regular premium option only) Who can buy this product? Minimum age at entry: 18 years Maximum age at entry: 65 years Maximum age at maturity: 75 years

What is the Policy term? Minimum Policy term: Maximum Policy term: Charges under the Plan: For regular premium policies: Term of the Policy Years First Year second year Thereafter 99% 99% 99% Upto 199999 70% 200000 to 499999 80% 500000 to 1999999 85% 10 years 25 year

The Premium Allocation Charge for Single Premium & top-ups is 2%.

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2.

Policy Administration Charge: each month.

20 will be deducted from your Unit Account

4. Fund Management Charges: HDFC Standard life insurance have only 0.80% fund management charges (The Fund Management charges are the least in whole insurance industry.)

Any changes made to the charges under this Policy will be subject to IRDA approval. 4. Partial Withdrawal Charges: Unit Account. 5. 6. Switching Charges: 100 per switch Mortality Charges: The Mortality Charges, based on your attained age, are determined using 1/12th of the charges mentioned in Appendix 1 and are deducted From the Fund Value monthly. 7. Surrender Charge: This charge is equal to the 60% of the difference between the regular premium expected and received in the first year of contract. 250 per withdrawal will be deducted from your

How safe is your investment? 1. The investments made in the Unit Funds are subject to investment risks associated with Capital Markets and the NAVs of the units may go up or down

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based on the performance of the fund and the factors influencing the Capital Market, and the insured is responsible for his/her decisions. 2. The Unit Price is a reflection of the financial and equity/debt market conditions and can increase or decrease at any time due to this. 3. Benefit payable under the Policy will be made according to the tax laws and other regulations in force at that time. 4. There are no guarantees for any fund of any kind under this Policy. The benefit payable on maturity will be equal to the value of your units. 5. The name in the funds in no way indicates the returns derived from them.

What happens if I discontinue paying regular premiums? Within 3 years of the inception: If due premiums have not been paid for the first three consecutive years, the insurance cover will cease immediately. However, you will continue to participate in the performance of Unit Funds chosen by you. The Monthly Administration Charges will be deducted from Fund Value by cancellation of units. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the II1aturity date of the Policy. In case the Policy is not revived during Revival Period, the Policy shall be terminated and the Surrender Value, if any, shall be paid at the end of the third Policy Anniversary or at the end of the period allowed for revival.

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After paying of at least 3 full years' premiums: If premiums have been paid for at least three consecutive years and subsequent premiums are unpaid, the Policy will remain in force with Sum Assured intact. The Mortality and Policy Administration charges will be deducted from your account by cancellation of units. You will continue to participate in the performance of the Unit Funds chosen by you. You may revive the Policy by re-commencing the premium payment within a period of three years from the date of first unpaid premium but before the maturity date of the Policy. At the end of the allowed Revival Period, if the Policy is not revived, it shall be terminated by paying the Surrender Value. However, you may opt to continue the Policy even beyond the Revival Period (but not beyond the maturity date of the Policy). The Mortality and Administration Charges will be deducted from your account by canceling the units. You will continue to participate in the performance of the Unit Funds chosen by you.

This option will be available until the Fund Value does not fall below an amount equivalent to one full year's premium. If at any point of time, the Fund Value reaches an amount equivalent to one full year's premium, the Policy shall be terminated by paying the Fund Value.

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Tax Benefit Premiums paid are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. Provided the premium in any years during the term of the Policy does not exceed 20% of the Sum Assured, maturity and withdrawals are eligible for tax benefit under Section 10(10D). Death Benefit are tax free under Section 10(10) D of the Income Tax Act, 1961. Under Section 80C premiums up to Rs 100,000 are allowed as deduction from your taxable income

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9. HDFC STANDARD LIFE FUNCTION & SCOPE OF AUTHORITY OF THE FINANCIAL CONSULTANT The function to be performed and the scope of and limitations on such scope of authority of the Advisor are as provided in the Manual and Agreement (as amended and in force from time to time). The Insurance Advisor is not a general agent of HDFC and his authority is limited to the acts, deeds, matters and things expressly authorized by the Agreement. The Insurance FC shall not hold out or describe himself as an agent or representative of HDFC except to the extent expressly authorized in writing by HDFC. It is clarified that receipt by HDFC of a Proposal and the initial payment towards premium does not create any obligation on the part of HDFC to undertake the risk, and HDFC shall not be liable until such time it has underwritten the risk and issued the Policy. The Agent shall bring this to the notice of the Prospect. The Insurance Advisor shall, with respect to any matter pertaining to or arising out of the Agreement or Manual, deal with such designated officer and/or designated office of HDFC as may be notified by HDFC, form time to time. All such dealings shall take place only during normal course of business.

10. DUTIES AND OBLIGATIONS OF HDFC SLIC Duties & Obligations The Insurance advisor, in addition and subject to such duties and obligations contained elsewhere in the Manual or the agreement and the Insurance Law, shall: a) Use his best efforts, give his time and attention and exercise due skill and diligence for the purpose of performing his functions and to promote the interest of HDFC. b) Bear and pay all costs, charges and expenses incurred by him in the conduct of his activities and except for the commissions that he is entitled to under the Agreement and the Manual; HDFC shall not be liable to reimburse him any such costs, charges or expenses. c) Use ethical and lawful means for performing his functions under the agreement and the Manual and shall not at any time behave in a manner, which may cause any disrepute to or affect the reputation or cause damage to the goodwill of HDFC. d) Abide by the directions, guidelines, rules, regulations and procedures of HDFC and maintain the performance standards prescribed by HDFC in performing his functions and his dealings with any Prospect or Policyholder. e) Hold forms, Proposal Forms, applications, cheques, drafts, premiums, money, properties, or securities collected or received by the Financial

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Consultant on behalf of HDFC from a Prospect or Policyholder in trust for and on behalf of HDFC. f) Renew and keep renewed, from time to time, the license issued to him under the Insurance Law and maintain such license in full force and effect throughout the term of agreement. The Financial Consultants license has to be renewed every three years from the date of issue of license. In case of nonrenewal HDFC can terminate the contract with the agent, and the agent will no longer be licensed to source business for HDFC. Should the agent become aware of any circumstances that could result in the Advisor being disqualified to act as such, he shall forthwith inform HDFC. g) Fulfill the minimum performance requirements prescribed from time to time, by HDFC. h) Maintain and ensure confidentiality of any and all information relating to the business or affairs of HDFC, its directors, officers, employees, representatives, Prospects & Policyholders and shall hold in confidence any and all such information as the agent may come to possess pursuant to the Agreement or by virtue of being an Agent. Such information shall not be disclosed by the agent, except as may be required by an order of a judicial or such other authority in terms of relevant law. i) Comply at all times with any instruction or guidelines that may be issued by HDFC. j) Indemnify and keep HDFC indemnified, from and against any and all claim, liability, loss, damage, cost or expense that HDFC may incur arising out of breach by the Advisor of any of the terms contained in the Agreement or the Manual, or non-compliance of any instructions or guidelines issued by HDFC, or due to any negligence, act or omission on the part of the advisor. Proposal Forms: a) Inform prospect of Insurance Products available; explain the term and conditions of the Insurance Products; provide details of premium payable with respect to different Insurance Products. b) Use only those Products illustrations/ benefits illustrations that have been approved by HDFC while explaining the working of Insurance Products. c) Use and assist the Prospect in using the appropriate Proposal form for the relevant Insurance Product. d) Disclose all relevant information to the Prospects to enable them to make an informed decision. e) Advice Prospects of suitability of an Insurance Product based on their respective needs; ascertain whether a Prospect meets the eligibility requirements of HDFC for an Insurance Product. f) While soliciting or procuring insurance business, the Advisor shall keep in mind the needs and requirements of the Prospects and their financial ability to pay premiums and follow any guidelines or instructions from HDFC. g) Ensure that the Proposal forms (as per the standard format prescribed by HDFC) are duly completed by and signed by the Prospect; obtain all relevant documents

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h) i) j) k)

and information from each Prospect. Ensure that appropriate document evidencing proof of the age of the Prospector the life to be insured is attached to the Proposal. Bringing to the notice of HDFC, any material information (including any habits or health status of the prospect or the life insured) in the form of an Financial Consultant Confidential report along with every proposal submitted to HDFC. Submit the duly completed Proposal Forms to HDFCs designated office. Follow up with HDFC for the issuance of the Policy; deliver the Policy to the Prospect. The insurance policy should not be split without the prospect/ propose/ policyholder. (Split refers to collection of premium from a single customer, and booking it against more than one proposal in his name, without the express consent of the client.

Collection of premiums or premium deposits: a) Collect the initial/first premium deposits or premiums by way of an account payee cheque, demand draft (or in other manner, as may be permitted by HDFC from time to time) in favor of HDFC from a Prospect. b) Send the premium collection notice to the Policy holder prior to the date of scheduled payment, if so required by HDFC. c) Follow up with each policyholder (whose policy was procured by the Financial Consultant) for payment of the annual renewal premiums and collect them by way of an account payee cheque.( or in any other manner, as may be permitted by HDFC from time to time) in favor of HDFC. d) Forward all premiums and other sums received from Prospects and Policyholders to HDFC within 48 hours of receipt. e) The Financial Consultant shall not collect money from Policyholders/ Prospects in cash or through any bearer instrument. Reporting: a) Submit to HDFC monthly statements or other periodical statements containing particulars prescribed by HDFC including (i) Number of proposal submitted; (ii) Details of prospects; (iii) Number of policies issued; (iv)Nature of the Insurance Products sold; (v) Premiums collected by the insurance Advisor on behalf of HDFC or directly paid to HDFC by policyholders. b) Provide any market information relating to insurance business or the Insurance Products to HDFC. c) Forward any queries or complaints from any Prospects or Policyholders to HDFC.

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Settlement of Claims: a) Inform HDFC of any claims payable under any policy of which he has been directly notified by the policyholder and forward to HDFC immediately the relevant claim form duly filled by the Policyholder. b) Collect claim forms from policyholders; assist in procuring any necessary information required by HDFC for processing of such claims and settlement thereof.

Marketing and Advertisement: The Insurance Financial consultant, in addition and subject to the provision , restrictions and limitations contained elsewhere in the Agreement or the manual or the Insurance Law: a) Shall not designate his functions to any other person or appoint any sub-advisor. b) Shall not promise or guarantee the issuance or renewal of any Policy to any Prospect or Policy holder and shall inform each Prospect or Policy holder that issuance or renewal; of an insurance policy are at the sole discretion of HDFC. c) Shall not pay to any Prospect or Policyholder any premium or part thereof or offer to any Prospect or Policyholder any credit facility for payment of premiums. d) Shall not sign or complete in his hand any Proposal form or claim form on behalf of a Prospect or Policyholder. e) Shall not make any commitment on behalf of the HDFC, or admit any liability or agree to any settlement of any insurance claim under any Policy. f) Shall not issue any advertisement in relation to HDFC or its Products. g) Shall not allow or offer to allow, as an inducement to any person to take out or renew or continue an insurance, any rebate of the whole or part of the commission payable or any rebate of the premium shown in the policy, except such rebate as may be allowed in accordance with the published prospectuses or tables of HDFC h) Shall not interfere with the Proposal or Policy secured by any other agent of HDFC, unless requested by HDFC. i) Shall not 1) Exceed the scope of its authority or put HDFC und3r any legal obligation; 2) Accept any risk, issue any policy, make change any contracts on behalf of HDFC, extend the time for performance by any party or grant any waiver of any rights available to HDFC, or otherwise compromise any rights of privileges available to HDFC; 3) Represent HDFC before any judicial or other authority, except as may be previously permitted by HDFC in writing; 4) Accept any notices or processes on behalf of HDFC; 5) Admit or accept any claim or liability on behalf of HDFC;

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Other obligations of the Financial consultant: HDFC may from time to time permit the Insurance Financial consultant to use the trade marks/ service marks, names, logos, copyrights and any other intellectual property rights of HDFC (together referred to as Intellectual Property Rights) on such terms as it may consider appropriate and only in relation to the solicitation/procurement/servicing of insurance business for HDFC. It is clarified that HDFC shall have the absolute rights to withdraw such permission or license as may be granted by it any time and further that no such permission or license as may be granted by HDFC shall be considered as giving any right in favor of the Financial consultant in using any of the Intellectual Property Rights of HDFC. Any such permission that may be granted to the insurance Financial consultant to use the Intellectual Property Rights of HDFC shall be a non- exclusive to and non-transferable by the Insurance Financial consultant and is limited to the terms and shall not constitute a general permission to use such HDFC Intellectual Property Rights. No materials including advertising and promotional materials with HDFC Intellectual Property Rights shall be used without the prior approval of HDFC, which approval may be withdrawn by HDFC at any time, at its sole discretion. The Insurance Agent agrees that he shall not at any time make use of any of the HDFC Intellectual Property Rights except to the extent such HDFC Intellectual Property Rights Are printed or form part of the communication material provided by HDFC to the Insurance Financial consultant for the purpose of providing services under or pursuant to the Agreement. The details of the Prospects, Policyholders and information relating to Prospects and policyholders and their respective Proposal Forms and Policies shall form part of the data- base of HDFC and shall belong to and be the property of HDFC. The Insurance Agent shall not claim any right to such database notwithstanding the fact that any Prospects or Policyholders have been procured by the financial consultant or have purchased the Insurance Products through the Insurance Agent. The Insurance Agent shall, at all times, hold in strictest confidence: (i) The database of the Prospects and Policyholders of HDFC, particulars or information pertaining to Prospects and Policyholders received by the Financial consultant. (ii) Any and all information relating to the business of HDFC, which is obtained directly or indirectly, whether orally or in writing by the Financial consultant; and (iii) Any and all property, software, data, tables, analysis, statistics, compilations, studies, projections, documents and records owned by or relating to HDFC or obtained by the Financial consultant pursuant to or as a result of his functions under the agreement or any material that may be developed or generated from any data, information or matters provided to the Financial consultant by HDFC. (All of the aforesaid being referred to as Confidential Information)

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The confidential information belongs to and is the sole property of HDFC and the Financial consultant shall not disclose or cause to be disclosed (whether directly or indirectly) any confidential information to any person. The Insurance Agent acknowledges that any disclosure or dissemination of such confidential Information to any person will cause HDFC grave prejudice and harm. The Financial consultant shall forthwith return all Confidential Information as may be contained in its records or books or systems. The provisions of this clause shall survive expiration or termination of the Agreement. The Financial consultant shall observe the limitations imposed by HDFC from time to time, in relation to the amount of insurance, premium, age and other matters. It is clarified that such limitations including the rules and policies for Underwriting may be changed by HDFC from time to time at its discretion. The Financial consultant is required to be familiar with rules and policies regarding medical examination applicable to various Insurance Products. When a medical examination is required, the same shall be conducted by a medical examiner approved by HDFC. Report of such medical examination shall be sent directly to HDFC in a sealed envelope and the Financial Consultant shall not review or retain a copy of such report. Financial consultant shall promptly notify HDFC in writing, if the Financial consultant is in breach of or likely to be in breach of any of his obligations, covenants, duties, representations or warranties under the Agreement or if the Financial consultant suffers or is likely to suffer from any disqualifications under the Insurance Law. The Financial consultant shall not do or engage in any act, whether during the currency of this Agreement or thereafter, which would or may adversely affect the interest or reputation of HDFC.

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11. ELIGBILITY, RECRUITMENT & DEVELOPMENT OF AN FINANCIAL CONSULTANT

ELIGIBILITY

Age 20+: An Financial Consultant of the company should be above twenty years of age, so that he becomes mature, sincere and focused towards his tasks and targets. By this time a person is settled both in his career and family life. He is able to fulfill his family responsibilities and self needs.

Graduate An Financial Consultant should be a graduate in any discipline, so that he has understanding and knowledge of the company, companys products and life insurance policy conditions (days of grace, lapsation, non-forfeiture, and nomination, revival, paid up value, surrender and loans). He must know about Taxation, Rules, Regulations and relevant Acts. He should have presentable manners and have persuasive communication skills. Married A company prefers an Financial Consultant who is married and settled in life. He shall have good social contacts with persons of various economic strata of society; this will assist him in generating regular insurance business. Experienced An Financial Consultant should be experience in financial market .Selling experience will teach him how to deal with people of different mind set; he will be able to analyzed people need, their attitude towards life. He will get rid of his shy nature and will become extrovert. Through experience he will learn to manage his income with his expenses. Localite An Financial Consultant should have at least 2-3yrs stay in the city, this will familiarize him with the persons economic status, living in the various parts of the city, 108

the movements in the insurance market, use his contacts to generate business and gain further references. Being a localite will help him in easy access to various roads, colonies, localities, etc. Three Ts a) Time: - A Financial Consultant should have adequate time so that he can perform his duties satisfactorily. b) Telephone: A Financial Consultant should have a mobile or some contact number so that his respective customers & company people can easily contact him. c) Transport: - A Financial Consultant should have his own conveyance so that he can reach to his customers without any delays.

RECRUITMENT AND SELECTION

Financial Consultants are recruited through newspaper advertisements, advertisements on websites & also through references and telecalling. Training HDFC sponsors hundred hours practical training in life insurance, which is spread over three or four weeks. Training should be provided from an institution approved by Insurance Regulatory and Development Authority (IRDA) After the licensing of the agents company conducts a seminar, which gives a brief knowledge about the company and its products to the agents. Respective Sales Managers train their Financial Consultants in Telecalling. They help Financial Consultants to record ninety to hundred contacts from the telephone directory and guide them how to prepare approach talk for people of different professions. It is necessary for any Financial Consultant to have a through knowledge of the products; also which product will be a remedy to the different needs of the customers. Under the product training Financial Consultants are taught how to analyze the needs of the customers and their remedies. The company trains its agents in how to approach a customer, how should he be dressed, how to open his speech, objection handling at different stages, etc. thus a company tries to groom the personality of its Financial Consultant. Issuing of Life insurance policies to the policyholder requires necessary medical test. Financial Consultants are given medical training. Medical includes measuring the policy holders chest and abdomen at the time of inflation and exhalation of air in the lungs, relaxation of a body, sugar test blood test and any defect that can be easily noticed by the agent in the customer. A Financial Consultant is also trained to prepare an 109

Financial Consultant Confidential Report (ADC) that helps the company in determining the premium to be charged by the company from the customer HDFC SLIC focuses on maintaining long-term relationship with its customers by way of after sales services provided through its Financial Consultant. The Prospect becomes a Policyholder with a sale of a life insurance policy. The Financial Consultants relationship with the Policyholder there after, depends on the service in life insurance, because unlike other savings or other investment plans, a contract of life insurance is a long-term commitment. People are often too involved in their day today activities that they neglect their obligations till it is too late. If the premium is not paid the policy becomes a useless piece of paper. The agents attention to service (including monitoring premium payments, nominations, revivals, if they become necessary helps in settling claims, etc) will ensure that the insurance policy does not suffer form such neglect.

FINANCIAL CONSULTANT DEVELOPMENT PROGRAMME

Financial Consultant Development Programmed is a process to Recognize Reward and Applaud consistent performance

It is a Club Membership whereby Financial Consultants are recognized as being one amongst the top performers at HDFC. The Club Membership

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How an Financial Consultant become Eligible? Based on the performance in the period 1st July to 30th June Performance is a factor of 1. FYC (First Year Commission earnings) earned and 2. Number of Net Lives (all lives insured during the contest period)

The Eligibility Criteria For: 1. Bronze Lion First Year Commission 100K Net Lives 24 (minimum) 2. Silver Lion First Year Commission 180K Net Lives 36 (minimum) 3. Gold Lion First Year Commission 240K Net Lives 48 (minimum) Reward: Reimbursement of business expenses (BRE) is as follows: i) Bronze Lion ii) Silver Lion iii) Gold Lion IV) Directors Club v) CEOs Club Rs. 24,000/- p.a. Rs. 36,000/- p.a. Rs. 48,000/- p.a. Rs.60, 000/- p.a. Rs. 96,000/- p.a.

The eligibility criteria to become member of Directors Club Two years consecutive membership of Gold Club First year persistency > 90% by value

The eligibility criteria to become member of CEOs Club Two years consecutive membership of Gold Club 111

First year persistency > 90% by value Qualification to MDRT in preceding year

Recognition
Certificate Letter head Business card Envelope

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12. RECOMMENDATIONS The Financial Consultant should create awareness among the customers about the benefits of various insurance Plans / Products. 1. Financial Consultant should go for an extensive personal contact program with the customers, so that customer may select insurance plans as per their requirement and available finances for short and long term investment. 2. Suggestions by Policyholders: i. If a Policyholder wants to make a fix deposit of matured policy amount such facility should be available with the company on primary basis. ii. Premium deposition through ATM /Debit Card /Internet should be popularized by company Financial Consultant. iii. A help line desk should be provided in the companys Office Premises to give instant attention to Policyholders queries/ complaints.

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13. CONCLUSION
1. HDFC Standard Life has established itself as a distinctive life insurance brand with an innovative, attractive and customer-friendly portfolio ranging from protection, savings, retirement and investment plans; which it sells through a unique tool-The Life Maker. 2. Financial Consultant must have full knowledge of the products of company and good Public relation & communication skills. 3. Financial Consultant must be engrossed with marketing & selling techniques and must have friendly approach towards his customers and must keep the insurers records for long- term usage. 4. Customer shall be satisfied with the services of an Financial Consultant & Financial Consultant efforts should be distinguished appreciated by the company. 5. Financial Consultant shall work in the direction of providing its customer maximum comfort & best of services. 6. HDFC is rich in services & produces a wide range of products for various needs. Further it requires making more efforts to advertise its products through Financial Consultant & other Media. 7. Following observations are worth mentioning here: Most of the customers in different age groups were not aware of various available insurance plans. Most of the customers are willing to try new plans suiting their pockets and needs. Large number of customers is of the opinion that direct selling by Agents is certainly a better and reliable way. 8. Life insurance is sold, not bought : General insurance is bought, primarily for legal or financial compulsion However, life insurance does not have any compelling need backing it. Decision to purchase life insurance is often too late

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Financial Consultants need to persuade to buy life insurance Myths about life insurance a. Superstitious beliefs. b. Low returns in term of investment.

14. BIBLIOGRAPHY ON LINE RESOURSES

www.hdfcinsurance.com www.hdfc.com

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