Comparative Analysis on Ulips

1. INDUSTRY PROFILE
INSURANCE SECTOR PERFORMANCE:
Introduction
Insurance is a system of spreading the risk of one onto the shoulders of many, Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance.

1.1 Global Scenario
History
Risk protection has been a primary goal of humans and institutions throughout history. Protecting against risk is what insurance is all about.
Over 5000 years ago, in China, insurance was seen as a preventative measure against piracy on the sea. Piracy, in fact, was so prevalent, that as a way of spreading the risk, a number of ships would carry a portion of another ship's cargo so that if one ship was captured, the entire shipment would not be lost.
In another part of the world, nearly 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the caravan trade by giving loans that had to be later repaid with interest when the goods arrived safely. In 2100 BC, the Code of Hammurabi granted legal status to the practice. It formalized concepts of “bottomry” referring to vessel bottoms and “respondentia” referring to cargo. These provided the underpinning for marine insurance contracts. Such contracts contained three elements: a loan on the vessel, cargo, or freight; an interest rate; and a surcharge to cover the possibility of loss. In effect, ship owners were the insured and lenders were the underwriters.
Life insurance came about a little later in ancient Rome, where burial clubs were formed to cover the funeral expenses of its members, as well as help survivors monetarily. With Rome's fall, around 450 A.D., most of the concepts of insurance were abandoned, but aspects of it did continue through the Middle Ages, particularly with merchant and artisan guilds. These provided forms of member insurance covering risks like fire, flood, theft, disability, death, and even imprisonment.
During the feudal period, early forms of insurance ebbed with the decline of travel and long-distance trade. But during the 14th to 16th centuries, transportation, commerce, and insurance would again remerge.
Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practiced by the Aryans.
And similar to ancient Rome, burial societies were formed in the Buddhist period to help families build houses, and to protect widows and children.
Current
The global insurance scenario has undergone profound changes during the last few years, accentuated by the terrorist attack on the World Trade Centre on 9/11/2001. Coincidentally, the major world stock markets suffered a steep decline in value towards the end of the last century, following the dot Com bubble burst and the unprecedented corporate scandals led by Enron and WorldCom. Hurricanes like the Katrina, the Wilma and the others, in addition, have bankrupted a substantial capitalization of insurers and reinsurers built up over decades. One estimate has put it that out of a total capitalization of $750 BN the WTC attack and the stock market failures due to the burst of dot com bubble alone wiped out a capital of $ 250 BN of the industry in one stroke.
These financial blows have resulted in a large number of insurers/reinsurers going bankrupt and several others suffering lowered ratings by reputed rating agencies. Despite these setbacks the industry has recovered from such serious and unexpected financial losses and the industry has begun to look as solid and resilient as ever.
The world insurance premium in 2005 was estimated at $3400 bn by Swiss Re. Sigma. 60% of the premium came from life insurance. The world’s population in 2005 was estimated at 6450 MN and its GDP at $ 44,450 bn. The life insurance market is growing faster in the emerging markets due to rising incomes and a growing younger working population.
It was also observed that the GDPs grew faster than the insurance premiums, both life and non-life, reducing the levels of insurance penetration (IP) in comparison with those of 2004. The combined ratio for the developed markets was slightly above 100% and the industry showed strong profitability. Insurance penetration is measured as the percentage ratio of premiums to GDP. Insurance density is measured as the gross premiums to population per capita. These measurements on a comparative basis show the insurance progress and sophistication of the insurance markets.

The African continent had a life premium of $ 28,000 MN and a non-life premium of $ 12,000 mn. The level of IP was 3.33% for life and 1.47% for non-life. The Insurance density was $ 30.7 for life and $ 13.5 for non-life.
With globalization, the insurance community in each country is becoming an integral part of the international insurance community. What happens in the developed markets has an impact on the domestic markets.
Future
Global overview
The global insurance industry is facing increasing competition, which has put significant pressure on companies to become more efficient, enhance their technology-related processes and alter their business models. Globally, most insurance companies are trying to enhance the efficiency of their underwriting process, cut their overheads and reduce claims leakage since returns from investment are shrinking. Net operating gains in the insurance sector are expected to increase globally in 2012. With high competition in the insurance industry, companies will need to strengthen their product lines, investment strategies and corporate infrastructure.
The following have been identified as challenges that may affect the global insurance industry in 2012-13.

1. Climate change: Climatic changes due to global warming have increased windstorms, floods and heat waves. These result in an increase in mortality and health problems, the spread of environment-related litigation and political risk linked to conflicts for control of resources. Climate changes can affect an insurance company’s pricing structure, solvency and corporate viability.

2. Demographic change: The proportion of the population over the age of 60 years is expected to rise from 20% in 2005 to 33% in 2050 worldwide, increasing the demand for financial products to meet post-retirement needs. Moreover, estimates suggest that around 10,000 people will become eligible for social security benefits every day over the next two decades, with 70 million baby boomers crossing the retirement threshold over the next 10 years. Hence, insurance companies are stepping in as social welfare providers.

3. Emerging markets: Most companies grow organically to meet their strategic objective of being global players, but insurers face a challenge in developing cultural knowledge (for product design and sales) and effective distribution channels. Russia, China and India are among the countries where local insurers have been more successful than in other countries.
4. Regulatory intervention: The shift from rule-based to principal-based regulations has increased regulatory scrutiny, the complexity of rules and sophisticated underlying methods of insurance business. Regulatory changes include the International Financial Reporting Standard, Sarbanes-Oxley, the proposed adoption of Solvency II norms in the UK, principal-based reserves in the US, among others. These regulations are driven by political factors and can result in a change in underwriting practices and the selection criteria.
5. Distribution channels: Technological advancements are edging out traditional agent based distribution models. Today, insurance companies are reaching their clients directly, either through phone or via the internet. However, insurance brokers and intermediaries are still preferred channels for selling commercial lines and complex products. Therefore, insurance companies need to look for innovative distribution channels.

6. Legal risks: Significant and unexpected changes in the legal environment can result in serious implications for the insurance business. These changes can be either through government legislations or case law decisions.
1.2 Indian Insurance Market – History
Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001.
Insurance Market- Present: The insurance sector was opened up for private participation 10 years ago. For years now, the private players are active in the liberalized environment. The insurance market has
Witnessed dynamic changes which includes presence of a fairly large number of insurers both life and non-life segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe.
There are now 29 insurance companies operating in the Indian market – 14 private life insurers, nine private non-life insurers and six public sector companies. With many more joint ventures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a de-tariffed scenario.
There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for expansion.
There are opportunities in the pensions sector where regulations are being framed. Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first license for a standalone health company in the country as many more players wait to enter. The health insurance sector has tremendous growth potential, and as it matures and new players enter, product innovation and enhancement will increase. The deepening of the health database over time will also allow players to develop and price products for larger segments of society.
State Insurers Continue to Dominate There may be room for many more players in a large underinsured market like India with a population of over one billion. But the reality is that the intense competition in the last five years has made it difficult for new entrants to keep pace with the leaders and thereby failing to make any impact in the market.

Figure 1.1 Market share of life insurers in 2010-11, based on first year premiums Source: Compiled from The Economic Times, Sept 1, 2010

FUTURE:-Indian life insurance industry to become the 3rd largest in the world
India is expected to emerge as the 3rd largest market for life insurance in the world by the year 2015 only behind China and Japan, according to a research report by BRIC data.

The data provides a comprehensive analysis of the life insurance market in India giving historical values for the period 2006–2010 and forecast figures for the 2011–2015. It covers an exhaustive list of parameters, including written premiums, incurred loss, loss ratio, commissions and expenses, combined ratio, frauds and crimes, total assets, total investment income and retentions. It also analyses the various distribution channels used by the life insurance industry.

FIGURE 1.2: Future of Indian Life Insurance Industry
Indian insurance industry consists of non-life insurance sector and life insurance sector. There are 24 insurance companies in the life insurance space which includes LIC and 23 private players. At present, India is at the 12th position when compared to the top markets for life insurance.
The insurance sector in India is expected to grow faster that the country’s overall economic growth, which will open up new business avenues across the industry. The insurance industry is showing early signs of entering a consolidation phase. An improved distribution infrastructure, adoption of new distribution channels and differentiated product offerings will continue to change the competitive landscape significantly.
The insurance regulator IRDA’s proposal to increase the foreign direct investment limit (FDI) from the present 26 per cent to 49 per cent coupled with improved efficiency of distribution channels in smaller cities are also among the other factors influencing growth of the industry.
FIGURE 1.3: Investment Break up:

FIGURE 1.4: Advantages of ULIPs

2. COMPANY PROFILE Stock broking businesses in the UK. Kotak Group was established in 1985.Kotak Mahindra Bank is the parent company of the group. Kotak Group entered into the life insurance business in 2001. The Kotak Mahindra group is one of India's leading banking and financial services organizations, with offerings across personal financial services; commercial banking; corporate and investment banking and markets; stock broking; asset management and life insurance.

Listed since 1992 and a leading financial brand. kotak is the India's first NBFC to convert into a Bank. Top 3 in several financial services and AAA rated by credit agencies with a customer base of over 7lakhs. Kotak has own several National and International awards.

Old Mutual was established more than 150 years ago. Old mutual plc, Is a world-class international financial service company. It owns the largest companies in the following areas in South Africa.

They are:
1. Life Insurance Company
2. Asset Management Company
3. Bank
4. Non-life insurance company

It has been developed into an International financial services group whose activities are focused on asset gathering and asset management. The Old Mutual Group offers a diverse range of financial services in three principal geographies: South Africa, the United States and the United Kingdom. The company is listed on the London Stock Exchange with a market capitalization of approximately $6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings of the World's 500 largest corporations by Fortune magazine, Old Mutual climbed 87 places to position number 366 and was also listed as the 14th largest insurance company in the world.
Old Mutual is the largest financial services business in South Africa, through its life insurance, asset management, banking and general insurance operations. The company serves 4 million life insurance policyholders and employs over 13 000 South Africans in its local operations.

In the USA, Old Mutual is one of the top ten fixed annuity businesses offering an array of specialist asset management skills through its 23 asset management businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002. Operations in the United Kingdom are focused on wealth management, through Gerard as one of the leading private client stock broking businesses in the UK. The Old Mutual Group has the ability to cater for a variety of consumer segments and offers a comprehensive and innovative range of products for all income groups.

2.1 Background and inception of the company
Stock broking businesses in the UK. Kotak Group was established in 1985.Kotak Mahindra Bank is the parent company of the group. Kotak Group entered into the life insurance business in 2001. Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd. (76%) and Old Mutual plc. (24%) Old Mutual plc is a world-Class international financial services company. It was established in South Africa before 160 years.

OLD MUTUAL is the largest financial services business in South Africa, through its life insurance, asset management, banking and general insurance operations. The company serves 4 million life insurance policyholders and employs over 13 000 South Africans in its local operations.

In the USA, OLD MUTUAL is one of the top ten fixed annuity businesses offering an array of specialist asset management skills through its 23 asset management businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002. Operations in the United Kingdom are focused on wealth management, through Gerard as one of the leading private client The OLD MUTUAL Group has the ability to cater for a variety of consumer segments and offers a comprehensive and innovative range of products for all income groups.

2.2 Nature and business carried
Kotak Life Insurance is into the business of insurance. It is one of the first private insurance companies. It sell various insurance policy based on the needs of consumers. It has traditional insurance plans as well as modern ULIP plan in its portfolio.

Kotak Mahindra one of India's leading financial institutions was born in 1985 as Kotak Capital Finance Limited. This company was promoted by Mr.Uday Kotak, Mr.sidney A,Pinto A, and kotak & Company. Industrialists Mr.Harish Mahindra and Mr.Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited.
KOTAK GROUP IS INVOLVED IN THE FOLLOWING AREAS OF BUSINESS * Kotak Mahindra Prime LTD. * KOTAK MAHINDRA CAPITAL COMPANY LTD * Kotak Mahindra Bank Ltd, * Kotak Mahindra Asset Management Company * International Subsidiaries * Kotak Securities
2.3 Vision, Mission and quality policy * Vision “A world class customer centric financial services enterprises that fulfils the needs of “Middle India”, with global process and a focus on profitable growth” * Mission
“At Kotak Life Insurance, we aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.” * Quality policy
“We will act ethically in all our dealings. We will keep our commitments and follow both the spirit and letter of the law” * values
Every member of the Kotak Group team is committed to 5 core values: Integrity, Customer First, Boundary less, Ownership, and Passion. These values shine forth in all we do, and have become the keystones of our success.
2.4 Product/Services Profile * INDIVIDUAL PLANS * * Kotak Smart Advantage * Kotak Eternal Life Plans * Kotak Platinum Advantage Plan * Kotak Headstart Child Plans * Kotak Sukhi Jeevan Plan * Kotak Privileged Assurance Plan * Kotak Term Plan * Kotak Preferred Term Plan * Kotak Money Back Plan * Kotak Child Advantage Plan * Kotak Endowment Plan * Kotak Capital Multiplier Plan * Kotak Retirement Income Plan * Kotak Retirement Income Plan (Unit-linked) * Kotak Safe Investment Plan II * Kotak Flexi Plan * Kotak Easy Growth Plan * Kotak Premium Return Plan

* GROUP PLANS * * Employee Benefits * Kotak Term Grouplan * Kotak Credit-Term Grouplan * Kotak Complete Cover Grouplan * Kotak Gratuity Grouplan * Kotak Superannuation Grouplan

* RURAL PLANS * Kotak Gramin Bima Yojana

* ULIP PLANS
Kotak’s ULIP basket underwent complete overhaul to meet the new regulatory norms governing ULIPs, which came into effect from September 1, 2010. During the year, Kotak Life launched 6 new ULIPs conforming to new norms. The 6 ULIPs launched in the financial year to offer distinct value propositions to customers. * Kotak Single Invest Advantage is an investment oriented single premium plan. * Kotak Ace Investment is a flexible long-term savings plan. * Kotak Head start Child Assure is a child plan. * Kotak Wealth Insurance is a protection-oriented plan that offers triple protection. * Kotak Secure Invest Insurance is a plan that offers capital guarantee along with market participation. * Kotak Platinum is a plan targeted at high net worth individuals offering unmatched flexibility and loyalty additions
2.5 Area of operation-Global/National/Regional
Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate.
The company strengthened its number of branches from 160 to 216 across the country in India in less than 3 years. Through these offices, the company today services its customer needs in over 210 cities and towns in India, and offices in New York, London, Dubai and Mauritius. Kotak Life Insurance's headquartered at Mumbai and has established its presence in almost every state.

2.6 Ownership Pattern

* * Brand equity Domain knowledge * Entrepreneurial employees Technology * Branch network Product innovation * Knowledge of the Indian market Training expertise * Access to customer base Global perspective * Distribution associates Systems and processes & Multi-channel management KOTAK MAHINDRA OLD MUTUAL KOTAK LIFE BANK PLC INSURANCE (74%) (26%) (100%)
2.7 Competitors Information
Kotak has numbers of competitors depending upon the particular field. In life insurance, Kotak Life Insurance is competes with companies like Bajaj Allianz, LIC, HDFC Standard Life, Tata-AIG, ICICI Prudential and many more. In life insurance field, LIC has been leading for long time because of the fact that it is run by government and general public in India prefer government over private companies. Among private companies,

AEGON Religare Life
AEGON, an international life insurance, pension and investment company, Religare, one of India’s leading integrated financial services groups. This venture is dedicated to build a firms future, both for customers and employees and will continue to balance a local approach with the power of an expanding global operation.

Aviva India
Aviva India is a joint venture between one of the country’s oldest and largest groups, Dabur, and Aviva plc, the UK’s largest insurance group, whose association with India dates back to 1834.

Bajaj Allianz Life Insurance Co Ltd.,
Bajaj Allianz Life Insurance Co Ltd is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion (Over INR.55,00,000 Crores). Allianz SE has over 115 years of financial experience and is present in over 70 countries around the world.

Canara HSBC OBC Life
The shareholding pattern of the joint venture is as follows- Canara Bank holds 51% equity, HSBC Insurance (Asia Pacific) Holdings Ltd 26% and Oriental Bank of Commerce 23%. The venture has an initial paid up capital of INR 325 crores which will further increase in our expansion plans. Canara HSBC Life has access to 4100 bank branches all over India.

ICICI Prudential Life Insurance
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank – one of India’s foremost financial services companies and prudential plc – a leading international financial services group headquartered in UK. Total capital infusion stands at Rs.47.80 billion. ICICI Prudential is the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings.

2.8 Infrastructural Facilities
In the life insurance industry, Kotak Life Insurance has 210 branches in over 216 cities across the country, and a work force of over 6000 employees and 7500 life advisory. 209% growth in premium income (year ending March 2010), more than 2, 10,000 policies issue (year ending March 2010). It aspires to spiralling growth with a strong focus on the customer, products, mapping of geographic distribution channels and fund performance.

Kotak Life Insurance continues to have one of the widest reaches among insurance companies. The group has a net worth of around Rs.2,000 crore and employs around 6,000 employees across its various businesses servicing around one million four hundred thousand customer accounts through a distribution network of branches, franchisees, representative offices and satellite offices across 210 cities and towns in India. Kotak has a robust IT Infrastructure as its major strengths. Whether it is human infrastructure or physical infrastructure or IT, Kotak has exceeded customers‟ expectation and it continues to improve it infrastructural facilities throughout the world.

2.9 Achievement/Awards

2006 * India’s Best Equity House in India by Finance Asia * Best Equity House in India by Asia Money
2007

* Best Broker in India by Finance Asia
Best Equity House in India by Euro money * *
2008
* Ranked no.1 in six categories in the Annual Euro money Private Banking Survey Poll for 2006 for India * Topped the best Mutual Fund House in the NDTV Business Leadership Awards2006
2009
* Most Popular Inventor Relation Website for the Asia/Pacific Region Conducted by IR Global Rankings * Emerged winner in 16 categories in the Euro money Private Banking Poll2007, including the Best local Private Bank.

FIGURE 1.5-2.10 Work Flow model (End to End)

2.11 Future growth and prospects.
With their being intense competition between the private players in the insurance market, distribution strength, reach, cost Effectiveness, product innovation, brand loyalty and customer service are the key factors that will determine performance in the marketplace. Your Company is concentrating on these areas so as to ensure superior performance.
During the current financial year, your Company plans to expand its operations and open branches in 15 additional cities.

Your Company intends to focus on:

* Providing the highest standards of service to its customers.

* Widening its geographical presence.

* Increasing the range of products offered to fulfil the needs of the target customer segments. * Strengthening its alternate distribution channel. * Recruiting and developing a highly motivated life advisors team and equipping them with superior selling skills. * Imparting intensive training to the team of sales managers. * Using technology to provide the cutting edge to its business.

3. Mckensy’s7s frame work introduction: JAPANESE first introduced this model. The 7’s this is better known as MC.KINSEY’S 7’S. This is because the two persons who developed this model, ‘TOMPETERS and ROBERT WATERMAN’ have been consultants at MC.KINSEY AND COMPANY at that time. They published their 7’s model in their article ‘Structure is not Organization’ (1980) and in their books ‘THE ART OF JAPAN MANAGEMENT’ (1981) and in search of excellent (1982). The model stats on the precise that an organization is not fist structure, but consists of seven elements:
They argued that when things went wrong, these eases were manipulated to give a solution. Out of the seven the 3’s across the top of the model are described as “HARD S” that is strategy, structure and system. The 4’Ss across the bottom of the model SKILL, STAFF, STYLE, SHARED VALUE are the tangible and more cultural in nature, and were termed “SOFT S’ by MC, KINSEY. There are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing. They are highly determined by the people at work in organization.
The MC.KINSEY’S 7’S model is widely discussed framework for viewing the interrelationship of strategy formulation and implementation.
It helps to form a manager’s attention on the importance of linking the chosen strategy to a variety of activities that an affect the implementation of that strategy. Originally developed as a way of thinking, more broadly about the problem of organising effectively the 7’s framework provides a tool for judging the strategies.
It is much more difficult to plan or to influence the characteristics of the soft elements, although the soft factors are below the surface, they can have a great impact on the hard structure, strategies, and systems of the organisation
.McKinney’s 7s frame work with special reference to organization under study. The McKinsey 7S model can be applied to elements of any team or a project. The alignment issues apply, regardless of how you decide to define the scope of the areas your study. The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements:
TABLE-1.1
"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.

The way the model is presented in the figure below depicts the interdependency of the elements and indicates how a change in one affects all the others.

FIGURE 1.6 - McKinsey’s 7s frame work

Let's look at each of the elements specifically:

3.1 Strategy: The plan devised to maintain and build competitive advantage over the competition.

KMOM’s strategy is to differentiate itself through an innovative product offering and a unique client-centric philosophy. The 6 ULIPs launched in the financial year by KMOM, offer’s distinct value propositions to customers.

* Kotak Single Invest Advantage is an investment oriented single premium plan. * Kotak Ace Investment is a flexible long-term savings plan. * Kotak Head start Child Assure is a child plan. * Kotak Wealth Insurance is a protection-oriented plan that offers triple protection. * Kotak Secure Invest Insurance is a plan that offers capital guarantee along with market participation. * Kotak Platinum is a plan targeted at high net worth individuals offering unmatched flexibility and loyalty additions.

Kotak Secure Invest Insurance is one such innovative product, which is a unit linked insurance plan (ULIP) with Capital Guarantee. This means that if the market value of units on maturity is higher, then you get fund value based on the same. And in case if the market performance is poor, then your investment is protected by Capital Guarantee.

Any investment product carries a risk element and in ULIP products the insurance company passes the risk on to the customer. In hope for good returns, customers also take such risks but end up exiting the policy when they see the slightest volatility in the market. By providing the capital guarantee feature, Kotak Secure Invest Insurance offers a safety net for armature ulip policy holders.

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Key Features of Kotak Secure Invest Insurance · Unit linked insurance plan with a capital guarantee · Inbuilt investment advice so as to assist capital appreciation · Option of shorter premium payment terms
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Benefits you get from Kotak Secure Invest Insurance
Death Benefit – In case of death of the Life Insured, the nominee would get higher of Sum Assured or Fund Value.
Maturity Benefit – On maturity, the Fund Value is paid to the policyholder.
Income Tax Benefit - Life Insurance premiums paid up to Rs. 1, 00,000 are allowed as a deduction from the taxable income each year under section 80C

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Additional Features and Benefits of Kotak Secure Invest Insurance
Riders – There are 6 riders available in this policy
1. Kotak Term / Preferred Term Benefit (KTB/KPTB)
2. Kotak Accidental Death Benefit (ADB)
3. Kotak Permanent Disability Benefit (PDB)
4. Kotak Critical Illness Benefit (CIB)
5. Kotak Life Guardian Benefit (LGB)
6. Kotak Accidental Disability Guardian Benefit (ADGB)

The non-ULIP offering was bolstered with the introduction of Kotak Assured Income Plan. The plan offers guaranteed annual pay-out for 20 years among other benefits. Kotak Saral Suraksha, a non-ULIP insurance plan was also launched specifically for the rural clientele. To achieve rural targets tie-up with new Micro Finance Institutions

This year your company also launched its e-Insurance portal through which a customer can buy life insurance online. In doing so, your company joined the annals of the first few to leverage the huge opportunity presented by the ever increasing independent buying of financial products and services online. This trend is expected to increase exponentially over the next few years, aided by factors such as rising internet penetration, convenience, speed, cost advantage and sturdier online payment safety architectures. Your company launched two products for online purchase - e-Term and e-Preferred Term plans. Highly competitive rates, medical examination at home in select cities, preferential rates for women and non-smokers are some of the key selling propositions.

FIGURE 1.7 - 3.2 Structure: The way the organization is structured and who reports to whom.
WORK FLOW MODEL Chairman Managing Director

Unit Head

Administration Staff

Management Staff Workers

3.3 Systems: the daily activities and procedures that staff members engage in to get the job done. e-Insurance portal System through which a customer can buy life insurance online. In doing so, your company joined the annals of the first few to leverage the huge opportunity presented by the ever increasing independent buying of financial products and services online. This trend is expected to increase exponentially over the next few years.
INFORMATION TECHNOLOGY
Your company has made significant investments into IT to create the backbone infrastructure to manage growth and scale of the kind your company aspires. Significant milestones have been achieved in driving online sales, business efficiency, information security, compliance and risk management through IT. * Your company launched the on-line sales portal this year. The initial response to the initiative has been encouraging. * Your company also implemented the Channel Partner Portal to cater to the information needs of alternate channel partners. This initiative is expected to significantly enhance efficiencies and service experience for our Alternate Channel partners. * Considering the growth and criticality of the Group Insurance business, your company has decided to migrate to Group Asia – the highly efficient and robust group insurance system from CSC. * Further, implementation of Siebel CRM will significantly raise the bar of our customer service function. * Your company has also managed to successfully centralize the agency function with the implementation of the Agency Recruitment and Licensing System. Furthermore, your company has added several new features to the internally developed payment system Pay connect, making data management faster and simpler. * Your company has also made significant strides in the area of information security with the introduction of Managed Security Services, which inter alia involves anti-phishing, malware and threat monitoring and management, desktop hardening, security log monitoring and management and information security awareness.
OPERATIONS AND CUSTOMER SERVICE * In FY 2010-2011 your company implemented several new and innovative customer-centric initiatives, and made significant strides in up scaling its existing initiatives to deliver seamless, world class customer experience. * Your company will shortly implement the world class Siebel CRM system for servicing its customers. Siebel will help us create a common view of customers and prospects besides providing us a common framework to manage information. It will significantly improve our capacity to manage complaints and service requests thereby enhancing the overall quality of customer experience. * Further, your company has initiated the zero paper initiative by implementing the first phase of email alerts to the customers. This ensures that basic alerts like renewal reminders, premium receipts etc. are sent to customers on their registered email ids. Apart from being environmentally friendlier, this mode is also fast and efficient. For greater operational convenience in collections, your company has extended its auto debit facility to 6 additional Banks in non ECS locations. Instant SMS alerts for rejection of UL related transactions are also sent to customers on real time basis to keep them informed.
Corporate Control:
• Review operating control systems established to ensure compliance with policies, plans, procedures, laws and regulations
• It shall also put in place an effective reporting system to ensure compliance with the policy set out by it apart from internal/Concurrent Audit mechanisms for a sustained and on-going monitoring of Investment Operations risk management committee
• Assist the Board in effective operation of the risk management system by performing specialised analyses and quality reviews an internal audit system commensurate with the size and nature of the business exists and is operating effectively. As the Company’s financial accounting system is centralized, no returns for the purpose of our audit are prepared at the branches of the Company;
Any business involved in marketing of financial product, especially life insurance has ideally embraced “Merit Rating System”. And the adoption of this system can be justified through the simple fact that performance matters. To be precise, communication practice system, management reporting system, approval process, planning and budgeting system.

3.4 Shared Values: called "super ordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.
Our values: - values
Every member of the Kotak Group team is committed to 5 core values: Integrity, Customer First, Boundary less, Ownership, and Passion. These values shine forth in all we do, and have become the keystones of our success. Innovation, people care, one for all and all for one, team work, joy and simplicity.
3.5 Style: the style of leadership adopted.
Kotak Life has always prided itself regarding the adoption of modern and acceptable leadership style. Kotak Life follows “Participative Style”, where everyone is treated equal with performance being primary deciding criteria. Suggestions and ideas are considered if found intriguing enough, regardless of level or rank. Kotak Mahindra Old Mutual Group doesn’t believe in authoritarian leadership or one way communication which disrupts the smooth flow of information and evolution of creative ideas.
3.6 Staff: the employees and their general capabilities.

Kotak Life has a dynamic management staff having vast experience and unrivalled knowledge in the area of financial products and services. Kotak Life prides itself with presence of highly skilled team of analysts offering outstanding research outputs. Kotak Life team comprises of people coming from various financial backgrounds, each having highly recognized qualifications such as MBA, CAs, etc.
The Company has well-staffed Investment team which has been structured for effective function and independent checks to constantly monitor investment performance and analysis.

3.7 Skills: the actual skills and competencies of the employees working for the company.

Your company’s HR department has been, for a second year in a row, re-certified with the ISO certification for the year for its HR operations.
The year has seen your company take major initiatives in Recruitment Process and Management areas. This would help your company in not just meeting with the environmental uncertainties - by building greater cost and process efficiencies - but also in further enhancing focus on the employee engagement and development priorities. The focus in the current year is to build on the employee value proposition to not just help in attracting new talent but also in retaining our key employees. The development agenda in the coming year would be geared up with a larger focus than ever before towards enhancing skills and improving employee productivity.
At Kotak Life, candidates are best preferred if he/she has a rare combination of finance and marketing both. Employees are well expected to be aware of different financial terms being taught in MBA or CA and should have ability to convince clients for what is good for both the parties. Kotak Life ensures a congenial environment, freedom to develop and able guidance from the executive management makes it easier for people to excel and consistently achieve the high standards set by the company. Apart from academic skills, employees are appreciated if they apply creativity, innovation, integrity, timeliness and team work in their performance.
4. SWOT Analysis of the company Strengths a) Robust IT Infrastructure: Kotak Life has equipped itself with the modern state of the art infrastructure with multi-layer data security, latest technology and systems to provide secure connectivity & communication channels. Kotak Life ensures scalable capabilities and manpower to deliver the required results for our clients.

b) The company covers over 3 million customers and is one of the fastest growing insurance companies in India

c) Partners having experience in different markets of the world and have Professional management skills in the field of insurance.

d) Expertise in local market with global exposure. Has network across 300 towns with more than 5000 employees in its belt.

e) Innovative Product range with transparent practices, good customer service and disciplined fund management.

Weakness a) More than 70% people live in rural area but Kotak Life is more centric in urban area. Rural areas still not covered.

b) Lack of credibility among the people because Kotak being a private player.

c) Premiums are high as compared to its competitors.

d) Very few branches in the country. Lack of presence in various parts of country

e) Not very known among Indian population.

f) Lack of Advertising and low brand visibility as compared to competitors

g) Fraudulent advisors affect brand image

Opportunity

a) India is fast growing market and 80 to 85% people are below age of 45, as the industry is growing the whole market is virgin.

b) Insurance awareness is increasing in India, with most of the insurance firms spending huge amount on insurance awareness.

c) It’s a volume business that is even if the company has few good corporate, the turnover cease to increase by manifold.

d) Growing potential in the semi-urban and rural market, this can be trapped using Tax free policy and investment opportunity.

e) Better investment awareness amongst the younger generation

Threats

a. Entry of other private company with equal strong experience and financial strength of partner making the competition difficult and saturating the urban market. Entry of other players is still not ruled out.

b. Indian investors are traditionally loyal to PSU such as LIC an SBI. With rising force of ICICI Birla Sun Life, competition is stiff not only in insurance but also in Equities, Online Mutual Fund, Depository services and Investment advisory and Apprehension towards Kotak being a private life insurance company. c. Current Govt. policies do not encourage in gross domestic saving. If the tax liabilities of the service rise the customer will have little money to invest and the government players will become aggressive thus growth is going to be tough.

d. Fluctuating, economic scenarios, Entry of new NBFCs in the sector increasing competition and High level of merger and acquisitions still in operation in industry, posing high threat.

e. Product differentiation is getting in market with various firms introducing similar products and Services.

TABLE 1.2 - 5. Analysis of Financial statement RATIOS | 2008 | 2009 | 2010 | 2011 | 2012 | Current ratio | 1.04:1 | 1.44:1 | 1.36:1 | 1.4:1 | 1.07:1 | Debt Equity ratio | 2.125 | 1.222 | 1.083 | 0.85 | 1.22 | NET profit ratio | -0.134 | -0.0832 | -0.0445 | -0.05 | -0.091 | Return on equity | 0.6817 | 0.4066 | 0.31875 | 0.3817 | 0.7714 | Retention ratio | 0.98 | 0.9854 | 0.98836 | 0.99157 | 0.99167 | ROCE ratio | -0.03126 | -0.2703 | -0.1709 | -0.2252 | -0.3174 |

INTERPRETATION:

* In the year 2011 current ratio is 1.4:1 signifies that current assets are 1.4 times its short term obligations. The liquidity position is better in the year 2011 as compared to year 2012. The current ratio has been less than the standard ratio 2:1, as basically KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE is a service company; maintenance of current assets is lower than its liabilities.

* A low debt equity ratio is considered favourable from creditor’s point of view as high proportion of owner’s funds provides a larger a lesser margin of safety for them. Here the debt equity ratio is high. This lead to inflexibility in the operations of the firm as creditors would exercise treasure and interfere in management. Therefore firm would able to borrow only under restrictive terms and conditions.

* In 2012 retention ratio is 0.99167 company is retaining 99.17% of risk with itself. In 2011 retention ratio is 0.99157, ceding 0.0084 to the reinsurer. This shows company has taken high risk compared to previous year, i.e. 0.01%.

6. Learning experience gained during in plant training

During my 10 weeks of project with Kotak Mahindra Old Mutual Life Insurance, I was able to gain a good insight about the working of ULIPs, its charges involve and also about the investors perception towards ULIP as an affordable investment option.
As my project concentrated on comparative analyses of ULIPs of different companies, * I was able to gain knowledge about the different funds linked with ULIPs in Kotak Mahindra Old mutual Life Insurance. * I also learnt about the various products of unit linked insurance plans, the benefits and other extra rider benefits derived from it if invested in ULIPs. * I was able to learn the methods of how financial planning can be done for an investor to assist in investment. * I was able to gain valuable experience in financial planning technique which helps to plan investment for long term so has to protect from all severities in life. * I was able to gain an insight into the various charge involved in ULIPs, and this helped me to understand the cost structure of ULIPs and able to understand the reason of ULIP being an expensive investment option. * I also gained knowledge of various ULIP funds with different debt equity mix and its allocation of funds in different sector wise portfolio so as to diversify risk and maximize return. * Most importantly I was able to develop my personal skills as I was trained about the method of approaching prospective client and to address their specific need requirement. * I had great opportunity to know about company’s process and procedure. Overall, learning experience at Kotak Mahindra Old Mutual Life Insurance had deep impact on my mind and I genuinely feel it helped to elevate my reach to a real field of financial services. PART B
“COMPARATIVE ANALYSIS OF ULIPs IN INDIA”
Chapter 1: INTRODUCTION

1.1 BACKGROUND OF THE STUDY

UNIT LINKED INSURANCE PLANS:
Unit-linked policies are known to be much more transparent in their offerings than their traditional counterparts. In traditional policies, no details are given about the charges deducted towards expenses, mortality charges and the amounts invested. There is a common pool of funds and contributions of all policyholders are invested in tis common pool. At the end of the year, the policyholder will not know how many returns the common pool has earned. The insurance company will share a part of the returns by way of bonuses. The investments of this common pool are, however, regulated by the insurance regulatory and development authority (IRDA).

Unit linked insurance plan (ULIP) is a life insurance solution that provides the client with the benefits of protection and flexibility in investment. It is a solution which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time the investment is denoted as unit and is represented by the value that it has attained called as Net Asset Value (NAV). ULIPs are a category of goal-based financial solutions that combine the safety of insurance protection with wealth creation opportunities. In ULIPs, a part of the investment goes towards providing a life cover. The residual portion of the ULIP is invested in a fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by the customer. Simply put, ULIPs are structured in such that the protection element and the savings element are distinguishable, and hence managed according to your specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency. ULIPs came into play in 1960’s and became very popular in Western Europe and America. The reason that is attributed to wide spread popularity of ULIP is because of the transparency and the flexibility which it offers to the clients.

As time progressed the plans were also successfully mapped along with life insurance needs top retirement planning. In today’s times ULIP provides solution for all the needs of client like insurance planning. In today’s times ULIP provides solution for all the needs of client like insurance planning, financial needs, financial planning for children’s future and retirement planning.
UNIT LINKED INSURANCE POLICIES (ULIPs)
Unit linked guidelines were notified by IRDA on 21st December 2005. The main intent of the guidelines was to ensure that they lead to greater transparency and understanding of these products among the insured, especially since the investment risk is borne by the policy holder. It is endeavour of IRDA to enable the buyer to make the most informed decision possible when planning for financial security. The following will enable a better insight about the character and feature of the Unit Linked Products.

a) ULIP:
ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. In a unit linked policy, the investment risk is generally borne by the investors. b) Unit Fund:
The allocated (invested) portion of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are polled together to form a Unit Fund. c) Unit:
It is a component of the fund in a Unit Linked Policy d) Are Investment Returns Guaranteed in a ULIP:
Investment return from ULIP may not be guaranteed. “In unit linked products/ policies, the investment risk in investment portfolio is borne by the policyholder”. Depending upon the performance of the Unit Linked Funds chosen; the policy holder may achieve gains or losses on his/her investment. It should also be noted that the past returns of a fund are not necessarily indicative of the future performance of the fund. e) The charges, fees and dedications in a ULIP:
ULIPs are offered by different insurers have varying charge structure. Broadly, the different types of fees and charges are given below. However it may be noted that different types of fees and charges are given below. However it may be noted that insurers have the right to revise fees and charges over a charges over a period of time.

* Premium Allocation Charges:
This is a percentage of the premium appropriated towards charges before allocation the units under the policy. This charge normally includes initial renewal expenses apart from commission expenses.

* Mortality Charges:
These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc.

* Fund Management fees:
These are fees levied for management of the fund and are deducted before arriving at the Net Asset Value (NAV).

* Policy/Administration charges:
These are the fees for administration of the plan and levied cancellation of the units. This could be flat throughout the policy term or vary at pre-determined rate.

* Surrender Charges:
A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.

* Fund Switching Charges:
Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge.
Working of ULIPs:
It is critical to understand how the money gets invested in ULIP. When the investor decides the amount of premium to be paid and the amount of life cover willing to get from ULIP, the insurer deducts some portion of the ULIP premium upfront. This portion is known as the Premium Allocation Charge, and varies from product to product. The rest of the premium is invested in the fund or mixture of funds chosen by the investor. Mortality charges and ULIP administration chares are thereafter deducted on a periodic (mostly monthly) basis by cancellation of units, whereas the ULIP fund management charges are adjusted from NAV on a daily basis.

Since the fund of investor’s choice has an underlying investment – either in equity or debt or a combination of the two – fund value will reflect the performance of the underlying asset classes. At the time of maturity of the plan, he is entitled to receive the fund value as at the time of maturity.

TYPES OF FUNDS UNDER ULIPs:
An investment is the use of capital to create more money through the acquisition of a security that promise the safety of the principal and generate a reasonable return.

Benefits of Unit – Linked Plan
Look at any advertisement for a life insurance product and chances are that it will be for a unit linked insurance plan (ULIP). Such has been the popularity of ULIPs in the recent past that they have outpaced the growth of regular endowment plans.
We take a look at the most important reasons why ULIPs score over endowment plans.

1. The power of equity:
Simply put, ULIPs are life insurance plans, which have a mandate to invest up to 100% of their corpus in equities. While individuals have the choice to shifts between equity and debt (explained later in this article), several studies have shown that equities are best equipped to deliver better returns compared to their fixed-return counterparts like bonds and G-sacs. And given the fact that life insurance is a long-term contract, equity-oriented ULIPs augur well for the policyholder. 2. Flexibility:
While ULIPs offer the opportunity to invest up to 100% in equity, it is also true that ULIPs provide individuals the flexibility to shift to up to 100% debt. It is entirely upon the individual how he wishes to allocate his premiums between equity and debt.
This is not the case with endowment type plans – individuals can’t choose their investment avenues and have to be content with the insurance company’s investment decisions which revolve largely around debt.
ULIPs are available in 3 broad variants: ‘Aggressive’ ULIPs, which invest up to 100% of their corpus in equities, ‘Balanced’ ULIPS WHICH INVEST UP TO 60% of their corpus in equities and ‘Conservative’ ULIPs which invest up to 100% of their corpus in debt instruments and the money market instruments.
ULIPs also provide individuals with the flexibility of terminating/resuming premiums, increasing/decreasing premiums and paying top-ups (i.e. a one-time sum over and above the regular premium) whenever possible. These options are not available in regular endowment plans. 3. Transparency:
For the first time, ULIPs introduced transparency into the manner in which life insurance products were being managed. This is something that was missing in conventional savings-based insurance products (like endowment/money-back/pension plans).
To understand why we are saying this, one has to first understand the structure of traditional endowment plans. Traditional endowment plans have been opaque in more ways than one. To begin with, traditional endowment plans have invested a sizable portion of their corpus in debt instruments like G-secs and bonds. The quantum of money invested is not known. Individuals do not have access to portfolios of endowment plans so they never find out how much money is in debt/equities.
Unit linked plans brought transparency into the scheme of things. Today, if an individual wants to invest in a ULIP, he knows upfront what percentage of the premium is being invested, what are the charges being levied and where his monies are being invested. This is a welcome change for the policyholder.
Another advantage ULIPs offer is that they enable insurance seekers to compare plans across companies and help him buy a plan that fits well into his portfolio. Also ULIPs disclose their portfolios at regular intervals, so you know exactly where your money is being invested.

4. Liquidity
ULIPs offer liquidity to the individual. He can withdraw money anytime he wishes too once the initial years premiums are paid. He will not be levied with any surrender charges i.e. he stands to get the full market value of his investments, net of charges, till date. This is unlike conventional endowment plans where individuals tend to lose out on surrender charges on surrendering their policies.

Besides, part surrender is also allowed in ULIPs. Simply put, part surrender allows individuals to withdraw a part of their corpus and thus keep the policy alive, albeit with some adjustments. This helps individuals tide over a situation where they need cash but have few ‘liquid’ investments at their disposal.

Individuals need to understand the demerits of investing in market-linked products like ULIPs. The latter are susceptible to the vagaries of markets and can burn a hole in your portfolio over the short term. So if you can’t withstand that kind of volatility, equity-oriented ULIPs are not right investment option for you.
Insurance seekers would do well to take into consideration their risk appetite as well as their overall financial portfolio before taking a final call on ULIP investments. The ideal option is to have a prudent mix of endowment and ULIPs depending on your preference for either long-term growth or stability.

TABLE 1.1 - TYPES OF FUNDS UNDER ULIPs:
Most insurers offer a wide range of funds to suit one’s investment objectives, Risk profile and horizons. Different funds have different profile. The potential for returns also varies. The following are some of the common types of funds available along with an indication of their risk characteristics.

General description | Nature of investments | Risk category | Equity Funds | Primarily invested in company stocks with the general aim of capital appreciation. | Medium to High | Income, Fixed Interest and Bond Funds | Invested in corporate bonds, government securities and other fixed income instruments. | Medium | Cash Funds | Sometimes known as Money Market Funds-invested in cash, bank deposits and money market instruments. | Low | Balanced Funds | Combining equity investment with fixed interest instruments | Medium |

Advantages of ULIPs:
ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan is a one stop solution for everything the customers want. Also the customers have the choice of multiple funds options based on their risk appetite, thereby enabling an investor to make the desired returns from the investment. The following are some of the advantages of Unit linked plans:

a. Life protection b. Investment and savings c. Tax Planning d. Flexibility of cover continuance e. Transparency f. Extra protection with riders g. Liquidity h. Variable investment options i. Premium holiday

1.2 Statement of the Problem
The present scenario of insurance industry has been going sea change. The first and the foremost thing the investor should know is the product. Product awareness plays a very crucial role in selecting the right kind of product. The investor should be convinced and comfortable, where his money is being invested. ULIP being relatively new concept, many investors could be apprehensive about investment decision. Selecting a product that suits investor’s needs and wills also maximizes his returns, an investor not only needs advice on how to choose from variety of investment options available, but also a proper investment strategy that is suitable to his situation and needs. Right entry at the right timing with right person is extremely important in Life insurance investment.

NEED FOR THE STUDY
IRDA – Insurance regulatory development authority notified on 21st December 2005 on the development of Unit Linked plans. With this came the advent of ULIP or Unit Linked Insurance Plan, which changed the way the insurance companies operate. ULIPs are insurance plans which have high cost involved but those costs are covered by gains made by it. ULIP are risky and all those risks are borne by the investor. Thoroughly understanding the performance of the funds in ULIP is needed. This study deals with the different ULIP funds and the analysis of funds’ performance and its comparison with other Insurance company.

1.3 SCOPE OF THE STUDY
This study aims to make a comparative study of the Unit Linked Insurance Plans (ULIPs) of different Insurance Company in India and study the consumer perception towards various insurance products. The comparative analysis covers 5 randomly selected insurance firms. This analysis is strictly based on current ULIP provided by these 5 selected insurance firms.

1.4 OBJECTIVE OF THE STUDY 1. To analyse the Unit Linked Insurance Plans (ULIPs) of 5 major insurance firms in India 2. To compare the Unit Linked Insurance Plans (ULIPs) of 5 major insurance firms in India 3. To investigate the investors awareness and behaviours towards various insurance products (ULIPs). 4. To analyses the investment patterns and behavior of the consumer in Financial Products.

1.5 RESEARCH METHODOLOGY
The whole study can be termed as comparative study. The study centres on comparing popular life insurance product “ULIP” of 5 major Indian Insurance firms.
The following methodology has been followed to achieve the objectives of the project.
FIGURE 1.1 - Steps in Research Methodology
Step1: Developing a right research design and timeline for the project

Step 2: Collecting secondary data of the insurance industry

Step 3: Designing of questionnaire

Step 4: Analysis of secondary data and pilot study

Step 5: Collection of primary data (Questionnaire and internet surveys)

Step 6: Analysis of primary data

Step 7: Interpretation of the results

Step 8: Preparation of the final report

1.5.1 RESEARCH DESIGN The type of research being followed here is the Analytical Research and Exploratory Research. The facts or information is already available and they are analysed to make a critical evaluation of the material, and primary data also collected and explored for the research purpose to know about investment pattern of the investors towards various investment instruments, particularly towards ULIPs.
1.5.2 SOURCES OF DATA In the data collection method, the researcher has collected both primary and secondary data to meet our objectives. Primary Data: The primary data was collected by a survey based on the questionnaire. It was formulated on the basis of information carefully gathered by the researcher about the various mind-sets of the people. This questionnaire has been mainly formulated to target the common man to see his perception and awareness of various investment options available. The number of respondents targeted was around 50 and the survey was confined Bangalore city. Secondary Data: The secondary data has been collected directly from the companies and their websites and internet surveys. Also a lot of similar research studies and journals have been referred too.
1.5.3 PERIOD OF STUDY
The study covers a period of 12months from March-2011 to February-2012.
1.5.4 SAMPLING TECHNIQUE
The quality of research output and the validity of its findings depend upon appropriateness of the sampling design selected for the study. But considering vastness of Indian financial sector, the researcher has applied random sampling method to select 5 major life insurance firms out of 22 major insurance companies based on market share, which more or less represent Indian life insurance sector. * Simple Random Sampling has applied to fix 50 as size of sampling for primary data collection * Statistical tool like chi-square analysis is being used to determine the significance of factors. * 1.5.5 ANALYTICAL TOOL

* CHI-SQUARE TEST
The chi-square (I) test is used to determine whether there is a significant difference between the expected frequencies and the observed frequencies in one or more categories. Do the numbers of individuals or objects that fall in each category differ significantly from the number you would expect.

X2= WHERE O is the Observed Frequency in each category E is the Expected Frequency in the corresponding Df is the "degree of freedom" (n-1)
X2 is Chi Square

1.5.6 LIMITATIONS: * The study will be conducted in Bangalore city only. This may not reflect the actual picture of market other than this area. * Sampling error might occur due to small sample size * Answers will be given by the respondents may be biased * There is a constraint on time to cover the entire consumers. * The sample size is very less, hence the responses of just 50 respondents does not imply for the complete population. * It is not always possible to evaluate companies under similar parameters since many companies deal with various businesses thus clubbing all the companies on the same parameters is not always possible.

2. Review of Literature
Till today a lot of research has been done on the Indian insurance industry especially the life insurance sector. The material for this study was collected from various internet sites, journals and books by various authors.
2.1 Gupta (2009), ULIPs are suitable for all types of customers, right from the lower class to the premium class. She says ULIP is flexible to the core and gives dual benefits of mutual funds and insurance. She has also mentioned that ULIP is the fastest rising life insurance product and there has been tremendous positive response from the customers.
2.2 Navasiyam, (2006) analysed those socioeconomic factors that are responsible for taking life insurance policies and examined the preferences of policyholders towards various types of policies of LIC. From the analysis, it was found that factors such as age, educational level and sex of the policyholders are insignificant. However, income level, family size and occupation are significant while deciding on insurance policy. From the analysis, it is inferred that respondents belonging to the age group of 31 to 40 years are much interested in taking life insurance policy.
2.3 Madhu T (2009), made a study on „ULIPs hold edge over Mutual Funds‟. The findings show that distributer would push unit linked plans to earn better commission. ULIPs offer attractive frontend commissions to agents. However, independent financial advisors believe that though there is a possibility of some distributers favouring ULIP in short term, the new directive would be beneficial for both the industry and investors in long run.
2.4 Shenoy(2006), in his article „Comparing ULIP with Mutual Funds‟ reveals that over last 3 years their growth mutual fund has given better returns than their “Maximizer” option of ULIPs. 2.5 Philip (2008) has analysed term and whole life insurance from various perspectives. He suggests investors should review their situation and investigate options. In many situations term life insurance makes the most financial sense. That said, as mentioned, each person's circumstances are unique. The first step is to identify which type of coverage is suitable for you and your family. Step 2: compare some life insurance rates. Philip has also explained about pros and cons of switching from one life insurance to another life insurance product.
2.6 Ramsey (2008) believes that Life coverage insurance, if you have a solid financial plan, is only needed for a short period of time. Buy term insurance and take the rest of the money you would save instead of buying a whole life policy and invest it in your own investment vehicle like a mutual fund, stocks, bonds or money market. Many people are sold a Whole life policy because the insurance agent was working for their own financial gain instead of having the interest of their client.
2.7 Theron (2008) has analysed both the sides of whole life insurance and term life insurance and has wrapped up her views by stating that comparison between these two life insurance policies will debated for years to come. Daniel suggests that investors should opt term life insurance when they require only coverage for particular period of year and when they can’t afford the cost of whole life insurance. Whole life insurance can be considered when investor can manage to pay for initially expensive premiums and when investor is ready to maintain the policy for the remainder of a life.
2.8 Banham (2009), the bottom line of this article is that whole or permanent life insurance is experiencing a revival of interest as a long term investment to weather difficult economic times. Aside from death benefit, the insurance provides a tax – deferred build-up of cash values that can be borrowed against on tax-favorable basis, providing a ready source of capital when other sources of money are problematic or hard to come by.
2.9 Keating (2009) “When times are tough the cash value from whole life policy can be a personal emergency find that helps you weather the financial storm.” He advocates WLI by stating that it provides lifelong protection, guaranteeing the policyholder that in the event of his or her death a benefit based on the stated face amount of the policy will be provided to the beneficiaries. 2.10 Ryan Richardson (2008) has also made comparative study of whole life insurance and term life insurance and drew conclusion that if there's not a lot of room in your budget for another monthly expense and price is your primary concern, a term policy is really your only option. But along with strong financial support, if you have other financial goals in mind, more than just making sure certain large debts will be paid off; a whole life insurance policy may be a better option for you. 3. RESULTS AND DISCUSSION COMPARATIVE ANALYSIS OF SECONDARY DATA PERFORMANCE OF ULIPs OF THE SELECTED COMPANIES
In order to compare the performances of the ULIPs among five selected companies, the researcher has selected a particular type of fund called equity growth funds. The reason for selecting equity growth fund is that investors would be very clearly able to understand the effect of market slowdown on these companies.

Here the researcher has considered the Net asset Values (NAV) of the equity growth funds from March 2011 to Feb-2012. The researcher has then compared the maximum and minimum NAVs during the period and found out the percentage change for the NAVs observed for the equity funds of the respective selected companies. The researcher has calculated the average NAV for every month (from March 2011 to Feb-2012) for all the companies and then plotted them on graphs. The researcher has then found out the extent to which each company was affected due to the market slowdown. The researcher has also taken into consideration the latest NAVs of these companies to see the pattern of growth of these funds post-recession. The percentage change (negative) in the Net Asset value for all the companies has been calculated below and one coul observe that Bajaj Allianz was the least affected among the selected companies with only a percentage change of only -3.17% which is quite low compared to -12.77% of that of ICICI Prudential.
.
Along with NAV of growth equity fund of the each company, various plans of ULIPs they offered are also mentioned in table format.

TABLE 1.2 - Comparison of Product Profile No | Bajaj Allianz | HDFC Standard Life | ICICI Prudential | LIC | SBI | I | Bajaj Allianz offers five types of ULIPs | HDFC Standard Life offers four different types of ULIPs | ICICI Prudential offers eleven types ULIPs, the highest. | LIC, the biggest player in the field offers 3 types of ULIPs | SBI offers seven types of ULIPs | II | Through Pension Guarantee, a customer can invest even at the age of 80 years whereas remaining four plans do not facilitate investment beyond the age of 60 years. | Max Entry Age in case of Endowment Plus II & Unit Linked Pension RP is 65 years whereas in case of Enhanced Life Protection II & Unit Linked Pension SP it is 45 & 70 respectively. | Max Entry Age in Life Stage RP is 75 years and 70 years in Life Stage RP Pension whereas for Smart Kid Child Plan it’s 15 years. It is 65 years in rest of all. | Through Market Plus of LIC a customer can invest even at the age of 70 years whereas it’s 60 years in case of Fortune Plus and 65 years in case of Profit Plus. | Through Smart performer, unit plus super and smart wealth assurance, a customer can invest up to the age of 75 whereas remaining four plans do not facilitate investment beyond the age of 65 years. | III | Unit Gain Plus Gold, Unit Gain Premier and New Unit Gain Plus do not have min entry age. But its 45 years in pension guarantee plan and 8 in case of century plus plan. | Min Entry Age in case of all four products of HDFC Standard Life is 18 years. | Life Time Super Pension and Life Stage Super Pension have 18 years as Min Entry Age whereas rest of the plans do not have min entry age. | Profit Plus does not have any Min Entry Age whereas it’s 18 years in case of Market Plus and 12 years in case of fortune plus | Saral Maha Anand, Smart Elite, Smart Scholar have min entry age of 18 years whereas Unit Plus Super and Smart Horizon have min entry age of 7 year, and Smart Performer have 9 year and 8 years as min entry age in case of Smart Wealth Assurance. | IV | New Unit Gain Plus makes a whopping 55% as premium allocation charge where it is just 15% in Unit Gain Plus Gold. | Endowment Plus II & Enhanced Life Prot. II charge 40%. Whereas Unit Linked Pension RP & Unit Linked Pen. SP charge 20% & 6% respectively as Premium Allocation. | Premier Life Gold charges least Premium Allocation of 12% whereas Life Time Plus, Life Stage RP and Life Stage uniformly charge 25% (the highest) as Premium Allocation. | Premium Allocation charge in Market Plus is 16.5% as compared to 15% in case of Profit Plus. | Premium Allocation charge in Smart Performer, Unit Plus Super, Smart Elite, Smart Scholar is 20% Whereas in Saral Maha Anand, Smart Horizon and Smart Wealth Assurance is 12% | BAJAJ ALLIANZ LIFE INSURANCE COMPANY TABLE 1.3 Different ULIPs from Bajaj Allianz Particulars | UNIT GAIN PLUS GOLD | UNIT GAIN PREMIER | CENTURY PLUS | NEW UNIT GAIN PLUS | PENSION GUARANTEE | Min. entry age | 0 | 0 | 8 years | 0 | 45 years | Max. entry age | 60 years | 60 years | 60 years | 60 years | 80 years | Max maturity. age | 70 years | 70 years | 70 years | 70 years | NA | Min. premium | 12000 | 50000 | 25000 | 10000 | 25000- purch | Riders | ADBR | NM | ADBR | ADBR, CIBR, WOP, FIB, HCB | NM | Min. prem. term | 3 Years | 3 Years | 3 Years | NM | NM |

FIGURE 1.2: Graphical representation of NAV of Bajaj Allianz’s Equity Growth Fund. Month | NAV | | | | | | | | | | Mar-11 | 15.8 | | | | | | | | | Apr-11 | 16.6 | | | | | | | | | May-11 | 16.2 | | | | | | | | | Jun-11 | 16.4 | | | | | | | | | Jul-11 | 16.8 | | | | | | | | | Aug-11 | 16 | | | | | | | | | Sep-11 | 16 | | | | | | | | | Oct-11 | 16 | | | | | | | | | Nov-11 | 16.1 | | | | | | | | | Dec-11 | 15.3 | | | | | | | | | Jan-12 | 15.4 | | | | | | | | | Feb-12 | 16.8 | | | | | | | | | INFERENCE:
Among these five selected companies, Bajaj Allianz suffered least setback during the period of post-recession period of 2011-2012. Net Asset Value of equity growth of Bajaj Allianz started in March-11 with 15.8. One could observe that NAV of Bajaj Allianz during these periods have been moderately volatile with figure touching almost every single digit. At the month of December 2011, NAV reached the lowest average monthly with figure of merely 15.3. Over all Bajaj Allianz suffered least fall in growth rate by almost 3.164%. On the better side, NAV responded well in the initial month of the year 2012 with 16.8.

Bajaj Allianz performance during the year 2011 was comparatively stable and they bounced back well in the year 2012. LIFE INSURANCE CORPORATION (LIC) OF INDIA

TABLE 1.4: Different ULIPs from LIC Particulars | MARKET PLUS | PROFIT PLUS (RP & SP) | FORTUNE PLUS | Min. entry age | 18 years | 0 | 12 years | Max. entry age | 70 years | 65 years | 60 years | Max. maturity age | 75 years | 70,75 years | 65 years | Min. premium | 5000 RP 10000 SP | 1000RP 2000SP | 20000 | Riders | ADBR | ADBR, CIBR | ADBR | Min. premium pay. Term | 5 years | 3 years | 5 years |

FIGURE 1.3: Graphical representation of NAV of LIC’s Equity Growth Fund Month | NAV | | | | | | | | | | Mar-11 | 14.8 | | | | | | | | | Apr-11 | 15.7 | | | | | | | | | May-11 | 15 | | | | | | | | | Jun-11 | 14.9 | | | | | | | | | Jul-11 | 15.4 | | | | | | | | | Aug-11 | 14.4 | | | | | | | | | Sep-11 | 14.1 | | | | | | | | | Oct-11 | 14.4 | | | | | | | | | Nov-11 | 14.3 | | | | | | | | | Dec-11 | 13.5 | | | | | | | | | Jan-12 | 13.6 | | | | | | | | | Feb-12 | 15 | | | | | | | | |

INFERENCE:

LIC, being run by government, enjoys immense investors trust and it was very much evident during this economic turmoil period. NAV of LIC equity growth fund during the month of March-11, was impressive 14.8 and ends the year with 15. There had a change of almost -8.7838% during the year but compared to rest of the companies, LIC was the least affected and most stable insurance company. LIC continues to dominate ULIP sector with back up from government and investors‟ traditional behaviour. But private players like ICICI Prudential is catching very fast and pose serious competition. HDFC STANDARD LIFE INSURANCE COMPANY TABLE 1.5: Different ULIPs from HDFC Standard Life Particulars | Endowment Plus II | Enhanced Life Protection II | Unit Linked Pension RP | Unit Linked Pension SP | Min. entry age | 18 years | 18 years | 18 years | 18 years | Max. entry age | 65 years | 45 years | 65 years | 75years | Max. maturity age | 75 years | 75 years | 75 years | 75 years | Min. premium | 12000 | 12000 | 12000 | NM | Riders | ADBR, CIBR | NO | NO | NO | Min. prem. pay term | TERM | TERM | TERM | TERM |

FIGURE 1.4: Graphical representation of NAV of HDFC Standard Life’s Equity growth fund. Month | NAV | | | | | | | | | | Mar-11 | 11.3 | | | | | | | | | Apr-11 | 11.9 | | | | | | | | | May-11 | 11.3 | | | | | | | | | Jun-11 | 11.2 | | | | | | | | | Jul-11 | 11.7 | | | | | | | | | Aug-11 | 10.9 | | | | | | | | | Sep-11 | 10.6 | | | | | | | | | Oct-11 | 10.7 | | | | | | | | | Nov-11 | 10.6 | | | | | | | | | Dec-11 | 10 | | | | | | | | | Jan-12 | 10.4 | | | | | | | | | Feb-12 | 11.1 | | | | | | | | |

INFERENCE:
HDFC STANDARD LIFE‟s performance during the year has been that of moderate category. It started the year with NAV of equity growth fund of 11.3. Overall, though with low NAV, its performance during the post-recession period is comparatively more stable. It ends in the year Feb-12 with 11.1 which encouraging to investors considering performance during the whole turmoil period. Globally, every industry related to equity market was hit by economic crisis and ULIP was no exception. But in Indian sub-continent and China, things were much better off and investors continued with their investment at some returns.

ICICI PRUDENTIAL LIFE INSURANCE COMPANY TABLE 1.6: Different ULIPs from ICICI Prudential Particulars | LIFE TIME GOLD | LIFE LINK SUPER | PREMIER LIFE GOLD | LIFE TIME PLUS | Min. entry age | 0 | 0 | 0 | 0 | Max. entry age | 65 years | 65 years | 65, 69 years | 65 years | Max. maturity age | 75 years | 70 years | 75 years | 75 years | Min. premium | 20000 | 50000 | 10000 | 20000 | Riders | ADBR,CIBR, WOP | NO | ADBR, CIBR, WOP | ADBR, CIBR | Min. prem. pay term | 3 years | SP | 3,5 years | 3 years |

TABLE 1.6.2 Different ULIPs from ICICI Prudential Particulars | LIFE STAGE | SMART KID CHILD PLAN | LIFE TIME SUPER PENSION | LIFE STAGE RP PENSION | Min. entry age | 0 | 0 | 18 years | 18 years | Max. entry age | 65 years | 15 years | 65 years | 70 years | Max. maturity age | 75 years | 25 years | 45 years vesting age | 50-80 yrs. vesting age | Min. premium | 15000 | 12000 | 15000 | 15000 | Riders | ADBR, CIBR | ADBR, CIBR, WOP | ADBR, CIBR | NO | Min. prem. pay term | LIFE BASED | 3 years | 3 years | 3 years | TABLE 1.6.3 Different ULIPs from ICICI Prudential Particulars | LIFE STAGE RP | LIFE STAGE ASSURE | INVEST SHIELD LIFE NEW | Min. entry age | 0 | 0 | 0 | Max. entry age | 75 years | 65 years | 65 years | Max. maturity age | 75 years | 75 years | 75 years | Min. premium | 15000 | 10000 | 12000 | Riders | ADBR, CIBR | ADBR, CIBR | NM | Min. prem. pay term | 3 years | 3 years | 3 years | FIGURE 1.5: Graphical representation of NAV OF ICICI Prudential’s Equity Growth Fund. Month | NAV | | | | | | | | | | Mar-11 | 14.1 | | | | | | | | | Apr-11 | 15.1 | | | | | | | | | May-11 | 14.4 | | | | | | | | | Jun-11 | 14.3 | | | | | | | | | Jul-11 | 14.9 | | | | | | | | | Aug-11 | 13.7 | | | | | | | | | Sep-11 | 13.5 | | | | | | | | | Oct-11 | 13.7 | | | | | | | | | Nov-11 | 13.6 | | | | | | | | | Dec-11 | 12.9 | | | | | | | | | Jan-12 | 13 | | | | | | | | | Feb-12 | 14.2 | | | | | | | | | INFERENCE:
ICICI Prudential has very NAV through the year. Its‟ initial NAV during the month of March-2011 was 14.1 which is way above other companies‟ NAV. Towards the end of the year 2011, NAV of ICICI Prudential touched lowest point of 12.9 but it bounced back in the beginning of next year 2012. ICICI Prudential is one the most sought after insurance companies after LIC. Being a private player, it has performed remarkably well and it continues to grow stronger and better. ICICI Prudential provides the highest number of ULIPs in India.

Different ULIPs from SBI Life TABLE 1.7: Different ULIPs from SBI Life Particulars | Smart Performer | Unit Plus Super | Saral Maha Anand | Smart Elite | Min. entry age | 9 | 7 | 18 | 18 | Max. entry age | 65 | 65 | 55 | 60 | Max. maturity age | 75 | 80 | 65 | 65 | Min. premium | Rs 20,000 | Rs. 30,000 | Rs. 2,000/- | Rs 12,500 | Riders | ADBR | Critic Care 13 Rider, ADBR, WBR, ISR | ADBR | NM | Min. prem. pay term | SP or 5 years | 5 or 8 years | 1 year | 5 or 8 or 10 years | TABLE 1.7.1 Different ULIPs from SBI Life Particulars | Smart Scholar | Smart Horizon | Smart Wealth Assurance | Min. entry age | 18 | 7 | 8 | Max. entry age | 57 | 60 | 65 | Max. maturity age | 65 | 70 | 75 | Min. premium | 24,000 | Rs 24,000 | Rs 50,000 | Riders | NM | Criti Care 13 Rider ADBR WBR Income Sustainer Rider | ADBR | Min. prem. pay term | 5 to 25 years | 10 yrs | 10 to 30 years | FIGURE 1.6: Graphical representation of NAV OF SBI LIFE’S Equity Growth Fund. Month | NAV | | | | | | | | | | Mar-11 | 20.4 | | | | | | | | | Apr-11 | 21.6 | | | | | | | | | May-11 | 20.6 | | | | | | | | | Jun-11 | 20.5 | | | | | | | | | Jul-11 | 21.2 | | | | | | | | | Aug-11 | 19.7 | | | | | | | | | Sep-11 | 19.6 | | | | | | | | | Oct-11 | 20.1 | | | | | | | | | Nov-11 | 20.2 | | | | | | | | | Dec-11 | 19.3 | | | | | | | | | Jan-12 | 19.5 | | | | | | | | | Feb-12 | 20.9 | | | | | | | | |

INFERENCE:
Net Asset Value of equity growth of SBI Life started in March 2011with 20.4. There had been some modest fluctuation through the year. At the end of the year December 2011, NAV of SBI Life equity growth fund reached lowest point in the year with 19.3. Over all SBI Life suffered fall of growth rate by 5.392%. On the better side, NAV responded well in the initial month of the year 2012 with 20.9. Observers could clearly see impact of global recession on NAV of ULIPs since ULIP partially depends of performance of equity at market. But compared to global scenario, Indian insurance sector did much better and was among least affected. From the year 2011 onwards, ULIPs performance is expected to rise on graph along Indian market index. FIGURE 1.7: Graphical representation of percentage changes in NAVs of various companies Company | % change | | | | | | | | | | Bajaj Allianz | -3.17% | | | | | | | | | LIC LIFE | -8.78% | | | | | | | | | HDFC LIFE | -11.50% | | | | | | | | | ICICI Prudential | -12.77% | | | | | | | | | SBI LIFE | -5.39% | | | | | | | | | INFERENCE: The above bar graph depicts the impact of recession in life insurance industry with all five companies possessing negative % of change in NAV. Among all five, Bajaj Allianz turned out with to be the least affected with just -3.17% where else ICICI LIFE suffered heaviest change of -12.77%, closely followed by HDFC LIFE.

PRIMARY DATA ANALYSIS The researcher has done a detailed survey in Bangalore city to understand and study the consumer’s responses. The primary data has been collected through questionnaires. This questionnaire was mainly formulated to target the common man to see his perception and awareness of various investment options available. The sample size of the survey was 50, out of which 34 respondents were male and 16 were female. The sample of respondents has been carefully selected covering people in all age groups and with different backgrounds and occupations. The analysis of these questionnaires gives an insight about the mind-set of people regarding various investments. Customer preferences as to where they would like to invest have been studied. Also the researcher came to know about the preferences given by customers towards various top life insurance companies and their reasons for it. Here one can notice that most of the customers invest regularly from quite some time but there is a clear indication of effect of last year recession though market is now on growth mode. Following is the analysis of the primary data collected through questionnaires. 1) TABLE 1.8 & Fig 1.8 - Break-up of respondents between different age groups. Age Group Break Up | No, of respondents | | | | | 18-30 | 16 | | | | | 31-40 | 14 | | | | | 41-50 | 12 | | | | | 50< | 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The sample included respondents from all the age groups out of which people in the age group 18-40 constituted around 70%. 2) TABLE 1.9 & Fig 1.9 - Break-up of respondents by their occupation

Occupation | % of respondents | | | | | | Gov., service | 22% | | | | | | Businessman | 40% | | | | | | Privet co, | 18% | | | | | | Self Employed | 12% | | | | | | Others | 8% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The sample of respondents was heterogeneous with people of various occupations right from government service to ones who were self-employed. Out of these people who were working in private companies constituted round 40%.

3) TABLE 2.0 & Fig 2.0 - Break-up of respondents based on their preferences for various savings instruments Savings | % of respondents | | | | | | Fixed deposits | 28% | | | | | | Post office schemes | 12% | | | | | | Bank deposits | 12% | | | | | | Investments | 42% | | | | | | Others | 6% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Also the customers‟ preferences for different forms of savings have been carefully studied. The main savings instruments generally preferred by customers are bank deposits, fixed deposits, investments and post office schemes. Out of these Investments has been preferred by around 42% respondents and fixed deposits by around 28%.

4) TABLE 2.1 & Fig 2.1 - Break-up of respondents based on factors influencing their decision Sources | % of respondents | | | | | Family opinion | 40% | | | | | Friend’s advice | 8% | | | | | Brokers advice | 4% | | | | | Own decision | 44% | | | | | Any other | 4% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

When the investors talk about making investment decisions around 44% respondents considered their own decision and another 40% respondents considered their family’s opinion before making any important investment decision.

5) TABLE 2.2 & Fig 2.2 - Break-down of respondents based on their preferences of various investments Investment | % investments | | | | | | Mutual funds | 20% | | | | | | Stock & shares | 34% | | | | | | Insurance products | 24% | | | | | | Govt. bonds | 16% | | | | | | Others | 6% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

The various forms of investments generally preferred by customers have been identified as mutual funds, stocks and shares, insurance products and government bonds. Out of these around 34% preferred stocks and shares and around 24% preferred insurance products.

6) TABLE 2.3 & Fig 2.3 - Break-down of respondents based on their frequencies of investment frequency | % of response | | | | | Once in a year | 44% | | | | | 2-3 times a year | 26% | | | | | More than 3 time a year | 14% | | | | | Not investing (no idea) | 14% | | | | | Not interested | 2% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

The main reason for people to invest in the insurance products was that they had the advantage of both life cover and tax benefits apart from other normal benefits. Talking about the frequency of investment around 44% respondents preferred investing once a year and another 26% preferred investing 2-3 times a year. It was also noticed that greater majority of respondents owned an insurance policy. Only 11% of the respondents did not own an insurance policy.

7) TABLE 2.4 & Fig 2.4 - Break-up of respondents who own/do not own an insurance policy.

life insurance policy | % of response | | | | | Yes | 88% | | | | | No | 12% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Around 88% of the respondents own an insurance policy and remaining 12% does not have an insurance cover. 8) TABLE 2.5 & Fig 2.5 - Break-down of respondents who own insurance policies in various insurance co.

company | % of response | | | | | | Bajaj Allianz | 4% | | | | | | Birla Sun life | 2% | | | | | | HDFC Standard | 6% | | | | | | ICICI Prudential | 12% | | | | | | IDBI Fortis | 6% | | | | | | Kotak Mahindra | 2% | | | | | | LIC | 60% | | | | | | Max New York | 2% | | | | | | SBI Life | 4% | | | | | | Others | 2% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Around 60% of the respondents owned an insurance policy in LIC which clearly shows that LIC still continues to be the market leader in as it has been since the last 50 years or so in spite of the presence various powerful private players which are still finding hard to capture a major market share. Around 12%b respondents chose ICICI Prudential 9) TABLE 2.6 - Rating Scale of Insurance Companies
Following is the rating (from 1-5, 1-bad, 5-best) given by respondents to the five selected life insurance companies. Here we can clearly see that LIC has the best rating. The reasons given by the respondents were that LIC was a public sector company which is well established and has got loads of experience. | 1 | 2 | 3 | 4 | 5 | BAJAJ ALLIANCE | 10 Votes | 20 Votes | 20 Votes | | | HDFC life | | 20 Votes | 25 Votes | 5 Votes | | ICICI | | 25 Votes | 25 Votes | | | LIC | | | 10 Votes | 15 Votes | 25 Votes | SBI | | 5 Votes | 20 Votes | 25 Votes | |

10) TABLE 2.7 & Fig 2.6 - Break-down of respondents based on their frequencies of investment in same Company Opinion | % of response | | | | | | | Always | 14% | | | | | | | Sometimes | 20% | | | | | | | Often | 26% | | | | | | | Seldom | 16% | | | | | | | Never | 24% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Around 40% respondents are not in favour of investing in the same company. 11) TABLE 2.8 & Fig 2.7 - Break-down of respondents based on their aware about ULIP plans of life insurance companies Opinion | % of response | | | | | | | Yes | 76% | | | | | | | No | 24% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Around 24% respondents are not aware about ULIP plans of life insurance companies. 12) TABLE 2.9 & Fig 2.8 - Break-down of respondents who invested in ULIP Opinion | % of response | | | | | | | Yes | 64% | | | | | | | No | 36% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Around 64% of the respondents own an ULIP policy and remaining 36% does not have an ULIP policy 13) TABLE 3.0 & Fig 2.9 - Break-down of respondents who responded to the involvement of risk in ULIPs Opinion | % of response | | | | | | | High risk | 38% | | | | | | | Moderate risk | 24% | | | | | | | Low risk | 6% | | | | | | | They are safe | 4% | | | | | | | No idea | 28% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Around 24% respondents felt that there was an amount of moderate to high risk involved with ULIPs. 14) TABLE 3.1 & Fig 3.0 - Break-down of respondents based on their aware of the charge FMC (FUND MANAGEMENT COST IN ULIPs) Opinion | % of response | | | | | | | Yes | 22% | | | | | | | No | 78% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Around 78% respondents are not aware of FMC (FUND MANAGEMENT COST IN ULIPs)

TABLE 3.2 - Frequency Analysis
We also have found out the age played an important role in deciding the investing patterns of the respondents. It was found out that people who were generally in between 18-30 had a higher tendency to invest quite frequently in a year. The following table and the figure below show us the results. Age | No of Respondents | % | Average Frequency of Investment per Year | 18-30 | 18 | 36% | 2.1111 | 30-50 | 26 | 52% | 1.5384 | 50< | 6 | 12% | 1.3333 | | 50 | 100% | |

Above analysis depicts those investors between the ages of 18-30 makes the most number of investment with frequency rate touching 2.1111, followed by age between 30-50 making 1.5384, rate of investment per year.
TABLE 3.3 - Chi-Square Analysis
In order to find the relationship between the age of the respondents and their investment patterns, a chi-square test for independence of attributes was used and results of the test are shown in the following table:

Factor | Calculated X2 Value | Tabulated X2 Value | DF | Significance | Age | 4.2136 | 7.82 | 3 | Significant at 5% level of significance |

It is noted from the above table that the calculated Chi-square value is less than the table value and the result in significant at 5% level. Hence, the null hypothesis “the age of the respondents and frequency of investment” holds good. From the above analysis it is concluded that there is a close relationship between the age of the respondents and their investment patterns.

4. CONCLUSION
Summary of the study
The first and the foremost thing the investor should know is the product. Product awareness plays a very crucial role in selecting the right kind of product. The investor should be convinced and comfortable, where his money is being invested. ULIP being relatively new concept, many investors could be apprehensive about investment decision. Selecting a product that suits investor’s needs and wills also maximizes his returns. An investor not only needs advice on how to choose from variety of investment options available, but also a proper investment strategy that is suitable to his situation and needs. Right entry at the right timing with right person is extremely important in Life insurance investment. This study aims to make a comparative study of the Unit Linked Insurance Plans (ULIPs) of different Insurance Company in India and study the consumer perception towards various insurance products. The comparative analysis covers 5 randomly selected insurance firms. This analysis is strictly based on current ULIP provided by these 5 selected insurance firms. This study is carried on with the objectives to compare the Unit Linked Insurance Plans (ULIPs) of 5 major insurance firms in India, to investigate the investors‟ behaviours towards various insurance products and to suggest remedial measures that would contribute to investors‟ dilemma regarding investment.
4.1 Findings of the study 1) There is a great future of the life insurance sector in India as 70% of the Indian population is still without life cover and people are just now coming in response to the awareness campaigns being carried out by almost all the insurance companies. 2) Bajaj Allianz is the company to be least affected during this market slowdown as NAV of its equity growth funds came down just by 3.17% during this major post-recession period. 3) Life Insurance Corporation (LIC) of India is still the undisputed market leader as 60% of the respondents surveyed owned a policy in it and it has also earned the highest rating in the survey conducted. 4) ICICI Prudential suffered the highest impact of post-recession during the year 2011-12 with change in NAV being -12.77%%. 5) ICICI Prudential has been the most influential among private players with 12% of the respondents favouring it. 6) Though ULIP provides insurance cover but still risk involvement is higher than normal life insurance. 38% of the respondents believed that ULIP fall in high risk category. 7) Apart from LIC, all other companies have formed alliance with international insurance giant. For instance, HDFC has formed partnership with UK based Standard Life Assurance. 8) Findings from product profile of ULIP of the five major companies. * ICICI Prudential offers most number of ULIPs.

* Pension Guarantee of Bajaj Allianz facilitates the longest Max Entry Age among all 5 companies at 80 years.

* Bajaj Allianz, LIC and ICICI Prudential offer some ULIPs without any bar on Min Entry Age.

* Unit plus Super of SBI LIFE and Life Stage RP Pension of ICICI Prudential offer the longest maturity age among all 5 companies at 80 years.

* New Unit Gain plus of Bajaj Allianz charges the highest Premium Allocation charge at whopping 55%.

* Life Link Super of ICICI Prudential charges the highest Min Premium among all 5 companies as Rs 50,000.

* New Unit Gain Plus and Unit Gain plus Gold of Bajaj Allianz have 6 riders as ADBR, CIBR, WOP, FIB, HCB and PDB.
4.2 RECOMMENDATIONS
1. For Bajaj Allianz Life Insurance, they should go for creating more awareness about its ULIP as now also people are just investing because Bajaj is India’s most known and favourite brand in past.
2. Most of the investors are oblivion to venture partner of the Indian firm. For instance, not many people know that Allianz of Bajaj Allianz is German based insurance firm which bore all the insurance claims of September 11 attack on New York. Well publicized goodwill of such international company could draw more investors.
3. An insurance plan for mentally retarded and physically handicapped people. This might be hard to digest but if at all plans like these are possible and really come out then a good amount of Indian population would really be interested.
4. The company could also come out with a plan for both the husband and wife where automatically the wife gets insured along with her husband when her husband purchases the policy. This could also be the other way round. This could be called the combo family plan. In simple words it means buy one policy and get another free. No other company has done something like this till now.
5. Private players such as ICICI Prudential, Bajaj Allianz and others have lost huge share to LIC. Private players could combine their forces in popularizing their product to counter immense public faith on LIC.
6. Try to reduce fund charges, administration charges and other charges which helps to invest more funds in the security market and earn good returns.
7. As ULIP is relatively new concept, government and non-government both could initiate a campaign to educate people regarding ULIP.

CONCLUSION
Awareness of ULIP is increasing as more numbers of private players are entering in life insurance industry. But even with the rapid growth, it’s still passing through starting phase which is why investors prefer only big brands like LIC. There has been some negative impact in ULIP industry during the year 2008-09 due to recession but it shall grow in the years to come. The concept that it covers both insurance and investment is found very intriguing to people and India especially could be that platform to showcase the real potential of this immense strong combo called ULIP.
ICICI Prudential which offers attractive NAV stands second in the rank of ULIP companies but lags very far behind LIC. Private players are catching up but LIC is very much like to continue its domination for few more years to come. With most of investors fall into the age of 18-35 years and these young investors realizing the efficiency of private players, there is bright light of hope to companies like ICICI Prudential, Tata-AIG and Bajaj Allianz.

5. BIBLIOGRAPHY * Susan, S. K. (2006), “compensation practices for distribution of ULIPs” Journal of Investment Compliance, Vol. IV, Issue 4, pp.. 27-45 * “Risk-Adjusted Performance Evaluation of Indian Life Insurance Schemes” Authored by Muthappan P.K and Damondharan E, Published in Finance India, Sep 2009, vol 20 issue 3 * “Performance evaluation of Life Insurance industry in India” Authored by Sivakumar K.P, Raja Mohan.S, Sizhivan.D.M and Narsimbulu.S, Published in Vidwat: The Indian journal of management jan-july 2010, vol 3, issue 1 BOOKS * “Financial Management” Authored by KHAN & JAIN * “Investment Management” Authored by V.K Bhalla * “Investment Analysis and Portfolio Management”, Authored by Prasanna Chandra * PUBLISHED ANNUAL REPORTS AND OTHER FINANCIAL MANUALS

Websites * http://www.economictimes.com * http://www.investopedia.com/university/ULIPs/default.asp * http://news.moneycontrol.com/Ulip/glossary.php * http://www.ulipindia.com/resourcecentre.asp * http://www.valueresearchonline.com * http://www.kotaklife.com

6. ANNEXURE