Future Generali Total insurance solutions Presents…..
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Chapter-1 Introduction of the study
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Introduction of the study
Insurance can be described as a social device to reduce or eliminate the risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risks, attached to individual. Unit linked insurance plan (ULIP) provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is a life insurance solution that provides for the benefits of protection and flexibility of investment. The investment is denoted as units and is represented by the value that it has attainted called as net asset value (NAV).ULIP came into play in 1960s and in popular in many countries in the world. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. In today’s time, ULIP provides solutions for insurance planning, financial needs, financial planning for children’s marriage planning etc .ULIP is financial product that offers life insurance as well as an investment like a mutual fund. Part of the premium pay goes towards the sum assured and the balance will be invested in whichever investments consumer’s desire-equity, fixed-return, or a mixture of both. In India insurance development regulatory authority (IRDA) made various regulations on ULIPS on 1st September 2010, like the changes such as increasing cap on various charges, change in the lock –in period from 3 to 5 years. Hence, the study has been conducted to understand about the consumer’s perception on ULIPS. Their preference and related satisfaction towards ULIP policies, with special reference to Future Generali life insurance Company.
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Need of study This study is conducted to collect valuable information from the customers of Future Generali India life insurance Company limited. The research study is about customer’s preference and perception towards ULIPS. This study also explores about customers awareness level of ULIP schemes. Moreover, this survey helps to know the ground realities of the insurance market from its customers. Also, this survey can be used as a link between the insurance companies and its customers. This survey helps the customers to share their views, beliefs and experience in the insurance market while purchasing the policies from various insurance companies. On the other hand, it will help the insurance companies to take the findings of the survey as suggestions from their own customers and try to improve their upon so as to attract customers and to create a goodwill in the insurance market. Moreover, this survey also helps the companies to identify various needs of customers and to modify their basic plans thereafter and can also come up with new and innovative plans to improve their market share by attracting more customers.
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Objectives of study The objectives of the study are following:1) To study the customer’s preference and perception toward ULIP. 2) To study the demographic and rational profile of customer’s of ULIP. 3) To identify those factors, which enhance favorable opinion among consumers towards ULIPS. 4) To study the customer’s satisfaction level towards ULIPS. 5) To study the customer’s awareness level towards the investment criteria and various facets about ULIPS. 6) To study customers investment trends in ULIPS. 7) To study the required areas, where company need to focus to retain and attract more customers for ULIP policies.
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Scope of study
The following are the scopes of the study:1) The subject matter relates to the investors approach towards ULIPs. 2) This study may enable the company to take initiative in improving the new and existing products. 3) In this study efforts are made to explore the existing degree of satisfaction prevailing among the customers. 4) In this study efforts are made to understand the awareness level of different facets about ULIPs. 5) This study understands the prevailing problems related to ULIPs and its policyholders. 6) This study understands the satisfaction level of policyholders.
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Research design The objective is to study the customer preference on ULIPS.I have limited the scope of the study to the analysis of the preferences of the different class and fields of people towards ULIPS. The research has been done within the ULIP policyholders of the future generali life insurance limited. 1) Population:The existing ULIP policyholders of the company. 2) Sample size:Total of 110 respondents have been taken for the research due to various extraneous variables and factors. 3) Sampling technique:Non-probability sampling technique has been used in this research, as the research is confined to the clients of the organisation only. Quota sampling method is being undertaken for the study. 4) Scaling techniques:Multiple choice questions have been used in questionnaires and Likert-type scales is also used in the questionnaire. 5) Data Collection: Data has been collected both from primary as well as secondary sources as described below:
Primary sources The Primary data has been collected by administry a schedule to various
employees working at various levels in future generali. The primary data has been collected from various sources through interaction with concerned branch manager and personal interview with employees and participating in their discussion. A successfully designed questionnaire has been canvassed on a sample of 110 respondents selected . 7|Page
Secondary sources The secondary sources of data has been collected from annual reports,
company records, various websites , books, journals reports, articles, newspaper, business magazines etc. This mainly provided information about the mutual fund and ULIPS industry in India. 6) Data Tabulation: The data collected from this survey is tabulated in the form of Agree or Disagree or also in the form of calculated percentages on the basis of the option given in the questionnaire. 7) Analysis method: The collected data through a survey is analyzed by calculating percentages for each and every question in the questionnaire and is depicted with the help of Pie Charts. The findings and conclusions is drawn from these depicted bar diagrams and pie charts.
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Limitations of the study No study is free from limitations. The limitations of this study are as follows:1) Sample size taken is small and may not be sufficient to predict the results with 100% accuracy and the study is considered during the prevailing conditions, which are likely to change in future. 2) The result is based on primary and secondary data that has it’s own limitations. 3) The study only covers the area of Visakhaptnam that may not be applicable to other areas. 4) We observe that time constraints to obtain more extensive information and unwillingness of respondents to answer some questions are some of the main concerns. 5) The limited period allocated for the survey is not sufficient to analyze the market. 6) This is possibility of collecting biased opinions from the people. 7) Some respondents refused to give information.
Some other limitations are as follows: Lack of awareness among the people. Perception of the people towards Insurance product. Lack of awareness about the earning opportunity in the Insurance sector.
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Chapter- 2 Industry Profile
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Industry profile Introduction of Insurance sector Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.
Need of insurance The need for insurance arises due to the risk associated with life, trade and other commercial activities of which the future is known. This, in order to protect oneself from the loss arising out future uncertainties, one has to go for insurance. The reason for buying an insurance policy, whether life or non-life, is to protect oneself from vagaries of life. One does not invest in insurance for returns; rather one invests in it for regrettable necessities. Some people do look for tax concessions, but things have changed now. Concessions are limited and tax saving schemes like public provident fund societies offers better returns. Various scams in financial sector and ups and downs in share market tend to make insurance safer option. Also natural calamities like earthquakes, floods, etc., add to the people‟s perception of the need for insurance.
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Evolution of insurance market in India The evolution of insurance market dates back to 1818. The business of life insurance in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Kolkata. Some of the important milestones in the insurance business in India are: 1912: The Indian Life Insurance Companies Act enacted as the first statute to regulate the Life Insurance business. 1928: The Indian Insurance Companies Act enabled the government to collect statistical information about life and non-life insurance business. 1938: Earlier legislation was consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the Central Government were nationalized. LIC formed by an Act of parliament, viz., LIC Act 1956, with a capital contribution of Rs 5 crores from the Government in India. Prior to 1956, a large number of organizations were managing life insurance and general insurance business. But in 1956, the life insurance business was nationalized and monopoly was vested with Life Insurance Corporation (LIC). Similarly in 1972, the general insurance business was nationalized and started to be managed by General Insurance Corporation (GIC) and its four subsidies namely National Insurance Company Limited, New India Assurance Company Limited, Oriental Fire and General Insurance Company Limited and United Company Limited. The government’s concern about the state of the insurance industry was revealed in the early nineties, when an expert committee was set up under the chairmanship of late R.N.Malhotra. Amongst the various recommendations put in by the Malhotra Committee, the most important recommendations was the opening up of the insurance industry, subject to the conditions that a private insurer should have a minimum paid up capital of Rs.100 crores, and that the promoter’s stake in the otherwise widely held company should not be less than 26 percent and not more than 40 percent.
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Subsequent to the submission of its report by the Malhotra Committee, Insurance Regulatory Authority(IRA) Bill was introduced in the parliament. In November 1998, the Central Cabinet approved the Bill, which envisaged a ceiling of 26 percent for non-Indian stakeholders. The committee has also recommended that the minimum paid up share capital of the new insurance companies be raised to Rs.200 crores, double the amount proposed by the Malhotra Committee. Today, due to these developments, the Indian Insurance market stands wide open and has attracted a host of global players.
Malhotra committee:In 1993, Malhotra Committee headed by former finance secretary and RBI governor R.N.Malhotra, was formed to evaluate the Indian Insurance industry and recommended its future direction. The Malhotra Committee was set up with the objective of implementing the reforms initiated in the financial sector. The reforms were aimed at “creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms...”
Recommendations:Malhotra Committee made some recommendations to improve the penetration of insurance. They include: Government stake in the insurance companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate.
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Competition Private companies with a minimum paid of Rs.1 billion should be allowed to enter the industry. No company should deal in both life and general insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Postal life insurance should be allowed to operate in the rural market. Only one state level life insurance company should be allowed to operate in each state. The insurance Act should be changed and an insurance regulatory body should be setup. Controller of insurance should be made independent
Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company.
Costumer service:LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry. The committee emphasized that in order to improve the customer service and increase the coverage of the insurance industry should be opened upto competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs. 100 crores. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body.
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Organizational profile:Company’s Profile: Future Generali ABOUT THE COMPANY: Future Generali is a joint venture between the India-based Future Group and the Italybased Generali Group. Future Generali is present in India in both the Life and Non-Life businesses as Future Generali India Life Insurance Co. Ltd. and Future Generali India Insurance Co. Ltd.
FUTURE GROUP Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India’s leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics. Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square feet of retail space in 71 cities and towns and 65 rural locations across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30,000 people and is listed on the Indian stock exchanges. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail chain and Central, a chain of seamless malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of Indian bazaars with the choice and convenience of modern retail. The group’s specialty retail formats include sportswear retailer, Planet Sports, electronics retailer, eZone, home improvement chain, Home Town and rural retail chain, Aadhaar, among others. It also operates popular shopping portal, www.futurebazaar.com.
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Future Capital Holdings, the group’s financial arm, provides investment advisory to assets worth over $1 billion that are being invested in consumer brands and companies, real estate, hotels and logistics. It also operates a consumer finance arm with branches in 150 locations. Other group companies include, Future Generali, the group’s insurance venture in partnership with Italy’s Generali Group, Future Brands, a brand development and IPR company, Future Logistics, providing logistics and distribution solutions to group companies and business partners and Future Media, a retail media initiative. The group’s presence in Leisure & Entertainment segment is led through, Mumbaibased listed company Galaxy Entertainment Limited. Galaxy leading leisure chains, Sports Bar and Bowling Co. and family entertainment centers, F123. Through its partner company, Blue Foods the group operates around 100 restaurants and food courts through brands like Bombay Blues, Spaghetti Kitchen, Noodle Bar, The Spoon, Copper Chimney and Gelato. Future Group’s joint venture partners include, US-based stationery products retailers, Staples and Middle East-based Axiom Communications. Future Group believes in developing strong insights on Indian consumers and building businesses based on Indian ideas, as espoused in the group’s core value of ‘Indianans.’ The group’s corporate credo is, ‘Rewrite rules, Retain values.’ THE GENERALI GROUP The Generali Group is a leading player in the global insurance and financial markets. Established in Trieste in 1831, today the Group is one of Europe’s largest insurance providers and the European biggest Life insurer. It is also one of the world’s top asset managers with assets totaling more than € 400 billion. With an employed sales force of more than 100,000 people serving 70 million clients in 68 countries, the Group occupies a leadership position in Western Europe and an increasingly important place in Eastern Europe and Asia. The Group strategy aims to consolidate Generali’s pre-eminence on its key markets and achieve a premier position on markets with high growth potential, establishing its leadership in profitability.
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IDENTITY CARD: Since its establishment, the Generali Group has always held a reputation for its capital and financial strength. Its solidity derives from prudent investment management and a focus on achieving a correct match between risk and medium/long-term profitability. Generali Group is one of the leading insurance groups in Europe, with a 2009 total premium income of more than € 70 billion It is present in 68 countries It has 70 million clients worldwide It has 85,322 employees (15,956 in Italy) It has over € 400 billion of assets under management High rating assigned by the international rating agencies: A.M. BEST: A+ STABLE Standard & Poor’s: AA- STABLE Fitch Ibca: AA- NEGATIVE Moody’s: Aa3 STABLE
Vision Statement: "Pledged to provide financial security to all people & enterprises through total insurance solutions"
Values: Respect: for all our stakeholders- employees, customers, for all rules and regulations both internal and external. Indianness: We understand India in all its diversity and different facets and will use for our local understanding to respond to our specific markets, design our products and craft our processes. Nimbleness: A combination of speed and quality, and ability to overcome all obstacles which come in the way of the achievement of our vision. "Can Do”: An attitude which demonstrates our passion, entrepreneurship, and positive thinking. Positioning Knowledge Organization with Leadership Approach One Stop Total Insurance Solutions & Services Provider Customer Centric Model embracing Passion, Convenience and Service Excellence Objective To provide superior customer service through our knowledge-based business partners and employees supported by innovative products and services.
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Chapter-3 Theoretical framework
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ULIP- Unit Linked Insurance Plans Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs is allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component.However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. ULIPs are a category of goal-based financial solutions that combine the safety of insurance protection with wealth creation opportunities. In ULIPs, a part of the investment goes towards providing you life cover. The residual portion of the ULIP is invested in a fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by you. Simply put, ULIPs are structured in such that the protection element and the savings element are distinguishable, and hence managed according to your specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency.
History The first ULIP was launched in India in 1971 by Unit Trust of India (UTI). With the Government of India opening up the insurance sector to foreign investors in 2001 and the subsequent issue of major guidelines for ULIPs by the Insurance Regulatory and Development Authority (IRDA) in 2005, several insurance companies forayed into the ULIP business leading to an over abundance of ULIP schemes being launched to serve the investment needs of those looking to invest in an investment cum insurance product.
Working of ULIPs A ULIP is basically a combination of insurance as well as investment. A part of the premium paid is utilized to provide insurance cover to the policy holder while the remaining portion is invested in various equity and debt schemes. The money collected by the insurance provider is utilized to form a pool of fund that is used to invest in various markets instruments (debt and equity) in varying proportions just the way it is done for mutual funds. Policy holders have the option of selecting the type of funds (debt or equity) or a mix of both based on their investment need and appetite. Just the way it is for mutual funds, ULIP policy holders are also 19 | P a g e
allotted units and each unit has a net asset value (NAV) that is declared on a daily basis. The NAV is the value based on which the net rate of returns on ULIPs are determined. The NAV varies from one ULIP to another based on market conditions and the fund’s performance.
Features ULIP policy holders can make use of features such as top-up facilities, switching between various funds during the tenure of the policy, reduce or increase the level of protection, options to surrender, additional riders to enhance coverage and returns as well as tax benefits.
Types There are a variety of ULIP plans to choose from based on the investment objectives of the investor, his risk appetite as well as the investment horizon. Some ULIPs play it safe by allocating a larger portion of the invested capital in debt instruments while others purely invest in equity. Again, all this is totally based on the type of ULIP chosen for investment and the investor preference and risk appetite.
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Charges Unlike traditional insurance policies, ULIP schemes have a list of applicable charges that are deducted from the payable premium. The notable ones include policy administration charges, premium allocation charges, fund switching charges, mortality charges, and a policy surrender or withdrawal charge. Some Insurer also charge "Guarantee Charge" as a percentage of Fund Value for built in minimum guarantee under the policy.
Risks Since ULIP returns are directly linked to market performance and the investment risk in investment portfolio is borne entirely by the policy holder, one needs to thoroughly understand the risks involved and one’s own risk absorption capacity before deciding to invest in ULIPs.
Providers There are several public and private sector insurance providers that either operate solo or have partnered with foreign insurance companies to sell unit linked insurance plans in India. The public insurance providers include LIC of India, SBI Life and Canara while some of the private insurance providers include ICICI Prudential, HDFC Life, Bajaj Allianz, Aviva Life Insurance and Kotak Mahindra Life.
Types of Funds offered Most insurers offer a wide range of funds to suit one’s investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund. The following are some of the common types of funds available along with an indication of their risk characteristics.
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Review of literature According to Agarwal (2010), ULIP helps to manage the risk return profile. With the double advantage of security and investment, ULIPs have become the most popular insurance product form the available range of life insurance policies. Dipak Mondal (2010), the minimum sum assured in ULIPs is 5 times and most policies offer covers between 5-10 times the annual premium which has been the signaling factor for the investors. Amar Ranu (2010), leading financial conglomerate says that other market related products lags behind ULIPs returns by a larger margin in the long term which confirms that investment in ULIPs is ideal investment vehicle for wealth creation in long run. ULIPs are covered under sec 80(c),10 10(d),of IT act, hence tax benefits upto a maximum of Rs.1,00,000 investment can claimed in these plans, {Sanjay Mathew (2010)} According to Suddhadeb Chakraborti (2011), financial consultant and author discuss about the latest amendments that it provides mortality healthcare mandatorily.
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Chapter-4 Analysis of study
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1) Age group of surveyed respondents:Options 18-25 years 26-35 years 36-49 years 50-60 Years More than 60 years Total
respondents 49 27 18 11 5 110
% of respondents 26% 44% 15% 10% 5% 100%
AGE 10%
5% 26% 18-25 yrs
15%
26-35 yrs 36-49 yrs 50-60 yrs 44%
>60 yrs
Inference: From the chart above, we find that 44% of respondents fall in the age group of 26-35 yrs, 26% fall in the group of 18-25 yrs and 15% fall in the age group of 36-49 yrs. Therefore most of the respondents are relatively young, aged between 18- 35 yrs. As a result, these young people can be induced to buy the insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns, which will be beneficial for their spouse, children (if married).
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2) Occupation:Options Public sector Private sector Retired Student Business
respondents 31 21 12 5 16
% of respondents 30% 21% 12% 6% 16%
Others
15
15%
Total
110
100
occupation 15% 30% public sector 16%
pvt sector retired student
6% 12%
21%
business others
Inference:From the above data, we have found that 30% of respondents are under public sector, 21% of pvt. Sector, 16% are business people. Thus we can see that mostly working professionals invest into ULIP plans. These people have definite and regular source of income so they prefer investing with the expectation of earning more money.
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3) Income:Options 10,000-20,000 20,000-30,000 30,000-40,000 >40,000 Total
respondents 22 32 30 26 110
% of respondents 20% 29% 27% 24% 100
income
24%
20%
10,000-20,000 20,000-30,000 27%
29%
30,000-40,000 >40,000
Inference:From the above data, it’s clear that people almost equally invest irrespective of their income levels. Moreover, it has been seen that 29% of respondents are of income group between 20,000-30,000, followed by the income group of 30,000-40,000 with 27%.
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4) Do you think life insurance is necessary:Options Yes No Total
respondents 80 30 110
% of respondents 73% 27% 100
life insurance is necessary 27%
yes no 73%
Inference: From the above data, it’s clear that 73% of respondents thinks that life insurance is necessary. On the contrary, 27% of respondents think that it’s not necessary.
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5) What percentage of your income do you invest :Options 0-5% 5-10% 10-15% >15% Total
respondents 19 41 28 22 110
% of respondents 17% 37% 25% 21% 100%
% of income investment 21%
17%
0-5% 5-10% 25%
37%
10-15% >15%
Inference:From the above data, it’s clear that respondents don’t invest large part of their money in ULIP plans, rather a smaller portion. 37% of respondents invest only 5-10% of their income, followed by 25% of them invest 10-15%. On the other hand, 21% if respondents invest more than 15% of their income, as they expect of earning high returns from them.
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6) In which sector you mostly prefer to invest your money? options Private sector Public sector Both total
respondents 35 46 29 110
% of respondents 32% 42% 26% 100
preferred sector for investment
26%
32%
pvt. Sector public sector both 42%
Inference:From the above data, it’s clear that most of the respondents prefer and trust public sector when compared to private sector. Evidently, 42% of respondents prefer public sector whereas 32% are happy with private sector. It can also be seen that 26% of them prefer both.
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7) For how long have you been investing in ULIPS:Options >2years 2-5 years 5-10 years >10 years Total
respondents 16 38 32 24 110
% of respondents 15% 36% 29% 22% 100
For how long investors have been investing in ULIPs 22%
15%
>2yrs 2-5yrs 29%
36%
5-10yrs >10yrs
Inference:According to the data above, respondents have been investing in ULIPS since not for a long time. It shows the lack of awareness among the people about ULIP plans. The statistical data says that 36% of investors have been investing since 2-5 yrs, 29% of investors have been investing since 5-10 yrs. But there are investors who are aware about ULIPs and have been investing since more than 10 yrs i.e. 22%.
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8) Why do you invest in ULIPS: options Insurance-cum-invest. Scheme Flexibility to choose/stop premium payments Switch between various funds Options to surrender Tax benefits Total
respondents 16
% of respondents 16%
23
21%
27
25%
20 24 110
18% 22% 100
Reasons for investing in ULIPs
16%
22%
insurance-cum-invest. Scheme 21% 18%
flexibility switiching options
25%
options to surrender tax benefits
Inference:According to the above data, mostly investors invest in ULIPs because of switching options, flexibility options and tax benefits i.e. 25%, 21% and 22% respectively. As the market is so dynamic and volatile options like switching between funds i.e. switching between equity or debt and flexibility of either continuing or stopping the premiums lure the investors to opt for ULIP plans.
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9) What kind of investor are you:options Long term investor Short term investor High insurance Low insurance total
respondents 36 31 25 18 110
% of respondents 33% 28% 23% 16% 100
kind of investor 16% 33% long term investor 23%
short term investor high insurance 28%
low insurance
Inference:From the above data, it can be inferred that most of the respondents go for long term investing i.e. 33%, whereas 28% go for short term investment. It is advisable to go for long term investments when investing in ULIPs, if the investor wants to reap the actual benefits.
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10) What category of fund in ULIP you prefer the most:options Equity funds Bond/fixed income funds Govt. securities Money market funds Balanced/hybrid funds total
respondents 22 26 19 18 27 110
% of respondents 20% 24% 17% 16% 25% 100
Preferred category of fund 20%
25%
equity funds bond funds 24%
16%
gvt. Securities mny mkt funds
17%
balanced funds
Inference:According to the above data, it is inferred that mostly respondents prefer balanced funds and bond funds i.e. 25% and 24% respectively. Investors prefer balanced funds to be on the safe side with less risk .In balanced funds part of the premium money is invested in equity and the other part on debt funds as per to the investor. But 20% of investors also prefer equity funds, as equity funds will give more returns than debt funds, but will be the riskiest of all. Money market funds and Gvt. Securities bagged 16% and 17% respectively
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11) Minimum expected return from ULIP plan:options 5-10% 10-15% 15-20% >20% Total
respondents 22 41 30 17 110
% of respondents 20% 37% 27% 16% 100
minimum expected return 16%
20%
5-10% 10-15%
27%
15-20% 37%
>20%
Inference:According to the data, the minimum expected return investors have on their ULIP plans is 10-15% i.e. 37%. 27% said they expect 15- 20%. Therefore the average return on investment expected is between 10-20%. Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. If company invests in debt market, the returns will be low. If the company invests in equity market the returns will be high, but with high risk as well. Therefore a combination of 2 is a wise decision. 34 | P a g e
12) Are you satisfied with the funds taxes/expenses levied on ULIP:options Highly satisfied Satisfied Neutral Unsatisfied Highly unsatisfied Total
Respondents 15 31 19 25 20 110
% of respondents 14% 28% 17% 23% 18% 100
satisfaction level on funds taxes/expenses 14%
18%
highly satisfied 28%
23%
satisfied neutral unsatisfied
17%
highly unsatisfied
Inference:According to the data, 28% of respondents are satisfied with the funds expenditure so far. They say that in ULIP the fee deduction will be there in starting years of policy, but gradually decreases thereafter. On the other hand, 18% are highly unsatisfied with the taxes. Here the company needs to focus upon to retain its customers.
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13) Which type of ULIP policy you have and prefer:options Income fund Equity fund Security fund Balance fund total
respondents 20 26 28 36 110
% of respondents 18% 24% 25% 33% 100
prefeered type of ULIP policy 18% 33% income fund 24%
equity fund security fund
25%
balance fund
Inference:As stated above earlier, that 25% of respondents preferred balanced funds to be on the safer side. Thereby, most of the respondents i.e. 33% of investor prefer balance fund ULIP policy. 25% and 24% of respondents preferred security and equity fund respectively.
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14) In ULIP policy, how much coverage you expect from premium:Options 5 times 10 times 15 times 30 times Total
respondents 18 40 36 16 110
% of respondents 16% 36% 33% 15% 100
coverage expectation from premium 15%
16%
5 times 33%
10 times 36%
15 times 30 times
Inference:From the above data, it is inferred that 36% of respondents expect 10 times of coverage from their premium paid. Now this aspect and expectation of customers the company has to look after in order to retain the potential investors.
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15) In the past, where else have you invested mostly in:options Savings a/c & post office schemes Bank deposits Life insurance policies Provident fund schemes Govt. securities Other instruments like gold, real estate etc Total
respondents 21
% of respondents 19%
23 9 13 12 32
21% 8% 12% 11% 29%
110
100
other investments savings a/c & PO schemes bank deposits
19%
29%
life insurance policies 21% 11% 12%
8%
provident fund schemes gvt. Securities other instruments like gold,real estate etc
Inference:According to the above data, 29% of respondents have mostly invested in other instruments like real estate and gold. Moreover, 19% and 21% of respondents have invested in savings a/c & PO schemes and bank deposits respectively. From the above data, we can also conclude that only 8% of respondents have invested in life insurance policies, this shows the trust, awareness and expectation of respondents towards life insurance policies. On the contrary, 29% of investors trust more on gold and real estate for earning more money. This also shows the lack of awareness among people about other investment avenues. 38 | P a g e
16) Do you think ULIP is a risky investment:options Agree Highly agree Disagree Highly disagree total
respondents 43 27 24 16 110
% of respondents 39% 25% 22% 14% 100
ULIP is a risky investment 14% 39% agree
22%
highly agree disagree 25%
highly disagree
Inference:According to the data, 39% of the respondents agree that ULIP is a risky investment and 25% of respondents highly agree that ULIP is a risky investment. This might be one of the reasons why investors don’t invest in ULIPs and prefer other invest avenues. But 14% of them disagree to the point that ULIP is risky rather they are satisfied with ULIP policies.
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17) According to you, which of the following risks mostly affect’s the fund’s performance:options Market risks Scheme risks Investment risks Business risks Political risks total
respondents 21 13 48 19 9 110
% of respondents 19% 12% 44% 17% 8% 100
Type of risk's affecting fund's 8%
19%
17% market risk 12%
scheme risk invest. Risk business risk
44%
political risk
Inference:According to the data, it is found that 44% of respondents feel that ULIPs are risky because of the investment risk involve in it. If the invest. advice goes wrong, the fund has to suffer a lot. The invest. expertise of various funds are different and it is reflected on the returns which they offer to investors. 19% of respondents believe that it is because of the market risks the fund’s performance goes down.
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18) What according to you are the reasons people not investing in ULIPS:Options Too risky Lack of info. Don’t know how to invest. Don’t know how ULIPS works Total
respondents 33 22 30
% of respondents 30% 20% 27%
25
23%
110
100
Reasons for investing in ULIPs
23%
30% too risky lack of info.
27%
don't know how to invest. 20%
don't know how ULIP works
Inference:According to the data, we can infer that 30% of respondents feel that it’s too risky to invest in ULIPs.27% of respondents feel that many people don’t know how to invest. But by analyzing the pie chart, it can be concluded that all the 4 reasons have a played a strong role among people for not investing in ULIPs. Therefore it’s important for the company to look after various strategies and measures to spread awareness and information about ULIPs.
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19) Why do you think, ULIPs are not still a good option:Options Costlier than mutual fund High charges 5-year locking period No guaranteed returns Lack of awareness Total
respondents 17 21 13 31 28 110
% of respondents 15% 19% 12% 28% 25% 100
Why ULIPs not still a good option
25%
15% costlier than mutual fund 19%
high charges 5-year locking period
28%
12%
no guaranteed returns lack of awraeness
Inference:According to the above data, most of the respondents feel that ULIPs doesn’t guarantees returns and also lose lack of awareness among people. Moreover, ULIP also have high charges in the forms of fee deductions from premium. 28% of investors opted for no guaranteed returns, 25% of investors opted for lack of awareness, 19% of investors opted for high charges as the major reasons against investing in ULIPs.
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20) What factors do you consider, before investing in mutual funds or ULIPs:options Safety of principle High returns Maturity periods Terms and conditions Total
respondents 18 40 28 24 110
% of respondents 16% 37% 25% 22% 100%
Factors considered before investment
22%
16%
safety of principle high returns 25%
37%
maturity periods terms& conditions
Inference:According to the data, it is seen that 37% of respondents gives 1 st preference to the high returns.25% of respondents feel maturity periods plays vital role.22% of respondents considers terms & conditions important and rest 16% considers safety of principle.
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21) You have mostly bought life insurance policies from:Options LIC Future Generali Both Total
respondents 58 40 12 110
% of respondents 53% 36% 11% 100%
mostly bought life insurance policies from 11%
36%
53%
LIC Future Generali both
Inference:According to the data, 53% of respondents have mostly bought life insurance policies from LIC. 36% of respondents have mostly bought life insurance policies from Future Generali. Interestingly, 11% of them have bought from both. From this, we can easily conclude that customers mostly prefer and trust public sectors for life insurance policies for obvious reasons.
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22) Are you satisfied with your investment so far:Options Highly satisfied Satisfied Neutral Unsatisfied Highly unsatisfied Total
respondents 16 27 14 33 20 110
% of respondents 14% 25% 13% 30% 18% 100%
Satisfaction level 18%
14% highly satisfied 25%
satisfied neutral
30%
unsatisfied 13%
highly unsatisfied
Inference:According to the data, 30% of respondents are not satisfied with their investments whereas 25% of them are satisfied. 13% are in neutral state i.e. they cannot comment on their satisfaction levels as of now.
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Chapter-5 Summary of Findings and Suggestions
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Findings The following are the findings from the study:1) Most vital problem spotted was ignorance. Investors should be made aware about the benefits of ULIP policies. 2) It has been found that less than 10% of Indian households have invested in mutual funds and ULIPs. It has been seen that investors are holding back from putting their money into ULIPs due to their perceived high risk and a lack of information on how ULIP works. 3) 39% of respondents agree that investment in ULIP is a risky investment, specifically investment risk is involved. 4) 29% of respondents have mostly invested in instruments like gold, real estate’s etc. Many have invested in savings a/c, post office schemes and bank deposits. These might be the reasons, investors abstaining from ULIPs. 5) Further the most attractive benefits people look forward are the ease of switching between funds and tax benefits in ULIPs. 6) 44% of respondents between 26-35 years of age group invested in ULIPs. As a result, these young people can be induced to buy the insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns, which will be beneficial for their spouse, children (if married). 7) 42% of investors prefer to invest in public sector. As a result, 53% of respondents have mostly bought their life insurance policies from LIC. 8) 25% and 24% of respondents prefer balanced funds and bond funds respectively to be on the safer side. Only 20% opted for equity funds, which gives high returns but has high risks. 9) 30% are not satisfied with their investments so far.
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Suggestions
The suggestions to the findings of this survey are:1) Building trust by providing the customers with adequate knowledge about the company and then the product is essential. 2) The private players should try to establish brand awareness and credibility among customers to divert their interest from the clean sweep made by LIC. 3) Creating awareness among the school and college students by conducting various programmes regarding savings will cater large no. of customers. 4) Certain discount charges should be made available because of the severe competition within the private players as well as biggest threat posed by LIC. 5) Most of the people are still unaware about the ULIP plans and hence by making proper promotional strategy company can increase their sales. 6) In addition to above, first the people should identify their needs and then decide on the type of policy they want to invest in order to get satisfaction. ULIP is a good investment option that may give them higher returns. 7) Company can start offering jobs to eligible family members of deceased policyholders at the time of claim as a part of CSR (corporate social responsibility) initiative. Today the key to success in an industry plagued by losses is to be different and customer-oriented.
8) Offering ULIP schemes with very low premium to help people meet their financial goals. 9) Company should offer multiple choices to the customer to have the flexibility to mixand- match according to their convenience. 10) Government should take effective measures towards removal of malpractices in private insurance sector which leads to insurance frauds and redlining.
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Bibliography Books referred:1) C.R.Kothari, second edition 2004,Research Methodology: methods and techniques, New Age International (P) ltd, publishers, New Delhi. 2) E.Gordon & K.Natarajan,Edition 2010,Financial Markets & Services, Himalaya publishing house pvt. Ltd, Mumbai. 3) S.Kevin, Edition 2006, Security Analysis & Portfolio Management, PHI Learning Pvt ltd, New Delhi. 4) Gitam Journal of Management, April-June 2013, Gitam Institute of Management: Gitam University, Visakhapatnam.
Websites: www.wikipedia.com www.Future Generali.in www.investopedia.com www.mutual funds.com www.ULIP.com
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Annexure “Customer Preference on ULIPS” Note: - I Nandini Thakur, student of Gitam Institute of Management, GITAM University, Visakhapatnam as part of my project, doing research/survey on the above mentioned topic among all the ULIP policyholders of FUTURE GENERALI. So, kindly fill in your respective opinions.
Name:1) Age:a) 18-25yrs
b)26-35 yrs
c) 36-49 yrs
d)50-60 yrs
e)>60 yrs
2) Occupation:a) Public sector
b) private sector
c) retired
d) student
e) business f) others
3) Income:a) 10,000-20,000
b) 20,000-30,000
c) 30,000-40,000
d) >4000
4) Do you think life insurance is necessary? a) Yes
b) no
5) What % of your income do you invest? a)0-5%
b) 5-10%
c) 10-15%
d) >15%
6) In which sector you mostly prefer to invest your money? a) private sector
b) public sector
c) both
7) For how long have you been investing in ULIPS? a) <2years
b) 2-5years
c) 5-10 years
d) >10 years
8) Why do you invest in ULIPS? a) insurance-cum-investment scheme payments c) Switch between various funds
b) flexibility to choose/stop premium
d) options to surrender
e) Tax benefits 50 | P a g e
9) What kind of investor are you? a) Long-term investor
b) short-term investor
c) high insurance
d) low insurance
10) Which category of fund in ULIP you prefer the most? a) Equity funds
b) bond /fixed income funds
d) Money market funds
c) government securities
e) balanced/hybrid funds
11) How much return do you expect from your ULIP plan? a)5-10%
b) 10-15%
c) 15-20%
d) >20%
12) Are you satisfied with the fund taxes/expenses being levied on ULIP? a) Highly satisfied
b) satisfied
d) Unsatisfied
c) neutral
e) highly unsatisfied
13) Which type of ULIP policy you have and prefer? a) Income fund c) Security fund
b) equity fund d) balance fund
14) In ULIP policy, how much coverage you expect from premium? a) 5 times
b) 10 times
c)15 times
d) 30 times
15) In the past, where else have you invested mostly in? a) Savings a/c and post office schemes
b) bank deposits
c) life insurance policies
d) Provident fund schemes
e) government securities
f) Other instruments like real estate, gold
16) Do you think ULIP is a risky investment? a) Agree
b) highly agree
c)disagree
d)highly disagree
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17) According to you, which of the following risks mostly affects the fund’s performance? a) Market risks
b) scheme risks
c) investment risks
d) business risks
e) Political risks
18) What according to you are the reasons people not investing in ULIPS? a) Too risky
b) lack of information
c) Don’t know how to invest
d) don’t know’ how ULIPS works
19) Why do you think, ULIPS are not still a good option? a) Costlier than mutual fund
b) high charges
c) 5-year locking period
d) no guaranteed returns
e) lack of awareness
20) What factor do you consider before investing in mutual fund or ULIPS? A) Safety of principle
b) high returns
c) maturity periods
d) Terms and conditions
21) You have bought life insurance policies from:a) LIC
b) Future Generali
c) both
22) Are you satisfied with your investment so far? a) Highly satisfied
b) satisfied
c) neutral
d) unsatisfied
e) Highly unsatisfied Reason, why??
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