A STUDY ON CHILD INSURANCE POLICIES: IDBI FEDERAL LIFE INSURANCE COMPANY LTD
Submitted in partial fulfillment of PGDM PGDM BATCH 2013-15
Submitted To: Prof. Ravi Kishore
Submitted By: Hibah Wasif
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EXECUTIVE SUMMARY Insurance is the backbone of a country’s risk management system. Risk is an inherent part of our lives. The insurance providers offer a variety of products to businesses and individuals in order to provide protection from risk and to ensure financial security. They are also an important component in the financial intermediation chain of a country and are a source of long term capital for infrastructure and long-term projects. Through their participation in financial markets, they also provide support in stabilizing the markets by evening out any fluctuations. The availability of insurance can mitigate the 2
impacts of risk by providing products which help organizations and individuals to minimize the consequences of risk and has a positive effect on industry growth as entrepreneurs are able to cover their risks.
The insurance business is broadly divided into life, health, and non-life insurance. Individuals, families, and businesses face risks of premature death, depletion in income because of retirement, health risks, loss of property, risk of legal liability, etc. The insurance companies offer life insurance, pension and retirement income, property insurance, legal liability insurance, etc., to cover these risks. In addition, they offer several specialized products to meet the specific needs and requirements of businesses and individuals. Businesses also depend on these companies for various property and liability covers, employee compensation, and marine insurance.
I Hibah Wasif, have been working with IDBI federal life insurance company ltd, as a Marketing Intern for the past 2 months. IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each.
In the past two months, I have been through an intense learning mode. With each continuing month, I gained more experience and more knowledge. While working with the organization, I completed a project titled: “A STUDY ON CHILD INSURANCE POLICIES :IDBI FEDERAL LIFE INSURANCE CO.LTD” Life insurance for your child may not be the first thing that you think about when you bring them home from the hospital. In fact, you may not even be aware that Children’s Whole Life insurance is available. We want to help you understand the whole life insurance options available to your child. 3
Child Plan is insurance cum investment plan that serves 2 purposes –
To financially secure your child’s future
To finance the turning points in his life such as higher education and marriage The study aims at deriving plausible information needed to enhance the company services and also to increase the customer base particularly in the case of child insurance. These two months proved to be a great experience for me. I learnt many valuable lessons and will take them forward and apply them in the future.
INTRODUCTION Insurance is a contract between the insurance company (insurer) and the policyholder (insured). In return for a consideration (the premium), the insurance company promises to pay a specified amount to the insured on the happening of a specified event. BACKGROUND OF THE TOPIC
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Insurance is an integral part of any personal financial plan. The type of insurance and the amount of coverage you obtain all depends on your unique financial and family circumstances, and must be evaluated carefully. When considering purchasing coverage, you should review all the potential risks and the financial impact of these risks on your financial health. This will help you determine what options to look for and what questions to ask. And as with any type of financial product, you must read the fine print and consult with a competent advisor. Insurance is a form is risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary compensation known as the premium. Why insurance is important in present scenario: protecting family after one's death from loss of income Ensuring debt repayment after death Covering liabilities. Protecting against the death of a key employee or person in your business. Protecting your business from business interruption and loss of income. Protection against unforeseeable health expenses. Protecting your home against theft, fire, flood and other hazards.
PRODUCT: A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. When a person or an organization buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the 5
assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. IDBI Federal provides many products which cater to the needs of the Indian customers.
IDBI Federal Products:WEALTHSURANCE INCOMESURANCE TERMSURANCE HEALTHSURANCE GROUP MICROSURANCE BONDSURANCE
OBJECTIVES OF THE STUDY
To analyze Life Insurance products of IDBI Federal Life Insurance Co Ltd.
To compare the children insurance products with other companies money back plans. To understand the factors contributing to the product and its promotion.
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To provide the company with valid and research based suggestions which might help the company increase the market share. The study deals with the factors that can be altered or influenced that can increase the customer base of the company.
NEED FOR STUDY Knowing about insurance based companies in India and performing a comparative analysis. Evaluation of child insurance on the basis of customer data collection. Primary data collection through the questionnaires and generate primary information by processing the crude data. Knowing the advantages and disadvantages of insurance policies with IDBI federal with competitors. Comparing and highlighting the advantages of the products of IDBI with reference to children insurance plan.
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CHAPTER-1 THE ORGANISATION: BIRD’S VIEW
THE ORGANISATON: BIRD’S VIEW IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Ageas, a multinational insurance giant based
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out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. IDBI federal endeavors to deliver the product that provides value and convenience to the customer. IDBI federal started in March 2008 and within few months of inception it became one of the fastest growing new insurance companies. The company offers its services through a vast nationwide network across the branches of IDBI bank and Federal Bank in addition to sizeable network of advisors and partners. Vision: To be the leader provider of the wealth management, protection and retirement solution that meets the need of the customer.
Mission: 1. To continue strive to enhance customer experience through innovative product
offering, dedicated relationship management and
superior service while striving to interact with our customer in most convenient and cost effective way. 2. To be transparent in the way we deal with our customer and act with integrity. 3. To invest in and build quality human capital in order to achieve our mission.
Values: 1. Transparency: Crystal clear communication to our partners and stake holders 2. Value to customer: A product and service offering in which customer perceive value.
3. Rock solid and Delivery on promise: This translates into being financially strong, operationally robust and having clarity in claims. 4. Customer friendly: Advice and support in working with customers and partners.
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5. Profit to stakeholders: Balance the interest of the customers, partners, employees and community at large.
HISTORY
2006: IDBI Bank, Federal Bank and Belgian-Dutch insurance major Fortis Insurance International NV signed a MoU to start a life insurance company
2008: IDBI Fortis Life Insurance Co. Ltd., which started its operations in March 2008
2008: IDBI Fortis opens its second branch in Andhra Pradesh in Vijayawada
2008: IDBI Fortis Life positive on assured return products
2008: IDBI Fortis launches the Bondsurance Plan
2009: IDBI Fortis announces Rs 250cr capital infusion
2009: IDBI Fortis launches Retiresurance Pension Plan
2009: IDBI Fortis scores with Goalsurance
2009: IDBI Fortis launches Incomesurance Immediate Annuity
2009: IDBI Fortis receives bronze Dragon at 'PMAA 2009'
2009: IDBI Fortis Life Insurance introduces financial inclusion plan in rural Orissa
2009: IDBI Fortis launches Termsurance Protection Plan
2009: IDBI Fortis redefines endowment & money back with Incomesurance
2009: IDBI Fortis to open 65 more branches; raise headcount by 1,000
2010: IDBI Fortis now renamed as IDBI Federal Life Insurance Company
THE ORGANISATION STRUCTURE: VIGHNESH SAHANE (MD & CEO)
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BUSINESS SEGMENTATION: Businesses Segment can be defined as technique used by the companies to separate business to reflect key develop, sell and develop differences. Segmentation is basically done by grouping customer according to homogenous attributes. Segmentation of business allows companies to focus its marketing where it is most productive. IDBI federal has done its business segmentation by introducing different range of products into the market.
Products and Services Offered by IDBI Federal Life Insurance: 1. Childsurance:
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IDBI federal’s childsurance is for the parents who are looking to make their child’s future shock-proof is its powerful insurance benefits. Childsurance allows to you to protect your child plan with triple insurance benefits so that your wealth-building plan remains unaffected by unforeseen events and your child future remains secure. 2. Healthsurance:
IDBI federal Healthsurance Hospitalization and surgical plan offers host of features and benefits that is designed to help the customers to manage extra burden that comes with hospitalization.
3. Lifesurance:
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IDBI feral Lifesurance Plan is a saving insurance plan that helps you to safeguard your wealth at the same time will present better opportunity to earning better return.
4. Bondsurance:
Bondsurance is designed for customer looking for guaranteed returns which will not get affected by financial market conditions. It offers guaranteed return on investment along with life insurance cover.
5.Wealthsurance:
Wealthsurance plan enables the policyholder to save and build wealth to meet their financial goals. Wealthsurance plan comes up with a wide range of 13 investment option and 7 insurance benefits with low charge structure and unmatched flexibility.
6.Homesurance:
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Homesurance protection plan provides full insurance cover for properties under construction, thus ensuring that beneficiary gets the full sanctioned amount in case of an unfortunate event. It also has an innovative fixed cover for those who would prepay their loans early.
7.Incomesurance:
Knowing customer helped us to combine the Endowment & Money Back plans into a single plan. It linked the returns to the G-sec rates, transparently declared by the government. Also, the Guaranteed Annual Payout and other benefits upon death are tax- free under Sec 10(10D).
8 .Termsurance:
Teramsurance protection plan of IDBI federal offers unique increasing cover option that can automatically increase the cover every year without increasing the premium.
SWOT ANALYSIS : 14
STRENGTHS:
WEAKNESS:
-Skilled workforce -Reduced labor costs
-High loan rates. -Costs
OPPORTUNITIES :
THREATS:
-New markets
-Increase in labor costs
-Growing demand
-Tax changes
-Growth rates and profitability
-Unexpected problems
-New products and services.
-Global economy
Promotional Practices: IDBI federal Life Insurance Co Ltd is been involved in number of promotional practices. IDBI uses different modes of advertisements for promoting their products. Following are the different modes through which IDBI federal promotes its products: 1. Print Media: Print media is one the most reliable, cost effective and easy mode of advertisement to reach the masses. Main ways of advertising via print media are: 1. Newspaper: Paper
Pages
Cost (in Rs.)
The Economic
3rd
320 per sq. cm
Times of India
3rd
320 per sq. cm
The Hindu
1st
400 per sq. cm
Times
2. Pamphlets: 15
Pamphlets are distributed across India at least 5 times in a month without any cost. This distribution is mainly done to create maximum awareness about the products/services.
3. Magazines: There is no specific magazine in which advertisement is given. Magazines are selected based on their sales and reputation like outlook , money etc.
2.Television: Television is another mode of advertisement used by IDBI federal Life Insurance Co. Ltd. Like print media television is also very popular mode of advertisement which easily grasps attention of masses. Mainly the advertisements of IDBI federal are shown on Cricket channels, star channels because of their popularity. Main promotion is done in the month of February and March to:
Highlight tax benefits
To combat competition as all the competitor insurance companies would advertise during this time at great frequency.
Also the companies will soon start displaying their advertisement on satellite TV like Sun network etc. Following are the cost associate with running the TVC: Region/ Channel
Cost (in Rs.)
Duration/ SLOT
Tamil Nadu
45,000
10 seconds
Local Channels
6000-8000
10 seconds
Cricket channels
60,000 onwards
3.Word of Mouth: 16
10 econds
A strong network of distributors and parent advisors also helps a lot in promoting products/ services of IDBI federal by Word of mouth.
4.Online: A viral campaign also runs on the internet by wherein flash videos of working of product are explained in a very humorous manner. This video is shown on www.bosskaboss.com
5.Hoarding: As of now, total number of Hoardings which are put up in Hyderabad region counts to be 17. Cost (in Rs.)
Time Lease
4,00,000
3 Months
6.Local Events: Some events are created in and out of the city by IDBI federal to create more awareness about the IDBI federal and free gifts were given wherein local marketing people interact with the prospects and try to gauge their financial needs and respectively pitch the products. The overall costs associated with such an events totals to Rs. 2, 00,000 pm. Such events are generally conducted in apartments and schools etc.
Business Life Cycle: 17
Business life cycle is referred as various stages of development of a small business. Every stage has its own unique characteristics and focus on. There are five different stages of business Life Cycle:
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1. Stage 0- The Aspirational Stage: Stage 0 is referred as the aspiration stage or can also be termed as start-up stage, this is the starting stage of business where people start their business. 2. Stage 1- The Entry Stage: Stage 1 is the entry stage where people have decided to start their business and they work actively building market and offers. IDBI federal was at entry stage on March 2008 when it started its operations. 3. Stage 2- The Growth Stage: Stage 2 is the growth stage. The entrepreneurs in the growth stage have a business plan and are growing their revenues by meeting new clients and customers. IDBI federal being started in March 2008 is in its Growth stage. The company is growing very rapidly by becoming fastest growing new insurance company to garner Rs. 100 cr. in premium. 4. Stage 3-The Crucible Stage: Stage 3 is the Crucible stage or the maturity stage. In this stage the entrepreneurs work at full stream but the demands for their goods and services exceed their ability to meet it. 5. Stage 4- The Cruise Stage: Stage 4 is the cruise stage or can also be termed as the decline stage. In this stage the entrepreneurs have to identify the bottlenecks that arrived at stage 3 and try to remove them. They have the necessary team that allows them to focus on their core competencies.
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CHAPTER-2 THE INDUSTRY ANALYSIS
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THE INDUSTRY ANALYSIS Introduction to Insurance Industry: Insurance is a form of risk management that shields insured from the risk of any uncertain of unfortunate events. In simple terms insurance can be defined as transfer of risk from one entity to another in exchange of the payment. The transaction consists of insured assuming a guaranteed small loss in the form of payment to the insurer in exchange of the promise to compensate insured in case of any kind of financial loss to insured. In a layman’s term, insurance is a guard against monetary loss arising on the happening of an unforeseen event. In developing countries like India insurance sector still holds lot of potential which need to be tapped. Types of Insurance: Insurance can be classified into three categories: 1. Life Insurance: Life Insurance is a concord between the insurer and the policyholder, where insurer promises to pay beneficiary designated sum of money upon death of the insured person. Life Insurance covers number of contingencies like Death, Disability, Disease. 2. General Insurance: General Insurance is a non-life insurance policy including automobile and homeowner policy. General insurance specifically consist of nonlife insurance. It includes property insurance, liability insurance and other forms of insurance. Fire and Marine insurance are called property insurance. 3. Social Insurance: Social insurance is another type of insurance for weaker section of the society. It provides protection to weaker section of the society who are unable to pay premium. Industrial Insurance, sickness insurance, pension plan, disability benefits, unemployment benefits are some the type of social insurance.
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2.1. INDUSTRY’S DOMINANT ECONOMIC FEATURES: Insurance Sector in India: Indian insurance sector has gone through different phases of competition, from being an open competitive market to a nationalized market and then again getting back to liberalized market. Indian insurance sector has witnessed complete dynamism in past few centuries. Insurance sector in India has a deep- rooted history. Its mention has been found in writings of Manu (Manusmriti), Yagnavalkya (dharmashastra) and Kautilya (Arthshastra). Ancient Indian history has preserved traces of insurance in the form of marine trade loans and carrier contracts. Insurance industry in India is governed by Insurance Act of 1938, Life Insurance Corporation Act of 1956 and General Insurance business Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act of 1999 and other related acts. Insurance industry in India is considered as an industry with big potential market. One of the reason that India is seen as huge potential market is because of its huge population and untapped market area of this population. In terms of population India has an immense potential expanding their life insurance cover. Majority of people in India are unaware of the functions and benefits of Insurance because of which insurance sector has a bright future in India. But it is relevant to consider factors like different varieties of social structure, urban and rural composition other than very important factors like age, sex, income level, literacy level. Making assessment of Life Insurance potential of India is very difficult task due to wide variance in every aspect of Indian circumstances and without a refined analysis any estimate would be meaningless.
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Indian Insurance Industry at present: Life Insurance Corporation (LIC) had the monopoly over the market till the late 90’s when the insurance sector in India was opened for private players. Before that there were only two state insurer, one was LIC (Life Insurance Corporation of India) and GIC (General Insurance corporation of India). Indian insurance sector at present has undergone many structural changes in 2000. The Government of India has liberalized the insurance sector in 2000 with IRDA (Insurance Regulatory and development authority) lifting all entry restriction of foreign players with a specific limit on direct foreign ownership. Under the current guideline 26% of equity cap is there for foreign players in an insurance company and proposal is being given to increase this limit to 49%. Post liberalization insurance industry in India have come a long way and today it stands as one of the most competitive, challenging and exploring industry in India. Increased use of new distribution channels are in limelight today due to entry of private players. In the long run the use of these distribution channels and modern IT tools has increased scope of the insurance industry. Also the changing economics patterns, changing political scenario, modern IT tools will eventually help in reshaping future of Indian financial market and Life Insurance business in the country.
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Major Players: Various players in Indian Life insurance are given below: 1. Life Insurance Corporation of India 2. IDBI federal Life Insurance Co. Ltd 3. Bajaj Allianz Life Insurance Co. Ltd 4. Birla Sun Life Insurance Co. Ltd 5. HDFC Standard Life Insurance Co. Ltd 6. ICICI Prudential Life Insurance Co. Ltd 7. ING Vysya Life Insurance Co. Ltd 8. Max New York Life Insurance Co. Ltd 9. Met Life India Insurance Co. Ltd 10. Kotak Mahindra old Mutual Life Insurance Ltd 11. SBI Life Insurance Co. Ltd 12. Tata AIG Life Insurance Co. Ltd 13. Reliance Life Insurance Co. Ltd 14. Aviva Life Insurance Co. India Pvt. Ltd 15. Sahara India Life Insurance Co. Ltd 16. Shriram Life Insurance Co. Ltd 17. Bharti AXA Life Insurance Co. Ltd 18. Futute Generali Life Insurance Co. Ltd 19. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd 20. AEGON Religare Life Insurance Co. Ltd 21. DLF Pramerica Life Insurance Co. Ltd 22. Star Union Dai-ichi Life Insurance Co. Ltd
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Latest market share of all insurance companies as of march 2011:
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Regulatory Issues: Insurance Regulatory and Development Authority (IRDA) is a national agency of government of India. It was formed by an act of Indian Parliament known as IRDA Act 1999 which was amended in 2002 to incorporate some upcoming requirement. It is responsible for protecting the interest of policy holders, to regulate and promote orderly growth of Insurance Industry in India. To achieve this objective IRDA has taken following steps: 1. IRDA has notified protection of policyholders Interest Regulation 2001 to provide for: policy proposal document is in easily understandable language; claims procedure in both life and non-life; setting up grievance redress machinery; speedy settlement of claims and policy holders servicing. The regulation also provides for payment of interest by insurer for delay in settlement of claims. 2. Solvency margins are to be maintained by the insurer so that they can be in a position to meet their obligation towards the policyholder with respect to payment of claims. 3. The Insurance Company has to clearly disclose the benefits, terms and condition under the policy. 4. The advertisement issued by the insurer should not mislead the insuring public. 5. Proper grievance redress machinery should be set up in the head office and all the other offices by the insurer. 6. If any complaints are received by the policyholder with respect to the services provided by the insurer under the insurance contact, then the authority takes up with the insurer. 7. Insurer has to maintain separate account related to the fund of Policyholder. The funds of the policyholder should be retained within the country. 8. According to the new regime, Insurance companies will have to exposure to rural and social sector.
2.2. PORTER'S FIVE FORCES 26
Threat of New Entrants. The average entrepreneur can't come along and start a large insurance company. The threat of new entrants lies within the insurance industry itself. Some companies have carved out niche areas in which they underwrite insurance. These insurance companies are fearful of being squeezed out by the big players. Another threat for many insurance companies is other financial services companies entering the market. What would it take for a bank or investment bank to start offering insurance products? In some countries, only regulations that prevent banks and other financial firms from entering the industry. If those barriers were ever broken down, like they were in the U.S. with the Gramm-Leach-Bliley Act of 1999, you can be sure that the floodgates will open.
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Power of Suppliers. The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human capital does. If a talented insurance underwriter is working for a smaller insurance company (or one in a niche industry), there is the chance that person will be enticed away by larger companies looking to move into a particular market.
Power of Buyers. The individual doesn't pose much of a threat to the insurance industry. Large corporate clients have a lot more bargaining power with insurance companies. Large corporate clients like airlines and pharmaceutical companies pay millions of dollars a year in premiums. Insurance companies try extremely hard to get high-margin corporate clients.
Availability of Substitutes. This one is pretty straight forward, for there are plenty of substitutes in the insurance industry. Most large insurance companies offer similar suites of services.In some areas of insurance, however, the availability of substitutes are few and far between. Companies focusing on niche areas usually have a competitive advantage, but this advantage depends entirely on the size of the niche and on whether there are any barriers preventing other firms from entering. Competitive Rivalry. The insurance industry is becoming highly competitive. The difference between one insurance company and another is usually not that great. As a result, insurance has become more like a commodity - an area in which the insurance company with the low cost structure, greater efficiency and better customer service will beat out competitors. Insurance companies also use higher investment returns and a variety of insurance investment products to try to lure in customers. In the long run, we're likely to see more consolidation in the insurance industry. Larger companies prefer to take over or merge with other companies rather than spend the money to market and advertise to people.
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2.3. DRIVERS FOR CHANGE IN THE BROAD ENVIRONMENT Domestic Economic Conditions: Domestic economic conditions play a major role in growth or downfall of an Insurance company, No matter how financially stable an insurer is; none is immune to the slow economic growth. In an Indian economy double digit inflation is one the uncomfortable factor and RBI which is the central bank of India has a huge task of controlling the inflation without hampering the economic growth. Trade off between Interest rates and Inflation has been the core the business of the RBI and the past one year has been very difficult for the RBI. In an attempt to manage inflation, RBI has been constantly raising repo rate and reverse-repo rates every quarter but it has not succeeded in moderating inflation. This simply implies that inflation is more of a supply side issue than a monetary implication. The implications of this relatively high interest rates and high inflation regime are unlikely to be positive for insurance industry. It would be difficult for an Insurance industry to manage return expectations as they are likely to be high. While competing with a fixed income product higher assured returns are required for high. Interest rates in order to increase penetration. There may be some reductions in actual growth rates, but Indian’s long term fundamentals remain intact as life Insurance being an industry with long time horizon, it would be able to tide over economic cycle.
Inflation on the other hand means lower disposal incomes in the hand of the consumer leading to lower household savings which currently stands at 34.7%, though significantly lower than china which is 50%.
Global Economic Environment: 29
According to the Swiss Re’s newly appointed Economist, Kurl Karl low interest rates and euro debt crisis will prove to be a problem for insurance industry. According to Kurt karl momentum of growth has been slowed down due to this two factors, but the only bright spot according to him is the ongoing growth in the emerging market. However Kurl is lot more optimistic looking forward to 2013 forecasting a pick-up in investment yield and premium in a modest improvement in economic conditions.
1. Political Development: Political developments are the more serious threat in Europe and US. In Europe this can lead to serious sovereign defaults and also exit from the euro monetary union. 2. Emerging markets has been negatively impacted by faltering growth in the developed economy. Also tighter monetary policies on the part of several emerging economies also slowed down growth. 3. Both global in-force and new business life insurance fell in 2011, but it again recovered. According to the economist in order to return to the pre-crisis profitability short- term factors like low investment returns, high hedging cost and more onerous capital requirement. Life Insurance industry’s capitalization has improved markedly and it is in the better shape to cope up with the future challenges. 4. Because of some Regulatory changes in China and India, coming two years will see life insurance business in emerging market returning to its long term trend of around 8%.
Demand Drivers: 30
Insurance industry in India has become lot more competitive in recent years. With private players entering into the market, competition level has significantly increased with more private players trying to gain more market share. Some of the demand drivers that give change to the smaller companies to compete against giants like Life Insurance Corporation of India Ltd (LIC) which has 70% market share are:
1. Rural market: According to the Mckinsey report, titled India Insurance 2012: Fortune Favors the Bold, finds that the sector is still in a dissident with different players in different stage of development and market presence. According to the Mckinsey’s report the rural penetration is likely to increase from about 25% at present to around 35-40% in 2012. With 65% of the Life insurance coming from rich urban class, smaller companies can look for rural and low income group as potential demand driver.
2. Product Mix; A better product mix would also drive growth of insurance companies, with companies making a move to lower the share of single premium products.
3. Life insurance product can also fill the gap that is created by growing demand for investment products and long-term savings.
2.4. COMPANIES IN THE STRONGEST/WEAKEST POSITIONS: 31
Competitor analysis in marketing and strategic management is a judgment of strength and weakness of the competitors. Companies generally do this analysis to understand the strength and weakness of their current and potential competitors. This analysis provides both offensive and defensive strategy to identify both opportunity and threats. IDBI federal Life Insurance is one of emerging insurance company. It is one of the few companies that have shown rapid growth since the day of its inception. In order to gain higher market Share Company has to understand its competitors that is their strength and weakness. Competitor analysis will help IDBI to understand strength and weakness of their competitors. It will IDBI to come up with offensive or defensive strategy to identify both opportunity and threats. Some of the main competitors of IDBI federal are: 1. Life Insurance Corporation of India (LIC) 2. ICICI prudential 3. SBI Life 4. HDFC standard Life 5. Bajaj Alliance
1. Life Insurance Corporation of India ( LIC): LIC was founded in 1956 with the merger of 243 insurance company and provident societies. It is the largest insurance and investment company in India. It is a state owned with 100% stake owned by government of India. Products offered by LIC are: 1. Jeevan Arogya plan: Jeevan arogya plan is a unique non-linked health insurance plan which provides health insurance against certain specified health risk. LIC’s jeevan arogya plan is a direct competition to IDBI’s Healthsurance plan.
2. Bima Account plan:
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Under this plan the premiums payed by the customer after deduction of all charges, will be credited to the policyholders account maintained separately for each policyholder. If all premiums are paid the amount held in policyholder’s account will earn an annual interest rate of 6% p.a
3. Endowment plan: It’s a unit linked endowment plan which offers investment cum insurance cover during the term of the policy. 4. Children Plans 5. Plan for Handicapped Dependents 6. Endowment assurance plans 7. Plans for high worth Individual 8. Money Back Plans 9. Special Money Back Plan for Women 10. Whole Life Plans 11. Term assurance plans 12. Joint Life Plan
SWOT Analysis of LIC: SWOT Analysis is a strategic planning method used to analyze strength, weakness, opportunity and threat involved in a business or a project. 1. Strength:
LIC is India’s largest state-owned company and also India’s largest investors
LIC has over 2000 branches all across India and more than 1, 00,000 agents.
LIC is the largest investor in India with largest fund base.
LIC has over 1, 15,000 employees across India.
LIC is the 8th most trusted brand of India.
2. Weakness: 33
It lacks imagination since it has an image of a government company
Red tape, bureaucracy causes the problem since it is a government company.
During the economic crises managing a he workforce is a lot of burden.
2. ICICI Prudential: ICICI prudential Life Insurance Company is the joint venture of ICICI bank and Prudential Plc, one of the leading financial service groups in UK. Products offered by ICICI prudential: 1. ICICI pru care: It is an insurance plan that protects family’s future and ensures they lead their life comfortably. 2. Save n Protect 3. Cash back 4. Home Assure 5. Life Guard 6. ICICI pru iprotect 7. Smartkid Regular premium 8. ICICI pru Elite Life 9. Group term insurance plan 10. Group Gratuity plan 11. Annuity solution 12. ICICI pru life link pension SP 13. Forever Life 14. Immediate annuity 15. ICICI pru heath saver 16. ICICI pru Hospital care
SWOT Analysis of ICICI Prudential:
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STRENGTHS:
Weaknesses:
1.Strong tie up
1.Low customer awareness
2.Brand Equity
2.Less promotion
3.Strong network
3.Untouched Rural Population
4.Huge customer database 5.Strong financial base OPPORTUNITIES:
Threats:
1.Untouched Rural market
1.Competitors
2.Large Uninsured population
2.Customer beliefs in LIC
3.Network Building
3.Fast turnover of employees
Details of Companies inception: Insurer
Foreign
Date
of Years
of
Partners
Inception
operation
LIC
None
01.09.1956
1956-57
ICICI Prudential
Prudential
plc, 24.11.2000
2000-01
UK IDBI Federal
Ageas, Europe
19.12.2008
2007-08
First Year (Including Single Premium) Life Insurance Premium: Insurer
2013-12
2012-11
2011-10
2010-09
2009-08
LIC
87012.35
71521.90
53179.08
59996.57
56223.56
(34.49)
(-11.36)
(6.71)
78262.14
6334.03
6811.83
8034.75
5162.13
444.95
400.56
316.78
11.90
-----------
(% of profit (21.66) share) ICICI Prudential IDBI federal
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2.5. KEY SUCCESS FACTOR’S(KSFs) Post Liberalization Insurance industry in India has become very competitive. With private players entering into the India market making the market lot more competitive. Insurance industry in India has become highly competitive with different companies and individual agents competing against each other to gain higher market share. In order to gain higher market share companies have to differentiate themselves from others. Companies can differentiate themselves in the market by using a number of critical success factors:
1. Product Quality: One the most important factor that differentiates companies is by the quality of product it offers. Quality of product instills a confidence in the customer that the product offered by the company is better. Better the quality of product, more successful is the company.
2. Developing relationships with the customer: Insurance Industry is a highly competitive industry. In order to gain the market share first priority is to be given to the customer. Range of product and services should be designed to give the customer what he desires.
3. Market Segmentation: Greater market segmentation should be done in which target audience should be divided into homogenous groups and products and services should be targeted towards such market. This would tie company to their client by customized combination of coverage, easy payment plan, risk management advice and quick claim handling.
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4. Designing new strategies: Insurance Industry cannot be satisfied with consolidation of their existing market, but have to achieve future growth and penetration. Companies must focus on new distribution channels, strengthening their existing point of services, direct contact with their ultimate customer, refresh their marketing setup, new comers should focus on tapping the market which is left unexploited by public sector companies.
5. Shift towards Rural market: Rural market is India is still uncovered by this sector. Insurance penetration can be achieved by tapping the untapped rural market of India.
6. Motivating sales force: Sales force is one the major strength that the company has that could differentiate them from their competitors. A good sales force can do wonders to the future of the company, because of which a proper motivation of sales force is very important for the company. Life Insurance Company should constantly involve in motivating their sales force so that they can meet their target on time.
7. Use of technology: Technology plays a very important role in the success of the company. Internet based Life insurance will help companies to reduce time and transaction cost and also improves quality of services to its customer.
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2.6ANALYSIS AND SUMMARY Industry’s Attractiveness and Prospects for Long-Term Profitability: The Indian insurance industry has undergone transformational changes since 2000 when the industry was liberalised. With a one-player market to 24 in 13 years, the industry has witnessed phases of rapid growth along with extent of growth moderation and intensifying competition. There have also been a number of product and operational innovations necessitated by consumer need and increased competition among the players. Changes in the regulatory environment also had a path-breaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth. The decade 2001-10 was characterized by a period of high growth (compound annual growth rate of 31 percent in new business premium) and a flat growth (CAGR of around two percent in new business premium between 2010-12), according to KPMG. There was exponential growth in the first decade of insurance industry liberalization. Backed by innovative products and aggressive expansion of distribution, the life insurance industry grew at jet speed. However, this frenzied growth also brought in its wake issues related to product design, market conduct, complaints of management and the necessity to make course correction for the long term health of the industry.
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Regulatory changes were introduced during the past two years and life insurance companies adopted many new customer-centric practices in this period. Product-related changes, first in ULIPs (Unit Linked Insurance Plans) in September 2011 and now in traditional products, will have the biggest impact on the industry In the long run the insurance industry is still poised for a strong growth as the domestic economy is expected to grow steadily. This will lead to rise in per capita and disposable income, while savings are expected to be stable.
Insurance growth drivers in India The demand for insurance products is likely to increase due to the exponential growth of household savings, purchasing power, the middle class and the country’s working population. Listed below, are the various underlying growth drivers for India’s insurance industry:
Growing of the financial industry as a whole
Growth of life and non-life industry
Promoting innovation and removing inefficiency
Competition and orderly growth
Growth of specific insurance segments such as motor insurance
Emerging trends
Multi-distribution i.e. increasing penetration through new modes of distribution such as the internet, direct and telemarketing and NGOs
Product innovation i.e. increased levels of customization through product innovation
Claims management i.e. timely and efficient management of claims to prevent delays which can increase the claims cost.
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Profitable growth i.e. expanding product range, developing innovative products and expanding distribution channels
Regulatory trends i.e. mandated regulatory changes by the IRDA to promote a competitive environment in both the life and non-life insurance sectors.
Life insurance: key challenges In FY12, the life insurance industry witnessed a decline in the first year premium collected which dropped from INR1, 258 billion in FY11 to INR1, 142 billion, a drop of approximately 10%. This was owing to the following challenges that the industry faced in
Products strategy and design
Cost
Taxation
Prospects and challenges of various channels
Compensation
Customer service
Governance and regulatory issues
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Way Forward: The Indian insurance market is poised for strong growth in the long run. Significant latent market - The insurance market has a considerable amount of latent potential, given the fact that the Indian economy is expected to do well in the coming decades leading to increase in per capita incomes and awareness. Channelizing industry focus - In meeting the significant potential, the industry has an increased role and responsibility. Three areas of focus could be — a) product innovation matching the risk profile of the policy holders b) reengineering the distribution and more significantly c) making sales and marketing more responsible and answerable. Distribution - Distribution channels evolved in response to market dynamics and changing consumer preferences. The alignment of economic incentives with distribution dynamics should be driven by market forces rather than regulatory intervention.The stakeholders should eventually work toward maintaining a favourable environment for stable growth, increasing the penetration of insurance to rural and increasing the contribution to the economy.
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PART-2
42
CHAPTER-3 THE PRESENT STUDY
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3.1 BACKGROUND OF THE STUDY: Insurance is an integral part of any personal financial plan. The type of insurance and the amount of coverage you obtain all depends on your unique financial and family circumstances, and must be evaluated carefully. When considering purchasing coverage, you should review all the potential risks and the financial impact of these risks on your financial health. This will help you determine what options to look for and what questions to ask. And as with any type of financial product, you must read the fine print and consult with a competent advisor. Insurance is a form is risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary compensation known as the premium. INTRODUCTION TO CHILD INSURANCE Life insurance for your child may not be the first thing that you think about when you bring them home from the hospital. In fact, you may not even be aware that Children’s Whole Life insurance is available. We want to help you understand the whole life insurance options available to your child. Child Plan is insurance cum investment plan that serves 2 purposes –
To financially secure your child’s future
To finance the turning points in his life such as higher education and marriage So, like a double-edged sword, the best Child Plan is designed to protect the future of your child in case of your unfortunate demise and at the same time, builds a corpus over a term to be utilized to finance the prime moments in his life like higher education and marriage.
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Need for Child Plans in India: Child Plan gives you various benefits such as life cover, building a corpus for the child's education, future needs and the option of adding specific riders. Go ahead and invest in an Education Plan, but always compare quotes before you finally sign on the dotted line.
How is it different from a Term Plan?
In case the Policy Holder dies
Term Plan
Child Plan
Death
Death
Paid
Benefit Policy
Ends
In case the Policy
No
Holder survives
Benefit
Benefit
Paid
Policy
Continues Rest of the Premium Paid by Insurer
Maturity
Maturity Benefit
Features and Flexibilities of a Typical Child Plan: Work out the detailed specifications of the needs you are looking to fulfill through a Child Plan. Here are the key parameters you should look forPremium Amount – It more or less depends on the Sum Assured and Maturity Amount you choose. Mode of Premium Payment – Regular premium – As the name implies, the premium is paid on a regular basis. This can be yearly, half yearly or even quarterly. Single premium – The premium is paid as a single payment.
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Sum Assured -The thumb rule to follow is that the Sum Assured should be around 10 times your present income. Policy Term - An ideal Policy Term for a Child Plan is the time you think your child needs to get on his feet. If your child is 10 years old, your policy term should be 8 years. Maturity Amount - Sit with your financial advisor and taking into account the inflation rate and other such factors, work out a Maturity Amount that you would require at the end of the Policy Term. Maturity Amount can be received as a lump sum or in a frequent period of 5 years. Waiver of Premium – This is a kind of rider that comes inbuilt in Child Plans. However, if this is not a part of the policy, it is always advisable to opt for the same. In case of death of the insured, this rider enables the policy to continue by passing off the financial burden to pay the rest of the premium to the insurer. Partial Withdrawals - Some parents prefer withdrawing chunks of Maturity Amount at pre-fixed intervals instead of getting a lump sum amount at one go. The intention to opt for this feature is to meet the financial needs of your kid at the key moments in his life. Riders and Benefits – These are the add-ons that make your coverage financially and qualitatively more valuable
Premium Waiver Benefit
Accidental Death and Disability Benefit
Critical Illness Rider Benefit
Types of Child Plans Child ULIPs – A fraction of the premium flows into debt instruments and the rest into equity instruments. The decision of switching between the funds remains in the hands of the insured. Since it’s a market linked plan, the return is decided by the net value of the assets at the maturity period.
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Child Endowment Plans - The premium flows into debt instruments, the decision of which is at the discretion of the insurance company. Return is decided by the bonus payable on maturity.
A Case Scenario: Mr. Ketan buys a Child Plan for his 8 year old kid with a policy term of 10 years, aiming to get a maturity benefit of Rs 20,00,000. He opts for a life cover of Rs 25,00,000. He suffered a heart attack after 4 years the policy began. The insurer is liable to pay the appointee a sum of Rs 25,00,000 and also to borne the premium to be paid for the rest of the policy term left i.e 6 years. The child will also get the maturity benefit of Rs 20,00,000 once he reaches the age of 18 years. The same has been illustrated:
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COMPETITOR’S CHILD PLANS LIC’s JEEVAN ANKUR LIC’s Jeevan Ankur is a conventional with profits plan, specially designed to meet the educational and other needs of your child. If you are the parent of a child aged upto 17 years, LIC’s Jeevan Ankur is the most suitable insurance plan for you which ensures that your responsibilities are met whether you survive or not and without depending on anyone else. The risk cover under this plan will be on your life as a parent and the named child shall be the nominee under the plan. The policy term shall be based on the age at maturity of the child. 1.Benefits i) Death benefit: On death of the Life Assured during the policy term: Basic Sum Assured shall be payable to the nominee and an income benefit equal to 10% of Basic Sum Assured shall be payable on each policy anniversary, from the policy anniversary coinciding with or next following the date of death, till the end of the policy term. On death of child, when Life Assured is alive: On death of the child, the Life Assured will have an option to nominate another child/person and the policy will continue with the same benefit payable to new nominee/legal heirs after the death of the Life Assured during the term of the policy. On death of child/nominee after Life Assured’s death: The policy shall continue and the benefits shall be payable to the legal heir(s). ii)Maturity Benefit: At the end of the policy term an assured maturity benefit equal to Basic Sum assured along with Loyalty Addition, if any, shall be payable irrespective of survival of the Life Assured.
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iii) Loyalty Addition: Depending upon the Corporation’s experience the policy will be eligible for Loyalty addition on the stipulated date of maturity irrespective of survival of Life Assured.
2. Optional Benefits: You may choose the following optional riders by payment of additional premium
i) Accident Benefit Rider: This benefit is available under regular premium policies only. An additional sum equal to Accident Benefit Rider Sum Assured is payable upon death due to accident. The Accident Benefit Rider Sum Assured may be opted for an amount upto the Basic Sum Assured subject to minimum of Rs. 25,000 and maximum of Rs. 50 lakh (including all policies with LIC of India and other insurers). This benefit will be available only till the age nearer birthday of the Life assured is 70 years. ii) Critical Illness Rider: An amount equal to Critical Illness Rider Sum Assured will be payable in case of diagnosis of defined categories of Critical Illnesses. The Critical Illness Rider Sum Assured may be opted for an amount upto the Basic Sum Assured subject to a minimum of Rs. 50,000 and a maximum of Rs. 5 lakh (including all policies with LIC of India). This benefit will be available provided the policy matures on or before the Life Assured attains 60years of age. Critical Illness Rider can be availed with or without Premium Waiver Benefit. If Critical Illness Rider is opted with Premium Waiver Benefit, then in the event of Life Assured diagnosed with any of the Critical Illnesses covered under the policy, the total future premium in respect of the policy will be waived. The Basic Sum Assured under such policies should be equal to the Critical Illness Rider Sum Assured.
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3. Eligibility Conditions and Other Restrictions (For Basic Plan): a) Minimum Sum Assured
: Rs. 100,000
b) Maximum Sum Assured
: No Limit
(The Sum Assured shall be in multiples of Rs. 5000/-) c) Minimum Age at entry for Life Assured : 18 years (completed) d) Maximum Age at entry for Life Assured : 50 years (nearest birthday) e) Maximum Maturity Age for Life Assured : 75 years (nearest birthday) f) Minimum Age at entry for child
: 0 years (last birthday)
g) Maximum Age at entry for child
: 17 years ( last birthday) : Higher of (18 – age of child, 8)
h) Minimum Term years
: (25 – age of child) years
i) Maximum Term 4. Sample premium Rates:
Premiums can be paid regularly at yearly, half-yearly, quarterly or monthly mode (through ECS only) or through SSS mode over the term of policy. Alternatively, a single premium can be paid. A grace period of one calendar month but not less than 30 days will be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums.
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Following are some of the sample premium rates (exclusive of service tax) per Rs. 1000/- S.A.: Single Premium Age
Policy term 10
15
20
25
615.45
494.95
405.95
348.00
30
618.80
503.35
422.10
375.30
40
638.75
541.60
483.60
463.60
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Annual Regular Premium Age
Policy term 10
15
20
25
20
90.65
56.45
39.70
31.10
30
91.20
57.50
41.35
33.50
40
94.70
62.35
47.80
41.75
6. Revival: If premiums are not paid within the grace period then the policy will lapse. A lapsed policy can be revived from the date of first unpaid premium and before the date of maturity by paying all the arrears of premium together with interest within a period of five years, subject to submission of satisfactory evidence of continued insurability. The Corporation reserves the right to accept at original terms, accept at revised terms or decline the revival of a discontinued policy. The revival of discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the life assured. Riders shall be revived along with the basic plan and not in isolation.
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7. Paid-up Value: Under regular premium policies, if after atleast three full years’ premium have been paid and any subsequent premiums be not duly paid, this policy shall not be wholly void, but shall continue as a paid-up policy for a reduced paidup sum assured. This Paid-Up Sum Assured shall be payable on the date of maturity or on Life Assured’s prior death. Further, in case of death during the term of the policy, the paid up value shall be paid immediately on death. But, neither income benefit nor paid up value on maturity shall be payable. Accident Benefit and Critical Illness riders do not acquire any paid-up value. 8. Surrender Value: The Guaranteed Surrender Value will be as under: 1. Single Premium Policies: The Guaranteed Surrender value will be available after completion of atleast one policy year and is equal to 90% of the premium paid excluding premium for optional rider and extras, if any. 2.
Regular Premium Policies: The Guaranteed surrender value will be available after completion of three policy years and atleast three full years’ premiums have been paid and is equal to 30% of the premiums paid excluding the premium paid for the first year and all premiums in respect of optional rider and extras, if any.
9. Policy Loan: No loan facility will be available under this plan.
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10. Service Tax: Service tax, if any, shall be as per the Service Tax laws and the rate of service tax as applicable from time to time. The amount of service tax as per the prevailing rates shall be payable by the policyholder on premium(s) as and when the premiums are paid. 11. Cooling-off period: If you are not satisfied with the ―Terms and Conditions‖ of the policy you may return the policy to them within 15 days from the date of receipt of the policy bond. 12. Exclusion: Suicide:- This policy shall be void if the Life Assured commits suicide (whether sane or insane at that time) at any time within one year from the date of commencement of risk and the Corporation will not entertain any other claim by virtue of this policy except to the extent of a maximum of 90% of single premium paid excluding any extra premium (in case of single premium policies).
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CHILD CAREER PLAN Introduction: This plan is specially designed to meet the increasing educational and other needs of growing children. It provides the risk cover on the life of child not only during the policy term but also during the extended term (i.e. 7 years after the expiry of policy term). A number of Survival benefits are payable on surviving by the life assured to the end of the specified durations.
Options: You may choose Sum Assured (S.A.), Maturity Age, Policy Term, Mode of Premium payment and Premium Waiver Benefit. Payment of Premiums: You may pay the premiums regularly at yearly, half-yearly, quarterly or through Salary deductions over the term of policy. Premiums may be paid either for 6 years or upto 5 years before the policy term.
KOMAL JEEVAN Product summary: This is a Children's Money Back Plan that provides financial protection against death during the term of plan with periodic payments on survival at specified durations. The plan can be purchased by any of the parent for a child aged 0 10 years. Commencement of risk cover: The risk commences either after 2 years from the date of commencement of policy or from the policy anniversary immediately following the completion of 7 years of age of child, whichever is later.
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Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, up to the policy anniversary immediately after the life assured (child) attains 18 years of age or till the earlier death of the life assured. Alternatively, the premium may be paid in one lump sum (Single premium).
Guaranteed Additions: The policy provides for theGuaranteed Additions at the rate of Rs.75 per thousand Sum Assured for each completed year. The Guaranteed Additions are payable at the end of the term of the policy or earlier death of the Life Assured.
Loyalty Additions: This is a with-profit plan and participates in the profits of the Corporation’s life insurance business. It gets a share of the profits in the form of loyalty additions which are terminal bonuses payable along with death or maturity benefit. Loyalty addition may be payable depending on the experience of the Corporation.
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HDFC LIFE Children's Insurance Plans
Successful parenting is no mean accomplishment. A huge contributor to this success is financial planning for your child's future needs at the right age! There is really no better gift you can give your child, than the promise of a secure future with YoungStar Plans from HDFC Life. HDFC Life YoungStar Udaan Since the birth of the child, parents make sincere efforts to ensure that their child can dream big without having second thoughts. We, at HDFC Life, are here to help you empower your child’s dreams and live the rest of your life as the proud parents you deserve to be. HDFC Life Young Star Udaan, is a traditional participating insurance plan and is ideal for parents who wish to make provision for: 1.
Academic expenses that occur prior to college education
2.
Specific goals like college fees or marriage expenses etc
3.
All miscellaneous and extracurricular expenses that occur during
college/school 4.
Three Maturity benefit options to choose from based on which your
survival/maturity benefits payable are decided 1.Aspiration (Endowment benefit) – Lumpsum pay-out at maturity 2.Academia (Moneyback benefit) – payouts during last 5 policy years with first guaranteed payout higher than subsequent guaranteed payouts.
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3.Career (Moneyback benefit) – payouts during last 5 policy years with last guaranteed payout higher than previous guaranteed payouts. 3. Two Death Benefit options to choose from based on which death benefit payable are decided 1. Classic: Policy Terminates after payment of death benefit 2. Classic Waiver: Policy continues after payment of death benefit + Future Premiums waived 4. Limited PPT of 7, 10 or Policy term minus 5 years 5. Flexibility to choose your policy term from 15 to 25 years as per your child’s future needs 6. Guaranteed Additions during first 5 policy years, if applicable 7. Participating plan with accrued bonuses payable at maturity 8. Option to take this policy by filling a Short Medical Questionnaire (SMQ)2 9. Tax Benefits3 under Section 80C and Sec 10(10D) of Income Tax Act 1961.
Survival/Maturity Benefits: The table below specifies the series of money back/endowment payouts, payable at the end of each year, for a premium paying or a fully paid-up policy.
SA: Sum Assured on maturity. GA: Guaranteed Additions
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Death Benefit: Death Benefit Options
Death Benefits
Classic
Basic
Death
benefit
+
AccruedGuaranteed Additions+ Accrued Bonuses, if any Classic Waiver
Basic
Death
benefit
+
Premium Waiver
The table below describes each of the above benefits in detail. Basic Death Benefit
The basic death benefit shall be the higher of: o
Sum Assured on Death
o
105% of Premiums paid
The Sum Assured on Death shall be the higher of: o
Sum Assured on Maturity^
o
10 times Annualised Premium for entry age up to 50 years and 7 times Annualised Premium for entry age greater than 50 years
Premium Waiver
All future outstanding premiums under the policy will be waived. The contract shall continue and the benefits as per Survival benefit and Maturity Benefit shall be available.
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HDFC SL YoungStar Super Premium Children insurance plans help build savings so that over time there is enough to finance your child’s education, marriage, house or car. HDFC SL YoungStar Super Premium, a unit-linked insurance plan (ULIP) designed to accumulate savings for your child's future, even in your absence. Every parent naturally wants the best for his or her child in every sphere, particularly education. Best-in-class education is no longer a luxury; it’s a must-have for anyone who wants to excel in his or her career. But that is easier said than done, given the escalating cost of education at premier institutes coupled with increasing competition. Fortunately for you, help is at hand. Children insurance plans help build savings so that over time there is enough to finance your child’s education, marriage, house or car.
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Flexibility to choose from 4 funds to suit your risk appetite: 1. Income Fund: Higher potential returns due to higher duration and credit exposure. 2. Balanced Fund: Dynamic equity exposure to enhance the returns while the debt allocation reduces the volatility. 3. Blue chip Fund: Investments in large cap equities. 4. Opportunities Fund: Investments in mid-cap equities.
Flexibility to select premium amount – no ceiling on maximum premium
Flexibility to select tenure of 10, 15 - 20 years
Flexibility to select the Sum Assured
ADVANTAGES
Save Benefit - In case of unfortunate death of the parent or a critical illness 1. Sum Assured is paid to the beneficiary (child) 2. No need to pay any further premiums as we will pay 100% of the future premiums 3. On maturity, fund value is again paid to the beneficiary
Save-n-Gain Benefit - In case of unfortunate death of the parent or a critical illness 1. Sum Assured is paid to the beneficiary (child) 2. No need to pay further premiums as we will pay 50% of the future premiums towards the policy and 50% of the premiums to the beneficiary on the premium due date 3. On maturity, fund value is paid to the beneficiary
Customize a plan suited for your child with the premium, Sum Assured and the plan option of your choice
Manage your investment fund(s) either by switching across fund options or re-directing future premiums into a different fund option
Tax benefits subject to provisions contained under sections 80C and 10(10D) of the Income Tax Act 1961.
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3.2 LIMITATIONS OF THE PROJECT: Duration of the project is 8 weeks. Within this short time, completion of the project is a challenge. Targeting the customers for the product (Childsurance) and conducting primary research is a challenge. From the data collected through primary and secondary research analyzing it and giving recommendations and conclusions within this short time is again a challenge.
3.3 OBJECTIVES OF THE STUDY:
To analyze Life Insurance products of IDBI Federal Life Insurance Co Ltd.
To compare the children insurance products with other companies money back plans. To understand the factors contributing to the product and its promotion. To provide the company with valid and research based suggestions which might help the company increase the market share. To know the Pros and Cons of the Childsurance plan. 3.4 RESEARCH METHODOLOGY The research so carried out is exploratory research on the market of insurance products available. The research design formulated involves the following. SAMPLE: The insurance policy holders or insurance policy prospects, who want buy a policy SAMPLE SIZE: The required sample size would range about 100 respondents.
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PRIMARY DATA: The primary data is collected with the help of questionnaire response from the customers.
SECONDARY DATA: The data is obtained from books and website which help in further process of the project work.
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CHAPTER-4 THE DATA ANALYSIS
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DATA ANALYSIS 1. Gender of Respondents
No.of Respondents Female 50%
Male 50%
FINDINGS: From the above pie chart it is interpreted that there are 50% male respondents and 50% female respondents.
2. Marital Status of Respondents
Marital Status Married 41% Single 59%
FINDINGS: From the above pie chart it is interpreted that there are 59% single respondents and 41% married respondents.
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3. If married how many children you have?
Respondents having No.of children >=3 13%
1 26%
2 61%
FINDINGS: From the above pie chart it is interpreted that 26% of respondents have 1 child, 61% have 2 children and 13% have >=3 children.
4. Age of your child/children? 18 years & above 8%
Age of child
11-17years 13%
1 Month-4 Years 38%
5 -10years 41%
FINDINGS: From the above pie chart it is interpreted that the respondents having children of age 1month-4years is 38%, 5-10 years is 41%, 11-17 years is 13% and 18years and above is 8%.
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5. Occupation of Respondents.
Occupation of Respondents Govt sector 11%
others 47%
Private Sector 35%
Businessmen 7%
FINDINGS: From the above pie chart it is interpreted that the occupation respondents in Govt sector is 11%, in private sector is 35% and others is 47%.
6. Education Qualification of Respondents.
Educational Qualification 10th passed 3%
Post Graduate & above 53%
Graduate 44%
FINDINGS: From the above pie chart it is interpreted that Educational Qualification of respondents post Graduate and above is 53%,Graduate is 44% and 10th passed is 3%. 66
7. Annual Income of Respondents.
Annual Income of Respondents 6,00,000 & above 16% Below 1,00,000 27% 3,000005,00,000 26%
1,00,0002,00,000 31%
FINDINGS: From the above pie chart it is interpreted that Annual income of respondents below 1 lakh is 27%, between 12 lakhs is 31%, 3-5 lakhs is 26%,6 lakhs and above is 16%.
8. Are you insured?
No.of Respondents Insured NO 44% yes 56%
FINDINGS: From the above pie chart it is interpreted that 56% respondents are insured.
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9. If yes which policies do you have?
7% 30%
Life insurance 63%
Health Insurance Others
FINDINGS: From the above pie chart , it is interpreted that 63% of the respondents have life insurance, 30% have health insurance.
10. In which company do you have/had policies?
Respondents having policies IDBI federal 12%
HDFC 8%
SBI Life 16%
Others 3%
LIC 61%
FINDINGS: From the above pie chart , it is interpreted that 61% respondents have policies in LIC,16% in SBI Life, 12% in IDBI Federal,8% in HDFC.
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11. Are you aware of child policies?
Awareness about child policy No 35%
Yes 65%
FINDINGS: From the above pie chart , it is interpreted that 65% of respondents are aware about child policies. 12. If yes which company’s child policy are you aware?
Respondents aware about companies offering child policies HDFC 6%
Others 2%
LIC 28% IDBI federal 46%
SBI Life 18%
FINDINGS: From the above pie chart , it is interpreted that 46% of respondents are aware about IDBI Federal child policy,28% about LIC, 18% about SBI Life.
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13. Do you have/had a child policy?
Respondents having child policy Yes 17%
No 83%
FINDINGS: From the above pie chart , it is interpreted that 83% of respondents do not have child policies.
14. If yes in which company do you have/had?
Respondents having Child policies Others 6%
HDFC 6%
LIC 22%
IDBI 41%
SBI 25%
FINDINGS: IDBI Federal Childsurance was taken by 41% of people who have child policies and then SBI Life followed by LIC.
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15.Why do you/people go for child policies generally?
Reason Respondents having child policies others 1%
Future Benefits 30%
Child Education 45% Child Marriage 24%
FINDINGS: From the above pie chart , it is interpreted that 45% of respondents go for child policy for child’s education, followed by future benefits.
16. How did you come to know about child policies?
Respondents knowing about child policies others 14%
Agents 20%
Promotions 19%
Family and Friends 47%
FINDINGS: From the above pie chart , it is interpreted that 47% of respondents came to know about child policies through family and friends,20% agents and 19% through promotions. 71
17.Child policies are very useful ?
4%
1%
AGREE STRONGLY AGREE DISAGREE
35% 60%
STRONGLY DISAGREE
FINDINGS: From the above pie chart , it is interpreted that 95% of respondents agree that child policies are useful.
18.Which factor mostly affects your buying decision of child policy?
Factors affecting buying decision for child policies Premium paying term 26%
More returns 42% Premium amount 32%
FINDINGS: From the above pie chart , it is interpreted that 42% of respondents go for child policy for more returns and 32% for premium amount.
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19.Any up gradation in child policy do you think should be done? If yes mention.
Upgradation in child policies No 43% Yes 57%
FINDINGS: From the above pie chart , it is interpreted that 57% of respondents wanted upgradation in child policy.
20. Are you aware of IDBI federal Childsurance policy? If yes what is the source?
Source of IDBI Federal child policies others 20%
Agents 16%
Promotions 10% Family and Friends 54%
FINDINGS: From the above pie chart , it is interpreted that 54% of respondents know about IDBI Federal childsurance policy from family and friends. 73
21. IDBI Federal Childsurance is better than other Child policies.
IDBI Federal childsurance policy is better Strongly agree 13% Disagree 32% Agree 52% Strongly disagree 3%
FINDINGS: From the above pie chart , it is interpreted that 65% of respondents agree that IDBI Federal childsurance policy is better.
22. Have you seen any advertisements or promotions of IDBI Federal Childsurance policy? If yes where?
Advertisement of IDBI Federal others 23%
T.v 43%
News Paper 17% Internet 17%
FINDINGS: From the above pie chart , it is interpreted that 43% of respondents know about IDBI Federal through advertisement in T.V. 74
FINDINGS: 56% of people from sample are insured. 63% of people from sample have Life insurance and 30% people have health insurance. 61% of people from sample have policies in LIC, followed by SBI Life. 65% of the people from the sample are aware of Child policies and the rest are not aware of child policies. 46% of people from the sample are aware about IDBI Federal child policy. 83% of people from the sample do not have child policy. 41% of people from the sample have child policies in IDBI followed by SBI Life. 47% of people from sample came to know about child policy through friends and family. Almost 95% from the sample agree that Child policies are very useful. 45% said they take child policies for child’s education and the factor which affects their buying decision is mostly more returns. 54% of people from the sample came to know about Childsurance through Interns, Family and friends. Only 20% from the sample knew IDBI Federal through Promotions in media and social network.
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CHAPTER-5 CONCLUSION AND RECOMMENDATIONS
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5.1 CONCLUSION The data were collected from the customer’s response of the IDBI Federal Life Insurance Corporation Limited Hyderabad branch. Based on the percentage of the customers 100 sample size was collected. The age, gender, marital statuses, educational qualification, occupation, monthly income, were analyzed as personal information in the questionnaire. According to the collected personal information, most of the sample customers were young age, single, educated, higher income customers who got insurance. According to the research the IDBI Federal Life Insurance Corporation Limited Hyderabad needs to create awareness among people as only 20% of people know about IDBI Federal Life insurance Co. ltd through promotions.
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5.2 RECOMMENDATIONS AND SUGGESTIONS: From the responses I have collected following are few recommendations given by the people and few are suggestions given by me: IDBI Federal Childsurance is a good plan designed for child’s future and security for the child’s future in the absence of parents. If it can be redesigned with some sub-plans in such a way that it fulfills specific needs of customers like Child education planner, Plan for mentally or physically challenged children. The premium amount can be customized for child plans according to the income level of people so that even low income parents also can insure their children at least with less maturity benefit. Using Childsurance giving some less interest rate for education loans in IDBI bank can be provided. Awareness among people about IDBI Federal Childsurance is very less so it will be better if promotions are increased in TV, Radio, Internet, newspapers in order to build the brand image. To ensure increase in sales they can tie up with the hospitals also. They should highlight the benefits and should differentiate from other child policies in the promotions and more awareness is needed. Expansion of branches even in rural areas is required. Facilitating customers by linking policies to bank accounts so that money can be drawn from the account every year if the policy holder wants it to happen.
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QUESTIONNAIRE 1. Gender a) Male b) Female
2. Marital Status a) Single b) Married
3. If married how many children you have? a) 1 b) 2 c) >=3 d) None
4. Age of your child/children? a) 1 month - 4 years b) 5 years - 10 years c) 11years-17 years d) 18years & above
5. Occupation a) Govt sector b) Private sector c) Businessmen d) Others.
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6. Education Qualification a) Post Graduate & above b) Graduate c) 12 th passed d) 10th passed
7. Annual Income a) 6,00,000 &above b) 3,00,000-5,00,000 c) 1,00,000-2,00,000 d) Below 1,00,000
8. Are you insured? a) yes b) No
9. If yes which policies do u have?
10. In which company do you have/had policy? a) LIC b) SBI Life c) IDBI Federal d) HDFC e) others
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11. Are you aware about child policies? a) yes b) No
12. If yes which company’s child policy are you aware? a) LIC b) SBI Life c) IDBI Federal d) HDFC e) others
13. Do you have/had child policy? a)Yes b)No
14. If yes which company you have/had child policy? a) LIC b) SBI Life c) IDBI Federal d) HDFC e) others
15. Why do you/people go for child policies generally? a) Education b) Child’s Marriage c) Future benefits d) Others
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16. How did you come to know about child policies? a) Agents b) Family &Friends c) Promotions d) Others
17. Child policies are very useful a) Strongly Agree b) Agree c) Strongly Disagree d) Disagree
18. Which factor mostly affects your buying decision of child policy a)Premium Amount b)Premium paying term c)More returns d)Others
19. Any up gradation in child policy do you think should be done?
20. Are you aware of IDBI federal Childsurance policy? If yes what is the source? a) Agents b) Family &Friends c) Promotions d) Others
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21. IDBI Federal Childsurance is better than other Child policies? a) Strongly Agree b) Agree c) Strongly Disagree d) Disagree
22. Have you seen any advertisements or promotions of IDBI Federal Childsurance policy? If yes where? a) T.V b) Internet c) Newspaper d) others
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