Bharti Hdfc Project

8/8/2019 Bharti Hdfc Project

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A

PROJECT REPORT

ON“Organization study & study of problem related to

Recruitment, Training & Motivation level of Emloyees”

In the partial fulfillment of the

Master of Business Administration Program

2010-2011

Undertaken at

HDFC Standard Life Insurance

ADVENT INSTITUTE OF MANAGEMENT STUDIES

UDAIPUR

(Affiliated to Rajasthan Technical University, Kota)

SUPERVISED TO: SUBMITTED BY:

Dr. Dipin Mathur Bharti Tank

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MBA lII rd Semester

CERTIFICATE

TO WHOM SOEVER IT MAY CONCERN

This is to certify that Miss Bharti Tank student of MBA III-sem , Advent

institute of management studies , Udaipur has successfully undergone

the training on “Organization study & study of problem related to

recruitment, training &motivation level of employees” in our

organization for the period from 25thJune to 9th Aug,2010.

During the tenure of training, we found him sincere and hardworking.

We wish him every success for his bright future career.

Manoj Tailor

Branch Manager

HDFC SLIC

Udaipur

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PREFACE

Man has found out himself many things to make himself and his near dear ones happy.

Insurance is one such invention of man. Insurance is many splendid things. It is not

just the reluctant entry and the periodical reminders for paying the premium and the

last receipt of the claim money which may look large or a mere pittance depending upon

whether the policy was in force earning handsome bonus or had been languishing in

a state of suspended animation. insurance is a wonderful world of mortality rates,

utmost good faith, medical examinations with ECG and treadmill exercises, bonuses

and no claim discounts and a host of other science and arts which the insurance people

learn in order to provide what they call financial security and peace of mind which no

other invention of man can match.

In this project I try to show the performance of the various funds of the HDFC

standard life insurance company limited. In the first chapter of this project I have focus

on the introduction, history, needs, importance of the insurance and along with this I also

focus on the insurance industry in the India. In the second chapter I have focus on the

insurance players in India and types of the plans.

In the third chapter of this project I have discuss on the various researchmethodologies and objectives of this study and the limitation of the study.

In the fourth chapter of the project give introduction about the HDFC standard life

insurance company limited and it’s vision, mission and value. It focuses on various ULIP

plans. In the fifth chapter I have focused that how to design a Unit linked plan and types

of the unit linked plans.

The sixth chapter is very important because this chapter is the main part of my

study in this chapter I have show the performance of the various funds of the HDFC

standard life insurance company. what is the current position of the fund in market and

what is the current rate of return of the fund all this shows by the various charts and data

and the last chapter is related to the conclusion of this project.

The following research work takes a look on such persuasion of the insurance

companies and the way they deal with people regarding the support of life in old age-

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The Pension Plans.

ACKNOWLEDGEMENTS

I would like to thank Dr. Dipin Mathur for supporting me during this

project and provid ing me an oppo r tunity to lea rn outside the class

room. It was a truly wonderful lea r ning exper ience.

I would like to thank Mr.Ravi Khabya Head of the department for providing me this

opportunity to work on this project.

I would like to thank my project g uide M r. B.K. Panda, Sa les Development

Manager HDFC Standa rd Lif e Insu rance, Vinimay commercial

complex udaiapole,Udaipur for guiding me thr ough my summer

inte rnship and resea rch p roject. His encou ragem ent, time and effort

are greatly app r eciated. I wish to extend my sincere gratitude to the branch

manager of HDFC SLIC, Vinimay commercial complex udaiapole,

Udaipur Mr. Praveen jha for his insight.

I extend my sincere thanks to Director Prof. N.S Rao and I would also like to thank

the supporting staff of ADVENT INSTITUTE OF MANAGEMENT STUDIES, for their

help and co-operation throughout my project.

I would like to dedicate this project to my parents. Without their help

and constant support this project would not have been possible.

Lastly I would like to thank all my friends for their help in completion this project

and the respondents who off ered their opi nions and sug gestions

through the survey that was conducted by me in Udai pur .

Thanking You

Bharti tank4



DECLARATION

I hereby declare that this project work “Organization

study & study of problem related to Recruitment, Training &

Motivation level of Employees” has been carried out by me in partial

fulfillment of “Master of Business administration”(MBA) is an own

record carried out by me under the supervision of Mr. Dipin

Mathur, Project Head.

I also declare that this project is originally prepared by me and not

been submitted to any University for the award of any degree.

Place: Udaipur Date:

Signature

Bharti Tank

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EXECUTIVE SUMMARY

HDFC Standard Life Insurance is the oldest life insurance company in the world. It is the

largest insurer of U.K. and is 28th

largest company of the world. In India, the company is

dealing in the marketing of life insurance products and unit linked investment plans. The

company faces competition from all private players in insurance industry but its major

competitor is ICICI Prudential Life Insurance Company Limited.

To compete with its rival HDFC SLIC have to come up with products at cheaper prices

with the same kind of services which they are providing to their esteem customers. Theycan try to increase their market share by coming up with the products which are of short

term period and with small premium.

HDFC SLIC has now being started to advertise on different media as its competitors do.

But the drawback which I feel is that they are focusing on few of their popular products

only. Till date Indian customer has a false perception about the insurance – they feel that

it would benefit them if they do not live through the policy term. Family responsibilities and

high returns are the two main reasons for the people to invest in insurance. Optimumreturn of 15-20% must be provided to consumers to keep them interested in purchasing

insurance.

On the whole HDFC SLIC is a good place to work at. Every new recruit is provided with

extensive training on unit linked funds and product of HDFC SLIC. With an improvement

in the sales techniques used, a fair bit of advertising and modifications to the existing

product portfolio. HDFC is set to capture the insurance market in India as it has around

the globe.

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Content

Acknowledgement

Declaration

Certificate

Preface

Executive summary

Chapter Page No.

CHAPTER 1 :-

Introduction of insurance 8

Role of insurance 10

Classification of insurance 11

History of life insurance business 12

Needs of life insurance 12

Benefits of life insurance 13

Role of life insurance 15

Law and regulations 17

Insurance industry in India 21

What is human life value 25

What is contract of insurance 26

CHAPTER 2 :-

The insurance player 28

Types of plan 31

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CHAPTER 3 :-

Research methodology 33

Objectives of research 34

Data collection 34

Techniques used in this study 37

Sources of data 37

Objectives of the study 38

Limitation of the study 38

CHAPTER 4 :-

Organizational profile 40

Why HDFC standard life 46

Vision, mission, values 47

CHPTER 5 :-

Product portfolio 51

Introduction to unit linked product 54

Benefits of unit linked plan 56

Design of a unit linked plan 60

Types of unit linked plan 63

CHAPTER 6 :-

Introduction of fund 80

Performance Statistics 87

Individual pension portfolio

CHAPTER 7 :-

Conclusion

Recommendation

Appendix

Bibliography

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INTROD U CTION OF INSURANCE

WHAT IS INSURANCE

Insurance is basically risk management device. The losses to assets resulting fromnatural calamities like fire; flood, earthquake, accident etc. are met out of the common

pool contributed by large number of persons who are exposed to similar risks. This

contribution of many is used to pay the looses suffered by unfortunate few. However the

basic principle is that loss should occur as a result of natural calamities or unexpected

events, which are beyond the human control. Secondly insured person should not make

any gains out of insurance.

It is natural to think of insurance of physical assets such as motor car insurance or fire

insurance but often be forget that creator all these assets is the human being whose

effort have gone along way in building up to assets. In that scene human life is a unique

income generating assets. Unlike physical assets, which decrease with the passage of

time, the individual become more experienced and mature as he advances in age. This

raises his earning capacity and the purpose of life insurance is to protect the income to

individual and provide financial security to his family, which is dependent on his

income in the event of his pre-mature death. The individual also himself also needs

financial security for the old age or on his becoming permanently disabled when his

income will stop. Insurance also has an element of saving in certain cases.

Insurance is rupees 400 billion business in India and yet its spread in the country is

relatively thin. Insurance as a concept has not being able to make headway in India.

Presently LIC enjoys a monopoly in Life Insurance business while GIC enjoys it in

general insurance business. There has been very little option before the customer to

decide the insurer. A successful passage of the IRA bill has clear the way of private

sector operators in collaboration with their overseas partners. It is likely to bring in a more

professional and focused approach. More over the foreign players would bring

sophisticated actuarial techniques with them, which would facilitate the insurer to

effectively price the product. It is very important that the trained marketing professionals

who are able to communicate specific features of the policy should sell the policy. In the

next millennium all these activities would play a crucial role in the overall development

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The amount of payment depends on the nature of losses incurred

Role of Insurance in Economic Development

• For economies development, investment is necessary. Investment is made out of

savings. A life insurance company is a major instrument for the mobilization of

savings of people, particularly from the middle and lower income groups. These

savings are channeled into investment for economic growth.

• As on 31.3.2002,the total investment of LIC exceed rs.245, 000 corers, of which

more than rs.130, 000 corers were directly in government related securities, more

than rs.12000crores in hosing loan and Rs.4000 corers in water supply and

sewerage systems.

• The LIC is not an exception. All good life insurance companies have huge funds,

accumulated through the payment of small amount of premium of individual. These

funds are invested in ways that contributed substantially for the economic

development of the countries in which they do business.

• A life insurance company will have large funds. These amounts are collected by

way of premiums. Every premium represents a risk that is covered by that

premium. In effect, therefore, these vast amounts represent pooling of risks. These

fund are collected and held in trust for the benefit of the policyholders.

• Without insurance, trade and commerce will find it difficult to face the impact of

major perils like fire, earthquake, floods, etc.

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Classification of insurance business:

The insurance is broadly classified as:1 .Life insurance business

2. Non-life insurance business/General Insurance business.

Life insurance business:

It is the business of effecting contracts of insurances upon human life including anycontract whereby the payment of money is assured on death or on the happening of any

Contingency to the dependent on human life and any contract which is subject to thepayment of premiums for a term and shall be deemed to include:

The granting disability and double and triple indemnity accident benefits, if soprovided in the contract of insurance.The granting of annuties of human life. The granting of super-annuation allowance andannuities payable out of any fund applicable solely to the relief and maintenance of theperson engaged or who have been engaged in any particular profession, trade or employment or of the dependents of such persons.

Non life insurancebusiness :

Conventional classification of insurance business:1. Fire insurance2. Marine insurance3. Miscellaneous insurance (accident)

Modern classification of general insurance1. Insurance of person2. Insurance of property3. Insurance of interest4. Insurance of liability

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History of Life Insurance

Life insurance or life assurance is a contract between the policy owner and the insurer,

where the insurer agrees to pay a sum of money upon the occurrence of the insuredindividual's or individuals' death or other event, such as terminal illness or critical

illness. In return, the policy owner (or policy payer) agrees to pay a stipulated amount

called a premium at regular intervals or in lump sums. There may be designs in some

countries where bills and death expenses plus catering for after funeral expenses

should be included in Policy Premium. In the United States, the predominant form

simply specifies a lump sum to be paid on the insured's demise.

As with most insurance policies, life insurance is a contract between the insurer and thepolicy owner (policyholder) whereby a benefit is paid to the designated Beneficiary

(or Beneficiaries) if an insured event occurs which is covered by the policy. To be a life

policy the insured event must be based upon life (or lives) of the people named in the

policy

NEED OF THE LIFE INSURANCE: -

The original, basic intention of life insurance is to provide for one’s family

and perhaps others in the event of death. Originally, polices were to provide for short

periods of time, covering temporary risk situations, such as sea voyages. As life

insurance became more established. It was realized what a useful tool it was in a

number of situations, including:

1. Temporary needs/ threats:

The original purpose of Life Insurance remains an important element, namely

providing for replacement of income on death etc.

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http://en.wikipedia.org/wiki/Insurance

http://en.wikipedia.org/wiki/Beneficiary

http://en.wikipedia.org/wiki/Insurance

http://en.wikipedia.org/wiki/Beneficiary



2. Regular Saving:

Providing one’s family and oneself, as a medium to long term exercise (through a

series of regular payment of premiums). This has become more relevant in recent times

as people seek financial independence from their family.

3. Investment:

Put simply, the building up of saving while safeguarding it from ravages of inflation.

Unlike regular saving products are traditionally lump sum investments, where the

individual makes are one time payment.

4. Retirement:

Provision for one’s on later years has become increasingly necessary, especially in

changing culture and social environment. One can buy a suitable insurance policy, which

will provide periodical payments in one’s old age.

BENEFITS:

1. It is superior to traditional saving machine

As well as providing a secure vehicle to build up saving etc. it provides piece of mind to

the policy holder. In the event ultimately death, of say the main earner in the family,

the policy will pay out guaranteed sum assured, which is likely to be significantly more

then the total premiums paid. With more traditional saving vehicles, such as fixed

deposits, the only return would be the amount invested plus any interested accrued.

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2. It encourages saving and forces thrift:

Once an insurance contract has been entered into, the insured has an obligation to

continue paying premiums, until the end of the term of policy, otherwise the policy will

lapse. In other words, it becomes compulsory for the insure to save regularly and spend

wisely. In contrast savings held in a deposit account can be accessed or stop easily.

3. It provides easy settlement and protection against creditors

Once a person appointed for receiving the benefits or a transfer of rights is made

(assignment), a claim under the life insurance contract can be settled easily. In addition,

creditors have no right to any mommies by the insurer, where the policy is written under

trust. Under the married woman’s act the money available from the policy forms a kind

of trust which creditors can not claim on.

4. It can be encased and facilities borrowing:

Sum contracts may allow the policy can be surrendered for a cash amount, if policy

holder is not in a position to pay the premium. A loan, against certain policy, can be

taken for a temporary period to tide over the difficulty. Presence of life insurance policy

facilitates credit for personal or commercial loans as it can be offered as collateral

security.

5. Tax relief :

The policy holder obtains income tax rebates by paying the insurance premium. The

specified form of saving which enjoys a tax rebate u/s

88 of the income tax act. Include Life Insurance premiums and contribution to a

recognized PF etc.

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ROLE OF LIFE INSURANCE

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Role 1: Life Insurance as “investment”

Insurance is an attractive option for investment. While most people recognize the

tax hedging and tax saving potential of life insurance, many are not aware of its

advantages as an investment option as well as. Insurance products yield more

compared to regular investment option as this is besides the added incentives (read

bonuses) offered by insurers.

You can not compare an insurance product with other investment schemes for simple reason that it offers financial protection from risks, something that is the missing in

non- insurance products.

Infect, the premium you pay for a investment against risk. Thus, before comparing

with other scheme, you must accept that a part of total amount invested in life insurance

goes towards providing for the risk cover, while the rest is used for savings.

In life insurance, unlike non-products, you get maturity benefits on survival at the

end of the term. In other words, if you take a life insurance policy for 20 years and

survive the term the amount investor as premium in the policy will come back to you

with added returns. In the unfortunate event of death within the tenure of the policy, the

family of the deceased will receive the sum assured.

Now, let us compare insurance as an investment options. If you invest

Rs.10000/- in PPF, year money grows to Rs.10950 at 9.5% interest over a year. But in

this case, the access to your funds will be limited. One can withdraw 50% of the

initial deposit only after four years.

The sane amount of Rs. 10000/- can give you an insurance cover of up to

approximately Rs. 5 to 12 lacks. (Depending upon the plan, age and medical condition of

life insure etc.) And this amount can become immediately available to the nominee of

the policy holder on death. Thus insurance is a unique investment avenue that delivers

sound returns in addition to protection.

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Role 2: Life Insurance as “Risk Cover”

First and foremost, insurance is about risk cover and protection – financial

protection, to be more precise-to help out last once unpredictable losses. Designed to

safe guard against losses suffered on account of an unforeseen events. Insurance

provide you with that uniqueness sense of security that no other form of investment

provides. By buying life insurance, you buy peace of mind and are prepared to face

any financial demand that would hit the family incase of an untimely demise.

To provide such protection, insurance firms collect contributions for many people

who face the same risk. A loss claim is paid out of the total premium collected by the

insurance companies, who act as trustees to the monies.

Insurance also provides a safeguard in the case of accident or a drop in income

after retirement. An accident or disability can be devastating and an insurance policy

can lend timely support to the family in such time. It also comes as a great help when

you retire, in case untoward incident happens during the term in the policy.

With the entry of private sector player in insurance, you have a wide range of

products and services to choose from. Further, many of these can be further customized

to fit individual/group specific needs considering the amount you have to pay now; it’s

worth buying some extra sleep.

ROLE 3: Life Insurance as “Tax Planning”

Insurance serves as an excellent tax saving mechanism too. The Govt. of India

has offered tax incentives to life insurance products in order to facilitate the flow of funds

into productive assets. U/S 88 of Income Tax Act 1961, an individual is entitled to rebate

20% on the annual premium payable on his/her life and life of his/her children or adult

children. The rebate is reducible from tax payable by a individual or Hindu undivided

family. This rebate is can be availed up to a maximum of Rs 12000/- on payment of

yearly premium of Rs 60000/- a year, you can buy anything upward of Rs 100000/- in

sum assured. This means that you get Rs 12000/- tax benefit. This rebate is deductible

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from the tax payable by an individual or a Hindu undivided family.

LAW AND REGULATIONS

Insurance act 1938

• The insurance act 1938, which came into effect from 1st July 1938, and was

amended in 1950 and later in 1999, is the principle enactment related to the

business of insurance in India. The act contains provisions regarding licensing of

agents and their remuneration, prohibition of rebates, and protection of

policyholder’s interest. It also has provision placing limits on the expenses of

insurer, use of funds and patterns of investments, maintaining solvency levels, and

constitution of insurance association and insurance council and the tariff advisory

committee foe general insurance.

• Section 2(5A) defines ‘chief agent’ as a person who, not being a salaried employee

of an insurer, in consideration of commission (I) perform any administrative and

organizing function for the insurer and (ii) procures life insurance business for the

insurer by employing or causing to be employed, insurance agents on behalf of the

insurer. Section 2(17) defines a ‘special agent’ as one who procures life insurancebusiness, in consideration of commission, employing or causing to be employing

insurance agents on behalf of the insurer. He only procures business through

agents but dose not perform administrative functions like a chief agents. Special

agents can work in the life insurance business, not in a general insurance

business.

• Individuals companies or firm can be appointed as chief agents or special agents.

The individuals, the director of companies or partners of firms, wanting to become

chief agents or special agents must be free of the disqualification specified in

connection with agents.

• Section 42A provides for the registration of chief agents and special agents.

Certificates to functions as such are to be insured after registration. The certificates

are valid for 12 month and may be renewed. The provision also stipulated the

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number of insurance agents that chief agents may employ directly or through

special agents and the minimum business they have to do. Similarly, there are

stipulations about the number of agents to be employed by a special agents and

the minimum business to be done. Renewal of certificate is subject to compliance

with these requirements. No chief agents or special agents were registered till the

end of 2001.

• The act vest the IRDA with powers to inspect documents, to appoint additional

director, to issue direction, to take over the management of an insurer and to

appoint administration. The IRDA has powers to adjudicate on disputes between

insurer and intermediaries or between intermediaries and to decide on disputes

relating to settlement of claim of amount and exceed Rs 2000. not may disputes

are likely to be referred to the authority under this section, as the amount of Rs

2000 is very small.

Life Insurance Corporation Act, 1956

• This act was the basis for the establishments of the L.I.C as a body corporate

consisting of not more than 16 members appointed by the central government, one

of them being the chairmen. The corporation’s duty was to carry on life insurance

business to the best advantage of the community. Section 30.gave the L.I.C

exclusive privilege to transact life insurance business in India. This exclusive

privilege ceased as a result of the amendment made in 1999. These amendments

were made in pursuance of the government’s policy of economic reforms and 11

insurance companies were registered and had commenced life insurance business

till 31.3.2002.

Insurance Regulatory and Development Authority Act 1999

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• This act, passed in December 1999, provided for the establishment of the IRDA to

protect the interest of holders of insurance policies, to regulate, promote and

ensure orderly growth of insurance industry and for matter connected therewith or

incidental there to. It also sought to amend the insurance act, 1938 the life

insurance corporation act 1956 and the general insurance business act, 1972.

• The IRDA is a corporate body. It is advised by an insurance advisory committee

consisting of not more than 25 member to represent the interest of commerce,

industry, transport, agriculture, consumer forums, surveyors, agents,

intermediaries, organization engaged in safety and loss prevention, research

bodies and employees’ association in the insurance sector. It replaces the

‘controller of insurance’ to administer the provision of the insurance act. That

includes registration, licensing, and laying down regulations for the proper conduct

of the business and the protection of the interest of policyholders.

• The regulations framed by the IRDA, in so far as they affect the working of the

agents, are reproduced in full at the end of this course.

OMBUDSMAN

• In exercise of the powers conferred by sub-section (1) of section 114 of the

insurance act, the central government has framed rules known as Redressal of

public grievances rules, 1998 whereby Ombudsmen are appointed. The governing

body of the insurance council appoints ombudsmen. Their function is to resolve

complaints in respect of disputes between policyholders and complaints in respect

of disputes between policyholders and insurers in cost effective, efficient andimpartial manner.

• The complaints to the Ombudsman may relate to (a) partial or total repudiation of

claims (b) any dispute regarding premium paid or payable in terms of the policy (c)

any disputes on the legal construction of the policy relating to claims (d) delay in

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settlement of claims (e) non- issue of any insurance document to customers after

receipt of premium.

• The Ombudsman shall act as counsel and mediator in matter within its terms of

reference. It is not a judicial authority. It has no right to summon witnesses. It has to

make its decision on the basis of document submitted to it. The complaints and the

insurer are allowed to make personal submission. But lawyers are not permitted to

argue the case.

• Complaints to the Ombudsman lie only when the insurer had rejected the complaint

or no reply was received within one month of the complaint or the reply was not

satisfactory. A complaint can be made within one year after the insurer had

rejected the representation. The subject matter should not be already before any

court or consumers’ forum or arbitration.

• The Ombudsman is expected to make a recommendation with in one month from

the date of receipt of complaint. If the complaint accepts this recommendation, the

insurer had to comply within 15 days and inform the Ombudsman accordingly. If

the complaints dose not accept the Ombudsman’s recommendation, the

Ombudsman shall pass an award an in writing, starting the amount awarded which

shall not be in excess of what is necessary to cover the loss suffered by the

complaint as a direct consequence of the insured peril or for an amount notexceeding Rs20, 00,000, whichever is lower. The award has to be passed within 3

month. the complaint has to intimate his acceptance of the award within one month

by a letter of acceptance to the insurer and the insurer has to comply within 15

days and inform the Ombudsman. If the complaint dose nit intimate acceptance,

the award cannot be implemented.

GOVT. ROLE:

Govt. keen to reduce the dependency on the state via private pension provisions.

They have a choice between using compulsion and incentives. Most of the govt.

chooses the later method. Tax relief is guaranteed in the pension plants and is

extremely generous, reflecting the value that the govt. and the society and large place

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on the provision of retirement benefits. Tax treatments of the benefit vary by country

and by benefits.

In India, the proceeds of gratuity and provident fund are tax free in the hand of

the members. In UK, a certain amount of the proceeds can be taken as tax lump sum

and reminder as taxable income. Benefits due on withdrawal from schemes are

generally taxed unless they are transferred to another scheme or approved pension

plan.

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Insurance industry in india

Brief History

The insurance sector in India dates back to 1818, when Oriental Life Insurance

Company like Bombay life Assurance Company, in 1823 and Tritons Insurance

Company, for General Insurance, in 1850 were incorporated. Insurance ACT was

passed in 1928 but it was subsequently reviewed and comprehensive legislation was

enacted in 1938.

The nationalization of life insurance business took place in 1956 when 245 Indian and

Foreign insurance societies were first merged and then nationalized. It paved the way

towards the establishment of life insurance Corporation (LIC) and since then it has

enjoyed a monopoly over the life insurance business in India. General Insurancebusiness. Subsequently in 1973, non-life insurance business was nationalized and

the General Insurance Business (Nationalization) ACT, 1972 was promulgated.

The General Insurance Corporation (GIC) in its present form was incorporated in 1972

and maintains a very strong hold over the non-life insurance business in India. Due to

concerns of relatively low spread of insurance in the country.

The efficient and quality functioning of the Public Sector Insurance Companies.

The untapped potential for mobilizing long-term contractual savings funds for

infrastructure.

The (Congress) government set up Insurance set u an Insurance Reforms committee in

April 1993. The committee submitted its report in January 1994, recommended a

phased program of liberalization, and called for private sector entry and restructuring of

the LIC and GIC.

EVALUATION OF INSURANCE INDUSTRY IN INDIA:

Life Insurance in its modern form is a western concept. The Indian insurance

industry is as old as it is in other part of the world. Although life insurance business

has been taking shape for the last 300 years, it came to India with the arrival of

Europeans. First Life Insurance Company was established in 1818 as Oriental

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Insurance Company, mainly to provide for widows of Europeans. The companies that

follow mainly catered to Europeans and charged extra premium on Indian Lives. The

first insurance company insuring Indian Lives at standard rates was BOMBAY

MUTUAL LIFE INSURANCE COMPANY which was formed in 1870. This was also

the year when 1st Insurance act was passed by the British Parliament. The years

subsequent to the Swadeshi movement saw the emergence of several insurance

companies. At the end of the year 1955 there were 245 insurance companies. All the

insurance companies were nationalized in 1956 and brought under one umbrella- LIFE

INSURANCE CORPORATION OF INDIA (LIC) which enjoyed a monopoly of the Life

Insurance business until near the end of 2000. By enacting the IRDA act 1999,

the Govt of India effectively ended LIC’s monopoly and opened the doors for

private Insurance companies.

Indian Scenario:

Unfortunately the concept of insurance is not popular in our country .As per the latest

estimates, the total premium income generated by life and general insurance in India is

estimated at around a meager 1.95% of GDP. However India's share of world insurance

market has shown an increase of 10% from 0.31% in 2004-2005 to 0.34% in 2005-

2006

India's market share in the life insurance business showed a real growth of 11 % thereby

out performing the global average of 7.7% Non-life business grew by 3.1% against

global average of 0.20%. In India insurance spending per capita was among the lowest

in the world at $7.6 compared to $7 in the previous year. Amongst the emerging

economies, India is one of the least insured countries but the potential for further growth

is phenomenal, as a significant portion of its population is in services and the life

expectancy has also increased over the years.

Insurance Sector

The practice of insurance in the world is quite old infect. How ever, life insurance

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business, as it is known today, is a much later development. It evolved from the great

transformation in life, which began with the decline of the agrarian society in the western

countries in the 19th century.

Industrialization with its cities, factories, cash economy and an urban ‘saving’

class set the stage for life insurance as a large – scale national institution. It can truly be

that life insurance is a product of modern industry. Growth of life insurance Company in

any country will illustrate introduced modern life insurance business didn’t make much

headway. The business started taking its deeper roots only when in the late 19th

century ‘India’ insurance companies appeared on the scenes and started accepting

‘India’ lies freely on the same terms as European lives in India. The growth of India life

insurance business continued to remain restricted till the Swedish movement gathered

momentum. The business passed through the period of ups and downs with the political

and economic situation in the country.

Need for Association

With the rise in the number of Indian life insurance companies occasioned by the growth

in the national spirit as a result of the independent movement a need was felt by the

companies for an organization to assist them in solving the problems faced by them.

With a view to meeting this need and also to providing a representative body for

expression of a common viewpoint of Indian insurance before the government regarding

insurance legislation and Indian life Assurance offices association was established in

1928. The association played companies’ forum for expression of representative views

on insurance and taxation legislation and imparting insurance education.

Nationalization

Even during days of the freedom struggle there was occasional demand

for nationalization of life insurance industry. The demand naturally gathers mare

momentum after independence. Mismanagement had lead to liquidation of as many as

26



25 life insurance companies in the decade after independence. Another 25 insurance

companies had during the same period so frittered away their resources that their

business had to be transferred to other companies. All these cost financial losses and

consequent suffering to several policyholders who had entrusted their hard earned

saving to the care of the company management. This misuse of power, position and

privilege by these companies in the private sector was one of the most compelling

reasons that influenced the decision of the government of India to nationalize the life

insurance industry in 1956. The life insurance industry in India had to be geared up

for raising resources for execution national

programs. One of the objectives of the national plans was to build a pay welfare state. It

was therefore, essential that benefits of life insurance were made available to every

family in the country and that the business should be conducted with utmost economy

by the management acting in a spirit of trusteeship to enable maximization of the

people’s saving that could be analyzed through the life insurance into the

development programs.

Objectives of nationalization:

The decision of the Government of India to nationalize life insurance industry was

implemented by the passage of the life insurance Corporation Act, 1956, by

Parliament. The objectives of nationalization of life insurance industry that

emerged out of the discussion and speeches in the parliament in the time passage of

the act were:

Spread of message of life insurance as far and wide as possible reaching out beyond

the more advanced urban areas well into hitherto neglected areas.

•

Effective mobilization of the people’ssavings. Complete security to policyholders.

• Prompt and efficient services to the policyholders.

• Conducting of the business with the utmost economy and with the full

realization that the money. Belonged to the policyholders.

27



• Investment of funds in such a way as to secure maximum yield

consistent with safety of capital.

• Economic premium rates.

• Development of a dynamic and vigorous organization under a

management conducted in sprit of Trusteeship.

• Formulation of scheme of insurance to suit different section of the

community.

28



How big is the insurance market?

Insurance is a Rs.400 billion business in India, and together with banking services adds

about 7% to India's Gap. Gross premium collection is about 2% of Gap and has beengrowing by 15-20% per annum. India also has the highest number of life insurance

policies in force in the world, and total investible funds with the LIC are almost 8% of

GDP. Yet more than three-fourths of India's insurable population has no life insurance

or pension cover. Health insurance of any kind is negligible and other forms of non-life

insurance are much below international standards.

What is Human Life Value

(HLV)?

Human life value is:-

• Capitalized value of the net earnings

• Present value of the total income lost to the family in the event death.

These points will be more cleared with this example:-

• Suppose an individual earns Rs. 10000/month.

• The personal expense is Rs.2000/month

• Therefore the income provided to his family is Rs. 8000/month.

• The annual income provided to his family works out to Rs. 96000

• Now if he were not to earn it for them , the family would have to Rs.1600000 in a

bank so that they get Rs. 96000 yearly at 6% interest.(96000*100/6)

• Therefore the HLV of the person is Rs. 1600000.

Ps. Note that we have not taken into account the future income growth of the person.

Hence this is not the exact human life value but only a representation to give

the customer a fair idea of how it works.

29



What is a contract of insurance?

A contract of insurance is a contract of utmost good faith, technically known as

uberrima fides. The doctrine of disclosing all material facts is embodied in this important

principal that applies to all forms of insurance. The purpose, who is one of the parties to

the contract, is presumed to have means of knowledge that are not accessible to the

corporation who is the other party to the contract. Therefore, the purpose is bound to tell

the insurer everything affecting the judgment of the insurer. In all the contracts of

insurance the proposes is bound

to make full disclosure of all material facts and not merely, those which he thinks

material Misrepresentation non-disclosure or fraud in any document leading to the

acceptance of the risk automatically discharges the corporation from all liability under

the contract. Although Section 45 of the Insurance Act, 1938 provides that no policy can

be called in question after a period of two years from the date of its issue on the ground

that any statement in proposal or a related document was false or inaccurate (making

the policy indisputable), This provision is not applicable if the corporation can prove that

misrepresentation or non- disclosure was on a material fact and was fraudulently

made and that the policyholder knew at the time that statement he made was false. It is,

therefore, in the interest of the would be policyholder to disclose all the material facts to

the corporation to avoid any complication when the claim arises. It is equally obligatory

on an agent to see that the assured doesn't obtain the contract by means of untrue

representation or concealment in any respect. It is the duty that the agent owes both to

his client and to the corporation.

30



The Insurance Players…

– HDFC Standard Life Insurance Company Limited

– Birla Sun Life Insurance Company Limited

– TATA AIG Life Insurance Company Limited

– Max New York Life Insurance Company Limited

– Kotak Mahindra Old Mutual Life Insurance Limited

– SBI – Cardiff Life Insurance Company Limited

– ING Vysya Life Insurance Company Limited

– Bajaj Allianz Life Insurance Company Limited

– ICICI Prudential Life Insurance Company Limited

– MetLife Life Insurance Company Limited

– Aviva Life Insurance Company Limited

– Reliance Life Insurance Company Limited

– Sahara India Life Insurance Limited

_ Shriram Life Insurance Company Limited

31



THE FOLLOWING COMPANIES HAS THE REST OF THE MARKET

SHARE OF THE INSURANCE INDUSTRY.

NAME OF THE PLAYER (%) MARKET SHARE

LIC 82.3

ICICI PRUDENTIAL 5.63

BIRLA SUN LIFE 2.56

BAJA ALLIANZ 2.03

SBI LIFE 1.80

HDFC STANDARD 1.36

TATA AIG 1.29

MAX NEW YORK 0.90

AVIVA 0.79

OM KOTAK MAHINDRA 0.51

ING VYASA 0.37

AMP SANMAR 0.26

METLIFE 0.21

32



Sharesof theinsuranceindustry

0

10

20

30

40

50

60

70

80

90

1

LIC

ICICI

PRUDENTIAL

BIRLASUN

LIFE

BAJA

ALLIANZ

SBI LIFE

HDFC

STANDARD

TATAAIG

MAXNEW

YORK

AVIVA

OMKOTAK

MAHINDRA

INGVYASA

AMP

SANMAR

METLIFE

33



Types of Plan…..

Conventional

ULIP

Conventional:-

Conventional plans are those plans in which returns are known and are fixed. Example: -

Children’s Plan. In this plan the customer has knows how much return he will get after

maturity or any miss happening occurs. Here risk is low and returns are also low,

because it is not dependent on the market risk and is a rigid policy.

It is seen that people also invest less in such type of policies as returns are

less and there is a compulsion attached is of compulsory premium submission till the

policy matures.

Illustration: -

Premium for 10 yrs is 20000

20000+20000+20000+20000+20000+20000+20000+20000+20000+20000= 2lks

Return described was 2.5 timesSo the customer will get approx 5 lakhs after deducting all charges.

Insurance is always of the parent and beneficiary is the child. There are 2

types of loss that occurs on any type of miss happening i.e. emotional loss and monetary

loss company can’t full fill emotional loss but can help in monetary loss by giving the

2lks Rs. At the miss happening and will give the rest premium by its own and will give

the bonus at maturity again to the child.

ULIP

ULIP stands for UNIT LINK INSURANCE PLAN. As it is said higher risk higher

34



return

35



RESEARCH METHODOLOGY

MEANING OF RESEARCH METHODOLOGY

“A Research is a careful investigation or inquiry, especially through search for new facts

in any branch of knowledge. It is a systemized effort to gain more knowledge.”

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. We study the

various steps that are generally adopted by a researcher in studying his research problem

along with the logic behind them. It is necessary for the researcher to know not only the

research methods or techniques but also the methodology. Researcher always needs to

understand the assumptions underline various technique and they need to know the

criteria by which they can decide that certain technique and procedures will be applicable

to certain problems and other will not.

Research is an organized enquiry designed and carried out to provide information for

solving a problem.

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically.

36



OBJECTIVES OF RESEARCH

1. Research extends knowledge of human beings, social life and environment.

Scientists and researchers search answers for various types of questions: what,

where, when, how and why.

2. Research unravels the mysteries of nature, brings to light hidden information that

might never be discovered fully during the ordinary course of life.

3. Research verifies and tests existing facts and theory and these help improving our

knowledge and ability to handle situation and events.

4. Research aims to analyze inter-relationships between variables and to derive

causal explanations and thus enables us to have a better understanding of the

world in which we live.

5. Research also aims at developing new tools, concepts and theories for a better

study of unknown phenomena.

DATA COLLECTION

The task of data collection begins after a research problem has been defined.

While deciding about the method of data collection to be used for the study, the

researcher should keep in mind two types of data viz ,primary and secondary.

37



Primary data may be described as those data that have been observed and recorded

by the researchers for the first time to their knowledge.

Primary data can be classified into two types:

• Data classified by their nature.

• Data classified according to function.

Primary data can be collected through several methods. Some of the

important ones are:

1. Observation method

2. Interview method

3. Questionnaires

4. Schedules

5. Other methods

Secondary data are statistics not gathered for the immediate study at hand but for

some other purposes.

Secondary data can be classified into two types:

Internal data which include

• sales analysis.

• Investor annual report.

• Earlier research done in the company.

38



External data which include

• Encyclopedias.

• Text books.

• Magazines.

• Published research.

Other Source of data collection

• Index.

• Internet search engines.

39



TECHNIQUES USED IN THIS STUDY

1 Consultation and personal observation.

2 Collection classification, compilation, tabulation analysis and figure relevant to fund

performance of the company.

3 Analysis of funds of the various plans of the HDFC standard life insurance

company.

4 Taking the help of the various broachers.

SOURCES OF DATA

The analysis was based on following document and related Information.

1 The annual financial statements of the concern i.e. balance sheet, profit & loss

account, annual report.

2 The company publication includes booklets, templates, Broachers etc.

3 Secondary data from various mutual funds.

4 Getting the various documents on websites, books, newspapers etc.

5 Various documents relating to the performance of the fund.

6 Data published by the CRICIL (Credit Rating company).

40



OBJECTIVES OF THE STUDY

1. To study the performance of the fund of the HDFC standard life

insurance company in various ULIP plans.

2. To study the investment structure of HDFC standard life insurance

company in ULIP plans.

3. To study the return on the various funds of HDFC standard life insurance

company limited under the various plans.

4. To know the awareness of the customer about various plans and their

funds of HDFC SLI company.

LIMITATION OF THIS STUDY

1. There is general paucity of adequate database.

2. The study is totally based on secondary data because the primary data relating to this

topic is very difficult to get from the general public.

3. The secondary data are not sufficient for this study.

41





INTRODUCTION

Founded in 1977, HDFC is today the market leader in housing finance in India and has

extended financial assistance to more than 15 lacks homes. HDFC has more than 110

offices in India presently. It has also one international office in Dubai and 3 more

services associate in Kuwait, Qatar and sultanate of OMAN. HDFC’s assets base

amount to over 15,000 crore. Its financial strength is reflected in highest safety rating of

‘FAAA’ and ‘MAAA’ awarded by CRISIL and ICRA – two of India’s leading credit rating

agency respectively, for the last 6 year consecutively. It has a depositor base of

over 11 lacks customer and a deposit agents force of over 46,000 of the total deposit,

73% are sourced from individual and trust depositors, which demonstrates the

tremendous confidence that retail investors have in the company.

HDFC- promoted companies have emerged to meet the investors and

customers needs. HDFC bank for commercial banking, HDFC Mutual Fund for mutual

fund products, to be followed very shortly by HDFC Standard Life Insurance Company for

the life insurance and pension products. Being an institution that is strongly committed to

the highest standards of quality and excellence, HDFC has won several accolades in the

past few years. One such award is the “ Ramakrishnan Bajaj National Quality Award “ for

the year 1999. this award was instituted to award recognition to Indian companies for

business excellence and quality achievement. HDFC is the only company so far to

receive this award in the service category.

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life

insurance companies, which offers a range of individual and group insurance solutions.

It is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard

Life plc, leading providers of financial services in the United Kingdom. Both the

promoters are well known for their ethical dealings and financial strength and are thus

committed to being a long-term player in the life insurance industry – all-important

factors to consider when choosing your insurer.

43



STANDARD LIFE:

The Standard Life Assurance Company ("Standard Life") was established in 1825 and the

first Standard Life Assurance Company Act was passed by Parliament in 1832. Standard

Life was reincorporated as a mutual assurance company in 1925.

Standard Life is Europe's largest mutual life assurance company. Standard Life,

which has been in the life insurance business for the past 182 years, is a modern

company surviving quite a few changes since selling its first policy in 1825. The company

expanded in the 19th century from its original Edinburgh premises, opening offices in

other towns and acquiring other similar businesses.

Standard Life currently has assets exceeding over £70 billion under itsmanagement and has the distinction of being accorded "AAA" rating consequently for the

past six years by Standard & Poor.

Banking, Healthcare & Investments -

The group set up Standard Life Bank, its UK mortgage and retail savings banking

subsidiary, in 1998 and Standard Life Investments, which had previously been the in-

house investment management unit of the group’s life assurance and pensions business,

was separated into a distinct legal entity in the same year, with the aim of establishing it

as an independent investment management business providing services to both the group

and third party retail and institutional clients. The group acquired Prime Health Limited

(subsequently renamed Standard Life Healthcare) in the United Kingdom in 2000.

Standard Life Healthcare expanded in March 2006 with the acquisition of the PMI

business of First Assist. Standard Life Asia Limited/Joint ventures -

The group’s Hong Kong subsidiary, Standard Life Asia Limited (“SL Asia”), wasincorporated in 1999 as a joint venture and became a wholly-owned subsidiary of

Standard Life in 2002. The group’s operations in Hong Kong were established to give the

group a presence in the Far East from which it could expand into China. The group’s joint

ventures in India with Housing Development Finance Corporation Limited (“HDFC”) were

incorporated in 2000 (in relation to the life assurance and pensions joint venture) and

44



2003 (in relation to the investment management joint venture). The group’s joint venture in

China with Tianjin Economic Development Area General Company (“TEDA”) became

operational in 2003. Standard Life international Limited - The group also incorporated

Standard Life International Limited (“SLIL”) in 2005 for the purposes of providing the

group with an offshore vehicle, based in Ireland, through which it could sell tax-efficient

investment products into the United Kingdom. Sales of these products commenced in

2006.

Service company

Following the group’s strategic review in 2004, the group established a service company

structure for the provision of central corporate services to the group’s business units.

Standard Life Employee Services Limited (“SLESL”) supplies a wide range of central

services to the rest of the group, including IT, facilities, legal and human resources

services, and employs staff working in the group’s UK and Irish operations (other than

SLI, SLB and SLH,which employ their staff directly). This service company structure was

created to enable Standard Life to comply with regulatory restrictions on the provision of

non-insurance services and to exploit group-wide synergies.

STANDARD LIFE ASIA LIMITED/JOINT VENTURES:

The group’s Hong Kong subsidiary, Standard Life Asia Limited (“SL Asia”), was

incorporated in 1999 as a joint venture and became a wholly-owned subsidiary of

Standard Life in 2002. The group’s operations in Hong Kong were established to give the

group a presence in the Far East from which it could expand into China. The group’s joint

ventures in India with Housing Development Finance Corporation Limited (“HDFC”) were

incorporated in 2000 (in relation to the life assurance and pension’s joint venture) and

2003 (in relation to the investment management joint venture). The group’s joint venture in

China with Tianjin Economic Development Area General Company (“TEDA”) became

operational in 2003.

Demutualization of Standard Life

45



On 31 May 2006, Standard Life's voting members voted in favor of the Special

Resolution for the demutualization of The Standard Life Assurance Company and the

flotation of Standard Life plc on the London Stock Exchange.

STANDARD LIFE GROUP:

• The Standard Life group has been looking after the financial needs of customers

for over 182 years

• It currently has a customer base of around 7 million people who rely on the

company for their insurance, pension, investment, banking and health-care needs

• Its investment manager currently administers £125 billion in assets

• It is a leading pensions provider in the UK, and is rated by Standard & Poor's as

'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's

• Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at

the Money Marketing Awards, and

• It was voted a 5 star life and pension’s provider at the Financial Adviser Service

Awards for the last 10 years running.

• The '5 Star' accolade has also been awarded to Standard Life Investments for the

last 10 years, and to Standard Life Bank since its inception in 1998.

• Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the

Mortgage Magazine Awards in 2006.

INCORPORATION OF HDFC STANDARD LIFE INSURANCE CO. LTD.:

The company was incorporated on 14th August 2000 under the name of HDFC

Standard Life Insurance Company Limited.

Their ambition from the beginning was to be the first private company to re-enter

the life insurance market in India. On the 23rd of October 2000, this ambition was realized

when HDFC Standard Life was the first life company to be granted a certificate of

registration.

46



HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while

Standard Life owns 18.6%. Given Standard Life's existing investment in the HDFC Group,

this is the maximum investment allowed under current regulations.

HDFC and Standard Life have a long and close relationship built upon shared

values and trust. The ambition of HDFC Standard Life is to mirror the success of the

parent companies and be the yardstick by which all other insurance companies in India

are measured.

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life

insurance companies, which offers a range of individual and group insurance solutions. It

is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard

Life plc, leading providers of financial services in the United Kingdom.

Both the promoters are well known for their ethical dealings and financial strength

and are thus committed to being a long-term player in the life insurance industry.

HDFC Standard Life Insurance Co. Ltd was incorporated on 14th august 2000. It is a

joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.)

India and UK based Standard Life Company. Both the joint venture partners being one

of the leaders in their respective areas came together in this 81.4:18.6 joint venture to

form HDFC Standard Life Insurance Company Limited.

The MD and CEO of HDFC Standard Life Mr. Deepak Satwalekar, has given the

company new directions and has helped the company achieve the status it currently

enjoys. HDFC Standard Life brings to you a whole range of insurance solutions be it

group or individual or NAV services for corporations, they can be easily customized as

per specific needs.

47



The Banc assurance partners of HDFC Standard Life Insurance Co Ltd are HDFC,

HDFC Bank India Limited, Union Bank of India, Indian Bank, Bank of Baroda, Saraswat

Bank and Bajaj Capital.

48



Why HDFC standard life

There are many reasons why people should choose HDFC Standard Life

Insurance Company Ltd. as their partner in meeting their insurance need:

a) Innovative products to meet customer’s needs.

b) Efficient customer service team.

c) Good financial track record of both parents – HDFC & Standard Life.

d) Certified Financial Consultants to advice prospective customers.

e) Professional approach in managing customer’s investments.

f) Income Tax benefits for their insurance products.

g) Innovative products to meet customer’s needs.

h) Efficient customer service team.

i) Good financial track record of both parents – HDFC & Standard Life.

j) Certified Financial Consultants to advice prospective customers.

k) Professional approach in managing customer’s investments.

49



VISION

“The most successful and admired life insurance company, which means that we are

the most trusted company, the easiest to deal with, offer the best value for money, and

set the standards in the industry. In short, “The most obvious choice for all”.

MISSION

We aim to be the top new life insurance company in the market. This doe’s not just

mean being the largest or the most productive company in the market; rather it is a

combination of several things like-

Customer service of the highest order Value for

money or customers Professionalism in carrying

out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

VALUE

INTIGRITY

What is it?

• Honest and Truthful in every action.

• Transpare

ncy

• Stick to principles irrespective of outcome.

• Be just and fair to everyone.

Why?

• Integrity is the bedrock on which the company and the expectations of the

customers and employees are built.

• Integrity establishes the credibility of the person, defines the character

50



and empowers one to do justice to the job.

51



• Enables building confidence and trust, achieving transparency and laying

a strong foundation for a binding relationship.

• Guiding principle for all walks of life.

INNOVATION

What is it?

• Building a store house of treasures through experiences.

• Looking at every product and process through fresh eyes

everyday.

Why?

• To exceed customer expectation and maximise customer retention.

• To achieve competitive advantage.

• To promote growth and upgrade standards in the industry.

• To foster creativity amongst employees and partners

• To open a world of new possibilities.

CUSTOMER

CENTRIC

What is it?

• Understand his expectations by keeping him as the centre - point

• Listen

actively

• Understand customer needs and deliver solutions.

• Customer interest always supreme.

Why?

• Reinforce brand loyalty by complete transparency.

• Customer is the source of revenue for the company.

• Customer is the reason for our existence.

52



• Ensure that customer chooses our company to do business with.

• Customers’ goodwill alone can bring more business and more

customers.

• Will contribute to customer retention.

PEOPLE CARE

What is it?

• Genuinely understanding the people we work with.

• Guiding their development through training and support

• Helping them develop requisite skills to reach their true potential.

• Know them on a personal front.

• Create an environment of trust and openness.

• Respect for the time of others.

Why?

• People are the most valuable assets of the company.

• Motivate individual to give his / her best.

• Establish a valuable relationship with them to create a joyful working

environment .

• Job

satisfaction

TEAM WORK “One for all and all for one”

What is it?

• Whole team takes the ownership of the deliverables

• Consult all involved , understand and arrive at a common objective

• Co-operate and support across departmental boundaries

• Identify strengths and weaknesses accordingly allocate responsibility to

achieve common objectives.

Why?

• Together Everyone Achieves More :- TEAM

53



• It adds joy at work place

• Team work generates synergy and provides a focussed approach.

• An idea or activity performed in a group has greater acceptability

•

“One for all and all for one”

JOY AND SIMPLICITY

54



PRODUCT PORTFOLIO

HDFC offers products as per the life stages of the customers and their respective needs .

Your insurance need will change as your life does, from starting to work to enjoying

your golden years and all the stages in between. Each one of these stages may pose a

different insurance need/cover for you. In this section, we have drawn up the basic life

stages and help you analyze various insurance needs accordingly.

55



LIFE STAGES & NEEDS IN HAT STAGES

STAGE 1: YOUNG & SINGLE

An important stage where one lays down the foundation of a successful life ahead.

Take advantage of the time and power of compounding to ensure that you build up your

dreams. Start saving early.

NEEDS:

Save for Home & Wedding

Tax Planning

Save for Golden Years

STAGE 2: JUST MARRIED

Marriage brings about a significant change. New dreams and new opportunities

also bring in additional responsibilities. While both of you look forward to a happy and

secure life, it is equally important to ensure that eventualities don’t come in the way of

shaping your dreams.

NEEDS:

Planning for home / securing your home loan liability.

Save for vacation.

56



Save for your first child.

STAGE 3: PROUD PARENTS

Once you have children, your need for life insurance is even more. You need to

protect your family from an untoward incident. Ensure your protection umbrella takes into

account the future cost of securing your child’s dream. You will want life to go on for your

loved ones, and having enough life insurance is a way to help ensure that.

NEEDS:

Provide for children's education

Safeguarding family against loan liabilities

Savings for post-retirement

STAGE 4: PLANNING FOR RETIREMENT

While you are busy climbing the ladder of success today, it is important

for you to take time and plan for your life after retirement. Having an early start for

retirement planning can make a significant difference to your savings. Think about your

golden years even before you have reached them. The key is to think ahead and plan well

using your time and money.

NEEDS –

57



Provide for regular income post retirement

Immediate Tax benefits

Lead a secure, independent and comfortable life style in your retirement years.

IN T RODUCT I ON T O U NIT L INKED P RODUCTS

What is Unit Linking?

UNIT-LINKED POLICIES ARE UNBUNDLED

Unbundling means the separate identification of the constituent parts of the insurance

policy. That is the investment element, expense and administration charges, and benefit

charges (e.g. mortality charge), as well as the benefits themselves, are clearly identified tothe client.

Until the 1960s , most life insurance policies was conventional policies, whereby the client

was not aware of what portion of the premium covered expenses of benefits, nor indeed,

of now investment returns were allocated to the policy. The first step to unbundling was to

identity the investment element separately from the other elements of the product.

Because this was explained to the client and formed a legal part of the policy, it was the

real start of unbundling. Some more years passed before the level of unbundling that

HDFC Standard Life see today was achieved.

As time went on in the 1960s and 1970s, the other major parts of life insurance policies

(mortality and expenses) also became unbundled. Product designers did this by

setting out the way that expense and mortality costs would affect the policy.

Unbundled products are also said to be transparent because the client can see the

progress of the policy. This is aided by an annual report on the status and performance of

the policy, including explicit reporting of charges taken from, and investment returns

allocated to, the policy.

In practice, however, the details of unbundled policies are quite complicated and whether

transparency is achieved from the client’s point of view depends primarily on the

clarity of the communication from the insurer and the extent to which the client is

58



interested in such detail.

59



UNIT LINK POLICY MAKE USE OF UNIT LINK FUNDS

In the UK, unbundled policies are generally referred to as being unit-linked because the

investment element of the policy is housed in funds that are divided into units of equalvalue.

A unit-linked policy is one whose underlying investments are identifiable and determine its

cash values.

It is important to recognize that the assets of the funds may not be shares –they may be

fixed-interest securities, money market instruments, property, derivative instruments, as

well as shares. Indeed, the assets of a particular fund may consist of a mixture of these

asset types. The client normally has a choice of funds having different characteristics to

which premiums can be allocated. Capital by reducing new-business strain.

THE UNDERLYING FUNDS THE UNITS

At HDFC Standard Life, the client has a choice of funds in which to invest.

Our unit linked funds have different investment objectives and give the customer the

opportunity to be exposed to different types of assets.

As a result, the customer can choose his fund according to his own attitude to risk and

desire of investment return.

UNIT-LINKED POLICIES ARE LINKED

Linking implies matching. The value of the policy is linked to the value of the net

assets (assets less liabilities) of the fund. The investment risk and rewardare

therefore transferred from the insurer to the client. This is the real distinguishing feature of

unit linking. Of course, the policy might offer some investment guarantees but in many

60



countries this is now the exception rather than the rule.

61



Our unit linked funds have different investment objectives and give the customer the

opportunity to be exposed to different types of assets.As a result , the customer can choose

his fund according to his own attitdew to risk and desire of investment return.

BENEFITS OF UNIT LINKED PLANS

To the client

- Flexibility of premium, sum assured and benefit

- Transparency

- Control over investment strategy

- Control over the degree of investment risk

To the insurer

- Product demanded by the market

- Retention of existing client and attracting new client

Unit-Linked Policies Have Explicit Charges:

With all insurance products we allow for the expenses, the cost of benefits incurred and a

profit margin to the company.

In HDFC standard life’s unit-linked policies the customer sees the charges being

deducted explicitly from their policy in respect to these expenses.

Some of these charges are charges deducted from the premium and some are deducted

from the fund.

62



The charges on a unit linked plan of HDFC Standard Life:

The charges under this policy are deducted to provide for the benefits and the

administration provided by HDFC standard life charges when taken together, are

among the lowest in the industry and are structured to the give the better returns over

the long term.

Investment Content Charge: This is a premium based charge. After deducting this

charge from the premiums, the remainder is invested to buy units. The following

table shows how much is used to buy units.

This percentage is called the investment content Rate.

INVESTMENTCONTENT RATE (ICR)

1st & 2nd years 3rd year

Regular

Premiums

Up to 200000 73.00% 99.00%

From 200000 to

50000080.00% 99.00%

From 500000 to

100000085.00% 99.00%

Above 1000000 90.00% 99.00%

Additional single premiums 97.50% 99.00%

Other Charges ExplanationReduced ICR A reduced percentage of the policy holder’s premium is

added to the fund.

These charges are intended to cover the marketing

distribution (including commission) and some other

administrative costs relating to the policy.

63



Fund Management

Charge (FMC)

Deducted as a percentage of the customer’s fund on a daily

basis.

These are intended to cover the ongoing costs of managing

the investments of the policy.

The daily unit price already includes a low fund management

charge of 1.25 % per annum of the fund’s value.

In the long term, the key to building reat maturity valuesis low FMC.

Administration

Charges

A charge of Rs. 60 per month is charges to cover regular

administration costs.

HDFC SL make the charge by canceling units in each of the

funds customer have chosen, in the proportion customer have

chosen.

Policy Fee A fixed monetary deduction done from the customer’s fund

on a monthly basis.

This charge is taken to cover the ongoing costs of

administration of the policy and for any renewal commissions.

Risk Charges Deducted from the customer’s fund on a monthly basis.to

cover the cost of lie cover critical illness and accidental death

depending on the option the customer has chosen. Every

month HDFC SL customers make a charge or providing

customer with the death or f critical illness customer with the

death or critical illness cover they have selected. The amount

of charges taken each month depend on customer age.

64



Miscellaneous

However you may come across other charges, which are used by other companies

else where in the market. Here are few examples:

Surrender Charges

Are applied when a policy is surrendered.

They are used to recover costs and lost profits.

On cancellation or surrender of the policy before 3 years of regular

premiums have been paid.

The company will make a charge of 25% of the outstanding premiums due

for the remainder of this 3 year period.

Switch or Redirection Charges

These cover the additional administration costs associated with switching

investments between funds and redirecting premiums. Companies also

sometimes use them to discourage excessively frequent switches are premium

redirections.

Premium alterations include stopping and restarting the regular premium after

3 years.

The Co. HDFC SL does not charge for any of these options currently.

The HDFC SL reserves the right to introduce such charges after approval fromthe IRDA

WHY BUY A UNIT LINKED PLAN

A unit – linked plan offers the benefits of market – linked returns. It give flexibility in

o Premium paying g

o Withdrawals

o Protective elements.

65



66



DESIGN OF AN UNIT LINKED PLAN

The product specification would include (where relevant):

CLASS OF PRODUCT

The technical class of product – e.g. whole, endowment, pension. Versions available –

single life, joint life (first death, last survivor), and business.

Premium options – single, regular, flexible. Allowable insurance benefit add-ons.

INVESTMENTS

Fund links available and investment objectives of each fund. Investment

guarantees (or lack of investment guarantees) Methods and frequency of unitpricing. The investment accounting and management system to be used.

MARKETING AND DISTRIBUTION

The distribution channels through which the product is available. Variations of

product design by distribution channels, if any.

The initial and renewal commission payable rules Capabilities of illustration

system to be used. Marketing material to be available, Training and qualification

standards of anti linked insurance intermediaries.

ADMINISTRATION

Business processing rules – new and ongoing business. Policy and endorsement

wordings.Cash processing rules – allocation of cast to policies, late processing

rules.Permitted policy changes (by the insurer and by the client) Availability of

loans and / or partial withdrawals and the rules for administering them Non-

forfeiture provisions.

67



PRICING

This means the level and type of charges that the insurer can take under the

policy. The types of charge, which can be levied, are initial charges, surrender

charges, renewal charges, fund management charges, and switch or

redirection charges. In addition, charges are taken for add-on benefits if the

premium for such benefits is not included in the total premium payable.

INITIAL CHARGES

Initial charges are intended to cover the marketing, distribution and other new

business costs relating to the policy. There are many different variations of initial

charges, but essentially, whatever method is used; the effect is that less money is

actually allocated to the policy than is received from the client for a period of time.

Some possible way of doing this are:

Allocate no money to the policy for a period of months.

Allocate only a proportion of each premium to the policy for a period of months.

Allocate money received in the early months of a policy to units that have a higher fund

management charge than these purchases by later premiums.

In the event of the policy being surrendered, the future excess fund management

charges, in excess of the regular charges that would have been levied on these units,

are levied at the point of surrender. As such, the excess fund management charges will

be received regardless of whether the policy runs its full term or not, and only the

amount of money required to purchase the units net of the excess fund management

charges needs to be allocated to the policy.

ADD-ON BENEFITS CHARGES

These are usually calculated using a current cost method (unless the premium for add-

on benefits is included in the total premium). This means that risk premium rate are

applied each month the sum at risk under each benefit. Any charge over and above

68



the pure risk premium charge will help offset expenses.

CHOOSING A CHARGING STRUCTURE

The pattern of expenses incurred for a life insurance policy will always be high

acquisition costs followed by much lower but steadily increasing renewal costs. There

will also usually be a high initial commission followed by a much lower renewal

commission. Ideally, therefore, the charging structure should match this incidence of

expenses with a high initial charge followed by a much lower level of renewal charges.

For marketing reasons, this may be unacceptable and the insurer may have to either

recoup initial expenses over a period of time by taking charges that (Significantly)

exceed there renewal expenses or disguise the high initial charges. It was this latter

approach that gave rise to the concept of initial units (units that have a high fundmanagement charge.

The alternative approach of taking higher renewal charges makes the insurer

vulnerable to early lapses, particularly if no surrender penalty is applied. Taking

charges more evenly can be accomplished in a variety of ways, but the main ones

are:

A high bid/offer spread.

An allocation rate of (significantly) less than 100%. This may be increased after a

period of years to 100% or more and can be marketed as a loyalty bonus.

An investment fee (often expressed as a percentage of the premium)

This is effectively an additional bid/offer spread.

A high fund management fee on all units. This could be reduced after a period

of years (for example by allocating bonus units) to bring the fund management

charge into line with the market more. These can be used either in isolation or in

combination.

69



Types of Unit linked plan

There are many unit linked plan of HDFC standard life insurance company.

1. Unit Linked Young Star Plus II

2. Unit Linked Pension II

3. Unit Linked Endowment II

4. Unit linked enhanced life protection

5. children plan

6. Money back plan

7. Single premium whole of life plan

8. Saving assurance plan

But in this project I have discuss only three plans because these three plans have themaximum share in the total business of the HDFC Standard life insurance company

limited. These plans are as follows:

1. Unit Linked Young Star Plus II



70



1. Unit linked Young Star Plus II

As a parent, your priority is your children’s future and being able to meet their dreams andaspiration. Today, we need more money for providing a good education, establishing a

professional career or even a modest wedding because these are expensive. Costs are

increasing fast. Just imagine how much we need when our children take these important

steps in life when institute like IIM is increasing their fees for education by leaps and

bound.

This plan ensures us a bright future for your children. It makes your child able to

lead a life of respect and dignity with a secured financial future.

Benefits of this plan

The HDFC unit linked Young star Plus II gives us:

• Valuable protection to your child in case you are not around.

• An outstanding investment opportunity by providing a choice of thoroughly

researched and selected investments.

• Regular loyalty units to boost your fund value every year.

• Flexible benefit combinations and premium payment options.

• Flexible additional benefit options such as critical illness cover.

• Flexible benefit payment preferences- Double and Triple Benefit.

Three steps to own your plan

Step1: CHOOSE YOUR REGULAR PREMIUM

IN this policy you will continue to pay each year of the policy. You can pay monthly, half-

yearly or annually. The minimum regular premium is Rs. 12,000 per year for annual and

71



half yearly policies. For monthly mode, the minimum regular premium is Rs 1500 per

month.

Step2: CHOOSE YOUR LEVEL OF PROTECTION

we can choose any amount of sum Assured with, a minimum of 5 times your chosen

annul regular premium and a maximum of 40 times your chosen annul regular premium.

Step3: CHOOSE ADITIONAL PLAN BENEFIT

It offers a range of valuable protection options to secure the future for whole family.

Benefit

Types

Benefit payment

Preference

Summary of the

benefits

Death

Benefit

Double

Benefit

1.It will pay the sum assured to the beneficiary.

2. Our family need not pay any further premiums. it will

pay 100% of all the future regular premiums at the

original level towards the beneficiary policy as and when

due, on an annual basis.

3. Any Critical illness cover terminates immediately.

Triple

1. It will pay the Sum Assured to the beneficiary.

2. Our family need not pay any further premiums. it will

pay 50% of all the future premiums at the original level

towards our policy and 50% of the premiums will be paid

72



Benefit to the beneficiary as and when due, on an annual basis.

3. Any critical illness cover terminates immediately.

Critical

Illness

Benefit

Double

Benefit

1. We will pay the sum Assured to the beneficiary.

2. our family need not pay any further premiums. It will

pay 100% of all the future regular premiums at the

original level towards your policy as and when due, on an

annual basis.

3. The death benefit cover terminates immediately.

Triple

Benefit

1. it will pay the sum assured to the beneficiary.

2. our family need not pay any further premiums it will

pay 50% of all the future premiums at the original level

towards your policy as and when due, on an annual

basis.

3. The death benefit cover terminates immediately.

Step4: CHOOSE YOUR INVESTMENT FUNDS

The most significant part of the Unit Linked Plan is that investor can choose the mode of

investment. In this plan the investment risk in your chosen investment portfolio is borne by

the investor. This means that the premiums you pay in this plan are subject to investment

risks associated with the capital markets. The unit prices of the funds may go up or down,

reflecting changes in the capital markets.

So to balance investors level of risk and return, making the right investment choiceis very important and you are responsible for the choices you make.

It has 7 funds that give investor:-

a) The potential for higher but more variable returns over the term of your policy; or

73



b) The more stable returns with lower long-term potential.

Your investment will buy units in any of the following 7 funds designed to meet your risk

appetite.

Table of funds are given below:-

Fund

Asset Class Risk &

Return RatingMoney

market++

Bank

Deposit++

Govt.

securities

Equity

Fund Composition

Liquid Fund 100% - Low

Stable Managed

Fund

0-30% 70-100% - Low

Secure Managed

Fund

0-5% 0-20% 75-100% - Low-

Moderate

Defensive Managed

Fund

0-5% 0-15% 50-85% 15%-30% Moderate

Balanced Managed

Fund

0-5% 0-15% 20-70% 30%-60% High

Equity Managed Fund 0-5% 0-10% 0-40% 60%-100% Very high

Growth Fund 0-5% - - 95%-100% Very high

+ note on the funds shows will manage the investment in each fund so that the proportion

of each Asset class is always with the ranges. + + shows Money market instruments. It

include liquid Mutual Funds, commercial papers, commercial bills, treasury bills,

government securities having an unexpired maturity up to one year. Bank deposits means

deposits issued by any primary dealer or non Banking and banking financial company

approved by the reserve by the reserve bank of India or any other public Financial

74



institutions or by Housing Finance Companies approved by the National Housing Bank.

The past performance of any of the funds

is not necessarily an indication of future performance. Unit prices can go up and down. No

fund offers an assured return. The names of the fund it offer under this plan do not, in any

way, indicate the quality of the plan, its future prospects or returns.

ELIGLBILTY

The age and term limit for taking out a HDFC unit linked young star plus II are as show

below:

BENEFIT OPTION

TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) MAXIMUM AGE

AT MATURITY

(Yrs.)

Minimum Maximum Minimum Maximum

Life option 10 25 18 65 75

Life and health option 10 25 18 55 65

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

PRIMIUM PAID DURING YEAR (Rs.) /

PRIMIUM FREQUENCY

ALLOCATION RATE

YEARLY HALF YEARLY MONTHLY

Single premium top up (s) -Year 1 97.50% 97.50% 97.50%

75



Single premium top up (s) -Year 2+ 98.00% 98.00% 98.00%


The masses of Unit linked Pension is live a life of dignity and self respect. Today we are

busy climbing the ladder of success and realizing your dreams. Today, time is with you.

Just take a moment and think. It will make you able to continue at the same pace.

The HDFC Unit Linked Pension is an insurance policy that is designed to provide a

retirement income for life with the freedom to maximize your investment returns. Stride

into your golden years of retirement with dignity and pride.

Benefits of this plan

The HDFC unit linked pension gives you

• An outstanding investment opportunity by providing a choice of thoroughly

researched and selected investments.

• It gives a post retirement income for life

• Flexibility to plan your retirement date and

• Freedom to invest premiums as per your preference

Steps regarding this Plan

Step1: CHOOSE YOUR RETIREMENT AGE

You can select any age you wish to retire at vesting age, between 50 years and 75 years.

Step2: CHOOSE YOUR PREMIUM YOU WISH TO INVEST, BASED ON YOUR

RETIREMENT NEED

76



You can choose either a single premium policy or a regular premium policy

For a regular premium policy, you continue to pay your chosen premium each year of the

policy. The minimum regular premium is Rs.10,000 per year. You can pay monthly (using

standing instructions or ecs Mandate), quarterly, half yearly or annually.

The minimum premium for a single premium policy is Rs.25,000. you may choose

to pay a hoc single premium top-up or additional regular premiums depending on the

policy type you have chosen and your convenience.

Step3: CHOOSE YOURT INVESTMENT STRATEGY






So to balance investor’s level of risk and return, making the right investment choice

is very important and you are responsible for the choices you make.





appetite.

77




78



Fund

Asset Class Risk &

Return RatingMoney

market++

Bank

Deposit++

Govt.

securities

Equity

Fund Composition


Stable Managed

Fund

0-30% 70-100% - Low

Secure Managed

Fund

0-5% 0-20% 75-100% - Low-

Moderate

Defensive Managed

Fund

0-5% 0-15% 50-85% 15%-30% Moderate

Balanced Managed

Fund

0-5% 0-15% 20-70% 30%-60% High



.

ELIGIBILITY

The age and term limit for taking out the HDFC unit linked pension II are as below:

TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) AGE AT VESTING (Yrs.)Minimum Maximum Minimum Maximum Minimum Maximum

10 40 18 65 50 75

Premium allocation charges

79



This is the premium based charge. After deducting this charge from your premium, the

remainder is invested to buy unit. The allocations are guaranteed for the entire duration of

the policy term.

PRIMIUM PAID DURING YEAR (Rs.) /

PRIMIUM FREQUENCY

PREMIUM ALLOCATION RATE

YEARLY HALF YEARLY MONTHLY

Annualized regular premium -Year 1

12,000 to 4,99,999 60% 60% 60%

5,00,000 to 10,00,000 80% 80% 80%

Annualized regular premium -Year 2 85% 80% 80%

Annualized regular premium -Year 3+ 98% 98% 98%



SINGLE PREMIOUM TOP-UP (s) ALLOCATION RATE

Paid during -Year 1 97.50%

Paid during -Year 2+ 98.00%


It’s massage is to invest in financial security and self respect for your and your family in

this policy, the investment risk in investment portfolio is borne by the policy holder.

80



Benefits of this product

The HDFC unit linked endowment plus II gives

• A valuable protection to your family in case you are not around.

• An outstanding investment opportunity by providing a choice of the thoroughly

Researched and selected investment.

• Flexible additional benefit options such as critical illness cover.

•

Flexibility benefits combination and premium payment option.

Simple steps for this product

Step1: CHOOSE YOUR REGULAR PREMIUM

This is the premium you will continue to pay each year of the policy. You can pay monthly,

half-yearly or annually. The minimum regular premium is Rs 12,000 per year for annual

and half yearly policies. For monthly mode, the minimum regular premium is Rs.1,500 per

month.

You may also choose to pay although single premium or additional regular

premiums depending on your convenience.

Step2: CHOOSE YOUR LEVEL OF PROTECTION

You can choose any amount of sum Assured with:

• A minimum of 5 times your chosen annual regular premium.81



• A maximum of 40 times your chosen annual regular premium.

Step3: CHOOSE ADITION PLAN BENEFIT

It offer a range of valuable protection options to secure the future for your family

Life option - Death Benefit

Extra Life option - death benefit + accidental Death benefit

Life and health option - Death benefit + critical illness benefit

Extra life and health option - Death benefit + critical illness benefit + Accidental

Death benefit.

Benefit types Summary

Death Benefit

We will pay the greater of your sum assured (less any

withdrawals you have made in the two year before your

claim) and your total fund value to your family.

The policy will terminate.

Critical illness benefit

We will pay the greater of your sum assured (less any

withdrawals you have made in the two year before your

claim) and your total fund value to your family.


Accidental Death Benefit.

In addition to the death benefit, we will pay a further

sum assured to your family.


82



Step4: CHOOSE YOUR INVESTMENT FUNDS






So to balance investors level of risk and return, making the right investment choice

is very important and you are responsible for the choices you make.





appetite.


83



Fund

Asset Class Risk &

Return RatingMoney

market++

Bank

Deposit++

Govt.

securities

Equity

Fund Composition


Stable Managed

Fund

0-30% 70-100% - Low

Secure Managed

Fund

0-5% 0-20% 75-100% - Low-

Moderate

Defensive Managed

Fund

0-5% 0-15% 50-85% 15%-30% Moderate

Balanced Managed

Fund

0-5% 0-15% 20-70% 30%-60% High



+ note on the funds shows will manage the investment in each fund so that the proportion

of each Asset class is always with the ranges. + + shows Money market instruments. It

include liquid Mutual Funds, commercial papers, commercial bills, treasury bills,

government securities having an unexpired maturity up to one year. Bank deposits means

deposits issued by any primary dealer or non Banking and banking financial company

approved by the reserve by the reserve bank of India or any other public Financial

institutions or by Housing Finance Companies approved by the National Housing Bank.

The past performance of any of the funds is not necessarily an indication of future

performance. Unit prices can go up and down. No fund offers an assured return. The

84



names of the fund it offer under this plan do not, in any way, indicate the quality of the

plan, its future prospects or returns.

ELIGLBILTY

The age and term limit for taking out a HDFC unit linked Endowment II are as show below:

BENEFIT OPTION

TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) MAXIMUM AGE

AT MATURITY

(Yrs.)

Minimum Maximum Minimum Maximum

Life option 10 30 18 65 75

Extra life option 10 30 18 55 70

Life and health option 10 30 18 55 65

Extra life and health

option

10 30 18 55 65



SINGLE PREMIOUM TOP-UP (s) ALLOCATION RATE



Paid during -Year 3+ 98.00%

85



Tax benefit (Based on current tax law)

You will be eligible for tax benefit under section 80C and section 10(10D) of the income

tax, 1961, subject to the provision contain therein.

•

Under section 80C, you can save up to Rs. 33,990 from your tax each year (calculate on the higher tax bracket) as premium up to Rs. 1,00,000 are allowed ata deduction from your taxable income.

• Under section 10(10D), the benefit you receive from this policy are exempt fromtax.

The above mentioned tax benefits are subjected to the change in the tax law.

86



INTRODUCTION OF FUNDS

All the unit linked plans of HDFC standard life insurance company have the 7 types of fund. They are as follows:-

1. Liquid fund

2. Stable managed fund

3. Secure managed fund

4. Defensive managed fund

5. Balanced managed fund

6. Equity managed fund

7. Growth fund

The HDFC standard life insurance provide these 7 funds to their investor. These fund are

different from each other according to their investment paturn. This fund is useful and

fruitful for all type of investors. These funds are different from each other some fund

provide higher return to their investor with a high risk, some fund provide less return with

very less risk, and some funds provide moderate return with a moderate rate of risk. So

the investors have various types of options to invest their fund. If the investor want less

return but security of investment then there is liquid fund for them, if the investor wants

high return and accept the high risk factor then there is growth fund is available. For the

moderate return there are balanced managed fund, equity managed fund, defensive

managed fund are available. Thus the investors have various option for investment their

money.

87



FUNDS AND INVESTMENTS

The fund choices available on our unit linked young Star plan are the same as

the funds under the existing unit linked endowment plan. You would already be

familiar with these funds:

a) Liquid Fund

The Liquid fund invests 100% in bank deposits and high quality short-term money

market instruments. The fund is designed to be cash secure and has a very low level of

risk; however unit prices may occasionally go down due to the use of short-term money

market instruments.

At inception, investments up to 20% can be allocated to this fund. Individual life

88



b) Secure Managed Fund

The Secure Managed fund invests 100% in Government Securities and Bonds issued

by companies or other bodies with a high credit standing, however a small amount of

working capital may be invested in cash to facilitate the day- to-day running of the fund.

This fund has a low level of risk but unit prices may still go up or down.

individual pension

89



C) Defensive Managed Fund

15% to 30% of the Defensive Managed fund will be invested in high quality Indian

equities. The remainder will be invested in Government Securities and Bonds issued

by companies or other bodies with a high credit standing. In addition, a small amount of

working capital may be invested in cash to facilitate the day-to-day running of the fund.

The fund has a moderate level of risk with the opportunity to earn higher returns

in the long term from some equity investment. Unit prices may go up or down.

90



d) Balanced Managed Fund

30% to 60% of the Balanced Managed fund will be invested in high quality Indian equities.

The remainder will be invested in Government Securities and Bonds issued by

companies or there bodies with a high credit standing. In addition a small amount of

working capital may be invested in cash to facilitate the day-to-day running of the fund.

The fund has a higher level of risk with the opportunity to earn higher returns in the long

term from the higher proportion it invests in equities Unit prices may go up or down.

91



E) Growth Fund

The Growth fund invests 100% in high quality Indian equities. In addition a small amountof working capital may be invested in cash to facilitate the day-to-day running of the

fund. The fund has a higher level of risk with the opportunity to earn higher returns in the

long term.

92



F) Stable Manage fund

100% fund of stable manage fund are invested in Government securities & bonds issues

by companies and other bodies with a high credit standing. This fund have a low level of

risk due to exposure only to short term bond (maximum 2 years). This fund gives the

higher potential return than liquid fund over a long period of time. this fund have no invest

in short term money market instruments.

G) Equity managed fund

60 to 100% of equity managed fund will be invested in high quality Indian equity andremaining of fund is invested in government securities and bonds issues by companies

and other bodies with a high credit standing. In addition a small amount of working capital

may be invested in cash to facilitate to day-to-day running of the funds. The fund has the

high level of risk with a greater long term return. The small bond holding will add

diversification and provide a little stability.

93



Performance Statistics

The long-term worth of any Unit Linked policy comes from

# The investment return it gives over time

# The effect of the charges over the lifetime of the policy

The illustration provide at the point of sale comply with IRDA guidelines and show the effect of

charges. This investment return data show that how, in general the various funds are performing.

This illustrated shows how our unit-linked funds available to our Retail Pension business have

performed so far.

We are illustrating our performance from 01-Jan-05 (1-year after launch: 02-Jan-04) to July,

2009.using charts.

These charts are showing that actual year-on-year performance of our fund against the year-on-

year performance of a comparable market index @ (Source: AMFI).they are not showing the unit

prices (normally called NAVs)

They are the superior way of understanding performance because:

# Allow us to compare different funds with different starting NAVs

# Allow us to compare Actual performance

# Provide us with a more comprehensive summary than traditional charts.

For a day where the green column is higher than the red line, HDFC SL has provided a better

return than the index over the preceding year. For a day where the green column is lower than the

red line, HDFC SL has provided a lower return than the index over the preceding year.

To let you see both when HDFC SL has make under or over performed the Index we have shown

the index returns as a line not a series of columns.

CRISIL © Indices are the sole property of CRISIL Limited (CRISIL). CRISIL Indices shall not be

copied, retransmitted or redistributed in any manner for any commercial use. CRISIL has taken

due care and caution in computation of the Indices, based on the data obtained from sources,

which it considers reliable.

94



INDIVIDUAL-PENSION

A look at changes in unit prices over a various period of time

1. Liquid fund

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Liquid fund CRISIL liquid fund

2. Secure managed fund

-5.00%

0.00%

5.00%

10.00%

15.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Secured manage fund I-sec composit index

95



3. Balanced managed fund

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Balanced managed fund CRISIL balanced fund

4. Growth fund

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Growth fund BSE 100

96



5. Equity managed fund

0.00%

10.00%

20.00%

30.00%

40.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Equity managed fund

75% BSE 100 + 25% I-sec composit index

6. Defensive managed fund

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Defensive managed fund CRISIL mip blended

97



CONCLUSION

The main objective of all the investor is to earn the higher return on their investment so

they always try to invest in those securities and fund which give them higher return with a

less risk.

In this project i tried to focus on the performance of various funds of the HDFC SLI. From

the various data available for helping in the project compilation I we said that the

performance of the various funds of the HDFC Standard life insurance is better than what

is prescribed by CRISIL

In this project I conclude that the return on the various funds of the HDFC standard life

insurance is high than the CRISIL indexed. The return of the growth fund of HDFC SLI is

greater than the BSE 100. The return on the balanced managed fund is also greater than

the CRISIL balanced fund. The return of this fund was equal for some time to the CRISIL

balanced fund.

The performance of the defensive managed fund of the HDFC standard life

insurance is always better than the CRISIL mip blended index. This fund always gives the

high return to their customer.

The performance of the secure managed fund of HDFC standard life insurance is

mostly equal to the performance of the I-sec composite index. Both the fund give the good

return to their customer.

The liquid fund of the HDFC standard life insurance is very high than the CRISIL liquid

fund. The performance of this fund is always better than the other fund.

The equity fund of HDFC standard life insurance not gives the good return to their investor

but it is fair and sufficient.

Thus after see all the available data we can said that the all the funds of the HDFC

standard life insurance give the higher return to their customer than the other fund. The

performance of the entire fund in the market is good and the investor like to invest in these

98



funds. On the above discussion we can said that the performance of those funds may be

good in future but is totally depends upon the market condition and fluctuation.

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RECMONDATION

The performance of fund is good. They give higher return to their investor but all the

investor wants higher and higher return because it’s human nature. So HDFC SLI should

try to increase their return of various funds.

Company can increase their return through selection of better securities, shares, bonds,

government securities etc. Company should take the effective portfolio investment

decision. No doubt company provides good return to their investor but if the company

selects effective and fruitful portfolio investment plan than company increase their return.

If the company provides better return to their investor than it increases the goodwill and

market share of the company and it become a top insurance company.

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APP ENDIX

(This Information is for our internal use only, will not to be disclosed to any other organization / department)

Consumer Behavior towards Insurance

Name Address

Telephone Age

Occupation Annual Income

Marital Status Single Ø Married Ø (Age of Children if applicable)

---------------------------------------------------------------------------------------------------

Q. 1 Any There Insurance Companies, which you are aware of ?

Q. 2 What do you think Insurance Is ?

A2. Necessity for Protection and security Ø

Imposition as an Extra Burden on expenditure Ø

A compulsory Tool for Tax Saving Ø

Q.3 What are the main considerations that a customer looks at while purchasing

an insurance policy.

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A3. Tax Ø Saving Ø Protection Ø Pension Ø Investment Ø

Q.4 What would you see while purchasing an Insurance Policy from a

Company ?

A4. Standing and Goodwill of the Company Ø

Product range of the Company Ø

Advertisement being given by the company Ø

Services beings given by the Company Ø

Communications and Knowledge of the representative Ø

Returns and Bonus declared by the Company Ø

Other Ø Please specify _________________________________

Q.5 Why you want to buy another Insurance ?

A.5 Tax Benefits Ø Savings Ø Other Ø

Q.6 If saving, What are your financial needs in next 10-20 years.

A.6 Child Education Ø Marriage House Construction Retirement Needs Ø

Q. 7 Are you aware about the Unit Link Plans beings launched by various

Insurance Companies.

A.7. Yes Ø No Ø (If yes, name the Co. and products)

Any other comments :

________________________________________________________________

________________________________________________________________

________________________________________________________________ 102



(Thank You)

BIBLIOGRAPHY

WEBSITES

ww w . h dfcin s urance.com

ww w . e co n o m ictimes.com

ww w . ir daindia.com

ww w . iiifin dia.com

ww w . g o o gle.com and other search engines

BROUCHERS

HDFC Standard Life Insurance

BOOKS

Life Insurance of RNIS Collage of Insurance

Mishra, M.N.; Insurance Principal and Practice

References

Websites

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http://www.hdfcinsurance.com/

http://www.economictimes.com/


http://www.irdaindia.com/

http://www.iiifindia.com/


http://www.google.com/

http://www.hdfcinsurance.com/






http://www.google.com/



http://www.hdfcstandardlifeinsurance.com

http://www.iciciprulife.com/index.jsp

http://www.hdfcstandardlifeinsurance.com/


http://www.hdfcstandardlifeinsurance.com/


Documents

Bharti Hdfc Project