SEMINAR ONMarket Potential of ULIP

In HDFC Standard Life

Insurance

Mukesh Verma3020070181

Contents:-•About insurance industry

•Major players

•About the organization

•Vision & Values

•Organization structure

•Board of directors

•Product range

•Awards and achievements

•About ULIP

•SWOT analysis of ULIP

•Objectives

•Research methodology

•Graphical representation

•Conclusion

•Market problems

•Suggestions

Cont…

About Insurance Industry1818 • 1st insurance company set up in India

named Oriental Life Insurance

1850 • 1st general insurance company set up in Kolkata named Triton Insurance Company

1956 • Life insurance nationalized with the formation Life Insurance Corporation

1973 • General insurance was nationalized and General Insurance Corporation was set up

1991 • The process of opening up the Insurance sector was initiated by Malhotra Committee

1999 • IRDA{ Insurance regulatory and development authority} act was passed

Market share of major players

• Stands for HOUSING DEVELOPMENT FINANCE CORPORATION.

• Incorporated in 1977 as the first specialized Mortgage Company

in India.

• It was started by Hasmukh Bhai Parekh .

•It has helped more than 23,00,000 houses since its incorporation.

•HDFC operates in almost 450 locations throughout the country.

•Rated AAA by CRISIL AND ICRA for ten consecutive years.

ABOUT HDFC

About Standard life• The company was founded in 1875.

• It has been looking after the financial needs of the customers for

over 180 years.

• It currently has a customer base of around 7 million people.

• It is a leading pension provider in UK and is rated A+ by Standards

And Poors for 6 consecutive years.

• The 5 star accolade has been awarded to standard life investment

for the last 10 years.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000

Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Limited was the first company to be

granted license by the IRDA to operate in life insurance sector.

HDFC ltd holds 72.43 % and standard life holds 26% of equity in the joint venture,

while the rest is held by others.

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'.

'The most obvious choice for all‘.

Values:

• Integrity • Innovation • Customer centric • People Care “One for all and all for one” • Team work • Joy and Simplicity

Organization structure

Regional Manager

Zonal Manager

Managing Director

Chairman

Asstt. B. M.

Branch Manager

Territory Manager

Retail Marketing

Sales Dev. Mgr

Business Dev. Mgr

Channel Executive

Branch Manager

Territory Manager

Alternative Channel

Operation Manager

Team Manager

Operation Channel

HR Executive

Human Resource

Mr. Deepak S. Parekh, CEO of the HDFC ltd.

Sir Alexander M. Crombier, Chief executive of STANDARD GROUP

Mr. Keki M. Mistry ,Managing Director of HDFC LIMITED

Ms. Marcia D. Campbell, Operations Director in the Standard Life group

BOARD OF DIRECTORS

Product range

Traditional

Unit linked PIPS

Awards and accolades• Received 2008 CIO Bold 100 and CIO Security Awards

• Silver Award for Radio commercial at Goafest 2008

•Deepak M Satwalekar Awarded QIMPRO Gold

Standard Award 2007

• Unit Linked Savings Plan Tops Mint Beast TV

Ads Survey

• “Sar Utha Ke Jiyo” Among India’s Glorious Advertising

Moments

ABOUT ULIP ULIP - Unit Linked Insurance Policy

Long term plan that provides the dual benefit of insurance and

investment

Its a unique and multiple benefits Plan

Provides multiple benefits like life protection, rider protection,

savings, transparency, investment choices, liquidity and planning

for taxes.

ULIPs offer tax benefit under section 80(C)

STRENGTHS:

•Investment plus Insurance

•High Returns

•Transparent

•Flexibility

SWOT analysis of ULIP

WEAKNESSES :

• Lack of Awareness

• High administrative charges • High mortality charges

• High fixed annual charges

OPPORTUNITIES:

• Large Untapped Market

• Products for every age group and income level

• Benefits of both an investment and insurance product

THREATS :• Presence of very strong competitors

• Aggressive marketing by competitors

• Not considered reliable

• People prefer to invest in Fixed Deposits

My trip to organizati on

1. To conduct a comparative analysis of ULIP between the main players in

the current market scenario.

2. To make a Comparative Analysis between ULIP and other financial

instrument.

3. To conduct a research so as to know customers awareness and

preferences in choosing/not choosing ULIP as an investment option.

4. To estimate and analyze the MARKET POTENTIAL OF ULIP in Ranchi.

5. Trying to find out the various factors on which the company lags/leads.

Objecti ves

Research Design : Descriptive

Sample Size : 50

Sampling technique : Random

Sampling unit : Student, Housewife, Working Professional,Business people ,Government service employee

Sampling area : Ranchi

Data collection method: Primary : Personal interview, questionnaire Secondary : Internet, product brochures, company website, competitor’s websites .

RESEARCH METHODOLOGY

Parameters RBI Bonds Fixed Deposits Mutual Funds Unit linked

Safety High High Medium High

Liquidity None High High High

Returns Low Low High High

Life Cover 1 time amount 1 time amount 1 time amount 10 times

Tax benefits Tax free Taxed Taxed Tax free

Unit linked versus other financial instruments

GRAPHICAL REPRESENTATION

Awareness of Unit Linked Plans No. of Respondents

Yes 27

No 23

AWARENESS REGARDING ULIP

YES

NO

0

5

10

15

20

25

30

AWARENESS OF UNIT LINKED PLANS

AWARENESS OF UNIT LINKED ...

LIFE INSURER NO. OF POLICIES

HDFC STANDARD LIFE 3

ICICI PRU LIFE INSURANCE 6

RELIANCE LIFE INSURANCE 2

KOTAK LIFE INSURANCE 1

OTHERS 10

MARKET SHARE OF LIFE INSURANCE COMPANIES

HDFC ST

ANDARD LIFE

ICICI PRU LI

FE IN

SURANCE

RELIA

NCE LIFE

INSU

RANCE

KOTAK LI

FE IN

SURANCE

OTHER

S0

1

2

3

4

5

6

7

8

9

10

MARKET SHARE OF LIFE INSURANCE COMPANIES

MARKET SHARE OF LIFE INSURANCE COMPANIES

REASONS FOR INVESTMENT IN ULIP

Parameters No. of respondents

Child education 5

Child marriage 4

Pension 7

Income growth 12

Tax rebate 16

2 in 1 benefit 6

child

marri

age

child

education

pension

income gro

wth

tax benefits

2 in 1 benefit

0

2

4

6

8

10

12

14

16

Reason for investment

reason for investment

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Willingness to spend on premium No. of respondents

Less than Rs. 6,000 13

Rs. 6,001 - Rs. 10,000 18

Rs. 10,001 - Rs. 25,000 14

Rs. 25,001 - Rs. 50,000 3

Rs. 50,001 - Rs. 1,00,000 2

less than Rs.6000 Rs.6001-

Rs.10000 Rs.10001-Rs.25000 Rs.25001-

Rs.50000 Rs.50001-Rs.100000

0

2

4

6

8

10

12

14

16

18

Consumer's willingness to spend on Life Insurance

PREFERENCE OF THE CUSTOMERS REGARDING POLICY TENURE

Ideal policy term No. of respondents

Up to 3 years 8

4-7 years 15

8 - 10 years 7

11 - 15 years 11

Over 15 years 9

up to 3 years 4-7 years 8-10 years 11-15 years over 15 years0

2

4

6

8

10

12

14

16

PREFERENCE OF CONSUMERS REGARDING POLICY TENURE

No. of respondents

PREFERENCE OF CUSTOMERS WHEN INVESTING IN ULIP

PARAMETRES NO. OF RESPONDENTS

a) Low Risk, Low Gain 13

b) Moderate Risk, Moderate Gain 18

c) High Risk, High Gain

15

d) No Risk 4

Low risk,low gain moderate risk,moderate gain

high risk, high gain no risk0

2

4

6

8

10

12

14

16

18

20

RISK APETITE OF CUSTOMERS

NO. OF RESPONDENTS

FINDINGS AND CONCLUSION• 54% of the sample population is aware about ULIP, while the remaining are not.

So a lack of public awareness was encountered

• That people give maximum importance to the tax benefit and then the income

growth that they receive after investing in the unit linked insurance plan

• ICICI in the private and LIC in public is a big threat to the company

• A large proportion of the sample was convenient with the time period of 4-7

years and then others were in favor of a period ranging between 11-15 years

which implies that it would be easier for the company to convince such

customers

CONT..• Maximum number of respondents were willing to spend on

insurance premium an amount ranging from Rs.6,000-Rs.10,000

• Approx 8% of the population are considering risk factor while others are not, hence the company can easily convince customers to invest in ULIP

WHY HDFC IS BETTER

because…

• HDFC Unit linked endowment plus II gives

additional units every year

• HDFC Unit linked endowment plus II has lower

premium allocation charges

• It has lowest FMC charge i.e. 1.25% across all

the funds

Market problems

• Existence of many players in the market which increases

competition.

• LIC is considered a safer option.

• Faces competition from banks and mutual funds.

• High premium policies are difficult to market

• Incorrect perception about insurance.

CONT..

• People do not have risk appetite to invest in shares.

• Customers don’t want to undertake medical examinations

• Large amount of documentation.

• Customers do not like their money locked up for many

years.

• Lack of awareness about the unit linked funds in the

market.

Suggestions• Advertise about the company and its products – it motivates

individuals to purchase insurance.

• Create a positive perception about insurance.

• Speak about the good features a plan offers like high returns, life

cover, tax benefits, accident cover while prospecting customers.

• Try to sell the product/plan which the consumer requires and not the

plan where the advisors benefit is higher .

• Bring out policies with small premiums payable for short periods of

time – Rs. 6000 – Rs. 10000 per annum for less than 10 years.

CONT...

• Attract the youth of India with higher returns on investment as

returns are the motivating factor which influence purchase of

insurance.

• Promote insurance in colleges and corporate houses.

• HDFC SLIC could have a brand ambassador or a mascot to

promote its services.

• Should have partial withdrawals from the first year onwards.

• Make products more straight forward – reduce complexities.