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Investment Opportunity with respect to Unit Linked Insurance Plans At ING Vysya Life Insurance Co. Ltd.,

ING Vysya Juhi

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Page 1: ING Vysya Juhi

Investment Opportunity with respect to

Unit Linked Insurance Plans

At

ING Vysya Life Insurance Co. Ltd.,

Page 2: ING Vysya Juhi

ACKNOWLEDGEMENT

I am thankful to those people who were with me throughout the training and

helped me generously in bringing up this project “Investment Opportunity in ING

Vysya Life, with reference to ULIPs.”

I am thankful to Mr. Rajeev Ranjan Rai and Mr. Deepak Suri for their valuable

guidance the course of training.

I am thankful to Dr. Anoop Pant who has helped me to understand the concept.

I express my sincere gratitude to Prof.Shamshul haq, without whose able guidance

and support I would not have been able to complete my report.

I will also like to extend my thanks to Mr Jatinder Bali, (Branch Manager, ING

Vysya Life) and Miss Shweta Singh (Branch Coordinator, ING Vysya Life) who

gave me an opportunity to work in the organization and for providing me with

excellent working environment.

I am thankful to all Sales Managers for their time & cooperation. My efforts would

not have been fruit but for their cooperation.

Page 3: ING Vysya Juhi

EXECUTIVE SUMMARY

In todays scenario Life Insurance Industry has come out with excellence

investment opportunities for the people.

The main insurance products, meant for investment, evolved in India the form of

Unit Linked Insurance Plans.

Unit Link Insurance Plans have proved quite appealing to the consumers given the

buoyancy of Indian stock market over the last few years.

Unit Linked Insurance Plans account for 70% to 90% of the ULIPs in Insurance

Industry the project undertaken by me is Investment opportunity in ING Vysya

Life Insurance with reference to ULIPs.

ING VYSYA LIFE is gradually making a place in Indian Life Insurance Sector. If

has made an investment of more than 500 crore Rupees in capital. If has more than

75 branches and towns in over 125 cities.

Page 4: ING Vysya Juhi

It is coming up with more branches in coming future. The company has launched

differentiated Unit Linked Insurance Plans and is gaining confidence of customers

gradually.

In this project I also found that company is very strict in underwriting rules and

has made full compliance with IRDA norms. Thus company is building its own

transparent in industry.

The study is done to go in depth of ULIPs, to understand basic principles on which

they work. Portfolio management in ULIPs is all taken into consideration.

This is inquired that why this plan is known for into flexible portfolios.

India, having a population of 1.2 billion has only 33% of people insured. Most of

the people are not Insured, just become they don’s know much about insurance.

Most people have following queries about life Insurance:-

What is Life Insurance?

A policy that will pay a specified sum to beneficiaries upon the death of the

insured.

Or

Page 5: ING Vysya Juhi

An agreement that guarantees the payment of a stated amount of monetary benefits

upon the death of the insured.

Why Insurance?

Insurance is the protection of life and assets against unforeseen circumstance.

Whether it is a general accident policy, a Medic aim policy or a pension policy, an

insurance policy helps you to scope with uncertainty and insecurity.

Ever though about why you should take an insurance policy. For one, it helps you

to hedge risks against unforeseen circumstances and save more. If that’s not all, it

is:

Superior to an ordinary savings plan as it provides full protection against risk of

death.

Encourages and force compulsory saving unlike other saving instruments, wherein

the saved money can be easily withdrawn.

Provides loan to tie over a temporary difficult phase and is also acceptable as

security for a commercial loan.

Offers tax relief to policyholders.

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Hedges risk taken under the MWP Act 1874, (Married Women’s Property Act), a

trust is created for wife and children as beneficiaries.

Based on the concept of sharing of losses, the society will benefit as catastrophic

losses are spread globally.

Who can buy a life insurance policy?

Any person above 18 years of age, who is eligible to enter into a valid contract,

can go for an insurance policy. Subject to certain conditions, a policy can be taken

on the life of a spouse or children.

How is a life insurance policy useful?

Planning for the financial consequences of a premature death is an essential part of

every financial plan. Generally, the consequences are simply too large to ignore

and cannot be totally covered with your own resources.

Life insurance (purchaser) pays a premium in exchange for coverage of specified

losses. Life insurance protects your family against the risk of the premature death

of you (or your spouse). Life insurance planning should consider your family’s

short-term needs (for example, medical) and long term needs (for example,

replacing your income).

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In the course of our life we are accosted by risk- that of failing health, financial

losses, accidents and so on. Insurance is a means by which life’s uncertainties are

addressed in financial terms. It offers a monetary compensation against those

losses. Insurance is considered more as a hedging mechanism rather than a true

investment avenue. Life insurance in particular is essentially acknowledged as a

mechanism that eliminates risk- substituting certainty for uncertainty primarily by

transferring risk the insured to the insurer.

Is life insurance a saving instrument?

Life insurance is mainly considered as a saving instrument rather than an

investment avenue as it promotes compulsory savings besides reducing tax burden

on the policyholder and protect the family of the policyholder in the event of

unforeseen happening. If is the only saving instrument, which covers the life risk

besides giving tax concession both at entry (premium paid) and at exit points. The

section 10 (D) of

The income tax act totally exempts payment of tax on any amount received as

bonus against life insurance policies.

Page 8: ING Vysya Juhi

OBJECTIVES

The objective of carrying on this project which basically aimed at inquiring about

the investment opportunities in Life Insurance with respect to ING Vysya Life

have been divided into two broad categories which are:

MAIN OBJECTIVE

Investment opportunities in Life Insurance with respect to ULIPs.

SUB OBJECTIVE

1) To understand basic principles on which ULIPs work.

2) To see how portfolio is managed in ULIPs .

3) How portfolio in ULIPs is so flexible.

Page 9: ING Vysya Juhi

INTRODUCTION OF THE TOPIC

My task is to go in depth of such a Insurance Plan that combines investment

opportunities with insurance cover, this grinning the dual benefits of insurance

cover with better returns.

This aspect was found in ULIPs

The advantages of ULIP are:

PROTECTION - Life Insurance helps us in providing financial security and

protection to our family, in case something happens to us.

SAVINGS - It works as an attractive tool for long term saving as premium is

paid regularly over an extended period.

INVESTMENT - Since the premium is paid by us will be invested in UNIT

LINKED funds closen by us, the policy offers scope for investment value

opportunities so that at the end of the term we or our family get an added value on

own investment. It is free from market swings.

TAX BENEFITS - Investment up to a certain exit and returns out of Life

Insurance product are exempted or tax free as per income law. (Sec 10 10 D)

Page 10: ING Vysya Juhi

RETIREMENT - Makes sure we have regular income after retirement and

also helps in maintaining standard of living.

Page 11: ING Vysya Juhi

INDUSTRY PROFILE

The insurance landscape in India is undergoing major change. Closed to foreign

competition since nationalization in 1956, the life insurance industry had been

protected from competitive pressures. Now, with the re-opening of the sector,

several new players have entered the scene.

The game is old but the rules are new and still developing. Ensconced in a

monopoly run form the nationalization days beginning in 1956, the insurance

industry has indeed awakened: to a deregulated environment in which several

private players have partnered with multinational insurance giants.

However, despite its teeming one billion population, India still has a low insurance

penetration of 1.95 per cent, 51st in the world. Despite the fact that India boasts a

saving rate of around 25 per cent, less than 5 percent is spent on insurance.

The first company to foray in this sector was LIC, which was set up on 1st Sept

1956. Since then it is enjoying monopoly until the recent entry of the private

players in this sector. The private companies in their five years of operation had

continuously suffered by the established leadership and monopoly of LIC.

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Although for the last 50 years LIC has been the only company to cater the

consumer needs in the insurance sector but in the past 5 years 12 insurance

companies have emerged in the scenario which are:

1. ING VYSYA LIFE

2. ICICI Prudential Life

3. Birla Sunlife

4. Bajaj Allianz

5. Max New York Life

6. Met Life

7. Om Kotak Mahindra

8. TATA AIG

9. AVIVA

10. HDFC Standard Life

11. SBI LIFE

12. Reliance Life Insurance

13. Bharti AXA Life

14. San lam Life

New players need to recognize the limitations of their and decide upon the right

mix of distribution channels in their businesses.

Competition is tough, each coming up varieties in product mix.

Page 13: ING Vysya Juhi

INNOVATIONS FROM PRIVATE SECTORS

200 different new products from private life Insurance.

All segments covered including traditional saving products (endowment money

back) and new production (term, health) retirement products (whole life, pension)

and unit linked products.

Consumer seeks clarity and confidence in the plethora of life insurance managers

he/she is getting.

Key Differentiators

Professional trained and licensed agents.

Professional medical networks.

7 days benefit turnaround.

Free look in period.

Call centers.

Websites/ E mail help desks.

Page 14: ING Vysya Juhi

COMPANY PROFILE

ING VYSYA LIFE IN INDIA – AN OVERVIEW

ING Vysya Life Insurance Company Private Limited (the Company) entered the

private life Insurance Industry In India in September 2001, and in a short span of 4

years has established itself as a distinctive life Insurance brand with an innovative,

attractive and customer friendly product portfolio and a professional advisor sates

force.

It has a dedicated and committed advisor sales force of over 11,000 people,

working from 80 branches located in 70 major cities across the country and over

2,60 employees. It also distributes product in close cooperation with the ING

Vysya Bank network. The Company has a customer base of over 3,00,000 & is

headquartered at Bangalore. In 2005, ING Vysya Life earned a total income in

excess of Rs.400 crore and also has a share capital of Rs.440 crore.

The Company aims to make customers look at life Insurance afresh, not just as a

tax saving device but as a means to add protection to life. The one thing we hold in

highest esteem is “life” itself. We believe in enhancing the very quality of life, in

addition to safeguarding an Individual’s security. Our core values are therefore

defined as Professional, Entrepreneurial, Trustworthy, Approachable and Caring.

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The Company’s portfolio offers products that cater to every financial requirement,

at any life stage. We believe in continuously developing customer-driven and

services and value being accessible and responsive to the needs of our customers.

In fact, the company has developed the Life Market, a simple method which can

be used to choose a plan most suitable to a specific customers based on his needs,

requirements and current life stage. This tools helps you build a complete financial

plan for life, whether the requirement is Protection, savings or Investment,

Retirement.

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ING VYSYA LIFE INSURANCE CO. LTD.

VISION

To be the dominant new player in the Life Insurance Industry.

This will be achieved through:

Recruitment of quality advisors.

Intensive product training.

Selling skills training.

Superior technology & processes.

Innovative financial solutions.

Achievements so for

Leasing Private Life Insurance Company.

Strong brand recognition.

Every 2.75 minutes we cover life.

State-of-the-art support services.

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ORGANIZATIONAL STRUCTURE

Marketing head

General Manager

Asstt. General Manager

Regional Manager

Agency Manager/ Branch Manager

Group Sales Manager

Senior Sales Manager

Sales Manager

Asstt. Sales Manager

Advisor

Page 18: ING Vysya Juhi

THIS IS THE HIERARCHY, WHICH ING VYSYA FOLLOWS WORLD WIDE

In every ING Vysya branch has a GSM who supervises the Senior Sales Manager

working under him. The number of the Sales Manager may very between 3 to 5 in

branch.

The Asstt. Sales Manager, Sales Manager, Senior Sales Manager, Group Sales

Manager direct reputing to the branch Manager.

Each Asstt. Sales Manager further has 10 to 15 Advisor working under his

supervision. The Job of these ASM is to recruit advisors of various profile who

have the capability to give business to the company.

While the advisor have to report to their respective ASM, the ASM”s further have

to give the performance feedback of their respective advisor team to the branch

Manager of the branch.

Each Asstt. Sales Manager of the company has on average 10-15 life advisor of

various profile working under him and they together from a team, which is headed

by that respective Asstt Sales Manager. When any of the life advisor,

sell policy i.e. he fetches business for the company he has to report to his

respective Asstt Sales Manager.

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This each ASM has to keep a track record of all the life advisor working under

him and the business they and fetching an well.

An advisor/agent does not have any particular boss. There are no working hours

and any particular day on which the advisor/agent has to report in office.

An advisor/ agent can do his/her operations from any branch of the company

located anywhere in the country.

The rest 25% of the distribution in life insurance is not permanent. It is usually

done through:

Bankers & Brokers

Work shops

Small allied groups

A target of selling of at least 12 policies in a year has been fixed by INSURANCE

REGULATION DEVELOPMENT AUTHORITY (IRDA) as the minimum

specification, which needs to be met by each advisor of any insurance company.

Page 20: ING Vysya Juhi

ING VYSYA LIFE STRATEGY

1. Manage for value

2. Improve customer satisfaction

3. Manage our risks

4. Manage our costs

5. Invest in growth

6. Develop performance culture

7. Manager our reputation

It’s not about saying yes or no to the customer. It’s about offering the most

competitive service.

Page 21: ING Vysya Juhi

SPECIAL FEATURE OF ING VYSYA LIFE

Customer Contact Program

The customer contact program or CCP is all about engaging the customer. A

pioneering initiative from ING Vysya life, CCP focuses on strengthening the

relationships with existing customers. Providing a platform to understand

customer experience, needs and expectations. The CCP also helps reviving

relationships with lapsed customer.

The CCP stresses on face to face meetings with customers that are arranged by tale

callers based in the respective branch offices.

Within short period of time the CCP has received overwhelming response from the

sales teams participating in the program.

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LIST OF MANAGEMENT PERSONNEL

1. Area Manager - Mr. Punkaj Molhatra

(Delhi west U.P.)

2. Agency Manager - Mr. Jitender Bali

(Ghaziabad)

3. Sales Manager - Mr. Manish Nigam

(Ghaziabad)

4. Sales manager - Ashok Upadhyay

(Ghaziabad)

5. Sales Manager - Kapil Bhatnagar

(Ghaziabad)

6. Asstt. Sales Manager - Mr. Rajeev Ranjan Rai

(Ghaziabad)

7. Asstt. Sales Manager - Mr. Ajay Malik

(Ghaziabad)

8. Asstt. Sales Manager - Mr. Dhiraj Rai

(Ghaziabad)

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ING VYSYA LIFE CO. LTD

The PRODUCT MIX

We cover you. At every step in life.

ING Vysya Life lives up to its promise to customers. Its wide range of policies

cover the gamut of insurance products including.

Savings cum protection plans

Pure protection plans

Child Plans

Market Linked Plans

Retirement Solutions

In addition, each and every feature of the products equips the customer with the

power of choice in their hands. The various various riders allow customization of

policies.

Page 24: ING Vysya Juhi

SUPERIOR PRODUCTS

Our products-which you can say as TRADITIONAL INSURANCE PRODUCTS:

Pension Product ING Vysya best yeas

Endowment Product Powering life

Anticipated Endowment Product Maximizing life

Term Insurance ING life conquering life

But with Constant Innovation With The Products Now We have-

Wide Range Of Products With Lot Of Flexibility.

The products to NO ONE in the Insurance Industry even near to it-

ING VYSYA Life Time

ING VYSYA Life Time Pension

ING VYSYA Life Link & Life Pension

Page 25: ING Vysya Juhi

ING VYSYA LIFE GOAL

To be in top 5 Life Insurance players in India.

(In is a Marathon and not a 100 meter dash. And we are extremely good marathon

runners.)

ING VYSYA LIFE- MISSION

To have the best and most productive advisor force.

Page 26: ING Vysya Juhi

CASE STUDY: A ULIP TOO EXPENSIVE

An attractive sales pitch about a product instinctively raises queries in the

audience’s mind. Our financial planning team at personality recently received one

such query regarding a unit linked insurance plan (ULIP) from a leading public

sector insurance company..

First let’s understand the client’s profile

1. The client, a 28 Yr old high net worth individual (HNI) was advised by

his insurance agent to go for a ULIP with a sum assured of Rs500,000,

and the policy term being 46 years. In this way he would be insured fill

the age of 74 years. The agent recommended that he opt for a single

premium policy, which amount to a one time premium of Rs100,000

2. The client was advised to go for the equity option, where he could have

100% equity exposure and hence eam higher returns. The returns

projected to him were calculated at rate of 15% CAGR.

The ULIP has an annual charge of 2% annual administration charge of Rs720 and

fund management charge of 1.5%.

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As always we examined this case with the objective of analyzing whether the

product would add value to the client’s portfolio and fulfill his insurance/

investment objective. This is what we concluded.

1. To begin with, the client did not have a life cover. So our basic

objective was to ensure that the product he was being recommended

provided him adequate insurance cover.

Individuals in quest of life insurance are often too retunes-centric

forgetting that they must first and foremost have adequate life cover that

can provide financial stability to their dependents in their absence. So

priority has to be given to the insurance component. The investment

component i.e. returns can come separately at a later stage.

In this case, the client was being recommended an insurance cover of

Rs500,00 which is a pittance for an HNI. In case of an unfortunate

event, the amount of Rs500,000 would not even service the family car

let alone provide financial stability to the family.

2. A brief analysis of the product and the returns generated by if over a

period of 46 years (the policy term) tells us, that the investment corpus

will take 12 years to exceed Rs500,000. So if the client expires before

that, he will get only the sum assured i.e. Rs500,000.

Page 28: ING Vysya Juhi

Ideally, a person of his financial standing should get himself insured for

a much amount and not subject his life cover to the vagaries of the stock

markets.

3. For some strange reason, the returns projected to the client have been

calculated at an optimistic rate of 15% CAGR. According to IRDA’s

(Insurance and Regulatory Development Authority) revised ULIP

guidelines, agents are bound to show benefit illustrations based on an

optimistic estimate of 10% (simple growth or CAGR) and a

conservative estimate of 6% Moreover, the guidelines dictate that

clients are to sign on the benefit illustration. Not surprisingly, the agent

did not take our client’s acknowledgement on the 15% CAGR

illustration since he was violating the ULIP guidelines. If reported by

the client, backed by his signature, this would have amounted to loss of

agency for the insurance agent.

Our solution

1. We advocate that all individuals (HNI or otherwise) buy a term plan for

an amount that can be considered reasonable given life style, income,

expenses and contingent expenses amount other. The capital

appreciation can be taken care of through investment like NSC

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(National Saving Certificate). PPF (Public Provident Fun), mutual

funds/stocks and fixed deposits.

2. For the investment component, mutual funds can play an important role

in the client’s portfolio, Mutual funds give investors an opportunity to

access equity and debt and market in a convenient manner. Given that

our client does not have the time and competence to take these markets,

mutual funds become an obvious choice.

3. In terms of expenses mutual funds are more cost-effective than the

ULIP that was recommended to our client. The annual expenses

incurred on the ULIP are 3.50% (2.00% recurring and 1.50% fund

management charges). In contrast, mutual funds are managed at an

annual expense of 2.50% (maximum) of net assets. Over a period of 48

years, there is a good chance this number could reduce since according

to the expenses slab defined by SEBI, higher not assets result in lower

expenses.

4. Put simply, the client must on priority opt for term plan that, in his

absence, can provide adequate financial stability to his family. He can

then consider investing to take care of the rectums. If you are wondering

why ULIPs do not feature in our solution to the clients, it’s because in

Page 30: ING Vysya Juhi

this particular case the ULIP was too expensive if there is a ULIP that

can match the returns and the lower expenses of a mutual fund. If can be

an option for investors.

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BUYING ULIPS? READ THIS FIRST

Unit linked insurance plans (ULIPs) have caught the fancy of individuals over the

past few years. In fact, most individuals opting for life insurance now go in for

ULIPs as opposed to term plans or endowment plans. Therefore if become

important for individuals to understand what to look for in a ULIP before

finalizing one. We outline four parameters that ULIPs need to be evaluated upon

before individuals zero-in on a unit linked product.

1. Investment mandate

ULIPs differ significantly from traditional endowment plans in the way invest

their monies. ULIPs have an investment mandate, which allows them to shift

assets freely between equities and debt. This is unlike saving based plans like

endowment plans, which invest pre-dominantly in specified debt instruments like

bonds and government securities (gsecs). The amount of money invested in equity

had the potential to make a significant difference to the returns that plan can

generate over the long run.

However, ULIPs with a higher equity component can prove to be very volatile

customer during stock market turbulence. So investors have to be sure that their

risk appetite coincides with that the ULIP. For this, make a note of the maximum

equity allocation the ULIP can take on.

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There are several options within a ULIP. You can select the option the best fits in

with your risk profile and helps you achieve you investment objective. If you are

an aggressive investor you can go for a ULIP with the maximum equity allocation-

this varies form insures to insures but is usually in the range of 70% -100% of

assets. If you are a conservative investor then you can opt for a ULIP option that

has a smaller equity allocation of about 20%.

2. ULIP expenses

A lot has been written about ULIP expenses in the past. At the cost of sounding

repetitive, ULIP expenses do make a difference to the returns. This gets more

evident over the long run. Expenses take a toll on the returns by way of reducing

the amount, which gets invested. A lower amount will yield lower returns.

ULIP expenses are broadly classified into annual expenses (excluding fund

management charges- FMC) and fund management charges. The annual expenses

are deducted form the premium amount and hence, that part of the premium which

is net of annual expenses is invested. While annual expenses are high in the initial

years, they even out in the long run (typically 15 years and above).

FMC on the other hand is levied on the corpus till date. A higher FMC therefore

means a reduction in the corpus that can generate returns going forwards. FMC

therefore makes a sizable difference to the returns in the long run.

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3. Miscellaneous features

ULIPs offerings also differ across companies in terms of the flexibility offered

various parameters. For example, the minimum premium for one insurance

company is Rs10,000 while for another, if is Rs18,000 Also some insurance

companies let individuals alter tier equity debt allocation 5 times a year at no

additional cost while other companies allow alteration only twice during the year

(without additional costs). The charge on top ups also differs- a certain deducts

2.50% as top up charges, investing the remaining 97.50% such differences need to

be considered before individuals zero-in on a ULIP product.

Focusing on your asset allocation

Individuals also need to stick to their asset allocation plan at all times. It has been

noticed that ULIPs are often bought by individuals without having an

understanding of the value that they bring to their financial portfolio it their

current asset allocation is skewed towards equities (i.e. mutual funds/ stocks), then

what the individual may really need is a term/endowment plan. Conversely. If the

portfolio is debt-heavy, then the individual can consider investing in a ULIP with a

significant allocations.

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ULIP PORTFOLIOS: NEED FOR MORE TRANSPARENCY

This article was written by Personify for Business India and was carried in its July

16, 2006 issue with the title be more transparent. The original draft, in its entirely

has been retained here.

Traditionally, life insurance product have usually been considered as safe

investment options, which also offer life cover. However, since unit linked

insurance plans (ULIPs) burst onto the scene a few years ago, the rules and

definitions of life insurance have undergone a sea change. The popularity of ULIP

a can be attributed party the scrapping of assured return insurance schemes and

falling interest rates which rendered conventional product like endowment plans

unattractive. At Personify however we feel that individuals need to understand

ULIPs a lot better before they make a decision to invest in it.

Simple put, depending on their mandate, ULIPs can invest in the stock and debt

market in varying proportions how a ULIP can invest its money is laid down by

the insure in the product literature. A few life insurance companies also declare

their ULIP portfolios on a regular which reveal the stock and believe the insurance

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regulatory and Development Authority (IRDA) needs to look at various various

issues related to portfolio disclosure norms.

1. Declaration of portfolios

With the growing popularity of ULIPs, we decided to analyse ULIP portfolios

from across various life insurance companies. However, to our dismay, we found

that not many companies make portfolios available in public domain. While this

information may be available to individuals who are insiders (i.e. company

employees), factory the matter is that investment have a hard time accessing these

portfolios.

It is pertinent that an investment avenue as complex as a ULIP is understood

appropriately before making investment in it. With the numerous variations

available across products and companies, if becomes necessary example, the

portfolio will reveal the quality and nature of companies that form part of the

ULIP portfolio. While four insurance companies i.e. ICICI PruLife , Kotak Life,

HDFC Standard Life and Aviva Life declared their portfolios on their websites,

we failed to procure the same for other companies.(ING Vysya Life is declaring in

the form of monthly magazine regularly.)

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2. Lack of consistency across portfolios

While evaluating the ULIP portfolios of life insurance companies, we observed

that the presentation of data lacked consistency. For example relevant data points

like the assets under management (AUM) and the benchmark indices were missing

for some ULIPs under our scanner. Barring ICICI PruLIfe, no one declared their

AUMs. Or the other hand, Aviva had not even mentioned the benchmark index for

its ULIP. The AUM becomes relevant the a higher AUM helps in achieving

economies of scale, which in turn, could result in reducing costs like transaction

and brokerage. The benchmark on the other hand, serves as a yardstick for

understanding how well a ULIP has performed during a given timeframe.

3. Investment mandate

Another important factor is the investment mandate. It is critical for individuals to

know the investment mandate ULIPs before they consider investing in it. For

example, our research term noticed that while ULIPs from HDFC Standard Life,

Kotak Life and ICICI Prulife invested predominantly in large cap companies,

Aviva Life investment liberally in midcaps.

While it is not wrong to invest in midcaps, we feel the insurance companies should

ideally reveal the investment mandates for their products this in turn will educators

investors about their investment will be managed. A risk averse investor may be

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unwilling to participate in a ULIP that is heavily invested in mid cap stocks Mid

cap stock tend to be high risk high return investment propositions vis-à-vis their

large cap peers. We believe that ULIPs should have an explicit investment

mandate. For example Bajaj Allianz clearly states that one of their ULIP options

can invest in companies in the mid cap segment. At least the individual know what

he is getting into while buying life insurance.

4. Standard format

Another problem we faced while analyzing ULIPs was the manner in which the

data was presented. For example, while most ULIP portfolios declared their

holdings along with the percentages held in each individual stock. Me life in their

quarterly portfolio update chose to declare only the names was the benchmarks

were not made available alongside the ULIP portfolios under review-we had to

hunt for them. ULIPs should ideally give out a consolidated portfolio that contains

all the relevant information and data points like assets, benchmarks past

performance among other in one place.

ULIPs can take a leaf out of the books of mutual funds. Mutual fund have a

guideline, while requires them to declare their portfolios (fact sheets’ in mutual

fund industry parlance) once every quarter. Most mutual fund houses on their part

however, declare their portfolios on a monthly basis. They also display the

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portfolios on their company websites. This helps the investing community in

understanding the investments better and take an informed decision.

Unfortunately, insurance companies haven’t been proactive as far as declaration of

portfolios is concerned. In fact, at the time of writing this article (June 23, 2006),

HDFC Standard Life still had the April 2006 portfolio on their website while in

case of Aviva, there was no sign of a portfolio beyond the one declared for March

2006. While the IRDA needs to be commended for its efforts to modify the basic

structure of ULIP product, its time the authority took steps to ensure that sufficient

guidelines for the declaration of ULIP portfolios are in place and that information

is made easily available to the retail investor.

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ULIP GUIDELINES: IRDA MAKES AN START.

On July 1, 2006, the IRDA introduced revised ULIP guidelines to correct “some”

of these anomalies, we say some because much is yet to be achieved, but more on

the later.

For one IRDA has given the new ULIP a face in insurance a face can be taken as

the sum assured and the tenure. The old ULIP lacked both and individuals did not

have an inking about either even after taking the ULIP the latest guidelines dictate

that.

Term/Tenure

The ULIP client must have the option to choose a term/ tenure.

If no term is defined, then the term will be defined as 70 minus the age of the

client, for example if the client is opting for ULIP at the age of 30 then the policy

term would be 40 years.

The ULIP must have a minimum tenure of 5 years.

2. Sum Assured

On the same lines, now there is a sum assured that clients can associate

with. The minimum sum assured is calculated as:

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(Term/2 Annual Premium) or (5 Annual Premium) whichever is higher.

There is no clarity with regarded to the maximum sum assured.

The sum assured is treated assured under the new guidelines: the cannot be

reduced at any point during the term of the policy except under certain

conditions- like a partial withdrawal within two years of death or all partial

withdrawals after 60 years of age. This way the client is at ease with

regards to the sum assured at his disposal.

3. Premium Payments

If less then first 3 years premiums are paid, the life cover will lapse and

policy will be terminated by paying the surrender value. However, if at

least first 3 years premiums have been paid. Then the life cover would have

to continue at the option of the client.

4. Surrender value

The surrender value would be payable only after completion of 3 policy

years.

5. Top- ups

Insurance companies can accept top-ups only if the client had paid regular

premiums till date. If the top –up amount exceeds 25% of total basic regular

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premiums paid till date, then the client has to be given as certain percentage

of sum assured on the excess amount. Top-ups have a look-in of 3 years

(unless the top up is made in the last 3 years of the policy).

6. Partial withdrawals

The client can make partial withdrawals only after 3 policy years.

7. Settlement

The client has the option to claim the amount accumulated in his account

after maturity of the term of the policy up to a maximum of 5 years. For

instance, if the ULIP matures on January 1, 2007, the client has the option

to claim the ULIP monies till as last as December 31, 2012, However, life

cover will not be available during the extended period.

8. Loans

No loans will be granted under the new ULIP.

9. Charges

The insurance company must state the ULIP charges explicitly. They must

also give method of deduction of charges.

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10 Benefit illustrations

The client must necessarily sign on the sales benefit illustrations. These

illustrations are shown to the client by the agent to give him an idea about

the return on his policy. Agents are bound by guidelines to show

illustrations based on an optimistic estimate of 10% and a conservative

estimate of 6% Now clients will have to sign on these illustrations, because

agents were violating these guidelines and projecting higher returns.

While what the IRDA has done is commendable, a lot more needs to be done. At

Personal, we have our own wish list with regards to ULIP portfolios:

1. Regular disclosure of detailed ULIP portfolios. This is a problem wit the

industry for all their mutual fund counterparts in frequency as will as in

transparency.

2. On the same lines, other data points turnover ratios need to be

mentioned clearly so clients have an idea on whether as well as in

transparency.

3. ULIPs (especially the aggressive options) need to mention their

investment mandate, is it going to aim for aggressive capital

appreciation or steady growth in other words will it be managed

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aggressively or conservatively? Will it invest in large caps, mid caps or

across both segments? Will it be managed with the growth style or the

value style?

4. Exposure to a stock/sector in a ULIP portfolio must be defined.

Diversified equity funds have a limit to how much they can invest in a

stock/sector. Investment guidelines for ULIPs must also be crystallized.

Our interaction with insurance companies indicates that there is little

clarity on this front, we believe that since ULIPs invest so heavily in

stock markets they must have clear-cut investment guidelines.

In ING VYSYA Life, how port folio is managed, what amount and what parentage

of money in his asked in different securities (in different funds) is shown in its

monthly publication. The Link a copy of the LINK is added in the report to make

easy to understand. The Link –30th June 2006 is added.

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UNIT LINKED INSURANCE PLANS

Unit linked insurance plans have proved quite appealing to the consumers given

the buoyancy of the Indian Stock Markets over the last few years. In the falling

interest rate scenario, it is becoming increasingly difficult for Financial Institution

and Banks to offer guaranteed returns to the investors. This has brought about a

change in the expectations of the investors. There is now an increasing acceptance

of variable returns offered by these Unit Linked Insurance Products.

Today’s customers have a wide spectrum of investment opportunities with

professional investment guidance enabling them to take to take calculated risks

while looking for safety of their capital, liquidity and decent returns.

The opening up of the Insurance sector has widened the ken of knowledge of the

investor thus increasing his demands. To meet the ever challenging demands of the

investing public it has become the need of the day to offer a wide array of products

that are flexible and tailor made to suit individual customer requirements and risk

appetites. As a result, Unit Linked Insurance Plans account for 70 to 90% of the

total new business of most of the Private Insurance. The Unit Linked Insurance

Product combine Investment opportunities with insurance cover thus giving the

dual benefit of Insurance Cover with better returns.

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Unit Trust of India was the first to launch the Unit Linked Insurance Plan (ULIP)

in India in the year 1971, by entering into a Group Insurance arrangement with

Life Insurance Corporation of India to provide Life Insurance cover to its

investors. Thus UTI as a Mutual Fund was taking care of investing the Unit

holders’ money in the capital markets while LIC was providing the required Life

Cover.

With the advanced support of computing technology and the advent of Overseas

insurers, sophisticated Unit Linked Insurance Product have evolved in India.

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UNDERSTADING THE TIME VALUE OF MONEY

When any amount is invested it earns you returns

FUTURE VALUE

Future Value (FV) of Money:

Gives an idea as to what would be the value of Re.1 after a specified number of

years at a given rate of compound interest.

Example for a Single Investment:

A one time investment of Rs.1000 for 15 years at a compounded interest rate of

9% will grow to Rs.3640.

Example for Regular Yearly Investment (payment made at the

beginning of each year):

A regular investment of Rs.1000 per year for 15 years growing at a compounded

interest rate of 9% will grow to Rs.32,000.

Example for Regular Yearly Investment (payment made at the end

of each year):

A regular investment of Rs.1000 per year for 15 years growing at a compounded

interest rate of 9% will grow to Rs.28,360.

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PRESENT VALUE

Present Value (PV):

Gives an idea as to what is the current value of Re.1 that is to be received after a

specified number of years depreciating at a given rate,.

Example for a single sum of amount to be received after 15 years:

The Present Value of Rs.1000 to be received after 15 years if the compound rate of

interest is 9% is Rs.275.

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The RULE OF72

72 divided by the Interest Rate gives you

The approximate number of years it takes for your money to double with the given

rate of interest.

Example: If the interest rate is 6%, the number of years if takes to double you

investment is……

72 = 12 Years 6

72 divided by the Number of Years gives

The approximate Compound Interest Rate required for your money to

double in the given number of Years.

Example: If your money needs to double in 12 years, then the Interest rate

required is…….

72 = 6% Compound Interest 12

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REAL AND NOMINAL RATE OF INTEREST

NOMINAL RATE OF INTEREST

The Nominal Rate of Interest is the Interest Rate before any adjustment for

inflation is done.

REAL RATE OF INTEREST

The Real Rate of Interest is the return on your investment that you receive after

adjusting the rate of inflation

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WHAT TO LOOK FOR IN AN INVESTMENT?

S- Safety

L-Liquidity

R-Returns

Safety : Is the soundness of the issuer to repay the principal amount

along with the interest thereof on the due dates.

Higher the Liquidity, the Returns

Liquidity : Is the Quickness with which you can convert your investment

into cash.

Returns : Is the Income that one earns on investment by way of interest,

dividend, realized capital gains, unrealized appreciation.

Higher the Risk, Higher the expected Returns

THE BASIS OF PERSONAL INVESTMENT

It is Making Money Work Hard for you while, you Work Hard for Money

BASIC TENETS OF PERSONAL INVESTING

Earn Spend Save Leads to Financial failure

Earn Save Spend Leads to Financial Dependence

Earn Save Invest Spend Leads to Financial Independence

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VARIOUS INVESTMENT OPTIONS

EQUITY SHARES

No Maturity date

No Guarantee of returns

Traded on Stock Exchange

Have high liquidity

Market prices go up and down

Does not provide regular income

Good for Capital growth over a long term

Can deliver 15-20% returns over longer time horizons

Risk of loss of Capital

GOVERNMENT SECURITIES

Issued by Central / State Government

Have fixed maturity dates of 2 to 30 years

Provide regular income

Principal and Interest payment guaranteed by Government

Guaranteed Returns – 6- 8%

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CORPORATE BONDS

Has fixed maturity date

Provides regular income

Market price sensitive to interest rate and credit rating changes.

Returns higher than Government Bonds.

Low Liquidity

Low Volatility

MONEY MARKET INSTRUMENTS

Mature within one year

Capital protected

Low returns 4 to 6%

Minimum Volatility

High Liquidity

Good for short-term Liquidity

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MONEY MARKET INSTRUMENTS

Call Money : Overnight lending and borrowing of money by Bank,

Insurance Companies, Mutual Funds.

Treasury Bills : Generally issued by Govt. of India for 91 days. 364

days at a discounts.

Certificate of Deposit : Generally issued by Banks for 91 days to 1 year at a

discount.

Commercial Paper : Generally issued by Corporate for 91 days to 1

year at a discount.

BANK DEPOSITS

Have varying maturities with a maximum of 10 years

Offer assured returns

Capital is protected

Not marketable

Premature encashment subject to penalty

TDS at 10.2% deducted if interest exceeds Rs.5,000.

Benefit of 80C for FDs of 5 years and above (budget 2006)

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8% TAXABLE GOVT. OF INDIA GAVINGS BONDS 2003

Interest payable half yearly or cumulative

Effective yield 8.16%

Tenure-6 years

Non transferable, Non transferable, Non pledge able

No TDS deductions

8% KISAN VIKAS PATRA

8% Interest compound quarterly

Doubles after 8 years and 7 monthly

Premature encashment – after 2.5 years with penalty

Interest amount taxable

8% NATIONAL SAVINGS CERTIFICATES

Interest compounded half yearly

Investment and interest qualify for deduction u/s. 80C

Rs.1,000/- becomes Rs.1601 after 6 years

No premature encashment within 6 years

Section 80C benefit for subscription amount and accrued interest.

Interest amount taxable

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9% GOVT. OF INDIA SENIOR CITIZEN SCHEME.

9% interest payable quarterly

Tenure- 5 years

Maximum amount – Rs.15 Lacs

No TDS

Premature withdrawal after 1 year with penalty

8% MONTLY INCOME SCHEME OF POST OFFICE

8% interest paid monthly,

Tenure 6 years

Maximum amount for joint account Rs.6 lacs.

Premature encashment- after 1 year with penalty

POST OFFICE TIME DEPOSITS

1 Year - 6.25%

2 Year - 6.50%

3 Year - 7.25%

5 Year - 7.50%

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INVESTMENT OBJECTIVES OF DIFFERENT FUNDS

Growth Fund:

The objectives is to provide capital appreciation over the medium to long term an

ideal fund for the investors seeking capital appreciation over a long term period.

Income Fund:

The objective is to provide regular and steady income, with preservation of capital.

Balanced Fund:

The objective is to provide both growth and regular income

Money Market Fund:

The objective is to provide easy liquidity, regular income and preservation of

capital.

GILT FUNDS

Invest in Government Securities

Invest in Treasury Bills

No Credit Risk

Exposed to Interest Rate Risk

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DEBT / BOND FUNDS

Invest in Government Securities

Invest in FI, PSU, Bank Bonds

Invest in Corporate Bonds

Invest in Securitized Debt

Invest mainly in Rated papers

Exposed to credit risk & interest rate risk

EQUITY FUNDS

Diversified Equity Funds:

Invest in index stocks & ‘A’ group shared diversified over different Industries &

Companies.

Tax Saving Funds:

Objectives is to offer tax rebated to the investors under specific provisions of the

Indian Income Tax Laws

Investment made under Equity Linked saving funds up to Rs.1 lac enjoys

deductions from income u/s 80 c of the Income.

Tax Act

Such funds are invested in equity shares.

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Index Funds:

The fund invests in specified sectors / industries e.g. Pharma, Auto, Banking.

Multi Caps Funds:

The fund invests in small, mid & large Cap Companies

BALANCED FUNDS

Invest in Debt & Equity instruments within predetermined Proportions.

Exposed to Interest Rate Risk & Market Risk.

LIQUID FUNDS

Invest in Money Market Instruments & Bank Deposits

Low impact of interest rate changes

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CALCULATION OF NET ASSET VALUE (NAV)

Net Asset Values of a unit is based upon Net Asset of the fund divided by no. of

units outstanding at the end of each day.

Net Assets of funds are Total Assets- Total Liabilities

Total Assets = Investment (Market Value) + Receivables +

Total Liabilities = Accrued Expenses + Payables + Other Current

Liabilities.

NAV of a Unit = Net Assets of the Scheme

No. of Units in the funds

Example for Calculation of NAV

Value of shares & Debentures 100,000

Cash in hand 20,000

Interest earned 18,000

Expense to be paid (-)6,000

Therefore the NAV is 132,000

NAV per unit = NAV divided by the units issued

If the units issued were 10,000

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With a face value of Rs,10

The NAV per unit will be 132,000/ 10,000 = Rs.13.200

COMMONLY ASKED QUESTIONS AND ANSWERS

Q. What is “term” of the policy?

A. The “term” represents the period after which your policy matures.

Q. What is “Premium Payment Term” of the policy?

A. The “Premium Payment Term” represents the period for which you are

required to pay premiums in a policy.

Q. What is “Sum Assured”?

A. The “Sum Assured” in a Unit Linked contract means the minimum amount

payable on the happening of the insured contingency.

Q. How should investment funds typically be selected?

A. A customer will have to select an investment fund of his choice or can do

so in consultations with an investment advisor, keeping in view the

following factors:

- Financial Goal

- Time Period

- Risk Appetite

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Q. What is “Risk Appetite”?

A. Risk appetite means the risk tolerance ability or individual temperament. If

by nature, one is conservative and averse to taking risks, a fund with lower

risks is best. E.g. Liquid Funds Secured Funds. But the financial goals not

be achieved within a given time period.

Q. What does “Fund Choice” mean?

A. It means that

- Any fund can be selected at any point of time.

- It is possible to shift from one fund to another, depending upon market

conditions.

- Fund values would grow faster if smart and timely choices are made.

A smart customer can make more money by appropriately switching his

funds. This facility is provided in a Unit Linked Policy.

Q. Is assignment allowed a Unit Linked policy?

A. Yes, a Unit Linked Policy can be assigned like any other policy. To record

the assignment of a policy, a notice regarding the same is required.

Q. How is a Maturity Claim made in a Unit Link Policy?

A. To process a maturity claim, you need to give

- The policy document

- Discharge form

Q. To whom will a death claim amount be paid in a Unit Linked Policy?

A. The death claim is paid to:

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- The nominee, as declared in the proposal form

- The legal heirs, I n case the nominee is not specified in the policy.

- The appointee, in case the nominee is a minor at the time of claim.

Q. What happens if I do not pay premiums after paying regularly for

three years?

A. If three full years of premiums have been paid and if fur5ther premiums are

not paid, you can opt for a Premiums Holiday and the insurance cover

under the policy will continue. However, during the premium holiday

period, the sick charges will continue to be deducted by canceling units.

You can paying regular premiums as and when your financial position

improves.

Q. How many fund choices does IVL offer?

A. IVL offers you 5 choices.

- Debt fund

- Secure Fund

- Balanced Fund

- Growth Fund

- Equity Fund

Q. Can an insurance company design a Customized Fund for the

customer?

A. No, this is not allowed.

Page 63: ING Vysya Juhi

Q. When is the choice of a fund in a Unit Linked Policy made?

A. The choice has to be indicated in the Proposal Form

Q. Is if possible to invest in all the available funds?

A. Yes, if is very much possible.

Q. Can future premiums be deposited into other funds without shifting

the existing funs?

A. Yes, Future premiums can be redirected to any fund in any proportion

without shifting the existing investments.

Q. Can an insurance company be directed to make investments is specific

securities?

A. No, the decision to invest in specific securities will be taken by the Fund

Manager of the insurance company.

Q. Is there any limit on the number of switches in a policy year?

A. We offer two free switches in a policy year. However, further switches are

allowed subject to certain payments.

Q. Does the insurance company disclose the investments made in each

fund?

A. Yes, we publish a monthly newsletter titled “the Link” in which we disclose

the investments made.

Q. Are loans available in IVL’s Unit Linked Plans?

A. No, IVL’s Unit Linked Insurance Plans do not offer loans on their plans.

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Q. Are Riders allowed in IVL’s Unit Linked Plans?

A. No, Riders cannot be added as of now.

Q. Can a Unit Linked Policy be surrendered?

A. Yes, it can be surrendered subject to the terms and conditions of the policy.

Q. Can a nomination be changed in a Unit Linked Policy?

A. Yes, nomination can be changed any time till the date of Maturity. The

change needs to be intimated to the insurance through a specific form.

Q. On maturity like a traditional policy, will I get Sum Assured and

bonuses in a Unit Linked Policy?

A. Unlike a traditional policy, in a Unit Linked Insurance Plan, the returns to

customers are provided by way of appreciation in the value of their units

and not through annual bonus additions. On maturity, the performance of

the Fund and your decision regarding choice of funds and timing of

switches between funds. The value of units can be higher or lower than the

sum assured.

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2. Some companies allot as high as 105% of the premium paid by me into

my Account. I would like to benefit of this.

The Article published in the Times of India is self explanatory

NO FREE LUNCHES, HONEY

Amrita Chauhan Sanyal February 20, 2006

The Economic Times

Many of you would have seen Bajaj Allianz’s latest TV commercial promising

investors Rs105 for every Rs100 that the investor will put in their Unit Gain Plan.

Sounds very promising after all who will not want their money to grow instantly?

But are investors actually naïve enough to believe the any company will actually

shell out their own capital to increase plan will give better returns than the other

unit-linked plans in the market. This may not necessarily be true and such

marketing gimmicks should not unduly influence investors.

Bajaj Allianz’s Unit Gain Premier is a single premium unit linked plan. The

differentiating factor in this unit-linked plan is that instead of charging entry load

or upfront charges, the plan is actually allocating 105% of the premium towards

the policyholders’ fund. This 5% extra allocation is coming from the promoter’s

capital. So, now the investor should ask the most important question. How is this

Page 66: ING Vysya Juhi

money going to be recovered? The answer is the higher fund management charge.

While most other unit-linked plans charge a maximum 1.5% as fund management

charge (for equity funds) this plan will charge 2.25% as fund management charge

to recover the 5% extra allocation done for the investor.

ET Big Bucks did some number crunching to help investors figure out whether

this plan will create higher wealth for the investor in the long run or not. We

compared Bajaj Allianz’s Unit Gain Premier plan with an existing single premium

unit- linked plan in the market say Plan X. plan X charges 2.5% entry load on the

single premium invested in the plan in the fund management fee of 1.5% Bajaj

Allianz Unit Gain Premier Plan allocates 105% of the single premium invested by

the policyholder but charges 2.25% as fund management fee. We are assuring that

both the fund will give 10% annual returns and all other parameters are same in

both the plans. This means that in Plan X if the annual returns and Unit Gain

Premier Plan. As expected the fund value of Unit Gain will be higher in the initial

years due to higher allocations. But the higher fund management fee will

eventually take over and the fund value of Unit Gain will start lagging behind

from the 9th year onwards. At the end of 20 years the fund fee. While plan X will

charge a cumulative of Rs.7472 as fund management fee in 20 years on an initial

speculation of Rs.9750, Unit Gain will charge Rs.10.,906 as fund management fee

for the same time period on an initial investment of Rs.10,500.

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FREEDOM PLAN

(ULIP of ING Vysya Life Insurance)

SUITABILITY

The policy is an investment cum endowment plan, and is suitable for people who

are looking at investment option with good return and the security of investment.

SAILENT FEATURES

This policy is a participating endowment plan with the flexibility of

utilizing the maturity benefits either in lump sum or in the form of an

annuity.

The policy has two phases i.e build up phase and withdrawal phase.

Premiums are payable for the whole of build up phase i.e, premiums are

payable till the maturity of the plan.

Premiums paid under the policy are transferred into accumulation account

after reducing the mortality and other administrative expenses.

The company announces the return on the accumulation account based on

its performance.

On the due date of maturity policy holder has the option to receive

complete benefits in the lump sum or exercise the option to withdraw

benefits in installments at the regular interval.

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One has the facility of Automatic Cover Maintenance , which ensures that

the policy remains in force even when the policy holder is unable to pay

premiums. The facility is available provided the policy is in force for three

policy years.

In addition to the regular premiums, one can make lump sum injection

anytime into the plan during the premium paying period ( such lump sum

injections during the year may not exceed 25 % of the basic sum assured ).

These premium payments will give rise to a supplementary Sum assured

and Supplementary Accumulation Account. These will be combined with

the Accumulation Account at the chosen maturity date .

Policyholder can utilize Supplementary Accumulation Account , created for

“lump sum injections “ to pay premiums .

The policyholder can opt to advance the date of maturity subject to the

policy being in force for 3 years . if the early maturity is due to illness, then

the policy holder is allowed the same without any minimum premium

payment restrictions.

The premiums paid under the plan will qualify for rebate under sec . 88 of

the Income Tax Act, 1961 and the returns are fully tax exempt under Sec.10

(10 D). Premiums paid for Critical illness Benefit qualify for rebate under

Sec 80D.

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The premiums paid, net are converted into units and are converted in funds

selected by the policy holder . Based on his risk appetite policyholder has to

choose any of the four funds offered under the policy.

Switch options are also introduced to the plan in order to give an approach

of customer friendly plan. Two free switches are given every year and for

every extra switch 1% charges are applied.

Top up facility is also seen in this plan.

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INVESTMENT BUCKETS

DEBT SECURE BALANCE GROWTH EQUITY

DEBT FUNDS

INVESTMENT RISK PROFILE

GOVERNMENT BONDS 100% low

SHARE MARKET 0% nil

SECURE FUNDS

INVESTMENT RISK PROFILE

GOVERNMENT BONDS 80% low

SHARE MARKET 20% low

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BALANCE FUNDS

INVESTMENT RISK PROFILE

GOVERNMENT BONDS 60% medium

SHARE MARKET 40% medium

GROWTH FUNDS

INVESTMENT RISK PROFILE

GOVERNMENT BONDS 40% low

SHARE MARKET 60% high

EQUITY FUNDS

INVESTMENT RISK PROFILE

GOVERNMENT BONDS 0% nil

SHARE MARKET 100% very high

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CONDITIONS:

Minimum age of entry : 18 years Maximum age of entry : 60 years

Minimum premium payment term : 5 years Maximum premium payment term : 25 years

Minimum Premium

Yearly Rs 15000

THE CHARGES One time charge Rs 700 and Rs 50 per lakh of SA or part

Thereof.

Allocation charges 1st year – 45% of the annual premium

Paid

2nd and 3rd year – 7.5%of the annual

premium paid.

4th year – 4% of the annual premium

paid

Additional top-up -1% of the amount

put as top up.

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Regular Charges Rs 25 per month

Fund management charges Debt plan 0.75%

Secure plan – 1.00%

Balanced Plan- 1.35%

Growth Plan- 1.25%

Switch charge 0.1% of the amount switched, subject

to the minimum of Rs 100

Surrender Charge 5% of fund value during the second

year , 2.5% of fund value between, the

2nd & 5th year, 1%of fund value the 6th

year onwards.

Partial Surrender Charge 0.25% of the surrender amount.

Page 74: ING Vysya Juhi

BENEFITS

Maturity Benefits

Benefits under the policy would be greater of sum assured and accumulation

account plus the supplementary sum assured and supplementary accumulation

account. Policy holder has the option to receive the benefits in full and policy

comes to an end. However policy holder can opt to receive 0- 50% of maturity

benefit in cash and utilize the rest to receive an annuity spread over a period of 15

years.

Death Benefit

Benefits include greater of Basic sum assured less all premiums due but not paid

and accumulation account plus 10% of the basic sum assured plus greater of

Supplementary sum assured and supplementary accumulation account.

On death within fifteen ears after the buildup phase of the policy

Benefits includes balance in accumulation account plus 10% of basic sum

assured. (upto the age of 75 years)

Loan Benefits

After paying a premium for three years, the person is eligible for a loan.

Tax Benefits

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Tax benefits under Section 10 (10 D) are available on all our life insurance plans

and riders.

Riders Benefits

Increase the coverage at a nominal extra cost by opting for any of the riders.

Term Rider: In the event of death during the term of the benefit, the beneficiary

would receive an additional death benefit amount, which is over an above the sum

assured. The maximum amount of benefit one can avail is equal to the basic sum

assured. Where the term benefit cover applied for is more than 10 lakhs, better

rates may apply, subject to meeting eligibility requirements.

Accidental Death Benefit: This benefits provides an additional amount (over and

above the sum assured) to the beneficiary in the event accidental death of the life

insured. The maximum cover available under this benefit is equal to the basic sum

assured (subject to a max of Rs. 10 lakhs).

Accidental Death: In case of the unfortunate death of the proposer, this benefit

keeps the policy alive by waiving all future premiums on the policy.

Disability and dismemberment rider: In case of permanent disability due to an

accident, the rider pays an additional amount, which is paid out as an annuity. The

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maximum permanent disability benefit that can avail of is the basic sum assured

(subject to maximum of Rs. 10 lakhs).

Accidental Disability Guardian Benefit: In case the proposer is permanently

disabled as a result of accident, the benefit keep the policy alive by waiving all

future premiums on the policy.

Look in Period

This is a 15 days period for going through the terms and conditions and decide

upon taking or canceling the policy.

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CONCLUSION

Life insurance sector has come up with vast investment opportunities.

Innovatives ULIPs provides excellent investment opportunities, backed up

with life cover which provides for protection retirement.

Investment here is less dependent on Market swings, as investment in

particular fund (in ULIPs) is nurtured by the company itself.

Flexible portfolio provides different funds, different mix of equity, debt &

other securities, thus an opportunity for everyone.

ING Vysya Life, strict in underwriting and in compliance with IRDA

norms has transparent image in industry and its own dignity in life

insurance sector in India.

Page 78: ING Vysya Juhi

BIBLIOGRAPHY

1. www.personalfn.com

2. www.5paisa.com

3. www.ingvysyalife.com

4. The Economic Times, February 20, 2006.

5. The Link – 30th June 2006. (Publication of ING Vysya Life)

Page 79: ING Vysya Juhi

ING VYSYA LIFE INSURANCE SHAREHOLDING

1. ING Group (Netherlands) 26%

2. ENAM Group of Industries 9.13%

3. Exide Industries Limited 50%

4. Gujrat Ambuja Cement 14.87%

1. The ING GROUP (The Lion of The Financial Jungle)

International Netherlands Group is currently the worlds largest life

insurance in profits.

Largest in revenues

Largest financial group in the world in terms of profits

Ranking at number 13 in Global Fortune 500, year 2006

2. Exide Industries

EIL Is the market leader in both the automotive and industrial

segments. ‘EXIDE’ and ‘SF (Standard Furukawa)’, the flagship

brands of the company, are also the leading battery brands in the

country.

Marketing Network

- Offices – 26

Page 80: ING Vysya Juhi

- Exide Care Centers – 100

- Exide Power Centers – 25

- Dealers

SLI-3423

MC-2469

Marketing Staff-291

3. Gujarat Ambuja Cements Ltd.

The Third largest cement company in India.

4. Enam Group

Enam Group is one of India’s leading financial service providers reputed

for its ability to perceive the true potential of businesses and enhance their

value. The culture at Enam Group is deeply rooted in ethics, innovation and

financial sobriety.

Page 81: ING Vysya Juhi

RANKED WITHIN INDUSTRIES : THE GLOBAL FORTUNE 500

Fortune, 14 July 2006

1. ING Group Netherlands 138,235 8,959 1 6 7 1 12

2. AXA France 129,839 5,186 2 4 9 1 19

3. ASSICURAZIONI GENERALI ITALY 101,404 2,384 8 2 16 1 4

4. AVIVA BRITAIN 92,579 3,211 6 3 13 1 11

5. PRUDENTIAL BRITAIN 74,745 1,359 13 2 19 0 18

6. LEGAL & GENERAL GROUP BRITAIN 56,385 1,716 9 3 14 1 15

7. CNP ASSURANCES FRANCE 48,475 1,183 14 2 15 0 17

8. METLIFE U.S. 49,983 4,714 3 10 4 1 5

9. AEGON NETHERLANDS 37,694 3,395 5 9 5 1 6

10. PRUDENTIAL FINANCIAL U.S. 31,708 3,540 4 11 1 1 8

11. CHINA LIFE CHINA 27,389 25 21 0 21 0 21

12. SAMSUNG LIFE SOUTH KOREA 26,692 618 18 2 17 1 13

13. MANULIFE FINANCIAL CANADA 26,446 2,716 7 10 3 1 4

14. OLD MUTUAL BRITAIN 26,084 1,576 10 6 8 1 2

15. POWER CORP, OF CANADA CANADA 21,962 869 15 4 11 1 7

16. T&D HOLDINGS JAPAN 21,589 314 19 1 20 0 20

17. CATHAY FINANCIAL HOLDINGS TAWAN 19,469 677 17 3 12 1 10

18. SUN LIFE FINANCIAL CANADA 18,088 1,541 11 9 6 1 3

19. SWISS LIFE CANADA 17,286 690 16 4 10 1 16

20. AFLAC U.S. 14,363 1,483 12 10 2 3 1

21. FRIENDS PROVIDENT BRITAIN 4,278 307 20 2 18 0 19

TOTAL 991,693 46,463

MEDIAN 27,389 1,541

Page 82: ING Vysya Juhi

PORTFOLIO MANAGEMENT

In ING Vysya Life, how portfolio is managed, what amount and what percentage

of money is invested in different securities (in different funds) is shown in its

monthly publication THE LINK.

A copy of the LINK is added in the report to make portfolio easy to understand.

The Link – 30th Jan 2011 is added.

Page 83: ING Vysya Juhi