Marketin Strategies on Max New York Life Insurance Ltd

8/4/2019 Marketin Strategies on Max New York Life Insurance Ltd

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A SUMMER TRAINING REPORT

IN

MARKETING STRATEGIES ON

MAX

NEW YORK LIFE INSURANCE PVT. LTD.

Submitted in partial fulfillment of requirement of Bachelor of Business

Administration (BBA)

Guru Jambheshwar University, Hisar

Trainee Supervisor SUBMITTED BY

SAAVAN RAI KHULLAR NANDITA NANDA

(Partner In-charge) Enrollment no05511242097

Session: 2005-2008

GURU JAMBHESHWAR UNIVERSITY


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HISAR

ACKNOWLEDGEMENT

My training at Max New York life insurance was extremely enriching. I

was given an opportunity to work in close association with senior

executive and was benefited tremendously with the interaction. I had

with them during course of our project.

During my training period I got insights in to the insurance sector and

an opportunity to understand the mechanics of how the work is done in

an insurance company. Study of the distribution models employed in

the industry was also extremely enlightening.

I would like to extend my heart-felt gratitude to MS. Anju kapoor(sales

manager) & Mr Saavan Rai Khullar(tranee supervisor) of Max New

York Life insurance company limited for providing an opportunity to

work in this organization.

I would like to express sincere thanks to Max New York life insurance

Company for enlightening guidance.

Last but not the least I would like to thank all the respondents who took

out time from there busy schedules to help me in my project, this

project could not have been a success without them.


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NANDITA NANDA

EXECUTIVE SUMMARY

In todays competitive and dynamic world, with every business providing

the same kind of product or service, only that firm which comes up with an

innovative idea can hope to survive in the long -run, by attracting and luring

customers.

Insurance, sure is an upcoming sector but with the privatization of the same,

selling insurance products has become tough due to the competition angle

attached to it.

It is usually said that if you can sell insurance, you can sell anything in the

world including garbage. The reason behind this concept is the hesitant and

unaware population, who simply run away at the mere mention of its name.

Providing insurance to a huge population such as ours encompassing

different strata of society has indeed been a formidable task for the last few

decades. WHO statistics put the insurance access in India at around 65


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percent. The remaining 35 percent do not have any access at all.

Governments in most parts of the world, developed or otherwise, realize the

limitations when it comes to providing Insurance per se or its financing

aspects. In a globalize market-driven economy, it becomes imperative for

each country to look for the solutions and structure them to suit the domestic

needs. While there will be various factors both external and internal

influencing this search, there is no doubt that public and private healthcare

providers and financers will have to keep the customer in focus when

formulating a well thought out and highly integrated approach to cover all

sorts of requirements.

PREFACE

The liberalization of the Indian insurance sector has been the subject of

much heated debate for some years. The policy makers where in the catch 22

situation wherein for one they wanted competition, development and growth

of this insurance sector which is extremely essential for channeling the

investments in to the infrastructure sector. At the other end the policy

makers had the fears that the insurance premier, which are substantial, would

seep out of the country; and wanted to have a cautious approach of opening

for foreign participation in the sector.

As one of the rare occurrences the entire debate was put on the back burner

and the IRDA saw the day of the light thanks to the maturing polity

emerging consensus among factions of different political parties. Though


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some changes and some restrictive clauses as regards to the foreign

participation were included the IRDA has opened the doors for the private

entry into insurance.

Whether the insurer is old or new, private or public, expanding the market

will present multitude of challenges and opportunities. But the key issues,

possible trends, opportunities and challenges that insurance sector will have

still remains under the realms of the possibilities and speculation. What is

the likely impact of opening up Indias insurance sector?

Broadening of Benefits

The large scale of operations, public sector bureaucracies and cumbersome

procedures hampers nationalized insurers. Therefore, potential private

entrants expect to score in the areas of customer service, speed and

flexibility. They point out that their entry will mean better products and

choice for the consumer. The critics counter that the benefit will be slim,

because new players will concentrate on affluent, urban customers as foreign

banks did until recently. This seems to be a logical strategy. Start-up costs-

such as those of setting up a conventional distribution network-are large and

high-end niches offer better returns. However, the middle-market segment

too has great potential. Since insurance is a volumes game. Therefore,

private insurers would be best served by a middle-market approach,

targeting customer segments that are currently untapped.


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CONTENT

CHAPTER-1

INTRODUCTION

1.1 ABOUTTHEINDUSTRY


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3 HISTORICALPERSPECTIVE

4 KEYMILESTONE

5 INDUSTRYREFORMS

1.2 MARKETPRESENCE

6 FUNDAMENTALDEFINATION

7 CHARACTERISTICSOFINSURANCE

8 FUNCTIONSOFINSURANCE

9 FUNDAMENTALOFINSURANCE

10 INSURANCEINDUSTRY

11 LIFEINSURANCEINDUSTRY

12 TYPESOFCONTRACTS

1.3 RANGEOFPRODUCT $ SERVICES

1.4 COMPANIESPOLICIES

13 LIFEINSURANCE- OTHERPROVISIONS

14 SPECIALRIDERS

15 GROUPINSURANCE

16 GROUPLIFEINSURANCE

17 INDIAN INSURANCEINDUSTRY

18 INSURANCESECTORININDIA

19 LIFEINSURANCESECTORIN INDIA

20 INSURANCEMARKETININDIA

1.5 SWOTANALYSIS

CHAPTER- 2

RESEARCH METHODOLOGY

2.1 Research objectives

Scope of the Study

2.2 Research design

Individual insurance

Group Insurance

Employee deposit linked insurance

Credit Shield


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Unit linked group gratuity

2.3 Data sources

21 Significance of the Industry

22 Significance of the Research

23 Research Technique

2.4 Sample design

24 Sampling Methodology

25 Sampling unit

26 Sampling Area

27 Sample Size

2.5 Limitations of the research

CHAPTER- 3

COMPANY PROFILE

28 Vision

29 Mission

30 Values

CHAPTER- 4

DATA ANALYSIS AND INTERPRETATION

CHAPTER- 5

5.1 FINDINGS

31 Monthly family income level32 Factors of investment33 Influencer

34 Analysis of time horizon for investment35 Annual investment level36 Preference for life insurance as an investment37 Return on investment38 Advantage of investing in life insurance39 Saving your tax


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5.2 CONCLUSIONS

CHAPTER- 6

RECOMMENDATIONS

CHAPTER- 7

ANNEXURE

Questionnaire

CHAPTER-8

BIBLIOGRAPHY

CHAPTER-1

1.1 INTRODUCTION TO THE INDUSTRY

With the largest number of life insurance policies in force in the world,

Insurance happens to be a mega opportunity in India. Its a business growing

at the rate of 15-20 per cent annually and presently is of the order of Rs 450

billion (for the financial year 2005 2006). Together with banking services,

it adds about 7% to the countrys Gross Domestic Product (GDP). The gross

premium collection is nearly 2% of GDP and funds available with LIC for

investments are 8% of the GDP.

Even so nearly 80% of the Indian population is without life insurance cover

while health insurance and non-life insurance continues to be below

international standards. A large part of our population is also subject to weak


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social security and pension systems with hardly any old age income security.

This in itself is an indicator that growth potential for the insurance sector in

India is immense.

A well-developed and evolved insurance sector is needed for economic

development as it provides long term funds for infrastructure development

and strengthens the risk taking ability of individuals. It is estimated that over

the next ten years India would require investments of the order of one trillion

US dollars. The Insurance sector, to some extent, can enable investments in

infrastructure development to sustain the economic growth of the country.

(Source: www.indiacore.com)

HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was

conceived as a means to provide for English Widows. Interestingly in those

days a higher premium was charged for Indian lives than the non - Indian

lives, as Indian lives were considered more risky to cover. The Bombay

Mutual Life Insurance Society started its business in 1870. It was the first

company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General

insurance business in India, on the other hand, can trace its roots to Triton

Insurance Company Limited, the first general insurance company

established in the year 1850 in Calcutta by the British. Till the end of the

nineteenth century insurance business was almost entirely in the hands of


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overseas companies.

Insurance regulation formally began in India with the passing of the Life

Insurance Companies Act of 1912 and the Provident Fund Act of 1912.

Several frauds during the 1920's and 1930's sullied insurance business in

India. By 1938 there were 176 insurance companies.

The first comprehensive legislation was introduced with the Insurance Act

of 1938 that provided strict State Control over the insurance business. The

insurance business grew at a faster pace after independence. Indian

companies strengthened their hold on this business but despite the growth

that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life

insurers and provident societies under one nationalized monopoly

corporation and Life Insurance Corporation (LIC) was born. Nationalization

was justified on the grounds that it would create the much needed funds for

rapid industrialization. This was in conformity with the Government's

chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector

till 1972. Their operations were restricted to organized trade and industry in

large cities. The general insurance industry was nationalized in 1972. With

this, nearly 107 insurers were amalgamated and grouped into four

companies- National Insurance Company, New India Assurance Company,

Oriental Insurance Company and United India Insurance Company. These

were subsidiaries of the General Insurance Company (GIC).


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KEY MILESTONES

1912: The Indian Life Assurance Companies Act enacted as the first statute

to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-life

insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act

with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were

taken over by the central government and nationalized. LIC was formed by

an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5

crore from the Government of India.

INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDABill in Parliament in December 1999. The IRDA since its incorporation as a

statutory body in April 2000 has fastidiously stuck to its schedule of framing

regulations and registering the private sector insurance companies. Since

being set up as an independent statutory body the IRDA has put in a

framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting systems

to the insurance sector and in particular the life insurance companies was the

launch of the IRDA online service for issue and renewal of licenses to

agents. The approval of institutions for imparting training to agents has also

ensured that the insurance companies would have a trained workforce of


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insurance agents in place to sell their products.


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1.2 MARKET PRESENCE

The life insurance industry in India grew by an impressive 36%, with

premium income from new businesses at Rs. 253.43 billion during the fiscal

year 2004-2005. Though the total volume of LIC's business increased in the

last fiscal year (2004-2005) compared to the previous one, its market share

came down from 87.04 to 78.07%.

The 14 private insurers increased their market share from about 13% to

about 22% in a year's time. The figures for the first two months of the fiscal

year 2005-06 also speak of the growing share of the private insurers. The

share of LIC for this period has further come down to 75 percent, while the

private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players

have entered the market. The restriction on these companies is that they are

not allowed to have more than a 26% stake in a companys ownership.

Since the opening up of the insurance sector in 1999, foreign investments of

Rs. 8.7 billion have poured into the Indian market and 14 private life

insurance companies have been granted licenses.

Definitions:


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General definition:

In the words of John Magee, Insurance is a plan by themselves which large

number of people associate and transfer to the shoulders of all, risks that

attach to individuals.

Fundamental definition:

In the words of D.S. Hansell, Insurance accumulated contributions of all

parties participating in the scheme.

Contractual definition: In the words of justice Tindall, Insurance is a

contract in which a sum of money is paid to the assured as consideration of

insurers incurring the risk of paying a large sum upon a given contingency.

Characteristics of insurance

Sharing of risks

Cooperative device

Evaluation of risk

Payment on happening of a special event

The amount of payment depends on the nature of losses incurred.

The success of insurance business depends on the large number of people

insured against similar risk.

Insurance is a plan, which spreads the risk and losses of few people

among a large number of people.

The insurance is a plan in which the insured transfers his risk on the


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insurer.

Insurance is a legal contract which is based upon certain principles of

insurance which includes, utmost good faith, insurable interest,

contribution, indemnity, causas proxima, subrogation, etc.

The scope of insurance is much wider and extensive.

Functions of insurance:

Primary functions:

40 Provide protection:- Insurance cannot check the happening of the risk,

but can provide for the losses of risk.

41 Collective bearing of risk: - Insurance is a device to share the financial

losses of few among many others.

42 Assessment of risk: - Insurance determines the probable volume of risk

by evaluating various factors that give rise to risk.

43 Provide certainty: - Insurance is a device, which helps to change from

uncertainty to certainty.

Secondary functions:

44 Prevention of losses: - Insurance cautions businessman and individuals to

adopt suitable device to prevent unfortunate consequences of risk by

observing safety instructions.

45 Small capital to cover large risks: - Insurance relives the businessman

from security investment, by paying small amount of insurance against

larger risks and uncertainty.

46 Contributes towards development of larger industries.


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Other Function:

Means of savings and investment:

Insurance companies are business houses. The product they sell is financial

protection. To succeed and survive, they must cover their costs, which

include payments to cover the losses of policyholders, as well as sales and

administrative expenses, taxes and dividends.

Insurance companies have two sources of income for covering these

costs: premiums and investment income. The premiums are collected on a

regular basis and invested in Government Bonds, Gilt, stocks, mutual funds,

real estates and other conservative avenues. However, investment income

depends on market conditions, interest rates, economy etc. and varies from

year to year. Because of the uncertainty associated with the investment

income, insurance companies must generate enough income from premiums

to cover the bulk of their expenses.

The risk becomes insurable if the following requirements are complied

with:

The insured must suffer financial loss if the risk operates.

The loss must be measurable in money,

The object of the insurance contract must be legal.

The insurer should have sufficient knowledge about the risks he accepts.

Fundamentals of Insurance

The fundamental Principles of the Insurance are as follows:

Insurable Interest: Insurable interest means the legal right to insure.

Insurable Interest is a must and only then the insurance contract is

enforceable at law. This principle differentiates a Contract of insurance


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from wager. Lack of insurable interest renders the contract null and void.

For Insurable Interest to exist there must be Property, Rights, Interest,

Life or Liability; this must be insured and the Insured should have a

legally recognizable relationship thereto. The Insured should be benefited

by the safety of the property or is prejudiced by its loss. Insurable Interest

may arise in the following manner:

1. Ownership: Absolute ownership entitles the owner to insure the

property. This is the commonest method whereby Insurable Interest

arises.

2. Partial Interest is also insurable e.g. a mortgagee. A creditor can also

insure the life of his debtor but only to the extent of his loan.

3. Administrators and executors i.e. officials appointed by a court of

law to take care of a property may also insure the property.

4. Relationship does not automatically constitute insurable interest. The

only relationship recognized by law for this purpose is the one between a

husband and wife.

5. An employer can insure his employee under a Personal Accident

Policy as he has insurable interest in them.

Proximate cause: Generally, the claims are payable under insurance

policies if they arise out of events which are proximately caused by the

insured perils. In other words, the proximate cause of the event has to be

peril covered by the policy, so as to constitute a valid claim.

Contribution: An insured may have several insurance on the same

subject matter. If he recovers his loss under all these insurance, he will

obviously make a profit out of loss. This will be an infringement of the

principle of indemnity. Common Law has, therefore, evolved the doctrine

of contribution whereby the insured is prevented from recovering more


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than his loss, despite his having several insurance on the subject

matter.

Subrogation: The principle of indemnity seeks to prevent the insured

from making profit out of loss. However, it may so happen that that the

insured may recover his loss under his policy and he may also have rights

against third parties. If, after the insurance claim is settled, the insured is

allowed to enforce his rights against third parties and to retain whatever

damages he receives from them, he will certainly make a profit and the

principle of indemnity will be infringed.

Common Law has therefore, evolved the doctrine of subrogation as

corollary to the principle of indemnity. Subrogation may be defined as

the transfer of rights and remedies of the insured to the insurers who have

indemnified the insured in respect of the loss. The Common Law right of

subrogation is implied an all contracts on indemnity, as it arises only

after payment of loss.

Utmost Good Faith: In all General Insurance contracts we know that a

property or interest or liability or life is offered for insurance and the

insured has to take decisions on the acceptance of the proposal. If he

decides to accept the proposal a premium commensurate with the risk has

to be charged. To enable him to take necessary decision in this regard,

the insurer must have certain facts about the risk offered. These facts

influence the judgment of the insurer in deciding about the acceptance or

otherwise of the risk and the rate of premium to be charged, if accepted.

Such facts are known as material facts.


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Insurance industry

A system under which the insurer, for a consideration usually agreed upon in

advance, promises to reimburse the insured or to render services to the

insured in the event that certain accidental occurrences result in losses

during a given period. It thus is a method of coping with risk. Its primary

function is to substitute certainty for uncertainty as regards the economic

cost of loss-producing events.

Insurance relies heavily on the law of large numbers. In large

homogeneous populations it is possible to estimate the normal frequency of

common events such as deaths and accidents. Losses can be predicted with

reasonable accuracy, and this accuracy increases as the size of the group

expands. From a theoretical standpoint, it is possible to eliminate all pure

risk if an infinitely large group is selected.

From the standpoint of the insurer, an insurable risk must meet the following

requirements:

1. The objects to be insured must be numerous enough and homogeneous

enough to allow a reasonably close calculation of the probable frequency

and severity of losses.

2. The insured objects must not be subject to simultaneous destruction. For

example, if all the buildings insured by one insurer are in an area subject to


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flood, and a flood occurs, the loss to the insurance underwriter may be

catastrophic.

3. The possible loss must be accidental in nature, and beyond the control of

the insured. If the insured could cause the loss, the element of randomness

and predictability would be destroyed.

4. There must be some way to determine whether a loss has occurred and

how great that loss is. This is why insurance contracts specify very definitely

what events must take place, what constitutes loss, and how it is to be

measured.

From the viewpoint of the insured person, an insurable risk is one for which

the probability of loss is not so high as to require excessive premiums. What

is excessive depends on individual circumstances, including the insured's

attitude toward risk. At the same time, the potential loss must be severe

enough to cause financial hardship if it is not insured against. Insurable risks

include losses to property resulting from fire, explosion, windstorm, etc.;

losses of life or health; and the legal liability arising out of use of

automobiles, occupancy of buildings, employment, or manufacture.

Uninsurable risks include losses resulting from price changes and

competitive conditions in the market. Political risks such as war or currency

debasement are usually not insurable by private parties but may be insurable

by governmental institutions. Very often contracts can be drawn in such a

way that an uninsurable risk can be turned into an insurable one through

restrictions on losses, redefinitions of perils, or other methods.


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Life insurance industry

Life insurance may be defined as a plan under which large groups of

individuals can equalize the burden of loss from death by distributing funds

to the beneficiaries of those who die. From the individual standpoint life

insurance is a means by which an estate may be created immediately for

one's heirs and dependents. It has achieved its greatest acceptance in

Canada, the United States, Belgium, South Korea, Australia, Ireland, New

Zealand, The Netherlands, and Japan, countries in which the face value of

life insurance policies in force generally exceeds the national income.

In the United States in 1990 nearly $9.4 trillion of life insurance was in

force. The assets of the more than 2,200 U.S. life insurance companies

totaled nearly $1.4 trillion, making life insurance one of the largest savings

institutions in the United States. Much the same is true of other wealthy

countries, in which life insurance has become a major channel of saving and

investment, with important consequences for the national economy.

Life insurance is relatively little used in poor countries, although its

acceptance has been increasing.

Types of contracts

The major types of life insurance contracts are term, whole life, and

universal life, but innumerable combinations of these basic types are sold.Term insurance contracts, issued for specified periods of years, are the

simplest. Protection under these contracts expires at the end of the stated

period, with no cash value remaining. Whole life contracts, on the other

hand, run for the whole of the insured's life and gradually accumulate a cash


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value. The cash value, which is less than the face value of the policy, is paid

to the policyholder when the contract matures or is surrendered. Universal

life contracts, a relatively new form of coverage introduced in the United

States in 1979, have become a major class of life insurance. They allow the

owner to decide the timing and size of the premium and amount of death

benefits of the policy. In this contract, the insurer makes a charge each

month for general expenses and mortality costs and credits the amount of

interest earned to the policyholder. There are two general types of universal

life contracts, type A and type B. In type-A policies the death benefit is a set

amount, while in type-B policies the death benefit is a set amount plus

whatever cash value has been built up in the policy.

Life insurance may also be classified, according to type of customer, as

ordinary, group, industrial, and credit. The ordinary insurance market

includes customers of whole life, term, and universal life contracts and is

made up primarily of individual purchasers of annual-premium insurance.

The group insurance market consists mainly of employers who arrange

group contracts to cover their employees. The industrial insurance market

consists of individual contracts sold in small amounts with premiums

collected weekly or monthly at the policyholder's home. Credit life

insurance is sold to individuals, usually as part of an installment purchase

contract; under these contracts, if the insured dies before the installment

payments are completed, the seller is protected for the balance of the unpaid

debt.

Insurance may be issued with a premium that remains the same throughout

the premium-paying period, or it may be issued with a premium that


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increases periodically according to the age of the insured. Practically all

ordinary life insurance policies are issued on a level-premium basis, which

makes it necessary to charge more than the true cost of the insurance in the

earlier years of the contract in order to make up for much higher costs in the

later years; the so-called overcharges in the earlier years are not really

overcharges but are a necessary part of the total insurance plan, reflecting

the fact that mortality rates increase with age. The insured is not overpaying

for protection, because of the claim on the cash values that accumulate in the

early years; the policyholder may borrow on this value or may recapture it

completely by lapsing the policy. The insured does not, however, have a

claim on all the earnings that accrue to the insurance company from

investing the funds of its policyholders.

By combining term and whole life insurance, an insurer can provide many

different kinds of policies. Two examples of such package contracts are

the family income policy and the mortgage protection policy. In each of

these, a base policy, usually whole life insurance, is combined with term

insurance calculated so that the amount of protection declines as the policy

runs its course. In the case of the mortgage protection contract, for example,

the amount of the decreasing term insurance is designed roughly to

approximate the amount of the mortgage on a property. As the mortgage is

paid off, the amount of insurance declines correspondingly. At the end of the

mortgage period the decreasing term insurance expires, leaving the base

policy still in force. Similarly, in a family income policy, the decreasing

term insurance is arranged to provide a given income to the beneficiary over

a period of years roughly corresponding to the period during which the

children are young and dependent.


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Some whole life policies permit the insured to limit the period during which

premiums are to be paid. Common examples of these are 20-year life, 30-

year life, and life paid up at age 65. On these contracts, the insured pays a

higher premium to compensate for the limited premium-paying period. At

the end of the stated period, the policy is said to be paid up, but it remains

effective until death or surrender.

Term insurance is most appropriate when the need for protection runs for

only a limited period; whole life insurance is most appropriate when the

protection need is permanent. The universal life plan, which earns interest at

a rate roughly equal to that earned by the insurer (approximately the rate

available in long-term bonds and mortgages), may be used as a convenient

vehicle by which to save money. The owner can vary the amount of death

protection as the need for it changes in the course of life. The policy offers

flexibility and saves the owner commission expense by eliminating the need

for dropping one policy and taking out another as protection requirements

change.

Settlement options

The death proceeds or cash values of insurance may be settled in various

ways. The insured may take the cash value and lapse the policy. Abeneficiary may take a lump sum settlement of the face amount upon the

death of the insured. The beneficiary may, instead, elect to receive the

proceeds over a given number of years or in some fixed amount, such as

Rs1000 a month, for as long as the proceeds last. The money may be left


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with the insurer temporarily to draw interest. Or the proceeds may be used to

purchase a life annuity, which in effect is another insurance policy

guaranteeing regular payments for the life of the insured.

1.3 Range of product & services

Innovative products, smart marketing, and aggressive distribution have

enabled fledgling private insurance companies to sign up Indian customers

faster than anyone expected. Indians, who had always seen life insurance as

a tax saving device, are now suddenly turning to the private sector and

snapping up the new innovative products on offer. Some of these products

include investment plans with insurance and good returns (unit linked

plans), multi purpose insurance plans, pension plans, child plans and

money back plans.

Insurance may be described as a social device to ensure protection of

economic value of life and other assets. Under the plan of insurance, a large

number of people associate themselves by sharing risks attached to

individuals. The risks, which can be insured against, include fire, the perils

of sea, death and accidents and burglary. Any risk contingent upon these,

may be insured against at a premium commensurate with the risk involved.

Thus collective bearing of risk is insurance.

Insurance is a contract whereby, in return for the payment of premium by the


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insured, the insurers pay the financial losses suffered by the insured as a

result of the occurrence of unforeseen events. The term "risk" is used to

describe the possibility of adverse results flowing from any occurrence or

the accidental happenings, which produce a monetary loss.

Insurance is a pool in which a large number of people exposed to a similar

risk make contributions to a common fund out of which the losses suffered

by the unfortunate few, due to accidental events, are made good. The sharing

of risk among large groups of people is the basis of insurance. The losses of

an individual are distributed over a group of individuals.

1.4 COMPANIES POLICIES

Life insurance - Other provisions

Life insurance policies contain various clauses that protect the rights of

beneficiaries and the insured. Perhaps the best-known is the incontestable

clause, which provides that if a policy has been in force for two years the

insurer may not afterward refuse to pay the proceeds or cancel the contract

for any reason except nonpayment of premiums. Thus, if the insured made a

material misrepresentation when the policy was originally obtained, and this

misrepresentation is not discovered until after the contestable period,

beneficiaries may still receive the value of the policy so long as the

premiums are maintained. Another protective clause is the suicide clause,


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which states that after a given period, usually two years, the insurer may not

deny liability for subsequent suicide of the insured. If suicide occurs within

the period, the insurer tenders to the beneficiary only the premiums that have

been paid. If the age of the insured was misstated when the policy was taken

out, the misstatement-of-age clause provides that the amount payable is the

amount of insurance that would have been purchased for the premium had

the correct age been stated. Many life insurance policies, known as

participating policies, return dividends to the insured. The dividends, which

may amount to 20 percent of the premiums, may be accumulated in cash left

with the insurer at interest, used to buy additional life insurance, used to

reduce premium payments, or used to pay up the contract sooner than would

otherwise have been possible.

Special riders

The insured may, at a nominal charge, attach to the contract a waiver-of-

premium rider under which premium payments will be waived in the event

of total and permanent disability before the age of 60. Under the disability

income rider, should the insured become totally and permanently disabled, a

monthly income will be paid. Under the double indemnity rider, if death

occurs through accident, the insurance payable is double the face amount.

Group insurance

Groups have always been important in the insurance field, from the burial

societies of the Romans and the insurance funds of the medieval guilds to

the fraternal and religious insurance plans of modern times. In the 20th


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century private insurance companies have written increasingly large

amounts of group insurance, particularly in life insurance, health insurance,

and annuities. In 1990 more than 95 percent of the industrial labour force in

the United States was covered by group life and health insurance plans

established by employers. Much of the impetus for these employee benefit

plans came from the labour unions, which pressed for such fringe benefits

in bargaining with employers.

Group insurance is widely used throughout the world, both in the form of

private plans and as social insurance plans. Social security plans with group

coverage exist in more than 140 nations. Private group plans are generally

offered wherever private life and health insurance companies operate. Group

life insurance is the most commonly offered plan; group health plans are

government-operated in many nations. In many countries, group pension

plans are common as a supplement to social insurance pension schemes.

Group insurance has been especially popular in Japan, where many

employees serve a company for life. All Japanese life insurance companies

offer group life insurance. Health insurance is provided by the government.

Funded group pensions became popular after a 1962 tax law made

contributions tax-deductible for Japanese employers. In addition, virtually

all Japanese employers provide lump-sum retirement allowances to their

workers.

Group life insurance

Under group life insurance an employer signs a master contract with the

insurance company outlining the provisions of the plan. Each employee


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receives a certificate that gives evidence of participation in the plan. The

amount of insurance depends on the employee's salary or job classification;

usually the employer pays a portion of the premium and the employee pays

the rest, but sometimes the employer pays the entire cost of the plan.

A major advantage of group life insurance to an employee is that usually

coverage may be obtained regardless of health. An employee who leaves the

group may, without a medical examination, convert the group coverage to an

individual policy. The premiums on group life insurance are considerably

less than on comparable individual policies, mainly because the selling and

administrative costs are minimal.

INDIAN INSURANCE INDUSTRY

Insurers

Insurance industry, as on 1.4.2000:

Life Insurers:

Life Insurance Corporation of India (LIC) .

Yr: 2000-2001 : ( From 2nd April '2000 to 31st December'2001)

Insurance Industry in the year 2000-2001 had 10 new entrants, namely:

Life Insurers:


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S.No. Registration

Number

Date of Reg. Name of the Company

1 101 23.10.2000 HDFC Standard Life Insurance

Company Ltd.2 104 15.11.2000 Max New York Life Insurance

Co. Ltd.3 105 24.11.2000 ICICI Prudential Life Insurance

Company Ltd.4 107 10.01.2001 OM Kotak Mahindra Life

Insurance Co. Ltd.5 109 31.01.2001 Birla Sun Life Insurance

Company Ltd.6 110 12.02.2001 Tata AIG Life Insurance

Company Ltd.7 111 30.03.2001 SBI Life Insurance Company

Limited .8 114 02.08.2001 ING Vysya Life Insurance

Company Private Limited9 116 03.08.2001 Allianz Bajaj Life Insurance

Company Ltd.10 117 06.08.2001 Metlife India Insurance Company

Pvt. Ltd.

Yr: 2001-2002 : ( From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 2 new entrants; namely


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Life Insurers:

S.No. Registration

Number


1 121 03.01.2002 AMP SANMAR Assurance Company

Ltd.2 122 14.05.2002 Aviva Life Insurance Co. India Pvt.

Ltd.

Yr: 2003-2004 : ( From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

S.No. Registration

Number


1 127 06.02.2004 Sahara India Insurance Company Ltd.

Policies And Measures To Develop Insurance Market

Generally, the Authority has taken a pro-active role in the establishment of a

vibrant insurance market in the country. The market regulation by

prudential norms, the registration of players who have the necessary

financial strength to withstand the demands of a growing and nascent


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market, the necessity to have 'fit and proper' persons in-charge of businesses,

the implementation of a solvency regime that ensures continuous financial

stability, and above all, the presence of an adequate number of insurers to

provide competition and choice to customers-all these steps lead to the

establishment of a regime committed to an overall development of the

market in normal times.

More particularly, for the development of the insurance market and

improvement in the insurance density and insurance penetration leading to

an adequate social security and health protection, the Authority has

prescribed rural and social sector norms in respect of insurance business

being underwritten by the companies. The companies have also been asked

to devise covers addressed to specific sectors in the economically weak

population.

For developing the market capacity, insurers have been asked to retain bulk

of the premium within the country and to exhaust local market capacity

before reinsuring abroad. The reinsurance regulations have tried to ensure

that local market capacity is enhanced on a continuous basis. The Authority

is also examining the prospects of expanding the reinsurance market in India

by encouraging the setting up one or more reinsurance companies in the

private sector.

The Authority even at the time of grant of registration to the new companies,

has made it a practice to specify, in suitable cases, the establishment of

branches and offices of the insurers in places where activities are on a low

key. In States like Jammu and Kashmir, Orissa, North Eastern areas where

the Authority feels that the development of business has been stunted,

insurers have been advised to open their offices.

Development of products including group policies to cater to special


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categories has been one of the salient features for the development of the

market.

The Authority is conscious of the fact that each of these factors has to be

given due importance and recognition for a sustained development of the

market. Necessary efforts are being directed continuously in this regard.

INSURANCE SECTOR IN INDIA

The insurance sector in India has come a full circle from being an open

competitive market to nationalisation and back to a liberalised market again.

Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries.

A brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in

the year 1818 with the establishment of the Oriental Life Insurance

Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first

statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-

life insurance businesses.

1938: Earlier legislation consolidated and amended to by the

Insurance Act with the objective of protecting the interests of the

insuring public.


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1956: 245 Indian and foreign insurers and provident societies taken

over by the central government and nationalised. LIC formed by an

Act of Parliament, viz. LIC Act, 1956, with a capital contribution of

Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its

roots to the Triton Insurance Company Ltd., the first general insurance

company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India

are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company

to transact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association

of India, frames a code of conduct for ensuring fair conduct and sound

business practices.

1968: The Insurance Act amended to regulate investments and set

minimum solvency margins and the Tariff Advisory Committee set

up.

1972: The General Insurance Business (Nationalisation) Act, 1972

nationalised the general insurance business in India with effect from

1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the

National Insurance Company Ltd., the New India Assurance


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Company Ltd., the Oriental Insurance Company Ltd. and the United

India Insurance Company Ltd. GIC incorporated as a company.

Insurance sector reforms:

In 1993, Malhotra Committee headed by former Finance Secretary and RBI

Governor R.N. Malhotra was formed to evaluate the Indian insurance

industry and recommend its future direction.

The Malhotra committee was set up with the objective of complementing the

reforms initiated in the financial sector. The reforms were aimed at "creating

a more efficient and competitive financial system suitable for the

requirements of the economy keeping in mind the structural changes

currently underway and recognizing that insurance is an important part of

the overall financial system where it was necessary to address the need for

similar reforms"

In 1994, the committee submitted the report and some of the key

recommendations included:

1) Structure

Government stake in the insurance Companies to be brought down to 50%

Government should take over the holdings of GIC and its subsidiaries so that

these subsidiaries can act as independent corporations

All the insurance companies should be given greater freedom to operate

2) Competition


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Private Companies with a minimum paid up capital of Rs.1bn should be

allowed to enter the industry

No Company should deal in both Life and General Insurance through a

single entity

Foreign companies may be allowed to enter the industry in collaboration

with the domestic companies

Postal Life Insurance should be allowed to operate in the rural market

Only One State Level Life Insurance Company should be allowed to operate

in each state

3) Regulatory Body

The Insurance Act should be changed

An Insurance Regulatory body should be set up

Controller of Insurance (Currently a part from the Finance Ministry) should

be made independent

4) Investments

Mandatory Investments of LIC Life Fund in government securities to be

reduced from 75% to 50%

GIC and its subsidiaries are not to hold more than 5% in any company

(There current holdings to be brought down to this level over a period of

time)


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5) Customer Service

LIC should pay interest on delays in payments beyond 30 days

Insurance companies must be encouraged to set up unit linked pension plans

Computerisation of operations and updating of technology to be carried out

in the insurance industry The committee emphasized that in order to improve

the customer services and increase the coverage of the insurance industry

should be opened up to competition.

But at the same time, the committee felt the need to exercise caution as any

failure on the part of new players could ruin the public confidence in the

industry. Hence, it was decided to allow competition in a limited way by

stipulating the minimum capital requirement of Rs.100 crores. The

committee felt the need to provide greater autonomy to insurance companies

in order to improve their performance and enable them to act as independent

companies with economic motives. For this purpose, it had proposed setting

up an independent regulatory body.

LIFE INSURANCE SECTOR IN INDIA

Many may not be aware that the life insurance industry of India is as old as

it is in any other part of the world. The first Indian life insurance company

was the Oriental Life Insurance Company, which was started in India in

1818 at Kolkata1. A number of players (over 250 in life and about 100 in


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non-life) mainly with regional focus flourished all across the country.

However, the Government of India, concerned by the unethical standards

adopted by some players against the consumers, nationalised the industry in

two phases in 1956 (life) and in 1972 (non-life). The insurance business of

the country was then brought under two public sector companies, Life

Insurance Corporation of India (LIC) and General Insurance Corporation of

India (GIC).

In line with the economic reforms that were ushered in India in early

nineties, the Government set up a Committee on Reforms (popularly called

the Malhotra Committee) in April 1993 to suggest reforms in the insurance

sector. The Committee recommended throwing open the sector to private

players to usher in competition and bring more choice to the consumer. The

objective was to improve the penetration of insurance as a percentage of

GDP, which remains low in India even compared to some developing

countries in Asia.

Reforms were initiated with the passage of Insurance Regulatory and

Development Authority (IRDA) Bill in 1999. IRDA was set up as an

independent regulatory authority, which has put in place regulations in line

with global norms. So far in the private sector, 12 life insurance companies

and 9 general insurance companies have been registered.

47 Term Insurance Policy

48 Whole Life Policy

49 Endowment Policy

50 Money Back Policy

51 Annuities and Pension


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Most of the products offered by Indian life insurers are developed and

structured around these "basic" policies and are usually an extension or a

combination of these policies. So, w hat are these policies and how do they

differ from each other?

Term insurance policy

52 A term insurance policy is a pure risk cover for a specified period

of time. What this means is that the sum assured is payable only if

the policyholder dies within the policy term. For instance, if a

person buys Rs 2 lakh policy for 15-years, his family is entitled to

the money if he dies within that 15-year period.

53 What if he survives the 15-year period? Well, then he is not

entitled to any payment; the insurance company keeps the entire

premium paid during the 15-year period.

54 So, there is no element of savings or investment in such a policy. It

is a 100 per cent risk cover. It simply means that a person pays acertain premium to protect his family against his sudden death. He

forfeits the amount if he outlives the period of the policy. This

explains why the Term Insurance Policy comes at the lowest cost.

Whole life policy

55 As the name suggests, a Whole Life Policy is an insurance cover

against death, irrespective of when it happens.

56 Under this plan, the policyholder pays regular premiums until his

death, following which the money is handed over to his family.


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This policy, however, fails to address the additional needs of the insured

during his post-retirement years. It doesn't take into account a person's

increasing needs either. While the insured buys the policy at a young age,

his requirements increase over time. By the time he dies, the value of the

sum assured is too low to meet his family's needs. As a result of these

drawbacks, insurance firms now offer either a modified Whole Life Policy

or combine in with another type of policy.

Endowment policy

Combining risk cover with financial savings, endowment policies is the

most popular policies in the world of life insurance.

57 In an Endowment Policy, the sum assured is payable even if the

insured survives the policy term.

58 If the insured dies during the tenure of the policy, the insurance

firm has to pay the sum assured just as any other pure risk cover.

59 A pure endowment policy is also a form of financial saving,

whereby if the person covered remains alive beyond the tenure of

the policy; he gets back the sum assured with some other

investment benefits.

In addition to the basic policy, insurers offer various benefits such as double

endowment and marriage/ education endowment plans. The cost of such a

policy is slightly higher but worth its value.


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Money back policy

60 These policies are structured to provide sums required as

anticipated expenses (marriage, education, etc) over a stipulated

period of time. With inflation becoming a big issue, companies

have realized that sometimes

the money value of the policy is eroded. That is why with-profit

policies are also being introduced to offset some of the losses incurred

on account of inflation.

61 A portion of the sum assured is payable at regular intervals. On

survival the remainder of the sum assured is payable.

62 In case of death, the full sum assured is payable to the insured.

63 The premium is payable for a particular period of time.

Annuities and pension

In an annuity, the insurer agrees to pay the insured a stipulated sum of

money periodically. The purpose of an annuity is to protect against risk as

well as provide money in the form of pension at regular intervals.

Over the years, insurers have added various features to basic insurance

policies in order to address specific needs of a cross section of people.

What are the types of term insurance policies?


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Term insurance comes in two basic varietieslevel term and decreasing

term. These days, almost everyone buys level term insurance. The terms

level and decreasing refer to the death benefit amount during the term of

the policy. A level term policy pays the same benefit amount if death occurs

at any point during the term.

Common types of level term are:

64 yearly- (or annually-) renewable term

65 5-year renewable term

66 10-year term

67 15-year term

68 20-year term

69 25-year term

70 30-year term

71 term to a specified age (usually 65)

Yearly renewable term, once popular, is no longer a top seller. The most

popular type is now 20-year term. Most companies will not sell term

insurance to an applicant for a term that ends past his or her 80th birthday.


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INSURANCE MARKET IN INDIA

By any yardstick, India, with about 200 million middle class households,

presents a huge untapped potential for players in the insurance industry.

Saturation of markets in many developed economies has made the Indian

market even more attractive for global insurance majors. Table 1 reflects the

low percentage and per capita penetration of insurance in India compared to

other developed and developing countries.

With the per capita income in India expected to grow at over 6% for the next

10 years and with improvement in awareness levels, the demand for

insurance is expected to grow at an attractive rate in India. An independent

consulting company, The Monitor Group has estimated that the life

insurance market will grow from Rs.218 billion in 1998 to Rs.1003 billion

by 2008 (a compounded annual growth of 16.5%).

1.5 SWOT ANALYSIS

STRENGTH WEAKNESS OPPORTUNITY THREAT


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ContinuousInnovation

Lack customerorientation

Huge untappedPotential.

Detarrificationleads to highercompetition.

Wide productportfolio.

Lack in Follow-ups

Customers valuequality the most .

Cut throatcompetition withBajaj Allianz &ICICI.

Brand Name Sales & profitorientedapproach

Competition is veryhigh

CompetitivePrices

CHAPTER-2

RESEARCH METHODOLOGY


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Title : Marketing Strategies of Max New York Life Insurance Ltd.

Title Justification : Max New York Life (MNYL) marketing strategies is

to become a leading player in the life insurance segment of India. The

training methodologies and process improvements undertaken by the

company are a part of their growth strategy. The distribution system

developed by Max New York Life has been discussed both in rural and

urban markets. The product differentiation strategies followed by Max New

York Life also plays an important role in their growth.

2.1 RESEARCH OBJECTIVES

72 To study the insurance sector in India with special consideration to

Max New York Life Insurance.

73 To study marketing strategies of Max New York Life Insurance and

find out the future scope of insurance in India.

Objective One

To study the insurance sector in India with special consideration to Max

New York Life Insurance.

Objective Two

To study marketing strategies of Max New York Life Insurance and find out

the future scope of insurance in India.


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RESEARCH DESIGN

Max New York Life has led the industry in realigning it towards providing

the right balance between protection and saving in life insurance products.

Over 70 per cent of the companys business is from protection-oriented

Whole Life policies, which offer the true value of life insurance.

The approach of Max New York Life (MNYL) marketing strategies is to

become a leading player in the life insurance segment of India. The training

methodologies and process improvements undertaken by the company are a

part of their growth strategy. The distribution system developed by Max

New York Life has been discussed both in rural and urban markets. The

product differentiation strategies followed by Max New York Life also plays

an important role in their growth.

Key strategies adopted by Max New York Life to promote marketing of its

products are:

74 Importance of training in Life Insurance Industry.

75 Need for SWOT analysis before planning competitive strategies.

76 To carefully analyze Impact of a wide distribution network

77 Product differentiation in Life Insurance

78 To tie up with various rural banks in order to penetrate more. As a

part of this strategy Max New York Life and Adilabad District

Cooperative Central Bank Ltd announced a strategic tie-up to sell life

insurance products through the rural bank.

79 My Options strategy.

Max New York Life believes that no two individuals have the same

specific needs. That is why Max New York Life tries to personalize life

insurance policies through My Options. My Options gives customers the

flexibility to customize your life insurance policy. Simply choose one of our


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base life insurance policies, attach any one or more of the relevant offerings

from My Options, and shape chosen policy to suit requirements. This

customization can be done at the time of buying the policy or anytime later,

subject to meeting certain conditions.

Max New York Life keeps maximum stress on its Product

differentiation Strategy. As a part of this strategy it has a large range of

products for various age groups and genders. The various ranges of products

and various benefits given by Max New York Life are discussed below.

INDIVIDUAL INSURANCE

PROTECTION

80 Whole Life Participating Insurance

Whole Life Participating Insurance provides an insurance cover that is

guaranteed for entire life. This policy also builds cash value, which can be

used during lifetime to fund any unforeseen needs either by surrendering

accumulated PUAs or taking a loan. In addition this policy is also eligible

for bonuses.

Unique features of this policy/Key benefits of this policy:

81 On death of life insured: Sum Assured plus accrued bonuses.

82 On Maturity (attaining age 100): Sum Assured plus accrued bonuses.


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83 Bonus: From 3rd policy year, we will declare bonuses every year.

84 Option to Participate in Progressive Bonuses: Allows you to top up your

premiums to purchase additional Sum Assured in your existing policy. It

also generates further bonuses.

85 Tax benefits:

You are entitled to the following tax benefits under Income Tax Act 1961:

o Your premiums are eligible for deduction u/s 80C up to

Rs.100,000/- every year.

o Your DD rider premiums are eligible for an additional deduction

u/s 80D up to Rs.10, 000/- every year.

o Your claim amounts (from death, through surrenders or on

maturity) are eligible for tax exemption u/s 10(10D).

86 Level Term Policy (Non-Participating/Non-Convertible)

In the exciting journey of your life, there will be uncertainties. Additionally

there are bound to be occasions when you have to assume additional

responsibilities as the head of the family. Max New York Lifes Level Term

(Non Participating) Policy insures your life at a very low cost and reduces

any hardship your family may have to bear in the unfortunate event of yourdeath.



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87 On death of life insured: In case of the unfortunate death of the life

insured during the term of the plan, an amount equal to the Sum assured

is paid to the beneficiary.

88 Tax benefits:

You are entitled to the following tax benefits under Income Tax Act

1961:


Rs.100,000/- every year



o Your claim amounts (from death) are eligible for tax exemption u/s

10(10D).

89 Five Year Renewable and Convertible Term Insurance

Five Year Renewable and Convertible Term Insurance provide you with

a low cost insurance cover during its tenure of five years. It is also

convertible any time into any permanent life insurance policy from Max

New York Life, so that you are able to take advantage of increasing your

savings when your responsibilities increase viz. on marriage, or on child

birth.


90 On death of life insured: Sum Assured


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91 Tax benefits:


Rs.100,000/- every year



o Your claim amounts (from death) are eligible for tax exemption u/s

10(10D).

92 Life Partner Plus

Life Partner PlusLimited Pay Endowment to age 75 offers you powerful

triple benefits of

93 Money if you live i.e. maturity benefit at age 75

94 Money if you don't i.e. a Life Insurance coverage till age 75

95 Money backs i.e. a part of the Sum Assured at regular intervals to take

care of your periodic foreseen needs.


96 On death of life insured: Initial Sum Assured Plus Sum Assured of Paid

Up Additions through bonuses

97 On survival: Money backs @ 7.5% of the Initial Sum Assured will be

paid on each policy anniversary from age 61 to 75.


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98 On maturity: 100% of Sum Assured with Sum Assured of Paid Up

Additions, if any.

99 On Surrender of Policy: Surrender value.

100Limited Premium Payment term: You can choose to pay the premiums

over 4 terms i.e. 3 years, 7 years, 10 years or 20 years.

101Bonus: From 3rd policy year, we will declare bonuses every year.

SAVINGS

102Life Gain Endowment (Participating Plan)

Life Gain Endowment (Participating Plan) provides you with an insurance

cover that is guaranteed during the tenure of the policy. This policy also

builds cash value, which you can use during your lifetime to fund any

unforeseen needs either by surrendering accumulated PUAs (explained

below) or taking a loan. In addition this policy is also eligible for bonuses.


103On death of life insured: Sum Assured plus accrued bonus

104On maturity: Sum Assured plus Guaranteed Addition @ 10% of Sum

Assured plus accrued bonus plus terminal bonus (if any).

105On Surrender of Policy: Surrender value.

106Bonus: From 3rd policy year, we will declare bonuses every year.

107Life Pay Money Back (Participating Plan)


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Life Pay Money Back (Participating Plan) will keep paying you a part of the

Sum Assured at regular intervals, to take care of your periodic foreseen

needs, and the balance keeps growing to take care of your long term saving

needs, as well as provides insurance coverage till maturity. In addition this

policy is also eligible for bonuses.

108Life Gain Plus Endowment (Participating) Policy

Life Gain Plus Endowment (Participating) Policy provides you with

insurance cover that is guaranteed during the tenure of the policy. This

policy also builds cash value, which you can use during your lifetime to fundany unforeseen needs either by surrendering accumulated PUAs (explained

below) or taking a loan. In addition this policy is also eligible for bonuses.

10920 Year Endowment Participating Insurance

20 Year Endowment Participating Insurance helps you save for specific need

20 years from now viz.

v Higher education of your child

v Children's marriage

v To buy a house

v To pay off a housing loan

v To create a fund for your retirement

And also provides you with an insurance cover to protect your family from

financial uncertainties in case of your untimely death during this period.


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This policy will mature exactly 20 years after you buy it, and during this

period, it also builds cash value. This policy is also eligible for bonuses. You

may use the cash value and/or the bonuses to fund any unforeseen needs

either by surrendering accumulated PUAs (explained below) or taking a

loan.

UNIT LINKED

110Life Maker Premium Investment Plan

A unit linked insurance plan that enables you to manage your investments

and fulfill your lifes needs.

Life gives you a lot of choices-especially when youre looking for ways to

protect your family, build the business you aim to own and the life style you

hope to establish. But things may change along the way and you may have

to adjust to the changes which life brings to you and this adaptability should

also be available with your life insurance plan. Our Unit linked Life

Insurance plan can be the financial cornerstone for your objectives. Life

MakerPremium Investment Plan provides you a solution to fulfill all your

dreams, whether youre buying a home, starting a family, launching a

business venture. Max New York Life Insurance provides you a powerful


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investment-cum-insurance plan that empowers you to manage your

investments through your insurance policy. In this unit linked plan, you can

direct your investments in our customized unit linked funds, which offer

investments of different types: Fixed Income (e.g. Govt. Securities,

Company Debentures) and Equities (shares). Hence it is a one-stop option to

fulfill all your plans without the hassle of managing multiple products.

111Life Maker Gold

In the Life Maker Gold plan; the premiums you pay are invested in funds

offered by us. You will determine the appropriate ratio of investments into

these funds in consultation with your Agent Advisor. These funds are

invested in assets such as equities, money market instruments, investment

grade corporate bonds, and government securities. These funds offer a wide

range of returns basis market returns. You can choose to invest your

premiums in one or more of these funds, basis your risk taking ability.

In turn, we issue units, which represent the value of your policy i.e. you can

"see" the value of your policy on any day by multiplying the number of your

units by the value of units on that day. The value of these units is called the

Net Asset Value (or NAV) and is normally published in newspapers on a

daily basis. The NAV is based on the market value of the underlying

investments in that fund i.e. equities, company bonds, government securities,

etc.


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112Life Maker Platinum

The journey of life is full of wonderful dreams. To make them come true,

your need for protection, investment, and financial liquidity keeps changingat different stages of life. The birth of a child will require you to increase

your insurance cover; a marriage in the family will require additional

money. Similarly on a promotion you may want to increase your

investments, to create a large kitty for future expenses. Usually you would

require multiple financial products to meet all your needs and would have to

actively manage them. However with the Life Maker Platinum- A Unit

Linked Investment Plan you can meet all your financial needs, without the

tedium of managing multiple products.

In the Life Maker Platinum plan; the premiums you pay are invested in

funds offered by us will determine the appropriate ratio of investments into

these funds in consultation with your Agent Advisor. These funds are

invested in assets such as equities, money market instruments, investment

grade corporate bonds, and government securities. These funds offer a wide

range of returns basis market returns. We can choose to invest premiums in

one or more of these funds, basis your risk taking ability.

In turn, we issue units, which represent the value of your policy i.e. you can

"see" the value of your policy on any day by multiplying the number of your

units by the value of units on that day. The value of these units is called the

Net Asset Value (or NAV) and is normally published in newspapers on a

daily basis. The NAV is based on the market value of the underlying

investments in that fund i.e. equities, company bonds, government securities,

etc.


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113Life Invest Plan

Life InvestPlan is designed keeping in mind that different individuals have

different needs, which change over time. We build many dreams and

aspirations and long to see they come true, sometime in our life. To make

them come true, your need for protection, investment, and financial liquidity

keeps changing at different stages of life. When you reach a certain stage in

life, you need your money to grow and see new heights. This plan helps you

meet all your investment and insurance needs and gives you an opportunityto invest your money where it grows much faster than you expenses.

CHILDREN

114Children's Endowment Participating Insurance

Children's Endowment Participating Insurance to age 18/24 with whole life

option enables you to provide for specific needs of your growing children

viz.

o Child Endowment to Age 18 enables you to provide for higher

education of your child.

o Child Endowment to Age 24 enables you to provide for the best

possible wedding of your child and also builds cash value, which

you can use during to fund any unforeseen needs by taking a loan.

In addition this policy is also eligible for bonuses


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115Stepping Stones Participating Insurance Plan

Stepping Stones Participating Insurance Plan is a smart way to plan for and

secure your child's future irrespective of whether you are there or not. It

provides you with regular money when it is required. This policy also builds

cash value, which you can use during your lifetime to fund any unforeseen

needs by surrendering accumulated PUAs (explained below). In addition this


RETIREMENT

Easy Life Retirement Plan Regular Premium/Single Premium (Participating)

Policy helps you to save money for your retirement, and also provides you

with an opportunity to take home a regular retirement income (pension) for

your entire life from your chosen date of retirement. This income is a

guaranteed amount, guaranteed when your annuity starts. In addition this


GROUP INSURANCE:

Group insurance is a health care coverage plan in which individual

employees or members are included under one 'master policy' owned by

their employers. Because the group insurance plan has so many contributors,

the policy often provides coverage for more services at a much lower cost

per participant. Group insurance may be provided by other organizations

besides for-profit companies. Labor unions, churches and other service

groups can also obtain group insurance for recognized members and


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possibly their dependents.

Individual members of a group insurance plan receive insurance certificates

which demonstrate their eligibility for benefits. If the master policy held by

the employer requires participation in an HMO(HUMAN MANAGEMENT

ORGANISATION) , then

individuals are also registered as members. Other group insurance policies

may be associated with major medical groups such as Blue Cross/Blue

Shield. A major medical policy may or may not restrict an individual's

choice of primary physician and specialists. HMO policies often require a

patient to use a specified physician, who must approve any visits to eligible

specialists.

Financing for a group insurance policy is commonly a flexiblepayroll

deduction, although some companies will absorb the entire cost of the policy

as a benefit for employees. As with many insurance policies, however, the

cost of premiums can rise significantly without warning. If a few

participants receive expensive treatments for serious medical conditions, the

rest of the group may have to absorb the higher premium costs over time.

Group insurers don't always require physical exams before issuing a master

policy, so some participants may benefit from treatments for pre-existing

conditions.

GROUP TERM LIFE

Group Term Insurance is the mainstay of our employee benefit platform.

Here are some of the key features and benefits:


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o Easy and convenient administration one single master policy for

all employees.

o Group size of at least 25 employees. No upper limit on

membership.

o Policy is valid for one year and can be renewed annually.

o Uniform or a graded cover can be provided on any basis chosen by

your subject to a maximum of three years of salary per employee.

o In case of death of an employee, due to natural or accidental

reasons, the entire sum assured amount is paid to the employer.

o Additional Protection is available through riders for Critical

Illness, Accidental Death Benefits, Disability and Dismemberment.

o New members can join and out going members can leave the

scheme at any time with premium adjustment.

GROUP GRATUITY

After an employee has rendered continuous service for at least five years, he/

she is eligible for 15 of days pay for each completed year of service. The

employer can also structure a gratuity benefit that is higher than statutory

requirements. The gratuity benefit is payable on cessation of employment

(either by resignation, death, retirement or termination etc), by taking last

drawn basic salary as the basis for the calculation.

Gratuity payment is a statutory liability for an organization and tends to

increase as the salaries and tenure of employment increase annually. In case

of big, developing & growing organization, gratuity payout can work out to


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a substantial amount. If the employer pays gratuity from its current revenue,

it may become difficult to meet the liability, it is therefore prudent and also

beneficial that a gratuity fund is set up.

Benefit of the group gratuity plan

116Investment management in a conservative manner to ensure steady

appreciation in fund income.

117Employees can be insured for the future service gratuity for full-

anticipated service.

118Scientific funding of gratuity on actuarial valuation and hence

superior planning for gratuity payments.

119Past gratuity liability contribution can be made in installments.

120Contributions are exempt under income tax act.

Benefit to the member of the Group Gratuity Plan

121Max New York Life will provide statement of account every

quarter.

122Free Actuarial Valuation for future gratuity liability.

123For a new fund Max New York Life can assist in formation of the

Trust and its documentation.


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124An existing Gratuity Fund can be taken over by Max New York

Life and we will offer assistance in documentation like Deed of

variation to the original Trust Deed etc.

125Basic Guidelines for Max New York Life Group Gratuity Scheme.

EMPLOYEE DEPOSIT LINKED INSURANCE

All establishments with at least 10 full-time permanent employee and to

whom the employees provident fund and miscellaneous provisions act

1952 applies, have a statutory liabilities to subscribe to employees deposits

linked insurance schemes.

The organization will enjoy the following advantages by subscribing to the

Max New York Life Group Term Insurance as compared to the EDLI

scheme:

126 The premium payable by the employer under the Max New York

Life Group Term Insurance Scheme will be usually less than the

total contribution being paid by the employer to Regional Provident

Fund Commissioner, particularly when average age of the group is

low and the employer is in a low-risk industry.

127Flexibility to opt for either a uniform flat cover for all employees or

a graded cover as per notional PF balance.

128Well defined and simplified claim process will ensure quicker and

hassle-free claim settlement.

129Administrative convenience for additions and deletions of members


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with no elaborate paperwork.

CREDIT SHIELDS

This plans provides a life cover for a group of employees why have taken a

loan from one organization or one institution like banks, finance provider,

credit institution etc.

Credit Shield is a protection cover, which ensures that the loan amount is

paid back to the lender in case of an untimely demise of the borrower.

The plan can be conveniently structured in a way such that the entire loan

amount or the balance loan amount is paid up in case of the untimely demise

of the borrower. The premiums can also be adjusted every year according to

the reducing loan balance amount.

This plan provides total peace of mind because in case of an untimely

demise of the borrower, the family is not burdened with the loan.

UNIT LINKED GROUP GRATUITY

Max New York Life has made the group insurance portfolio more robust by

launching the unit linked gratuity plan.

Gratuity is a statutory benefit to the employees under the Payment of

Gratuity Act 1972. After the employee has rendered continuous service for

at least five years, he/ she are eligible for 15 days pay for each completed

year of service. The gratuity benefit is payable on cessation of employment

(either by resignation, death, retirement or termination etc), by taking last

drawn basic salary as the basis for the calculation.


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Gratuity payment is a statutory liability for an organization and tends to

increase as the salaries and tenure of employment increase annually. In case

of big, developing & growing organization, gratuity payout can work out to

a substantial amount. If the trust pays gratuity from its current revenue, it

becomes difficult to meet the liability, it is therefore beneficial that a gratuity

fund is set up for prudent financial planning.

Max New York can now offer you two options of:

130Non unit Linked or Traditional Group Gratuity Plan: Which

facilitates systematic and steady funding of the liability

131Unit Linked Group Gratuity Plan: This facilitates steady

funding and the opportunity of increased returns on investment.

Benefits of the Unit Linked Group Gratuity Plan

o Opportunity for growing the fund safely and prudently by

managing the fund investments properly and maximizing the

returns on the investments and thereby bringing down the costs of

the funding liability in the future.

o Multiple Flexible Investment options based on the risk taking

ability of the trust.

8/4/2019 Marketin Strategies on Max New York Lif

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Marketin Strategies on Max New York Life Insurance Ltd