Project Reliance Insurance

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Project Report On

RELIANCE LIFE INSURANCE COMPANYLIMITED

CONTENTSExecutive Summary------------------------------------- (6)

EXECUTIVE SUMMARYAnil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100

percent shareholding in AMP Sanmar Life Insurance Company Limited.Reliance Life Insurance Company Limited is officially launched onFebruary 1, 2006. This was after obtaining the required regulatiry approvalsfrom the Registrar of Companies and the Insurance Regulatory andDevelopment Authority. Reliance Life Insurance is the part of the RelianceCapital.

Reliance Life Insurance has plenty of plans on the anvil. It has also 118branches, with strong presence in South and a bouquet of products cateringsavings protection and investment need of individuals and corporate. Thehead-office of it is at Chennai.The company has already added 600 employees in addition to the 1000 plusstaff of the erstwhile AMP Sanmar Life Insurance Company Limited.Reliance Life Insurance aims to be the consumers preferred life insurer byunderstanding and meeting his needs.Think Bigger, Think Better!

INDEXCHAPTER

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SUBJECT PAGE

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1 INSURANCE INDUSTRY

1.1 Meaning of Insurance1.2 Importance of Insurance1.3 Difference between Insurance and Assurance

1.4 Principles of Insurance1.5 History of Insurance1.6 Time line in Insurance history1.7 Meaning of Life Insurance1.8 History of Life Insurance1.9 Key features of Life Insurance1.10 Benefits of Life Insurance


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1.11 Role of Life Insurance in the growth of economy2 INTRODUCTION TO THE COMPANY

2.1 About Reliance Life Insurance2.2 History2.3 Journey so far2.4 Role of IT at Reliance Life Insurance2.5 Mission2.6 Core Values2.7 Future Plans2.8 Head Office2.9 Branches3 PRODUCT MIX

3.1 Traditional Plans3.2 Unit linked Plans

4 HUMAN RESOURCE MANAGEMENT4.1 Recruitment4.2 Selection4.3 Training and Development4.4 Career Development4.5 Communication4.6 Incentives4.7 Services4.8 Performance Appraisal4.9 Organizational form and Structure4.10 DepartmentProjects, Thesis, Dissertation projectsparadise.com 55 MARKETING DEPARTMENT

5.1 Distribution Channel5.2 Promotional Programmes and Target segment5.3 Comparative Study6 RESEARCH METHODOLOGY

6.1 Objective of the study6.2 Questionnaire

6.3 Sampling Method and Sampling Size6.4 Limitations6.5 Analysis of Questionnaire6.6 SWOT Analysis7 FINANCE DEPARTMENT 99

8 CONLUSION 106

9 BIBLIOGRAPHY AND REFRENCES 108


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10 APPENDIX 110

CHAPTER-1INSURANCE INDUSTRY

1.1MEANING OF INSURANCEInsurance may be described as a social device to

reduce or eliminate risk of loss to life and property.Insurance is a collective bearing of risk. Insurance is a financialdevice to spread the risks and losses of few people among a large number of

people, as people prefer small fixed liability instead of big uncertain andchanging liability.

Insurance can be defined as a legal contract between two partieswhereby one party called insurer undertakes to pay a fixed amount of money

on the happening of a particular event, which may be certain or uncertain.The other party called insured pays in exchange a fixed sum known as

premium. Insurance is desired to safeguard oneself and ones family against possible losses on account of risks and perils. It provides financialcompensation for the losses suffered due to the happening of any unforeseenevents.

1.2 IMPORTANCE OF INSURANCEInsurance constitutes one of the major segments of the financial market.

Insurance services play predominant role in the process of financialintermediary. Today insurance industry is one of the most growing sectors inIndia. There is lot of potential in the Indian Insurance Industry.

There are many issues, which require study. The scope of the study ofinsurance industry of India would be very great as there are ongoingdevelopments in the industry after the opening of the sector.

The major issue right now is the hike in FDI (Foreign Direct Investment)limit from 26% to 49% in the insurance sector. Government may in near

future allow 49% FDI in Insurance. This would lead to more capital inflowby foreign partners.

Another major issue is the effects on LIC after the entry of private players inthe market. Though market share of LIC has been affected, it has improvedin terms of efficiency.


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There are number of other hot topics like penetration of Health Insurance,Rural marketing of insurance, new distribution channels, new productranges, insurance brokers regulation, incentive scheme of developmentofficers of LIC etc. So it offers lot of scope for studying the insuranceindustry.

Right now the insurance industry has great opportunities in a country likeIndia or China which huge population. Also the penetration of insurance inIndia is very low in both life and non-life segment so there is lot potential to

be tapped.

Before starting the discussion on insurance industry and related issues, wehave to start with the basics of insurance. So first we understand what isinsurance? How the word insurance is different from the word

assurance? etc.

1.3 DIFFERENCE BEETWEN INSURANCE AND ASSURANCEAssurance is older in history and it was used to describe all types of

insurances. From 1826, the term assurance came to be used only for the riskscovered by life insurance and the term insurance was exclusively used todenote the risks covered by marine, fire, etc.

The word assurance indicated certainty. In life insurance, there is anassurance from the insurance company to make payment under the policyeither on the maturity or at earlier death. On the other hand the wordinsurance was used to denote indemnity type of insurances where theinsurance company was liable to pay only in case of the loss damage the

property.

The insured event was bound to happen sooner or later under assurance butthe event insured against may or may not happen under insurance. The

principle of indemnity applies to insurance contracts(non-life) only. Thescope of the word, insurance is wider.

1.4 PRINCIPLES OF INSURANCEAn insurance contract is based on some basic principles of insurance.(1) Principle of Uberrima Fides or Principle of utmost good faith

It means maximum truth. Both the parties should disclose all materialinformation regarding the subject matter of insurance.(2) Principle of indemnity


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This means that if the insured suffers a loss against which the policy hasbeen made, he shall be fully indemnified only to the extent of loss. In otherwords, the insured is not entitled to make a profit on his loss.(3) Principle of subrogation

This means the insurer has the right to stand in the place of the insured aftersettlement of claims in so far as the insureds right of recovery from analternative source is involved. The insurer before the settlement of the claimmay exercise the right. In other words, the insurer is entitled to recover froma negligent third party any loss payments made to the insured. The purposesof subrogation are to hold the negligent person responsible for the loss and

prevent the insured from collecting twice for the same loss. The concept ofThird Party Claims is based on the same principle.(4) Principle of causa proxima

The cause of loss must be direct and an insured one in order to claim of

compensation.(5) Principle of insurable interest

The assured must have insurance interest in the life or property insured.Insurable interest is that interest which considerably alters the position of theassured in the event of loss taking place and if the event does not take

placed, he remains in the same old position.

1.5 HISTORY OF INSURANCEThe concept of insurance is believed to have emerged almost 4500 years agoin the ancient land of Babylonia where traders used to bear risk of thecarvan by giving loans, which were later repaid with interest when thegoods arrived safely.

The concept of insurance as we know today took shape in 1688 at a placecalled Lloyds Coffee House in London where risk bearers used to meet totransact business. This coffee house became so popular that Lloyds becamethe one of the first modern insurance companies by the end of the eighteenthcentury.

Marine insurance companies came into existence by the end of theeighteenth century. These companies were empowered to write fire and lifeinsurance as well as marine. The Great Fire of London in 1966 caused hugeloss of property and life. With a view to providing fire insurance facilities,Dr. Nicholas Barbon set up in 1967 the first fire insurance company knownas the Fire office.


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The early history of insurance in India can be traced back to the Vedas. TheSanskrit term Yogakshema (meaning well being), the name of LifeInsurance Corporation of Indias corporate headquarters, is found in the RigVeda. The Aryans practiced some form of community insurance around1000 BC.

Life insurance in its modern form came to India from England in 1818. TheOriental Life Insurance Company was the first insurance company to be setup in India to help the widows of European community. The insurancecompanies, which came into existence between 1818 and 1869, treatedIndian lives as subnormal and charged an extra premium of 15 to 20 percent. The first Indian insurance company, the Bombay Mutual LifeAssurance Society, came into existence in 1870 to cover Indian lives atnormal rates.

The Insurance Act, 1938, the first comprehensive legislation governing bothlife and non-life branches of insurance were enacted to provide strict statecontrol over insurance business. This amended insurance Act looked intoinvestments, expenditure and management of these companies.

By the mid- 1950s there were 154 Indian insurers, 16 foreign insurers, and75 provident societies carrying on life insurance business in India. Insurance

business flourished and so did scams, irregularities and dubious investmentpractices by scores of companies. As a result the government decided tonationalize the life assurance business in India. The Life InsuranceCorporation of India (LIC) was set up in 1956. The nationalization of lifeinsurance was followed by general insurance in 1972.

1.6 TIME LINE IN INSURANCE HISTORY(MAJOR LANDMARKS)1818 British introduced the life insurance to India with the establishmentof the Oriental Life Insurance Company in Calcutta.1850Non life insurance started with Triton Insurance Company.

1870 Bombay Mutual Life Assurance Society is the first India owned lifeinsurer.1912 The Indian Life Assurance Company Act enacted to regulate the lifeinsurance business.1938 The Insurance Act was enacted.1956 Nationalization took place. Government took over 245 Indian andforeign insurers and provident societies.


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1972 Non-life business nationalized, General Insurance Corporation(GIC) came into being.

1993 Malhotra committee was constituted under the chairmanship offormer RBI chief R. N. Malhotra to draw a blue print for insurance sectorreforms.

1994 Malhotra committee recommended reentry of private players. 1997 IRDA (Insurance Regulatory and Development Authority) was set

up as a regulator of the insurance market in India. 2000 IRDA started giving license to private insurers. ICICI Prudential,

HDFC were first private players to sell insurance Policies. 2001 Royal Sundaram was the first non-life private player to sell an

insurance policy. 2002 Bank allowed to sell insurance plans as TPAs enter the scene,

insurers start setting non-life claims in the cashless mode.

1.7 MEANING OF LIFE INSURANCEThere are three parties in a life insurance transaction: the insurer, the

insured, and the owner of the policy (policyholder), although the owner andthe insured are often the same person. Another important person involved ina life insurance policy is the beneficiary. The beneficiary is the person or

persons who will receive the policy proceeds upon the death of the insured.

Life insurance may be divided into two basic classes term and permanent. Term life insurance provides for life insurance coverage for a specifiedterm of years for a specified premium. The policy does not accumulate cashvalue. Permanent life insurance is life insurance that remains in force until the

policy matures, unless the owner fails to pay the premium when due. Whole life insurance provides for a level premium, and a cash value tableincluded in the policy guaranteed by the company. The primary advantagesof whole life are guaranteed death benefits, guaranteed cash values, fixedand known annual premiums, and mortality and expense charges will notreduce the cash value shown in the policy.

Universal life insurance (UL) is a relatively new insurance productintended to provide permanent insurance coverage with greater flexibility in

premium payment and the potential for a higher internal rate of return. Auniversal life policy includes a cash account. Premiums increase the cashaccount.


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If you want insurance protection only, and not a savings and investmentproduct, buy a term life insurance policy.

If you want to buy a whole life, universal life, or other cash value policy,plan to hold it for at least 15 years.Canceling these policies after only a few years can more than double yourlife insurance costs. Check the National Association of InsuranceCommissioners website (www.naic.org/cis) or your local library forinformation on the financial soundness of insurance companies.1.8 HISTORY OF LIFE INSURANCERisk protection has been a primary goal of humans and institutionsthroughout history. Protecting against risk is what insurance is all about.Over 5000 years ago, in China, insurance was seen as a preventativemeasure against piracy on the sea. Piracy, in fact, was so prevalent, that as a

way of spreading the risk, a number of ships would carry a portion ofanother ship's cargo so that if one ship was captured, the entire shipmentwould not be lost.In another part of the world, nearly 4,500 years ago, in the ancient land ofBabylonia, traders used to bear risk of the caravan trade by giving loans thathad to be later repaid with interest when the goods arrived safely. In 2100BC, the Code of Hammurabi granted legal status to the practice. Itformalized concepts of bottomry referring to vessel bottoms andrespondentia referring to cargo. These provided the underpinning formarine insurance contracts. Such contracts contained three elements: a loanon the vessel, cargo, or freight; an interest rate; and a surcharge to cover the

possibility of loss. In effect, ship owners were the insured and lenders werethe underwriters.Projects, Thesis, Dissertation projectsparadise.com 18Life insurance came about a little later in ancient Rome, where burial clubswere formed to cover the funeral expenses of its members, as well as helpsurvivors monetarily. With Rome's fall, around 450 A.D., most of theconcepts of insurance were abandoned, but aspects of it did continue throughthe Middle Ages, particularly with merchant and artisan guilds. These

provided forms of member insurance covering risks like fire, flood, theft,disability, death, and even imprisonment.During the feudal period, early forms of insurance ebbed with the declineof travel and long-distance trade. But during the 14th to 16th centuries,transportation, commerce, and insurance would again reemerge.Insurance in India can be traced back to the Vedas. For instance,yogakshema, the name of Life Insurance Corporation of India's corporate


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headquarters, is derived from the Rig Veda. The term suggests that a form of"community insurance" was prevalent around 1000 BC and practiced by theAryans.And similar to ancient Rome, burial societies were formed in the Buddhist

period to help families build houses, and to protect widows and children.Modern Insurance

Illegal almost everywhere else in Europe, life insurance in England wasvigorously promoted in the three decades following the Glorious Revolutionof 1688. The type of insurance we see today owes it's roots to 17th centuryEngland. Lloyd's of London, or as they were known then, Lloyd's CoffeeProjects, Thesis, Dissertation projectsparadise.com 19House, was the location where merchants, ship owners and underwriters metto discuss and transact business deals.While serving as a means of risk-avoidance, life insurance also appealed

strongly to the gambling instincts of England's burgeoning middle class.Gambling was so rampant, in fact, that when newspapers published namesof

prominent people who were seriously ill, bets were placed at Lloyds ontheir anticipated dates of death. Reacting against such practices, 79 merchantunderwriters broke away in 1769 and two years later formed a New LloydsCoffee House that became known as the real Lloyds. Making wagers on

people's deaths ceased in 1774 when parliament forbade the practice. Insurance moves to America

The U.S. insurance industry was built on the British model. The year 1735saw the birth of the first insurance company in the American colonies inCharleston, SC. The Presbyterian Synod of Philadelphia in 1759, sponsoredthe first life insurance corporation in America for the benefit of ministersand their dependents. And the first life insurance policy for the general

public in the United States was issued, in Philadelphia, on May 22, 1761.But it wasn't until 80 years later (after 1840), that life insurance really tookoff in a big way. The key to its success was reducing the opposition fromreligious groups.In 1835, the infamous New York fire drew people's attention to the need to

provide for sudden and large losses. Two years later, Massachusetts becamethe first state to require companies by law to maintain such reserves. TheProjects, Thesis, Dissertation projectsparadise.com 20great Chicago fire of 1871 further emphasized how fires can cause hugelosses in densely populated modern cities. The practice of reinsurance,wherein the risks are spread among several companies, was devisedspecifically for such situations.


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With the creation of the automobile, public liability insurance, which firstmade its appearance in the 1880s, gained importance and acceptance?More advancement was made to insurance during the process ofindustrialization. In 1897, the British government passed the Workmen'sCompensation Act, which made it mandatory for a company to insure itsemployees against industrial accidents.During the 19th century, many societies were founded to insure the life andhealth of their members, while fraternal orders provided low-cost,membersonlyinsurance. Even today, such fraternal orders continue to provideinsurance coverage to members, as do most labor organizations. Manyemployers sponsor group insurance policies for their employees, providingnot just life insurance, but sickness and accident benefits and old-age

pensions. Employees contribute a certain percentage of the premium for

these policies. Final Thoughts

Even though the American insurance industry was greatly influenced byBritain, the US market developed somewhat differently from that of theUnited Kingdom. Contributing to that was America's size; land diversityand the overwhelming desire to be independent. As America moved from acolonial outpost to an independent force, from a farming country to anProjects, Thesis, Dissertation projectsparadise.com 21industrial nation, the insurance business developed from a small number ofcompanies to a large industry.Insurance became more sophisticated, offering new types of coverage anddiversified services for an increasingly complex country.1.9 KEY FEATURES OF LIFE INSURANCE1) Nomination: -

When one makes a nomination, as the policyholder you continue to be theowner of the policy and the nominee does not have any right under the

policy so long as you are alive. The nominee has only the right to receive thepolicy monies in case of your death within the term of the policy.2) Assignment: -

If your intention is that your policy monies should go only to a particularperson, you need to assign the policy in favor of that person.3) Death Benefit: -

The primary feature of a life insurance policy is the death benefit it provides.Permanent policies provide a death benefit that is guaranteed for the life ofthe insured, provided the premiums have been paid and the policy has not

been surrendered.


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4) Cash Value: -

Projects, Thesis, Dissertation projectsparadise.com 22The cash value of a permanent life insurance policy is accumulatedthroughout the life of the policy. It equals the amount a policy owner wouldreceive, after any applicable surrender charges, if the policy weresurrendered before the insured's death.5) Dividends: -

Many life insurance companies issue life insurance policies that entitle thepolicy owner to share in the company's divisible surplus.6) Paid-Up Additions: -

Dividends paid to a policy owner of a participating policy can be used innumerous ways, one of which is toward the purchase of additional coverage,called paid-up additions.7) Policy Loans: -

Some life insurance policies allow a policy owner to apply for a loan againstthe value of their policy. Either a fixed or variable rate of interest is charged.This feature allows the policy owner an easily accessible loan in times ofneed or opportunity.8) Conversion from Term to Permanent: -

When in need of temporary protection, individuals often purchase term lifeinsurance. If one owns a term policy, sometimes a provision is available thatwill allow her to convert her policy to a permanent one without providingadditional proof of insurability.

9) Disability Waiver of PremiumProjects, Thesis, Dissertation projectsparadise.com 23Waiver of Premium is an option or benefit that can be attached to a lifeinsurance policy at an additional cost. It guarantees that coverage will stay inforce and continue to grow1.10 BENEFITS OF LIFE INSURANCE1) Risk cover: -

Life Insurance contracts allow an individual to have a risk cover against anyunfortunate event of the future.2) Tax Deduction: -

Under section 80C of the Income Tax Act of 1961 one can get tax deductionon premiums up to one lakh rupees. Life Insurance policies thus decrease thetotal taxable income of an individual.Projects, Thesis, Dissertation projectsparadise.com 243) Loans: -

An individual can easily access loans from different financial institutions bypledging his insurance policies.


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4) Retirement Planning: -

What had provided protection against the financial consequences ofpremature death may now be used to help them enjoy their retirement years.Moreover the cash value can be used as an additional income in the old age.5) Educational Needs: -

Similar to retirement planning the cash values that flow from ones lifeinsurance schemes can be utilized for educational needs of the insurer or hischildren.1.11 ROLE OF LIFE INSURANCE IN THEGROWTH OF THE ECONOMYThe Life Insurance Industry has an enviable track record among publicsector units. It has a Consistent profit and dividend paying recordaccompanied by a steady growth in its financial resources. Throughinvestments in the Government sector and socially- oriented sectors the

Industry has contributed immensely to the nation's development. Theindustry is recognized as one of the largest financial Institutions in thecountry. The ventures initiated by the industry in the areas of Mutual Fund,Projects, Thesis, Dissertation projectsparadise.com 25Housing Finance has done exceedingly well in recent years. To protect thecountry's foreign exchange reserves, the reinsurance arrangement are soorganized that maximum retention is made possible within the country whileat the same time protecting interests of the policy holders.CHAPTER-2INTRODUCTION TO THE COMPANYProjects, Thesis, Dissertation projectsparadise.com 262.1 ABOUT RELIANCE LIFE INSURANCEReliance Life Insurance Company Limited is a part of Reliance Capital Ltd.of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one ofIndias leading private sector financial services companies, and ranks amongthe top 3 private sector financial services and banking companies, in termsProjects, Thesis, Dissertation projectsparadise.com 27of net worth. Reliance Capital has interests in asset management and mutualfunds, stock broking, life and general insurance, proprietary investments,

private equity and other activities in financial services.Reliance Capital Limited (RCL) is a Non-Banking Financial Company(NBFC) registered with the Reserve Bank of India under section 45-IA ofthe Reserve Bank of India Act, 1934.Reliance Capital sees immense potential in the rapidly growing financialservices sector in India and aims to become a dominant player in thisindustry and offer fully integrated financial services.


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Reliance Life Insurance is another steps forward for Reliance CapitalLimited to offer need based Life Insurance solutions to individuals andCorporate.2.2 HISTORYReliance Capital Limited announced the launch of its life insurance businesson February 1, 2006. This was after obtaining the required regulatoryapprovals from the Registrar Of Companies and the Insurance Regulatoryand Development Authority.It was in August 2005 that the ball was set rolling when Reliance CapitalLimited, the financial arm of Reliance Anil Dhirubhai Ambani GroupProjects, Thesis, Dissertation projectsparadise.com 28(ADAG) announced the requisition of 100% shareholding in AMP SanmarLife Insurance Company Limited; and the formal transfer of shares took

place in October 2005. The company will issue all policy contracts under the

Reliance Life Insurance Company limited name. All the existing policycontracts also stand transferred to the Reliance Life Insurance entity with allthe original contractual terms and commitments intact.2.3 JOURNEY SO FAR

2005August: Anil Dhirubhai Ambani Group (ADAG) announces theacquisition of 100 percent shareholding in AMP Sanmar Life InsuranceCo Ltd.

2006

January 17:Mr. Nandgopal participates in a one-day conference on

Optimising growth opportunities through Distribution Matrix:Projects, Thesis, Dissertation projectsparadise.com 29Emerging Bancassurance organized by the Asia Insurance Post at theTaj President, Mumbai.February 1: Rliance Life Insurance officially launched.February 16, 17, 18: Strategy meet at the Reliance ManagementInstitute. Amongst those who participate are the CEO, COO, FunctionalHeads, Regional Managers and Regional Sales Managers.February 26: A Puja held at the Churchgate office situated in Express

Building, 4th Floor, 14 E Road, Mumbai.March 1: Churchgate office inaugurated by Mr. AmitabhJhunjhunwala, Mr. Amitabh Chaturvedi and Mr. Nandgopal.March 6: Shifting to the new premises at Churchgate commences.March 7: The new office at Chennai, at the Trapezium, First Floor, #39, Nelson Manickam Road, inaugurated by their CEO Mr. Nandgopal,Mr. KV Srinivasan and Mr. Sureshbabu also graced the occasion.


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2.4 ROLE OF IT AT RELIANCE LIFEINSURANCE1) World Class Data Centre: -

They plan to establish a Primary Data Centre at Navi Mumbai(Dhirubhai Ambani Knowledge City) which will cater to their companyneeds across India, with fail-over capability to their Chennai Data CentreProjects, Thesis, Dissertation projectsparadise.com 30within the same business day in occurance if an incident or Disasterhappens.2) Inter Office Connectivity: -

All their Branch / Area and Regional offices will beinterconnected to their Data Centre with a 24x7 access to CoreApplications like Lotus Mail, Life-Asia and Internet Applications. Thiswill enable their associates to work faster and better with high-speed

Internet connectivity and also ensure faster Turn Around Time for theircustomers.3) Customer Care Centre: -

They will host a centralized Customer Care Centre atDhirubhai Ambani Knowledge City at Navi Mumbai, which caterservices to internal and external queries and complications. A customerRelationship Management Tool (CRM) and Lead Management System(LMS) are in progress.4) Web Portal: -

This portal will be an interface between both internal employeesand their external users. Some of the functions included in their portal arePolicy Tracking Systems, Corporate News, Quality Checking System,Under Writing Medical System, and Agent Management System etc.5) R World: -

Projects, Thesis, Dissertation projectsparadise.com 31Reliance Mobile R-World will provide online information abouttheir Company, Products, and Policy Services to their existing customers,Agents/Advisors and Lead Generators.6) SMS Alerts: -

SMS Alerts will be provided to their Sales Managers about thelatest happenings like Contests and Campaigns, Employee Alerts willinclude Company News and Welcome/Birthday/Anniversary messageetc. Customer Alerts will include Welcome/Birthday/Anniversarymessage, Policy Dispatch Details, Policy Servicing SMS like PremiumReceipt and Renewal Premium reminders etc.7) Life and Group Asia: -


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Single Life and Group Life details will be captured and managedby Life and Group Asia. A common middleware between theseapplications will enable Group Life Customers to view their individualSingle Life Insurance Plan details taken with Reliance Life Insurance andvice versa.8) Advisor Lounge: -

It is a dedicated area for Reliance Life InsuranceAgents/Advisors in all the branches across India. This Lounge will beequipped with desktops and printers with Internet connectivity, wheretheir Advisors can bring in the prospects and can have discussions acrossthe table and they can create and print quotes. The Agents/Advisors canuse this area to service their existing customers.9) Document Management System: -

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DMS will enable both policy issuance and contract servicingthrough an automated workflow, which yields a faster Turn around Timeto both internal and external users. This application will enable them tohave a paperless office and thus mitigate the risk of losing vitalrecords/papers.10) Wireless Data Access: -

This will enable identified Top Sales Managers and Top Advisorsto access real time data for both LMS and CRM on the fly through HandheldPDA device.

11) SAP ERP Modules: -SAP (Finance and HR Modules), will automate the Expense,Travel and Leave Management Systems.2.5 MISSIONThe mission of Reliance Life Insurance Company Limited is to be the bestinevery sphere- business results, customer care and employee focus. The aimof the company is to Think Bigger and Think Better.2.6 CORE VALUESReliance Life Insurance Company Limited has some core values which are

listed as follows:Projects, Thesis, Dissertation projectsparadise.com 331) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric


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6) Informal and Fun2.7 FUTURE PLANS

Forty-four new branches to be opened across the country in thecoming months; and a pan India presence with 162 branches in thecoming year.

A state-of-the-art customer care centre will provide continuous,responsive services to the caller and promptly address queries, collatefeedback and suggestions from the caller, who may be both

prospective and existing clientele and from channel partners inChennai and Mumbai.

It will be launching additional products aimed at providingunparalleled service to its valued clientele.2.8 HEAD OFFICEProjects, Thesis, Dissertation projectsparadise.com 34

Reliance Life Insurance Company Limited,The Trapezium,39, First Floor,

Nelson Manickam Road,Chennai 600 029.2.9 BRANCHESThey have so many branches and substations in the India. They have around160 branches in the India. And they have planned to open more branchesacross the country in the coming months.

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CHAPTER 3PRODUCT MIXProjects, Thesis, Dissertation projectsparadise.com 363.1 TRADITIONAL PLAN:-Life insurance products are designed to suit the requirementsof customers. Fundamentally the product provide for:

Risk coverInvestmentHealth cover

Projects, Thesis, Dissertation projectsparadise.com 37In every product, to a certain degree, risk cover is imperativefor it to fall under the category of insurance. Based on the coverage of the

product, the premiums are calculated and the customer pays accordingly. Inorder to suggest the right product, it is essential for an agent to understandthe requirements of the customer well.Reliance Life Insurance Company Limited has offered 9


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traditional plans to the customers, which are listed as follows:1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Child Plan4) Reliance Endowment Plan5) Reliance Special Endowment Plan6) Reliance Cash Flow Plan7) Reliance Credit Guardian Plan8) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows:1) Reliance Term plan: -This insurance policy is designed for those who only want life cover for the

protection of their family, and do not wish to save for themselves. It can alsobe useful to business firms that wish to provide financial security to their

business against the sudden loss of partners or valuable manpower. SinceProjects, Thesis, Dissertation projectsparadise.com 38there is no saving element or bonus provision, the premium is very low.Hence, this is a high-risk plan with a low premium.

Features: -a) Purely a term plan

b) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility N.A.e) Maturity amount = Sum assured2) Reliance Whole Life Plan: -This insurance policy is designed for people who do not wish to avail of any

benefits themselves but wish to create an immediate estate to protect theirfamily by availing of insurance cover on their life at a very low cost.

Features: -a) It is a whole life insurance policy with profits

b) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonus

e) Tax benefit is availableProjects, Thesis, Dissertation projectsparadise.com 393) Reliance Child Plan: -This insurance policy is designed for people who wish to save money for afuture time when there will be a recurring need for substantial amounts ofmoney. This is especially true when it comes to paying large sums of moneyfor higher education as and when your son or daughter is studying to become


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an Engineer, a Doctor or specialize in some other field, or is perhapsplanning to go abroad.This money is payable in equal installments over the last 4 years of the

policy term. Features: -

I. Minimum entry age is 20 year and maximum 60 yeara) Minimum sum assured is Rs. 25,000.

b) Minimum premium paying term is 5 year and maximum20 yearc) Tax benefit is availabled) Maturity amount = Four equal installment of sum insuredin last four year plus vested bonus in the last yeare) Loan facility is available4) Reliance Endowment Plan: -

Projects, Thesis, Dissertation projectsparadise.com 40Reliance Life Insurances Reliance Endowment Plan is the key to all yourfinancial needs. It is an inexpensive and easy way to protect you, yourfamily or your business.In a nutshell this plan will keep you financially prepared for all the specialoccasions in your life - your daughters wedding, your childs universityeducation or even a new office for your business - by eliminating the burdenthat a shortage of money creates.In the event of your untimely death, Reliance Endowment Plan will alsoassist your loved ones through this difficult time by the financial support thatit provides.Reliance Endowment Plan also gives you the additional benefit of

participating in the companys profits, which you will receive at the end ofthe policy period.

Features: -a) Entry age minimum is 5 year and maximum 65 year

b) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35year in case of regular and in case of single 15 year

Projects, Thesis, Dissertation projectsparadise.com 41d) Minimum sum assured is Rs. 25,000 or as determined by theminimum premiume) Maximum sum assured is Rs. 5,00,000 (entry age below 18years and no limit for entry age 18 and above)f) Premium mode annual, half yearly, quarterly and monthly(by salary deduction only)


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g) Loan up to 90% of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary

bonus5) Reliance Special Endowment Plan: -This insurance policy is designed for people who wish to combine savingswith extended security. The unique feature of this policy is that life

protection continues for five years after you have stopped the payment ofpremium. Payment of sum assured at the end of premium paying term andextension of life cover thereafter for the full sum assured for a period of 5years, are characteristics of the policy.This plan also participates in the profits.

Features: -a) Entry age minimum 12 year and maximum 65 year

b) Minimum sum assured is Rs. 25,000

c) Minimum premium paying term is 10 year and maximum 40yearProjects, Thesis, Dissertation projectsparadise.com 42d) Unique feature of this policy is that five year life protectioncontinues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date6) Reliance Cash Flow Plan: -This insurance policy is designed for those who have a recurring need forreinvestment in business or look for short-term investment channels. Theadvantage of the policy is that they need not part with a sizable amount ofmoney at any one time, but create, through regular premium payments, a

periodic return of lump sums which become available for reinvestment athigher returns, while providing simultaneously, substantial life cover.Alternatively, it can be used to meet any immediate financial crisis in thefamily like your son's college admission, your daughter's engagement, and

renovation of your home or perhaps, a holiday abroad.The money is payable in installments. The first installment is paid at the endof the 4th year and thereafter at the end of every 3rd year.

Features:-a) Plan with profits

b) Minimum entry age is 15 year and maximum is 63 yearProjects, Thesis, Dissertation projectsparadise.com 43


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c) Maximum premium paying term is 34 yeard) Loan facility is not availablee) In case of death full sum assured + accrued bonuses up tothe date of death is payable immediatelyf) In case of survival up to maturity date all premium paidg) Rider accident death and critical illnessh) Mode of payment is available7) Reliance Credit Guardian Plan: -This insurance policy is designed for those who not only safeguardsindividuals but also families and businesses from the financial hardship thatcould arise from unfortunate and unexpected death.

Features: -a) Loan protection against home, home improvement, twowheelers and four wheelers

b) In case of death remaining loan amount paid immediatelyc) In case of survival no benefit is availabled) Premium payment option for single and regular is availablee) Premium paying term is 2/3 of loan period and remaining

period paid by the company8) Reliance Special Credit Guardian Plan: -Projects, Thesis, Dissertation projectsparadise.com 44This insurance policy is designed for those who not only safeguardsindividuals but also families and businesses from the financial hardship thatcould arise from unfortunate and unexpected death, disability or criticalillnesses.

Features: -a) Loan protection against home, home improvement, twowheelers and four wheelers

b) In case of death remaining loan amount paid immediatelyc) In case of survival no benefit is availabled) Premium payment option for regular and single is availablee) Premium payment term is 2/3 of loan period and remaining

period paid by the company

f) Maturity amount = All the premium paid amountg) Tax benefit is available3.2 UNIT LINKED PLANA unit-linked policy is a life assurance policy in which the benefitsdepend on the performance of a portfolio of shares.Projects, Thesis, Dissertation projectsparadise.com 45Each premium paid by the insured person is split: a part is used to


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provide life assurance cover, while the balance (after the deduction of costs,expenses, etc.) is used to buy units in a unit trust.In this way, a small investor can benefit from investment in a managedfund without making a large financial commitment. As they are linked to thevalue of shares, unit linked policies can go up or down in value.Policyholders can surrender the policy at any time and the surrender value isthe selling price of the units purchased by the date of cancellation 9lessexpense). A small part of the contribution is used for providing life coverand the balance is invested in unit. Legal heirs are entitled to the amount ofinsurance cover and entitled units in case of death of the insured.Reliance Life Insurance Company Limited has also offered the twoUnit Linked Plans, which are listed as follows:1) Reliance Market Return Plan2) Reliance Golden Years Plan

Amongst the above plans the Reliance Market Return Plan is thelargest selling plan of the Reliance Life Insurance Company Limited. Theabove two ULIP plans are discussed as follows:1) Reliance Market Return Plan: -Reliance Market Return Fund is the unit-linked product that helps you investin the financial markets in a combination of investment instruments of yourProjects, Thesis, Dissertation projectsparadise.com 46choice. You can enjoy the returns from the markets without the trouble ofmonitoring and managing your own investment portfolio and keeping trackof the market movements. At the same time your investment premiums

provide you with insurance cover. Reliance Market Return Fund unit-linkedinsurance plan provides you with a basket of fund options that balances yourreturn and risk exposure while providing life cover at the same time.

Features: -a) Minimum entry age is 30 days and maximum entry ageis 65 year

b) Maximum policy term 40 year and minimum policyterm 5 yearc) Mode of premium as annual, quarterly, half yearly and

monthly Rs. 1000 (for salary deduction only) and Rs.2500 (standing order/credit card)d) Top up premium minimum Rs. 2500e) Option of investment fundi. Capital secure 100% fixed interest securitiesii. Balanced minimum 80% fixed interest securitiesand maximum 20% in equity


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iii. Equity 100% equityiv. Growth minimum 60% fixed interest securities andmaximum 40% in equityf) Loan facility is not availableg) One switches every year free and subsequent switchescharged 1% of the amount switchedProjects, Thesis, Dissertation projectsparadise.com 47h) Partial withdrawals per year under regular and single

premium options is 2 timesi) Lock in period till today is 3 year

j) Minimum unit account balance after each withdrawalsis Rs. 10,0002) Reliance Golden Years Plan: -Reliance Golden Years Plan.. The Reliance Life Insurance no-worry stay

happyretirementplan. Reliance Golden Years Plan is a flexible package thatprovides freedom of choice in choosing the type of investment, life cover,vesting options such as commuting and annuity options. Contributions

provide Income tax savings as well.Reliance Golden Years Plan, a flexible pension product is available for allindividuals who are between the ages of 18 and 65.

Features: -a) Entry age minimum is 18 year and maximum 65 year

b) Minimum premium amount Rs. 10,000 and maximumis unlimitedc) Mode of premium payment is availabled) Pension plan with risk cover and without risk covere) Choice of investmentProjects, Thesis, Dissertation projectsparadise.com 48i. Capital secure fund 80% in equity and 20% ingovernment securityii. Balanced fund 80% in government and 20%in equityf) No loan facility is available

g) Tax benefit is availableh) Annuity optionsi. Annuity payable for lifeii. Annuity payable for 5/10/15 years certain andthereafter with lifeiii. Annuity payable for life with return of capitalon death of the annuitant


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CHAPTER 4

HUMAN RESOURCE MANAGEMENTProjects, Thesis, Dissertation projectsparadise.com 494.1 RECRUITMENTRecruitment is the process of finding and attracting capable applicants foremployment. The process begins when new recruits are sought and endswhen their applications are submitted. The result is a pool of applicants fromwhich new employees are selected.Projects, Thesis, Dissertation projectsparadise.com 50In this company the Sales Manager, who recruits the advisors/agents forselling the products of the company, does the recruitment. The advisorsshould have at least passed the S.S.C. examination. They must pass the

prerecruitmentexamination, which is conducted by the Insurance Institute of

India, Mumbai, or any other approved examination body. After clearing theexamination the code will be provided to them and the license will also begiven to them, the validity the license would be 3 years. After all theserequirements, the person will become an insurance advisor in the company.4.2 SELECTIONSelection is the process of picking individuals (out of the pool of jobapplications) with requisite qualifications and competence to fill job in theorganization. In simple words, it is the process of differentiating betweenapplicants in order to identify these with a greater likelihood of success in a

job.The Branch Manager, which includes-, will conduct the process of selectionof Sales Manager1) Personal Interview: -

The first step of selection of Sales Manager in theReliance Life Insurance Company Limited is to conduct a personal interviewof an applicant by the Branch Manager.Projects, Thesis, Dissertation projectsparadise.com 512) Project 40 Interview: -

After clearing the personal interview, the project 40

interview will be taken by the Branch Manager. In this step, the applicantshould have to make a list of 40 and then start the business with them.3) Interview with Regional Head: -

After clearing the project 40 interview, the applicantshould be interviewed by the Regional Head, who will check his/her

performance.4) Negotiation: -


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After clearing the interview with Regional Head, thenegotiation will be provided to the applicant.5) Medical Examination: -

After that, the medical check up should e made to theapplicant.6) Selection: -

After clearing all the above steps the applicant should beappointed/selected as a Sales Manager in the company.Projects, Thesis, Dissertation projectsparadise.com 52

Requirements of Sales Manager:-The Sales Manager should possess thefollowing things-1. They should be an M.B.A.2. The age of them should be between 25 to 35 years.

3. They should have good communication skill.4. They should have at least sales experience of 3 years.5. They should have the capability to handle the team.6. Their job profile includes recruitment, training, guiding, motivatingand in turn getting business out of a team.4.3 TRAINING AND DEVELOPMENT:-Training and Development is any attempt to improve current or futureemployee performance by increasing an employees ability to performthrough learning usually by changing the employees attitude or increasinghis/her skills and knowledge. The need for training and development isdetermined by the employees performance deficiency, computed as follows:Projects, Thesis, Dissertation projectsparadise.com 53Training & Development = Standard Performance Actual PerformanceThey are providing 100 hours training to their advisors, whoare newly recruited. They are also providing the product training to theiradvisors and Sales Managers, who are newly recruited. The 100 hourstraining is to be conducted at Net Bios Computer Academy whereas the

product training is to be conducted at NIS SPARTA. The NIS SPARTAInstitute has more than 150 batches and is trained over 3000 agents for most

of the private insurance companies. This institute is approved by IDRA totrain agents/advisors.4.4 CAREER DEVELOPMENTThey are also providing career development plans, which will identify

potential and create avenues for growth.4.5 COMMUNICATIONCommunication is the process through which an individual can exchange


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their beliefs, things, information, and experience to others. In simple words,it is the process of exchanging the information from one person to another.They are providing an open environment, which enabling free interaction

between all levels. The communication is provided in the following manner:Projects, Thesis, Dissertation projectsparadise.com 54Projects, Thesis, Dissertation projectsparadise.com 55BRANCH

BRANCH BRANCH

REGIONAL

C M O

REGIONAL

REGIONAL

CHANNEL

HEAD

C E OProjects, Thesis, Dissertation projectsparadise.com 56

Explanations of the diagram:-The communication is flow between Branch to Branch.Within a branch, it flows between Branch Manager to Sales Managers andSales Managers to Agents/Advisors, and then Branch Head to RegionalHead, then different Regional Head to Regional Head, then Regional Headto Channel Head, then to Chief Marketing Officer (CMO), then to ChiefExecutive Officer (CEO).4.6 INCENTIVESIncentives are monetary benefits paid to workmen in recognition of theiroutstanding performance. They are providing an aggressive reward andrecognition plans, which are including sales incentives.4.7 SERVICESThey are offering following certain services to their employees.1) They are providing knowledge sharing and certification practices.2) They are planned team building and fun events.3) They are creating Reliance Life Insurance family, which includesemployees, associates and their families.

Projects, Thesis, Dissertation projectsparadise.com 574) Reliance Life Insurance in a team building mode and is looking for

performance driven, achievement oriented and challenge lovingperformance.4.8 PERFORMANCE APPRAISALPerformance appraisal is the systematic evaluation of the individual withrespect to his/her performance on the job and his/her potential for


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development. Performance appraisal is a formal, structured system ofmeasuring and evaluating an employees job related behaviors and outcomesto discover how and why the employee is presently performing on the joband how the employee can perform more effectively in the future so that theemployee, organization and society all benefit.They are providing a balanced scorecard approach for strategy deploymentand performance measurement, which goals and measure financial, customerfocused, process related and employee development related initiatives. Inaddition to this, the Branch Manager should measure the performance of theSales Managers at every six months and the Sales Manager should measurethe performance of the advisors/agents. If the performance is best thenhe/she will be prompted.Projects, Thesis, Dissertation projectsparadise.com 584.9 ORGANIZATION FORM AND

STRUCTURE4.10 DEPARTMENTThey are providing following areas or departments:1) Retail Sales2) Under Writing3) Actuarial4) Insurance Operations5) Customer Service6) Quality and Processes7) Human ResourcesCEOCMOChannel HeadRegional HeadBranch HeadSalesC MEOanagerAdvisors/AgentsCustomersProjects, Thesis, Dissertation projectsparadise.com 59

8) FinanceCHAPTER 5MARKETING DEPARTMENTProjects, Thesis, Dissertation projectsparadise.com 605.1 DISTRIBUTION CHANNELReliance Life Insurance Company Limited is using five types ofdistribution channel, which are as follows:


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1) Agency: -

Independent insurance agents represent a number of companiesand can research these companies products to find the right combinationfor their clients. Independent agents & insurance producer groups aregrowing in prevalence. Although producer groups are in their infancy,their emergence may potentially be realignment in the distribution offinancial services. Independent shops realized that by pooling productionand funding a central support office, they had increased buying power.The one type of distribution channel, which Reliance LifeInsurance Co. Ltd is using, is an agency. This channel works as follows:BranchManagersAdvisorsCustomers

Projects, Thesis, Dissertation projectsparadise.com 612) Bank Assurance: -

While a lot of bank relationships with insurance companieshave been established, life insurance sales have been slower than onewould expect he primary bank insurance activities have been thedistribution of annuities, credit life, and direct marketing insurance.Banks are failing to incorporate successful sales tactics used to sell otherfinancial services like investments.Another type of distribution channel is bank assurance. Thischannel is tie up with banks. In this channel the advisors using ortargeting the bank customers to make a business with them i.e., to sell the

policy of the company.3) Corporate:-

To gain a better understanding of the demand amongstindependent advisors for trust services and to gain a better feel for howindependent advisors handle trust services, a research was performedwith independent advisors across several broker/dealers and custodians.The interviews revealed that demand is greatest for living trusts amongindependent advisors, followed by demand for corporate trustee services.

Another type of distribution channel is corporate, which arefor employee benefits. This channel is tie up with corporate or smallenterprises. Through these small enterprises, the advisors will sell the

products/policy to customers of the small enterprises.Projects, Thesis, Dissertation projectsparadise.com 624) Rural Benefits:-

Brokerage firms have gained much of the institutional and


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personal trust business lost by the banks. These firms have steadilycaptured assets, primarily at the expense of the banks. The number ofnon-bank trust companies has increased in recent years as independenttrust companies have emerged and more broker/dealers are integratedservices. Insurance companies view full-service brokers as a potentiallynew distribution channel as well.Another type of distribution channel is rural benefits. Thischannel works as a dealership. In this channel, the dealers will sell the

policy to the target customers.5) Web World:-

Direct sales of life insurance are growing rapidly, but many ofthe traditional full-serve players seem to be letting it go. Across allfinancial services, consumers are expressing a willingness to deal with avariety of providers on the web. Web sites are starting to pop up offering

consumer insurance products especially designed for distribution over theweb.Another type of distribution channel is web world. This channelis tie up with customer database. In this channel, the advisors will sell the

policy to the target customers, which are taken from the customerdatabase, are listed in the website.Projects, Thesis, Dissertation projectsparadise.com 635.2 PROMOTIONAL PROGRAMMES &TARGET SEGMENTPromotional programmes and target segment are related to each other.The promotional programmes are made to motivate the advisors/agentsand sales managers to do more business i.e., to sell the more policies. TheReliance Life Insurance Co. Ltd has made three promotional schemes,which are as follows:1) Shubh Arambh:-

This promotional scheme is detailed as follows:SLAB (WRP) REWARDACHIEVERS


30,000 Reliance Life T-Shirt50,000 Table Top Clock75,000 Leather Bag1,00,000 World Space Radio1,50,000 L.G. Microwave- 19L2,00,000 DVD/VCD/MP3 Player3,00,000 Sony Music System


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SUPER ACHIEVERS

5,00,000 LG Refrigerators GL-2337,50,000 LG Air Conditioner 1T10,00,000 Sony Digital Camcorder15,00,000 Trip to Dubai 3D/4N20,00,000 Hero Honda SplenderSTAR ACHIEVERS

50,00,000 Maruti Alto Std.75,00,000 Maruti Swift Lxi1,00,00,000 GM Aveo 1.4LSLogin: 1st April to 31st May 06Issuance till 15th June 062) R.A.R.E.:-

The full form of R.A.R.E. is Reliance Advisors Reward

Experience. This programs consists of1. New Advisor Incentive Program2. Board of AdvisorsProjects, Thesis, Dissertation projectsparadise.com 653. Annual Discovery Series4. Advisor Career Progression5. RARE Club Loyalty ProgramThe above programs are described as follows1. R.A.R.E. Program New Advisor Incentives:-

CriteriaThere will be two levels in the New Advisor Incentive

programA. Launch PadB. Take Off2. R.A.R.E. Program Board of Advisors:-

CriteriaThere will be two levels in the Board of Advisors programA. Time PeriodB. Parameters

3. R.A.R.E. Program Discovery Series:-Criteria

There will be six levels in the Discovery Series programA. Qualification periodB. Business criteriaProjects, Thesis, Dissertation projectsparadise.com 66C. The qualification criteria will be the same for both the Global


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and the National Discovery SeriesD. Qualification for the Global Discovery SeriesE. Qualification for the National Discovery SeriesF. The top 150 will bb calculated based on WRP (Weighted RecdPremium)4. R.A.R.E. Program Advisor Career Progression:-

Advisor Career ProgressionA. Business AssociateB. Sales Manager5. R.A.R.E. Privilege Club:-

LevelsA. The RARE Club will have 6 different levelsB. The criteria for entry into each level will be based onI. Business (WRP)

II. PersistencyIII. Product MixC. The qualification period isI. Logins from 1st Apr 06 to 31st Mar 07II. Issuances from 1st Apr 06 to 15th Apr 07

Qualification CriteriaProjects, Thesis, Dissertation projectsparadise.com 67Level WRP (Rs) TraditionalProductsPersistencyTopaz 1,50,000 60% 80%Pearl 5,00,000 60% 80%Sapphire 10,00,000 60% 80%Emerald 15,00,000 50% 85%Ruby 25,00,000 50% 85%Diamond 50,00,000 50% 85%3) Elite Club Scheme:-

In this scheme the advisor, who have login the regularpremium of Rs. 2, 00,000 will be eligible for the Elite Club

Membership.5.3 COMPARATIVE STUDYPresently there are 15 Life insurance companies in the country.There is only one public sector company LIC and the rest 14 are privatesector. Although LIC has been dominating the Life Insurance business since

past few years the private players have now started to take the momentum.Projects, Thesis, Dissertation projectsparadise.com 68


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1) Major Market Players: -

Birla Sun Life Insurance Company: -Birla Sun Life Insurance Company is a 74:26 joint venture

between Birla group and Sun Life Financial. It is a private sector company.The company was registered on 31/1/2001. The market share for FY 2005-06 was 1.89%.

HDFC Standard: -HDFC standard is a 74:26 joint venture between HDFC andStandard Life. It is a private sector company. The company was registeredon 23/10/2000. The market share for FY 2005-06 was 2.87%.

ICICI Prudential Life Insurance: -ICICI Prudential Life is a 74:26 joint venture between ICICIand Prudential. It is a private sector company. The company was registeredon 24/11/2000. The market share for FY 2005-06 was 7.35%.

Life Insurance Corporation of India (LIC): -Life Insurance Corporation of India is a 100% government heldPublic Sector Company. Being the first to be established LIC is theforerunner in the Life Insurance sector. The market share for FY 2005-06was 71.44%.

Kotak Mahindra OLD Mutual: -Projects, Thesis, Dissertation projectsparadise.com 69Kotak Mahindra OLD Mutual is a 74:26 joint venture betweenKotak Mahindra bank and Old Mutual. It is a private sector company. Thecompany was registered on 10/1/2001. The market share for FY 2005-06was 1.11%.

Max New York Life: -Max New York Life is a 74:26 joint venture between J & Bank,Pallonji & Co and MetLife. It is a private sector company. The companywasregistered on 6/8/2001. The market share for FY 2005-06 was 1.23%.

Aviva Life Insurance India: -Aviva Life insurance is a 74:26 joint venture between Aviva andDabur. It is a private sector company. The company was registered on

14/5/2002. The market share for FY 2005-06 was 1.14%. ING Vysya Life insurance: -

ING Vysya Life Insurance is joint venture between Exide(50%), Gujarat Cements (14.87%), Enam (9.13%) and ING (26 %). It is a

private sector company. The company was registered on 2/8/2001. Themarket share for FY 2005-06 is 0.79%.

Met Life India: -


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Projects, Thesis, Dissertation projectsparadise.com 70Met Life India is a 74:26 joint venture between 74:26 JV

between J & Bank, Pallonji & Co and MetLife. It is a private sectorcompany. The company was registered on 6/8/2001. The market share forFY 2005-06 was 0.40%.

Bajaj Allianz Life Insurance Co.: -Bajaj Allianz Life Insurance Company is a 74: 26 Jointventure between Bajaj Auto limited and Allianz AIG. The company wasregistered on 3/8/2001. The market share for FY 2005-06 was 7.56%.

SBI Life Insurance Company Ltd: -SBI Life Insurance Company is a 74: 26 Joint venture betweenSBI and Cardiff S.A. The company was registered on 31/3/2001.It is a

private sector company. The market share for FY 2005-06 was 2.31%. The TATA AIG Group: -

TATA AIG group is a 74:26 JV between Tata Group and AIG. Itbelongs to the private sector. The company was registered on 12/2/2001. Themarket share for FY 2005-06 was 1.29%.

Sahara India Life Insurance Company Ltd.: -Projects, Thesis, Dissertation projectsparadise.com 71First Wholly Indian Owned Private Life Insurance Company.The Company commenced operations from 30th October 2004. The marketshare for FY 2005-06 was 0.06 %.

Shriram life insurance company Ltd: -Shriram Life is a recent entrant into the life insurance sectorIt is a 74:26 joint venture between the Shriram group through its ShriramFinancial Holdings and Sanlam Life Insurance Limited, South Africa. Thecompany expects to start operations soon.2) Market Share: -

Sr. No Insurer Market Share (%)1 LIC 71.442 Bajaj Allianz 7.563 ICICI Prudential 7.354 HDFC Standard 2.87

Projects, Thesis, Dissertation projectsparadise.com 725 SBI Life 2.316 Birla SunLife 1.897 Tata AIG 1.298 Max New York 1.239 Aviva 1.1410 Kotak Mahindra OLD Mutual 1.11


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11 ING Vysya 0.7912 Reliance Life 0.5413 MetLife 0.414 Sahara Life 0.0615 Shriram Life 0.03

Now lets depict the market share of these players on diagramProjects, Thesis, Dissertation projectsparadise.com 73Market Share(%)1LIC2 Bajaj A llianz3 ICICI Prudential4 HDFC Standard5 SBI Life6 Birla SunLife

7 Tata AIG8 M ax New York9 Aviva10 Kotak M ahindra OLDMutual11ING Vysya12 Reliance Life13 M etLife14 Sahara Life15 Shriram LifeHere we can see from the diagram that LIC is the market leader and itcommands the major part of the total life insurance market. Its market sharewas approximately 98% before 2000 but after the entry of private players ithas significantly decreased.Among private players Bajaj Allianz stands first. It has the market share ofapproximately 7.56% in the total market and it constitutes 40% of themarketshare among private players.HDFC Standard comes third. SBI Life insurance Company Limited comes

fourth. ICICI Prudential is also one of the fastest growing life insurancecompanies in India.Rest of the players has market share below 2%.Projects, Thesis, Dissertation projectsparadise.com 743) Capital Fund: -

Capital Fund of Private Companies( Rs in Crore )


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ICICI Prudential 375Max New York 250HDFC Standard 218Bajaj Allianz 200Tata AIG 183Birla Sun Life 180AVIVA 155OM Kotak 153Reliance Life 126SBI Life 125Met Life 110ING Vysya 110Projects, Thesis, Dissertation projectsparadise.com 75CHAPTER 6

RESEARCH METHODOLOGYProjects, Thesis, Dissertation projectsparadise.com 766.1 OBJECTIVES OF STUDY1) To get some good market exposure by dealing with the prospectsface to face.2) To improve our ability to sell a financial product like lifeinsurance.Projects, Thesis, Dissertation projectsparadise.com 773) To know the perception of the consumer about life insurance.4) To get a deep knowledge of the financial product like insurance.5) To get some information about the market share of Reliance LifeInsurance as compared to the giants like LIC and to know thestanding of the company in the market.6.2 QUESTIONNAIREIt is most common instrument whether administered in person

by phone or online questionnaires are very flexible. The form of eachquestion is also important. Closed end question include all the possibleanswers and subjects matters choices among them.I have used open-end questions so that customers can write

answer in their own words.I have also used closed-end questions, which provideanswers that are easier to interpret and tabulate. I have taken care in thewording and ordering of questions. I have used simple, direct, unbiasedwording questions, which are arranged in a logical order. I have asked

personal questions at last so that respondent does not become defensive.Projects, Thesis, Dissertation projectsparadise.com 78


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Questionnaire of the customerI have made questionnaire consisting seventeen questions toget customers view about life insurance. I have asked personal questionsat last so that they do not become defensive. I have tried to know their

performance i.e. whether they want to invest, where thy want to invest,up to what amount and since when.6.3 SAMPLING METHOD AND SAMPLE SIZE

Introduction:-Any organization whether big or small, private or public needdifferent types of information are to know its popularity. I have gatheredsecondary data and primary data and collected information from thecombination of these two data.

Secondary data: -Secondary data consist of information that already exists somewhere,

having been collected for another purpose. I have gathered secondary datafrom website of different operators, different magazines, newspapers andlibraries.

Primary data: -Projects, Thesis, Dissertation projectsparadise.com 79I have taken great care while collecting primary data to answer that it isrelevant, accurate, current and unbiased. I have taken a sample of 50 people.I have visited them personally to get data.

Sample size: -I have taken sample size of 50 respondents. Because the population is toolarge so it is difficult to survey.6.4 LIMITATIONSI am a human hang, so there is some limitation of the humanhangs which is reflected in this research.The following are the limitation of this research study.Projects, Thesis, Dissertation projectsparadise.com 801) The sample size of 50 might not represent the perception of whole

population, as the sample size is too small for total population ofAhmedabad city.

2) The opinion expressed by the respondents may be biased.3) The attitude of the research might be biased.4) One of the most influencing and most critical limitations is that Iam not trained for the research study and this is my first study. Itried hard to come at conclusion, but there is lack of expertise.5) Another limitation is that there is lack of time. If I give more timethen studies will be more effective.


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There are some limitations of this study. But in spite of their limitation Iworked with the enthusiasm. And I tried to give the best results to theresearch of this report.6.5 ANALYSIS OF QUESTIONNAIREHere I have formed a questionnaire to study why people go for lifeinsurance. What is peoples major motive behind investing in life insurance?Do they decide upon their own or they take guidance of an agent? What istheir perception about Reliance Life Insurance Company Limited?Projects, Thesis, Dissertation projectsparadise.com 81

Questions:-There are 7 questions in the questionnaire. Out of these 7 questions, 6questions are close ended and one question is an open ended one.

Target Population:-I had conducted this survey among 50 people, and the target group was a

mix of people from the society. I asked the questions to Doctors,Professionals, Professors, Advocates, Engineers, and general public.

Analysis:-I have used pie charts, and some other statistical measures to analyze thequestions.Q.1 What is your main motive behind investing in life insurance?

(a) Tax Benefit(b) Savings(c) Risk Cover(d) Return/YieldProjects, Thesis, Dissertation projectsparadise.com 82There could be any motive of

people behind investing in alife insurance policy. The main

purpose of life insurance is theRisk cover of ones life. But some people consider different advantages of alife insurance policy. Some people consider Tax benefit as the mainadvantage of life insurance. Some believe that life insurance is aninvestment so they tend to invest in life insurance. While some people

believe that it is a compulsory saving. Now lets see what all people sayTAXSAVINGRISKCOVERAGERETURN/YIELDMOTIVE NO.


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TAX 20SAVING 5RISK COVERAGE 23RETURN/YIELD 2TOTAL 50

Projects, Thesis, Dissertation projectsparadise.com 83Here we can see that majority of the people tend to invest in life insurancefor the risk coverage. The next preferred option is Tax Saving. We foundedfrom the discussion with public and some experts that those people with alow income tend to invest in life insurance to gain tax benefit.Saving motive constitutes very small part of the total sample. Return comeslast.But this is the general conclusion of 50 people. If we take a larger sample,we can get a different result.

As the private players have launched ULIPs, more and more people areturning towards these products so the Investment motive has been gainingcommand. Also the number of those people who wish to invest for return isalso increasing.According to a life insurance expert (Vinod Thakkar ), life insurance is for

protection first then for Savings and Tax benefits all those things.Q.2 Rank the above motives according to your preference

MOTIVE OF INVESTMENT

TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD

Preference1 21 3 24 12 19 11 16 43 8 25 7 104 2 11 3 35Projects, Thesis, Dissertation projectsparadise.com 840 5101520

25303540Preference12


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34TAX BENEFITSAVINGSRISK COVERRETURN/YIELDWe can see from the table and the graph that the number one motive of

people about investing in life insurance is risk coverage, which is the maintheme of life insurance followed by Tax benefit. The third position is ofsaving and fourth is Return. This shows that still people consider otherfinancial tools more viable for return and life insurance is for Tax benefitand risk cover.Q.3 How do you decide about investing in life insurance?

(a) On my own

(b) family decision(c) Employer decides(d) as per the guidance of agentThis is a very crucial question as most of the people are not much familiarabout different life insurance plans offered by different life insuranceProjects, Thesis, Dissertation projectsparadise.com 85companies so people take help of the life insurance agent and as he guidesunderstanding the needs of the individual, people would invest.Here one hazardous factor is the moral hazard. People tend to invest in lifeinsurance plans to maintain relations though they are not in need of lifeinsurance.Also sometimes it depends upon the convincing power of the agent.ON MY OWNFAMILYDECISIONEMPLOYERDECIDESAGENTGUIDANCE

Here we can see that majority people (58%) decides on their about investingin life insurance. 28% persons decides as per the guidance of the agent.SOURCE NO.ON MY OWN 29FAMILY DECISION 7EMPLOYER DECIDES 0AGENT GUIDANCE 14


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TOTAL 50

Projects, Thesis, Dissertation projectsparadise.com 86There is no contribution of employers in the decision of ones investment inlife insurance. 14% people invest in life insurance as per the family decision.Q.4. Which life insurance policy would you prefer to buy?

(a) Term Assurance(b) Whole Life(c) Endowment(d) Combination of Whole Life and Endowment(e) Unit LinkedThis is another crucial question as there are number of products offered bylife insurance companies. The products range from pure Term AssurancePlans to Unit Linked Insurance Plans, which are relatively new entrant in themarket.

We have already explained all these policies ahead.Now lets find out what people have to say:Type of policy N0.Term Assurance 9Whole Life 9Endowment 7Combined 19ULIPs 6TOTAL 50

Projects, Thesis, Dissertation projectsparadise.com87

TermAssuranceWhole LifeEndowmentCombinedULIPsAs it is evident from the chart and the table 38% people prefer combinationof Whole Life and Endowment product. It gives people double advantage.The person would get some amount at the end of the stipulated period; for

instance 20 years, and after that period the risk cover continues and the restof the amount would be paid when the person dies.Q.5 Would you prefer Reliance Life Insurance or LIC for buying the

life insurance policy?

(a) Reliance Life Insurance(b) LICThis is the most important question as it reflects the scope of the study. It is


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the main theme of this questionnaire.Projects, Thesis, Dissertation projectsparadise.com 88Prior to 2000 LIC was the only player in the life insurance market and it hadthe total market. So people had to go to LIC for buying life insurance policy.But after the entry of private players in 2000, some people have also turnedto private life insurers.Reliance Life Insurance Company Limited is newly launched company. Soithas fewer customers as compared to LIC. But the ULIP plans are sold moreof Reliance life insurance as compared to LIC in todays environment.

Now lets see what people say:Reliance LifeInsuranceLIC

As evident from the chart that 30% of people would prefer Reliance LifeInsurance while 70% would prefer LIC.Particulars No.Reliance Life Insurance 15LIC 35TOTAL 50

Projects, Thesis, Dissertation projectsparadise.com 89 Personal Details: -

1) Age

(a) 18 to 30(b) 31 to 50(c) 51 to 65Age No.18 to 30 531 to 50 3051 to 65 15TOTAL 50

Projects, Thesis, Dissertation projectsparadise.com 9018 to 30

31 to 5051 to 65As evident from the chart that I have taken a sample of 50. Out ofwhich 10% people are aged between 18 to 30, 60% people are aged between31 to 50, and remaining 30% people are aged between 51 to 65.2) Occupation

(a) Service


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(b) Business(c) Profession(d) Housewife(e) RetiredOccupation No.Projects, Thesis, Dissertation projectsparadise.com 91Service 5Business 15Profession 10Housewife 5Retired 15TOTAL 50

ServiceBusiness

ProfessionHousewifeRetiredAs the evident from the chart that out of 50 respondents 10% are of servicemen, 30% are of business men, 20% are of professions, 10% are ofhousewives and remaining 30% are of retired.3) Income

(a) 50,000 to 1,00,000(b) 1,00,000 to 5,00,000(c) More than 5,00,000Projects, Thesis, Dissertation projectsparadise.com 9250,000 to1,00,0001,00,000 to5,00,000More than5,00,000As the evident from the chart out of 50 respondents 20% are earningannually between 50,000 to 1,00,000, 50% are earning between 1,00,000 to

5,00,000 and 30% are earning more than 5,00,000.4) Family members

(a) 2(b) 3(c) 4(d) More than 4Income (Per Annum) No.


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50,000 to 1,00,000 101,00,000 to 5,00,000 25More than 5,00,000 15TOTAL 50

Projects, Thesis, Dissertation projectsparadise.com 93Family Members No.2 53 154 20More than 4 10TOTAL 50

234

More than 4As the evident from the chart out of 50 respondents 10% have 2 familymembers, 30% have 3 family members, 40% have 4 family members andremaining 20% have more than 4 family members.6.6 SWOT ANALYSISSWOT analysis is the analysis of the internal and external factors, whichhave impact on the survival of any organization. Now lets make SWOTanalysis for reliance Life Insurance Company Limited.Projects, Thesis, Dissertation projectsparadise.com 94

STRENGTHS:1) Reliance Life Insurance Company Limited is the part of theReliance Capital.2) The brand name is enough to sell the products easily.3) Private placement of Rs. 10,000 crs worth of securities with RBI

by the government. Led to an improvement in market securities.4) Strong liquidity from FII was the major reason for the up move.5) Range of products6) Reliance has a long and strong history of solvency, financialstability.

WEAKNESSES:1) Newly established company, so people seems it risky.2) Lack of staff.Projects, Thesis, Dissertation projectsparadise.com 953) Lack of advertisement, so most of the customers are not awareof the Reliance Life Insurance. OPPORTUNITY:


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1) There is a vast untapped market in India. The life insurancepenetration in India is approximately 2.5%. So it has largepotential.2) Intention of traditional products is to encourage long term,regular and disciplined savings to systematically build up atarget fund.3) The average insurance premium being collected by thecompany has been growing exponentially year on year. THREATS:1) The main threat is from the other players who have grabbedapproximately 15% of the market share.2) As the government has scrapped the rebate on the life insurance

premium, the people who used to invest in life insurance for thesole motive of tax benefit may turn to other instruments.

CHAPTER 7FINANCE DEPARTMENTProjects, Thesis, Dissertation projectsparadise.com 96

FUND PERFORMANCE:-There are four fund options, which Reliance Life InsuranceCompany Limited has offered, which are as follows:Projects, Thesis, Dissertation projectsparadise.com 971) Capital Secure Fund:-

This fund is for Reliance Golden Years Plan, and RelianceMarket Return Plan.In line with the objective of protecting the capital against any erosion, 61.4%of the funds were invested in short-term Government Securities (Gilts) andto meet liquidity requirement higher about 40% of funds are kept in shortterm bank deposits. The net return credited to policyholders and the assetcomposition ratios are given in the boxes below.

Net Returns during last 1 month (Mar.06) 0.36%Net Returns during the last 3 months (Jan.-Mar.06) 1.10%Net Returns during the last 12 months (Apr.05-Mar.06) 4.09%Net Returns since Inception in Feb03 (Annualized) 3.89%

Bank Fixed DepositsAsset Name % of total assets

Total Bank Deposit 38.60Gilts

6.75% GOI 2006 6.7511.68% GOI 2006 13.6911.75% GOI 2006 40.96


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Projects, Thesis, Dissertation projectsparadise.com 98Total Gilts 61.40

Total 100.00

Asset Allocation:-GiltsBank Deposits2) Balanced Fund:-

This fund is for Reliance Golden Years Plan, and Reliance MarketReturn Plan.To take advantage of the bullish trend in the equity market, theequity holdings in the fund was maintained as close as possible to themaximum of 20% allowed for the fund. Bank deposits were maintained onlyfor the purpose of liquidity management. To reflect their bearish view on thedebt market the duration of the fixed income portfolio was kept low. Within

the fixed income portfolio, allocation to Gilts was higher than corporatebonds. All the bonds in the portfolio are top rated. The asset composition,the details of the portfolio and the net returns are disclosed below.

Net Returns during last 1 month (Mar.06) 2.47%Projects, Thesis, Dissertation projectsparadise.com 99

Net Returns during the last 3 months (Jan.-Mar.06) 4.07%Net Returns during the last 12 months (Apr.05-Mar.06) 13.83%Net Returns since Inception in Feb03 (Annualized) 13.10%Asset Name % of Total AssetEquity 20Corporate Bonds & Debentures 22Gilts 53Bank Deposits 5Total 100.00

EquityCorporate Bonds& DebenturesGiltsBank Deposits

3) Growth Fund:-Projects, Thesis, Dissertation projectsparadise.com 100This fund is for Reliance Golden Years Plan, and Reliance MarketReturn Plan.To take advantage of the bullish trend in the equity market, the equityholdings in the fund was maintained as close as possible to the maximum of20% allowed for the fund. To reflect their bearish view on the debt market


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the duration of the fixed income portfolio was kept low. All the bonds in theportfolio are top rated. The asset composition, the details of the portfolio andthe net returns are disclosed below.

Net Returns during last 1 month (Mar.06) 4.60%Net Returns during the last 3 months (Jan.-Mar.06) 7.99%Net Returns during the last 12 months (Apr.05-Mar.06) 24.90%Net Returns since Inception in Feb03 (Annualized) 21.04%Asset Name % of Total AssetEquity 9Corporate Bonds & Debentures 40Gilts 45Bank Deposits 6Total 100.00


EquityCorporate Bonds& DebenturesGiltsBank Deposits4) Equity Fund:-

This fund is for Reliance Market Return Plan. In line with thestated asset allocation pattern and their view of the market, the entire corpusof the fund was invested in equities. Net returns earned since inception andthe full portfolio are disclosed below.

Net Returns during last 1 month (Mar.06) 11.18%Net Returns during the last 3 months (Jan.-Mar.06) 20.02%Net Returns during the last 12 months (Apr.05-Mar.06) 64.46%Net Returns since Inception in Feb03 (Annualized) 57.83%Projects, Thesis, Dissertation projectsparadise.com 102Asset Name % of Total AssetEquity 98.93Mutual Fund/Bank Deposits 1.07Total 100.00

EquityMutual Fund/BankDepositsCHAPTER 8Projects, Thesis, Dissertation projectsparadise.com 103CONCUSION

After the deep study of insurance sector of India, I can tell that this is


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the sector, which has most business opportunities perhaps in India.Projects, Thesis, Dissertation projectsparadise.com 104

Insurance industry is one of the fastest sectors in India. Insurancesector has been growing by 25% to 30% and it is expected to increase

by 50% in coming 5 years. After the opening up of the insurancesector, it has become much competitive and insurance awarenessamong people has increased.

As far as the comparison of Reliance Life Insurance and other playersis concerned, there are both positive as well as negative impacts on

both the sides.For Reliance Life Insurance, the negative aspect is that its market

share is low.For private players the negative aspect is that they have to fight with

the public sector giant which is established player with a high brand

value.But the positive impact is that the life insurance awareness has

increased and the business of Reliance Life Insurance has increased.CHAPTER 9BIBLIOGRAPHY AND REFERENCESProjects, Thesis, Dissertation projectsparadise.com 105

www.reliancelife.comwww.indiainfoline.comwww.bimaonline.comwww.google.com

Projects, Thesis, Dissertation projectsparadise.com 106Life Time Magazine of Reliance Life InsuranceNet Bios Computer Academys Life Insurance BookBroachers of Reliance Life Insurance

CHAPTER 10ANNEXUREProjects, Thesis, Dissertation projectsparadise.com 107

QuestionnaireSurvey by student of R.K.C.B.M.

OnLife Insurance

NAME: ___________________________________________

Q.1 What is your main motive behind investing in life insurance?

(a) Tax Benefit(b) Savings(c) Risk Cover


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Projects, Thesis, Dissertation projectsparadise.com 108(d) Return/YieldQ.2 Rank the above motives according to your preference

MOTIVE OF INVESTMENT

TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD

Preference

1234

Q.3 How do you decide about investing in life insurance?

(a) On my own(b) family decision(c) Employer decides(d) as per the guidance of agentQ.4. Which life insurance policy would you prefer to buy?

(a) Term Assurance

(b) Whole Life(c) Endowment(d) Combination of Whole Life and Endowment(e) Unit LinkedQ.5 Would you prefer Reliance Life Insurance or LIC for buying the

life insurance policy?

(a) Reliance Life Insurance(b) LICProjects, Thesis, Dissertation projectsparadise.com 109

PERSONAL DETAILS1) Age

(a) 18 to 30(b) 31 to 50(c) 51 to 652) Occupation

(a) Service(b) BusinessProjects, Thesis, Dissertation projectsparadise.com 110(c) Profession

(d) Housewife(e) Retired3) Income

(a) 50,000 to 1,00,000(b) 1,00,000 to 5,00,000(c) More than 5,00,0004) Family members


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(a) 2(b) 3(c) 4(d) More than 4

Documents

Project Reliance Insurance