study of traditional policy vs ulips

8/21/2019 study of traditional policy vs ulips

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Chapter-1

Profile of Reliance Life Insurance Co. Ltd.

1.1. About Reliance Life Insurance

Name of the Company:Reliance Life Insurance Company Limited

Address: 8th floor, Narain Manzil, Barakhambha Road ,Connought Place,

Delhi-110001

Ph no.:011-32627221 / 011-30183466 /011-30183467 /011- 30183468

Fax:91 22 3088 6587

Website:www.reliancelife.com

Registered Office:H Block, 1st Floor, Dhirubhai Ambani Knowledge City,

Navi Mumbai, Maharashtra - 400710.

Corporate Office: 9th floor/10th floor, Building No. 2, R-Tech Park,

Nirlon Compound, Next to Hub Mall, Behind I- Flex building,

Goregaon, (East), Mumbai-400 063.

Company Type: Private Limited Company

Branches:

They have so many branches and substations in India. They have around 1164

branches in India. And they have planned to open more branches across the

country in the coming months of October and November.
http://www.reliancelife.com/http://www.reliancelife.com/http://www.reliancelife.com/


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Geographical Areas of operation:

Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chattisgarh, Delhi, Goa,

Gujarat, Haryana, Himachal Pradesh, J&K, Jharkhand, Karnataka, Kerala,

Madhya Pradesh, Maharashtra, Meghalaya, Mizoram, Nagaland, Orissa,

Punjab,Rajasthan, Sikkim, Tamil Nadu,Tripura, U.P., Uttrakhand, West Bengal

1.2. Vision & Mission:

Vision

Empowering everyone live their dreams.

Mission

Create unmatched value for everyone through dependable, effective, transparent and

profitable life insurance and pension plans.

Our Goal

Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:

Emerge as transnational Life Insurer of global scale and standard

Create best value for Customers, Shareholders and all Stake holders

Achieve impeccable reputation and credentials through best business practices

1.3.Product Range:

Reliance Life Insurance offers two types of plans to their customers:


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Traditional Plans

ULIP plans

Traditional Plan:

Life insurance products are designed to suit the requirements of customers.

Fundamentally the product provide for:

Risk cover

Investment

Health cover

In every product, to a certain degree, risk cover is imperative for it to fall under the

category of insurance. Based on the coverage of the product, the premiums are calculated

and the customer pays accordingly. In order to suggest the right product, it is essential for

an agent to understand the requirements of the customer well.

Reliance Life Insurance Company Limited has offered 9 traditional plans to the

customers, which are listed as follows:

1) Reliance Term Plan

2) Reliance Whole Life Plan

3) Reliance Child Plan

4) Reliance Endowment Plan

5) Reliance Special Endowment Plan


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6) Reliance Cash Flow Plan

7) Reliance Credit Guardian Plan

8) Reliance Special Credit Guardian Plan

Unit Linked Plan:

A unit-linked policy is a life assurance policy in which the benefits depend on the

performance of a portfolio of shares.

Each premium paid by the insured person is split: a part is used to 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 managed fund without

making a large financial commitment. As they are linked to the value of shares, unit

linked policies can go up or down in value. Policyholders can surrender the policy at any

time and the surrender value is the selling price of the units purchased by the date of

cancellation 9less expense). A small part of the contribution is used for providing life

cover and the balance is invested in unit. Legal heirs are entitled to the amount of

insurance cover and entitled units in case of death of the insured.

Reliance Life Insurance Company Limited has also offered the three Unit Linked Plans,

which are listed as follows:

1) Reliance Market Return Plan

2) Reliance Golden Years Plan


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3) Highest NAV Plan

Amongst the above plans the Reliance Market Return Plan is the largest selling plan of

the Reliance Life Insurance Company Limited, but in recent time Highest NAV plan

breaks the all previous records in very short time. This plan is closed now.

1.4. Size of the organization:

1145nches 1,95,000 Advisors and over 16,000 employees.

1.5.Organisation form and structure:

Fig 1. Organization form and structure

1.6.Market Share & Position of the company:

3rd largestprivate player in a span of just 4 years, moved from 11th position to

3rd


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Amongst the fastest growingCompanies for 4 years in a row

Continuous increase in market share over 4 years; from 1.9% in 2005-06 to

10.26% in 2009 -10

RLIC has achieved a growth rate of 21% while the private industry has grown at

13%

Fastest to reach the 5 millionpolicy mark

Largest private insurerin terms of policy count in 2009-10

Fig 2. Market share of Life insurance companies in India


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Table 1. Market share of Life insurance companies in India

1.7. Present Leadership:

The names and designation of those people who regularly guide me in my project and

work are given below:

Mr.Nimit verma

Executive Sales Manager and Financial consultant (CP and jhandewala branch)

Mr.vipul shrama

Executive Sales manager and instructor. (CP branch)


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1.8.Types of Data:

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

design chalked out. While deciding about the method of data collection we should keep

in mind two types of data.

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

recorded by the researchers for the first time to their knowledge.

Secondary Data:Secondary data are statistics not gathered for the immediate study at

hand but for other purpose. They may be describe as those data that have been compiled

by some agency other than the user.

Data Sources: The sources of collection of data are:

Questionnaire

Books

Websites

Magazines

Company Brochures


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Chapter-2

SWOT Analysis of Reliance Life Insurance

Fig 3. SWOT Analysis

SWOT analysis is the analysis of the internal and external factors, which have impact on

the survival of any organization. Now lets make SWOT analysis for reliance Life

Insurance Company Limited.

Strengths & Weaknesses-

Strengths:

Reliance Life Insurance Company Limited is the part of the Reliance Capital.

The brand name is enough to sell the products easily.


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Private placement of Rs. 10,000 crs worth of securities with RBI by the

government led to an improvement in market securities.

Strong liquidity from FII was the major reason for the up move.

Range of products.

Reliance has a long and strong history of solvency, financial stability.

Weaknesses:

Newly established company, so people seems it risky.

Lack of staff.

Lack of advertisement, so most of the customers are not aware of the Reliance

Life Insurance.

No foreign partner bringing in FDI

Opportunities & Threats-

Opportunities:

There is a vast untapped market in India. The life insurance penetration in India is

approximately 2.5%. So it has large potential.

Intention of traditional products is to encourage long term, regular and disciplined

savings to systematically build up a target fund.

The average insurance premium being collected by the company has been

growing exponentially year on year.


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Threats:

The main threat is from the other players who have grabbed approximately 15%

of the market share.

As the government has scrapped the rebate on the life insurance premium, the

people who used to invest in life insurance for the sole motive of tax benefit may

turn to other instruments.

Strong tie up with the competitors.


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Chapter-3

Analytical Framework

Introduction

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the

Reliance Anil Dhirubhai Ambani Group. The company acquired 100 percent

shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over

AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a

portfolio.

AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar

Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country,

9,000 agents, and more than 900 employees.

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the

Reliance Anil Dhirubhai Ambani Group (ADAG). Reliance Life Insurance is another

step forward for Reliance Capital Limited to offer need based Life Insurance solutions to

individuals and Corporate.

Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and

banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset

management, life and general insurance, private equity and proprietary investments, stock

broking and other financial services.

Reliance Life Insurance History:

1966- Birth of Reliance first Textile Mill at Naroda.


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1971-72: Launch of Only Vimal Brand.

1977- Launch of first IPO for general public start at trend.

1985- Total asset cross 1000 cr.

1992- Twin IPOs receive 1 million applications.

1993- Sales cross 4000cr, becomes largest Pvt. Sector Co. in India

1997- First corporate in Asia to issue 50 and 100 yrs bond in US Debt Market.

1998- Total Asset cross 35000cr, Revenues Cross 14000cr.

2000- Group profit 2500cr, revenues 20000cr, and Total assets 50000cr

2000- Reliance communications plans announced

2001- Group revenues cross 60,000cr, largest business group in India.

2003- Controlling stake in BSES (Reliance Energy), largest mobile service in India.

2005-ADA group formed AMP Sanmar acquired and renamed Reliance Life Insurance

Corporation (RLIC)

Sep 07- became the 1stcompany to cross 1 million policy mark in 2 years of operations.

2007- RLIC became only became the 2ndnational insurance company to get ISO 9001-

2000

2007-08 RLIC jumps to 4th

position with 2750cr.

2008- Crosses 2 million policies.

2008- Reliance Mutual Funds becomes 1stAsset Management Company (AMC) to cross

Rs.1,00,000 Crore.

2008- Reliance Communications crosses 50 million customers.

2008-09 A total of more than 2000 branches on anvil in the fiscal year.

2009-10 RLIC become the top third insurance company in India.


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Industry Profile

Life Insurance

Life insurance is a form of insurance that pays monetary proceeds upon the death of the

insured covered in the policy. Essentially, a life insurance policy is a contract between the

named insured and the insurance company where in the insurance company agrees to pay

an agreed upon some of money to the insureds named beneficiary so long as the

insureds premiums are current.

With a large population and the untapped market area of this population insurance

happens to be a very opportunity in India. Today it stands as a business growing at the

rate of 15-20% annually. Together with banking services, it adds about 7% to country

GDP.

In spite of all this growth statistics of the penetration of the insurance in the country is

very poor. Nearly 80% of Indian populations are without life insurance cover and the

health insurance. This is an indicator that growth potential for the insurance sector is

immense in India.

It was due to this immense growth that the regulations were introduced in the insurance

sector and in continuation Malhotra Committee was constituted by the government in

1993 to examine the various aspects of the industry. The key element of the reform

process was participation of overseas insurance companies with 26% capital. Creating a

more competitive financial system suitable for the requirements of the economy was the

main idea behind this reform.


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Since then the insurance industry has gone through many changes. The liberalization of

the industry the insurance industry has never looked back and today stand as one of the

most competitive and exploring industry in India. The entry of the private players and the

increased use of the new distribution are in the limelight today. The use of new

distribution techniques and the IT tools has increased the scope of the industry in the

longer run.

Insurance is the business of providing protection against financial aspects of risk, such as

those property, life, health and legal liability.

It is one method of a greater concept known as risk management- which is the need to

manage uncertainty on account of exposure to loss, injury, disadvantage or destruction.

Insurance is the method of spreading and transfer of risks. The fortunate many who are

exposed to some or similar risk shares loss of the unfortunate. Insurance does not protect

the assets but only compensates the economy or financial loss.

In insurance the insured makes payment called Premiums to an insurer, and in return is

able to claim a payment from the insurer if the insured suffers a defined type of loss.

This relationship is usually drawn upon in a formal legal contract. Insurance companies

also earn investment profits, because the have the use of the premium money from the

time they receive it until the time the need it to pay claims. This money is called the float.

When the investment of float are successful the may earn large profits, even if the

insurance company pays out of claims every penny received as premiums.


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In fact, most insurance companies pay out more money than they receive in premiums.

The excess amount that they pay to policyholders is the cost of float. An insurance

company will profit if the invest the money at a greater return than their cost of float. An

insurance contract or policy will set out in detail the exact circumstances under which a

benefit payment will be made and the amount of premiums.

Benefits of Life Insurance

Life insurance encourages saving and forces thrift.

It is superior to traditional saving vehicles.

It help to achieve the purpose of life assured.

It can be enchased and facilitates quick borrowing.

It provides valuable tax relief.

Thus insurance is found to be very useful in the lives of the person both in short term and

long term.

Indian Insurance Industry an Overview

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 2100.41 billion (for the financial year

2009 2010). 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.


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Even so nearly 65% 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 social security and pension systems with

hardly any old age income security

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.

Product Mix

Working of the Reliance Insurance Plans

A. Traditional plans

Reliance Life Insurance Company Limited has offered 9 traditional plans to the

customers, which are listed as follows:

1) Reliance Term Plan

2) Reliance Whole Life Plan

3) Reliance Child Plan

4) Reliance Endowment Plan

5) Reliance Special Endowment Plan

6) Reliance Cash Flow Plan


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7) Reliance Credit Guardian Plan

8) Reliance Special Credit Guardian Plan

Each 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 also be useful to business

firms that wish to provide financial security to their business against the sudden loss of

partners or valuable manpower. Since there 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 year

c) Maximum premium paying term is 30 year

d) Loan facility N.A.

e) Maturity amount = Sum assured


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2) 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 their family 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 cover

c) Maturity age is 85 year or 99 years last birthday as chosen

d) Maturity amount = Sum assured + Vested bonus

e) Tax benefit is available

3) Reliance Child Plan: -

This insurance policy is designed for people who wish to save money for a future time

when there will be a recurring need for substantial amounts of money. This is especially

true when it comes to paying large sums of money for higher education as and when your

son or daughter is studying to become an Engineer, a Doctor or Specialize in some other

field, or is perhaps planning 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 year


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a) Minimum sum assured is Rs. 25,000.

b) Minimum premium paying term is 5 year and maximum 20 year

c) Tax benefit is available

d) Maturity amount = Four equal installment of sum insured in last four year plus vested

bonus in the last year

e) Loan facility is available

4) Reliance Endowment Plan: -

Reliance Life Insurances Reliance Endowment Plan is the key to all your financial

needs. It is an inexpensive and easy way to protect you, your family or your business.

In a nutshell this plan will keep you financially prepared for all the special occasions in

your life - your daughters wedding, your childs university education or even a new

office for your business - by eliminating the burden that a shortage of money creates.

In the event of your untimely death, Reliance Endowment Plan will also assist your loved

ones through this difficult time by the financial support that it provides.

Reliance Endowment Plan also gives you the additional benefit of participating in the

companys profits, which you will receive at the end of the policy period.

Features: -

a) Entry age minimum is 5 year and maximum 65 year

b) Maturity age minimum is 18 year and maximum 75 year


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c) Minimum premium paying term is 5 year and maximum 35 year in case of regular

and in case of single 15 year

d) Minimum sum assured is Rs. 25,000 or as determined by the minimum premium

e) Maximum sum assured is Rs. 5,00,000 (entry age below 18 years and no limit for

entry age 18 and above)

f) Premium mode annual, half yearly, quarterly and monthly (by salary deduction only)

g) Loan up to 90% of the surrender value of the policy

h) Maturity amount = Guaranteed sum assured + Reversionary bonus

5) Reliance Special Endowment Plan: -

This insurance policy is designed for people who wish to combine savings with

extended security. The unique feature of this policy is that life protection continues for

five years after you have stopped the payment of premium. Payment of sum assured at

the end of premium paying term and extension of life cover thereafter for the full sum

assured for a period of 5 years, 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 40 year


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d) Unique feature of this policy is that five year life protection continues after you have

stopped the payment of premium

e) Tax benefit is available

f) Under this policy bonus is compounded yearly

g) Loan facility is available

h) Maturity amount = Full sum assured before maturity date + Vested bonus at the time

of maturity date.

6) Reliance Cash Flow Plan: -

This insurance policy is designed for those who have a recurring need for reinvestment in

business or look for short-term investment channels. The advantage of the policy is that

they need not part with a sizable amount of money at any one time, but create, through

regular premium payments, a periodic return of lump sums which become available for

reinvestment at higher returns, while providing simultaneously, substantial life cover.

Alternatively, it can be used to meet any immediate financial crisis in the family 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 end of the 4th

year and thereafter at the end of every 3rd year.

Features:-

a) Plan with profits.


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b) Minimum entry age is 15 year and maximum is 63 year

c) Maximum premium paying term is 34 year

d) Loan facility is not available

e) In case of death full sum assured + accrued bonuses up to the date of death is payable

immediately.

f) In case of survival up to maturity date all premium paid

g) Rider accident death and critical illness

h) Mode of payment is available

7) Reliance Credit Guardian Plan: -

This insurance policy is designed for those who not only safeguards individuals but also

families and businesses from the financial hardship that could arise from unfortunate and

unexpected death.

Features: -

a) Loan protection against home, home improvement, two wheelers and four wheelers

b) In case of death remaining loan amount paid immediately

c) In case of survival no benefit is available

d) Premium payment option for single and regular is available

e) Premium paying term is 2/3 of loan period and remaining period paid by the company


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8) Reliance Special Credit Guardian Plan: -

This insurance policy is designed for those who not only safeguards individuals but also

families and businesses from the financial hardship that could arise from unfortunate and

unexpected death, disability or critical illnesses.

Features: -

a) Loan protection against home, home improvement, two wheelers and four wheelers

b) In case of death remaining loan amount paid immediately

c) In case of survival no benefit is available

d) Premium payment option for regular and single is available

e) Premium payment term is 2/3 of loan period & remaining period paid by the company

f) Maturity amount = All the premium paid amount

g) Tax benefit is available

B. Unit Linked Plan

Reliance Life Insurance Company Limited has also offered the three Unit Linked Plans,

which are listed as follows:

1) Reliance Market Return Plan

2) Reliance Golden Years Plan


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3) Highest NAV Plan

1) Reliance Market Return Plan: -

Reliance Market Return Fund is the unit-linked product that helps you investing the

financial markets in a combination of investment instruments of your choice. You can

enjoy the returns from the markets without the trouble of monitoring and managing your

own investment portfolio and keeping track of the market movements. At the same time

your investment premiums provide you with insurance cover. Reliance Market Return

Fund unit-linked insurance plan provides you with a basket of fund options that balances

your return and risk exposure while providing life cover at the same time.

Features: -

a) Minimum entry age is 30 days and maximum entry age is 65 year

b) Maximum policy term 40 year and minimum policy term 5 year

c) 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. 2500

e) Option of investment fund

i. Capital secure 100% fixed interest securities

ii. Balanced minimum 80% fixed interest securities and maximum 20% in equity

iii. Equity 100% equity


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iv. Growth minimum 60% fixed interest securities and maximum 40% in equity

f) Loan facility is not available

g) One switches every year free & subsequent switches charged 1% of amount switched

h) Partial withdrawals per year under regular and single premium options is 2 times

i) Lock in period till today is 3 year

j) Minimum unit account balance after each withdrawal is Rs. 10,000

2) Reliance Golden Years Plan: -

Reliance Golden Years Plan.. The Reliance Life Insurance no-worry stay happy

retirement plan. Reliance Golden Years Plan is a flexible package that provides 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 all individuals

who are between the ages of 18 and 65.

Features: -


b) Minimum premium amount Rs. 20,000 and maximum is unlimited

c) Mode of premium payment is available

d) Pension plan with risk cover and without risk cover

e) Choice of investment


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i. Capital secure fund80% in equity and 20% in government security

ii. Balanced fund80% in government and 20% in equity

f) No loan facility is available


h) Annuity options

i. Annuity payable for life

ii. Annuity payable for 5/10/15 years certain and thereafter with life

iii. Annuity payable for life with return of capital on death of the annuitant.

3. Highest NAV Plan

Reliance Highest NAV Plan is the unit-linked product that helps you investing the

financial markets. You can enjoy the returns from the markets without the trouble of

monitoring and managing your own investment portfolio and keeping track of the market

movements. It gives the return on the basis of highest net asset value within the total span

of the policy. At the same time your investment premiums provide you with insurance

cover. Reliance Highest NAV Plan is a unit-linked insurance plan provides you with a

basket of fund options that balances your return and risk exposure while providing life

cover at the same time.

Features: -



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b) Minimum premium amount Rs. 20,000 and maximum is unlimited.

c) Only for 10 years.

c) Mode of premium payment is available

f) No loan facility is available


Marketing Department

Reliance Life Insurance Company Limited is using five types of distribution channel,

which are as follows:

1.Agency: -

Independent insurance agents represent a number of companies and can research these

companies products to find the right combination for their clients. Independent agents &

insurance producer groups are growing in prevalence. Although producer groups are in

their infancy, their emergence may potentially be realignment in the distribution of

financial services. Independent shops realized that by pooling production and funding a

central support office, they had increased buying power.The one type of distribution

channel, which Reliance Life Insurance Co. Ltd is using, is an agency. This channel

works as follows:


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Fig 4. Agency distribution channel

2. Bank Assurance: -

While a lot of bank relationships with insurance companies have been established, life

insurance sales have been slower than one would expect he primary bank insurance

activities have been the distribution of annuities, credit life, and direct marketing

insurance. Banks are failing to incorporate successful sales tactics used to sell other

financial services like investments. Another type of distribution channel is bank

assurance. This channel is tie up with banks. In this channel the advisors using or

targeting 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 amongst independent advisors for trust

services and to gain a better feel for how independent advisors handle trust services, a


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research was performed with independent advisors across several broker/dealers and

custodians. The interviews revealed that demand is greatest for living trusts among

independent advisors, followed by demand for corporate trustee services.

Another type of distribution channel is corporate, which are for employee benefits. This

channel is tie up with corporate or small enterprises. Through these small enterprises, the

advisors will sell the products/policy to customers of the small enterprises.

4. Rural Benefits:-

Brokerage firms have gained much of the institutional and personal trust business lost by

the banks. These firms have steadily captured assets, primarily at the expense of the

banks. The number of non-bank trust companies has increased in recent years as

independent trust companies have emerged and more broker/dealers are integrated

services. Insurance companies view full-service brokers as a potentially new distribution

channel as well. Another type of distribution channel is rural benefits. This channel

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 of the traditional full-serve

players seem to be letting it go. Across all financial services, consumers are expressing a

willingness to deal with a variety of providers on the web. Web sites are starting to pop

up offering consumer insurance products especially designed for distribution over the

web. Another type of distribution channel is web world. This channel is tie up with

customer database. In this channel, the advisors will sell the policy to the target

customers, which are taken from the customer database, are listed in the website.


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Data Analysis & Interpretation

Q1) What do you think are the benefits of life Insurance cover?

Options Response

Cover Future Uncertainity 8

Tax Saving Tool 12

Saving Tool 16

Return/Yield 14

Fig. 5.1. Benefits of Life Insurance For Customers

Data interpretation:- From the above, we can see that insurance is a saving tool for

most of the respondents whereas return is also a tool as investment in ULIP provide

higher returns through equity.

8

12

16

14

Benefits of life insurance

Cover Future

uncertanityTax Saving Tool

Saving Tool

Return / Yeild


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Q.2)From whom you got to know about the insurance plans?

Options No.of Respondent

insurance

agents 30

Advertising 2

Family/Friends 10

Others 8

Fig 5.2. Source of information for the customers of Reliance Life Insurance.

Analysis:-From the above we can see that insurance agents are the one from whom the

customers of Reliance life insurance get to know about the products. Whereas family and

friends also influence their decision and other source of information such as students as

trainees are also a source of information.

Data interpretation:-From the above analysis it can be interpreted insurance agents are

the major source of information as push strategy of marketing is adopted and insurance is

always sold to the customers.

Source of Information

insurance agents

Advertising

Family/Friends

Others


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

Options Response

On my own 50%

Family decision 16%

Employer Decides 4%

As per the guidence 30%

Fig 5.3. Decision influencers for taking insurance plans by the customers

Data Analysis:-From the above figure we can see that 50% of the customers invest in

insurance according to their knowledge and 30% take decision according to the guidance

if their agents .Rest take decision as per the guidance of their family or friends .

Interpretation:- As Reliance plans are quite popular among middle class people hencethey like to take decision and invest time to time in such plans as per their knowledge and

incase they trust their agents they take decision as per their agents guidance as they

believe that their agent has the best knowledge about the market conditions and whether

to invest in equity or debt.

Decision influencers

50%

16%

4%

30%

On my ow n

Family decision

Employer Decides

As per the guidence


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Q4) Do you know about Reliance ULIP?

Options

No. of

respondents

Yes 46

No 4

Fig 5.4. depicts the awareness of ULIP plans among the customers of Reliance Life

Insurance.

Data analysis:-From the above figure we can conclude that out of 50 respondents 46

know about the ULIP plans and only 4 respondents are not aware about any ULIP plans

of Reliance life insurance.

Interpretation:- As insurance sector is growing rapidly so most of the life insurance

players are selling ULIP plans. And the awareness about ULIP is growing as most of the

people know about the ULIP of life insurance. Since last 4-5 years the returns provided

by ULIP were very good so people tend more to words ULIP.

Q5) If yes, have you taken any ULIP insurance policy?

Options Response

Yes 65%

No 35%

0

10

20

30

40

50

Yes No

Response

Awareness about ULIP

no. of respondent


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Fig5.5. Depict the percentage of customers of Reliance Life insurance investing in ULIP .

Data Interpretation:- Of the sample size 50 surveyed respondents 65 % are having

ULIP policy and only 35% do not have a ULIP policy.

Interpretation:-This may be a result of a the high returns that are possible only in ULIP

which could help beat inflation also the good market conditions could be the reason to

invest.

Q6)If no, then would you like to invest in ULIP?

Options No. of respondents

Yes 10

No 6

ULIP Investors

Response, Yes ,

65%

Response, No, 35%

Yes

No


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Fig 5.6. Depict the Percentage and number of potential ULIP customers

Data Interpretation:-Out of 16 respondents who do not have ULIP policy 10 would like

to take up ULIP plans.

Interpretation:-This is because ULIP provides a lot of benefits in one and taking ULIP

plans with traditional plans is considers to be the good combination.

Q7) Which ULIP plan have you bought or would prefer to buy?

Plans Response

Reliance market returnplan 38

Reliance golden years

plan 8

Fig 5.7. Depicts the percentage of ULIP customers and potential ULIP customers

Potential ULIP investors

Yes , 10, 62%

No, 6, 38%

Yes

No

ULIP customers

83%

17%

Reliance market return plan

Reliance golden years plan


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Data interpretation:-83% respondent has invested or would like to invest in reliance

market return plan .

Interpretation: Reliance market return plan is the classic plan of reliance that offers

higher return and the other plan does not exist anymore only the old customers are having

that plan. Also the option of choosing sum assured and 52 switches provided in an yearby the company could be the reason for the popularity of ULIP plans.

Q8) What is the reason for investment in ULIP?

Options Response

Child

Education 5

Child

marriage 2

Pension 2

Income

Growth 15

Tax Rebate 4

2in1 Benefit 22

Fig 5.8. Depicts the reason of investing in ULIP by the customers

52 2

15

4

22

0

5

10

15

20

25

no.of respondent

Child

Education

Pension Tax

Rebate

Reasons

Reason for investment in ULIP

Response


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Data interpretation: the first preference of customers for investing in Ulip is 2 in 1

benefit and second major preference is income growth and tax rebate

Interpretation: First reason or preference that why an investor is interested in ULIP is2.in1 that is for investment and other purposed such as tax rebate, and second is to its

returns and after that they investing because they are getting the tax benefit. Then again

there are some people who are investing for pension planning and security.

Q9) What feature of ULIP insurance attracted you the most?

Options Response

Money back

guarantee 14%

Larger risk coverage 14%

Easy access to agents 26%

Low premium 0

Company's reputation 18%

Flexibility in

investment 16%

Greater transperency 16%

Fig.5.9. Depicts the ULIP features that attract the customers the most.

ULIP features

14%

26%

10%0%18%

16%

16%Money back guarantee

Larger risk coverage

Easy access to agentsLow premium

Company's reputation

Flexibility in investment

Greater transperency


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Data interpretation: The most attractive feature of ULIP is that it can be easily accessed

by the customers to the agents whereas flexibility and greater transparency are other

attractive features of ULIP.

Q10) How would you rate Reliance ULIP insurance?

Options Response

Fair 11

Average 7

Good 13

Best 7

Fig 5.10. Depicts the ULIP performance rated by the customers.

Interpretation:-13 respondent that is 26% of people given good rating to the RelianceLife Insurance ULIP, so from this we can analyze that Reliance Life Insurance is doing

good but it is having good potential in Market. To improve its market share they should

improve the awareness level of the common people. also 11 respondent feel that ulip

plans are fair plans their performance depend upon the conditions of the market and they

are satisfied with the level of transparency provided by the company to its customers.

0

5

10

15

ULIP performance

Response 11 7 13 7

Fair Average Good Best


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Q11) Do you know about Traditional plans of RLIC ?

Options Response

Yes 40

No 10

Fig5.11. Depicts awareness about traditional insurance plans among the customers

Data interpretation:-Awareness level among the customers about traditional plans is

very high that is 80% .this might be due to secured returns guaranteed in traditional plans

and customers also like to take up ulip plans in combination with traditional insurance

plans.

Q12) Have you taken any Traditional Plan?

Options Response

Yes 14

No 22

Fig.5.12. Depicts the customers taking Traditional Plan

Awareness about traditional plans

yes

80%

No

20%

14

22

0

5

10

15

20

25

yes No

ULIP customers

Response


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Data interpretation:-only 14 respondents out of 50 have traditional insurance plans .

Interpretation:-Traditional plans have to invest at least 85% in debt instruments which

results in low returns. On the other hand, ULIP invest in market linked instruments with

varying debt and equity proportions and if you wish you can even choose 100% equityoption, so people prefer ULIP.

13) If no, then would you like to take reliance traditional plans?

Options Response

Yes 6

No 44

Fig

5.13. Depicts the percentage of potential ulip customers

Interpretation:-Very few customers that is only 12% of the people surveyed would like

to take up traditional plans as returns are very conservative.

Potential ULIP customers

yes

12%

No

88%


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Q14) Which reliance traditional insurance plan have you bought or would prefer to

buy?(multiple choice)

Plans Response

Reliance term plan 6

Reliance wholw life plan 0

Reliance child plan 2

Reliance endowment plan 4

Reliance special endowment

plan 2

Reliance cash flow plan 0

Reliance credit guardian plan 0

Fig5.14. Depicts the traditional plans opted by the customers.

Data interpretation:-Reliance term has been the oldest and classic traditional plan as its

working is very easy to understand and its sole purpose is providing risk coverage and

premiums are also very low . Also customer prefers endowment plan as it assures return

on investment.

0

2

4

6

no.of respondents

Traditional plans

Response 6 0 2 4 2 0 0

Reliance

term

Reliance

wholw

Reliance

child

Reliance

endowm

Reliance

special

Reliance

cash

Reliance

credit


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Q15) What is the reason for investment in reliance traditional plans?

Reasons Response

Steady Investment/growth 1

Social security (for family) 4

Security of money 0

Tax saving 2

Social security (for self) 2

Low premium 6

Fig5.15. Depicts reason for taking traditional plans by the customers.

Data interpretation:- Low premium is the major reason for opting for the traditional

insurance plans.

Interpreration:-In traditional policies you have to select Sum Assured based on which

you pay your premium but in ULIP you have the flexibility to choose your Sum

Assured let whatever be your premium(With little restriction like For premium of x

amount S.A cannot be greater than y!). Many ULIP also allow you to increase/decrease

risk cover as per your needs.

0

2

4

6

no.of respondents

Reson for taking Trditional plans

Response 1 4 0 2 2 6

Steady

Investme

Social

security

Security

of money

Tax

saving

Social

security

Low

premium


44/62

Q16) How would you rate Reliance traditional life insurance plans?

Options Response

Fair 13%

Average 31%

Good 37%

Best 19%

Fig.5.16. Depicts the performance of traditional plans rated by its customers.

Data interpretation:-37% of the people surveyed has rated performance of traditional

plans as good that means they are satisfied with low premiums and conservative returns .

Interpretation:- As middle class people were surveyed thus they do not want to risk

their money hence choose traditional insurance plan.

Q17) Whom Do you prefer first for investment?

Plans Response

Traditional

plans 22

ULIP 28

Performance of Traditonal plans

Fair

13%

Average

31%

Good

37%

Best

19%


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Fig5.17. Depicts investment wise preference of the customers.

Data interpretation:-55% people surveyed choose ULIP over traditional insurance plans

in terms of returns.

Interpretation:-As most of the people want the option which should provide security

and good returns and there is only option available with good liquidity is ULIP of

Reliance. 55 people had opted for ULIP as their future investment and 45% of people

opted for Traditional Plans. So we can find that there not so much difference in these

option.

Q18) Whom do you prefer for protection or risk coverage?

Plans Response

Traditional

plans 20

ULIP 30

Investment wise preference

Traditional plans

44%ULIP

56%


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Fig5.18. Depicts risk coverage wise preference of the customers.

Data interpretation:-60% of people surveyed choose ULIP over traditional plans .

Interpretation:-As most of the people want the option which should provide security

and good returns and there is only option available with good liquidity is ULIP of

Reliance. 54% people had opted for ULIP as their future investment and 45% of people

opted for Traditional Plans. So we can find that there not so much difference in these

option.

Q19) Whom do you think yields better returns?

Plans Response

Traditional

plans 16

ULIP 34

Risk coverage wise preference

Traditional plans

40%

ULIP

60%


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Fig5.19. Depicts return wise preference of the customers.

Data interpretation:-68% of the people surveyed choose Ulip in terms of better returns.

Interpretation:-This is because returns are conservative in traditional insurance plans

whereas in ULIP investment in equity yields better return as compared to the premiums

paid by the customers.

Q20) According to you, in what area should the company work upon?

Options Response

Less complicated procedures 15

Fewer premiums 9

More returns 18

Transparency 8

Return wise preference

Traditional plans32%

ULIP

68%


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Fig5.20. Depicts the strategies to enhance awareness among potential customers.

Data interpretation:-18 respondents said that more returns would be better way to

increase the satisfaction of the customers.

Interpretation:- this might be due to the reason that as compared to other insurance

companies reliance life insurance is a new entry thus it has not received the chance to

yield high returns in long term for their customers . customers withdraw their money very

soon after they invest.

15

9

18

8

0

5

10

15

20

Strategies to enhance awareness among potential customers

Response

Response 15 9 18 8

Less

complicated

Fewer

premiumsMore returns Transparency


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Chapter-4

Lessons Learnt

The company provides esteemed services regarding insurance plans to its customers. The

company conducted its training sessions for students for providing training in the field of

insurance plans of Reliance Life Insurance to them. The company deals with the

customer preferences and what kind of customer would prefer what plan according to

their respective needs. The company provided me with a form in the end of the session

which I was required to get filled by the new customers in order to create contractual

relationship between the two and to advertise about the services provided by the

company.

Thus a comparative study on traditional plans of reliance life insurance with ULIP plans

enables to understand the customer need and reason for investing in such plans.

Limitations-

The middle class people do not know basic concept of ULIP so creating

awareness is a big challenge for me

The findings of sample survey cannot be generalized to the entire population, as

the sample is not representative. As there is no set criterion for selecting the

sample, there is a scope for the research being influenced by the bias of the

researcher.

Narrow minded thinking of middle class people as investment is not their cup of

tea.


50/62

Many customers are thinking that investment in share market is very risky. As

ULIP is related to share Market.

A general preference to LIC and UTI over private players.

Hesitations on the part of respondents to disclose financial information.

Findings and Suggestions-

After survey there are some findings and suggestions as follows. These findings and

suggestions are explained with the help of Following tables and Illustrations

First reason or preference that why an investor is interested in ULIP is Investment

Purpose, and second is to its returns and after that they investing because they are getting

the tax benefit. Then again there are some people who are investing for pension planning

and security.

As insurance sector is growing rapidly so most of the life insurance players are

selling ULIP plans. And the awareness about ULIP is growing most of the people knows

the ULIP of life insurance. Since last 4-5 years the returns provided by ULIP were very

good so people tend more to words ULIP

Traditional plans have to invest at least 85% in debt instruments which results in

low returns. On the other hand, ULIPs invest in market linked instruments with varying

debt and equity proportions and if you wish you can even choose 100% equity option, so

people prefer ULIP.


51/62

In traditional policies you have to select Sum Assured based on which you pay

your premium but in ULIP you have the flexibility to choose your Sum Assured let

whatever be your premium(With little restriction like For premium of x amount S.A

cannot be greater than y!). Many ULIP also allow you to increase/decrease risk cover as

per your needs.

ULIP is flexible an cover life as well, so people are frequently selecting ULIP

plans over Traditional insurance plans.

Middle class people who are interested in investment but they are not aware of

such options so more awareness should be there, as main target customer are the middle

class people of Delhi.

While investing any insurance company customer prefers for good branded

company Reliance is Indias one of the most famous and richest family. And second

preference is given to SBI life as many people perceive that SBI Life is a govt. owned

company so people want security for their investment.

As now till date people in India dont wanted to invest in share marke t because

then were thinking that it is a bad thing but as the awareness about Mutual fund is

increasing as more and more private players are entering in the market. So awareness

about MF is good and it can be improved.

While survey I found that many all customers had already invested in ULIP and

Traditional Plans some people had invested in both options. 35% of people had invested


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in Traditional and 65% people had invested in ULIP and 11% people had invested in both

the options.

As age is increasing the investment pattern moving to words more secured options

like balanced and debt funds. All age group people are tend to invest in Tax saving funds

to avail the tax deduction.

In future people will be more preferring to the security of their money means they

want a secured option which should provide good returns. As ULIP are the option in

which you can have the security also and good returns. The second choice of the

investors is return of their money.

As most of the people want the option which should provide security and good

returns and there is only option available with good liquidity is ULIP of Reliance. 54%

people had opted for ULIP as their future investment and 45% of people opted for

Traditional Plans. So we can find that there not so much difference in these option.

26% of people given Best rating to the Reliance Life Insurance ULIP, so from this

we can analyze that Reliance Life Insurance is doing good but it is having good potential

in Market. To improve its market share they should improve the awareness level of the

common people.

Out of 50 ,18 respondent believe that the company should work upon yielding

more returns for their customers. This may be because Reliance life insurance is

a new entry in the field of insurance and has not received the opportunity to prove

itself in terms of long term returns.


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Conclusion/ Recommendation-

From the above analysis and survey we can conclude as follows:

Awareness of ULIP is increasing as more number of private players are entering

in life insurance industry.

A Unit Linked Insurance Plan, popularly called ULIP, is a financial product that

offers the twin benefits of life insurance as well as an investment.

ULIP is life insurance solution that provides the benefits of protection and

flexibility in investment.

Traditional policies also broadly work like that. A part of the premium is set aside

for life cover and the rest is invested in a fund after deducting charges.

People are turning towards the ULIP as a good investment option but as ULIP is

in its starting phase so customers are preferring only big brands.

Traditional plans are very much famous in rural areas as they not aware about

ULIP.

Even investors from cities like Delhi dont have that much of Knowledge about

fund selection they all are depend on Brokers.

People in Delhi are investing in only good branded companies as they dont

believe on other financial companies for taking ULIP.


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Traditional plans are not flexible and transparent as much as ULIPs are.

Deriving the right feedback from customers and bringing out innovative products

which cater to customer demands will go a long way in tapping the market potential of

the insurance.

Traditional Plans and ULIP insurance both are facing fierce competition;

increasingly more organizations are seeking to enhance their demand in the market place.

For Reliance Life Insurance They should go for creating more awareness about its

ULIP as now also people are just investing because Reliance is Indias most Known and

Favorite brand in past.

RLIC should go for providing more returns to its customers as the customers are

not satisfied with the returns.


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Bibliography

Books

1. S.Balchandran, IRDA, IC-33 LIFE INSURANCE

Magazines

1. Life time magazine of Reliance life insurance

2. Braochures of Reliance life insurance.

Website

1Life Insurance Industry in India http://www.irda.gov.in:

2. History and Profile of RLIChttp://www.Relianelifeinsurance.com

3.www.indiainfoline.com
http://www.irda.gov.in/http://www.irda.gov.in/http://www.relianelifeinsurance.com/http://www.relianelifeinsurance.com/http://www.indiainfoline.com/http://www.indiainfoline.com/http://www.relianelifeinsurance.com/http://www.irda.gov.in/


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Questionnaire

A COMPARATIVE STUDY OF TRADITIONAL PLANS OF RELIANCE

LIFE INSURANCE WITH ULIP PLANS.

This survey is for completion of a project for student and people participation is

voluntary and their data will be kept anonymous and confidential.

Questionnaire to be filled up only by the customers of Reliance Life Insurance Company.

Name of the Person: __________________________________________

Sex: Male Female

Age: 20 or Below 21- 30 31-40

Above 40

Marital Status: Married Unmarried Widowed

Divorced

Occupation: Job Business Other

Education: High school Graduate Post graduate

Masters Others


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Average Annual Income: 50000 -100000 100000 -200000

200000 -500000 Above 500000

Q1) What do you think are the benefits of Insurance Cover?

a) Cover Future Uncertainity

b) Tax Saving

c) Saving

d) Return/ Yield

Q2) From whom you got to know about the insurance plans?

A)Insurance Agents

b)Advertising

c) Family/Friends

d)Others(Please mention) ____________________


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Q3)How do you decide about investing in reliance life insurance?

a)On my own b)Family decision c)Employer Decides

d)As per the guidance of agent

Q4) Do you know about Reliance ULIP?

Yes No

Q5) If yes, have you taken any ULIP insurance policy?

Yes No

Q6)If no, then would you like to invest in ULIP?

Yes No

Q7) Which ULIP plan have you bought or would prefer to buy?

a) Reliance market return plan

B)Reliance golden years plan


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Q8) What is the reason for investment in ULIP?

a) Child education b) Child Marriage c) Pension

d)Income growth e)Tax rebate f)2 in 1 benefit

Q9) What feature of ULIP insurance attracted you the most?

a)Money back guarantee

b)Larger risk coverage

c)Easy access to agents

d)Low premium

e)Companys reputation

f)Flexibility in investment

g)Greater transparency

Q10) How would you rate Reliance ULIP insurance ?

Fair Average Good Best


60/62

Q11) Do you know about Traditional plan of RLIC ?

Yes No

Q12) Have you taken any Traditional Plan?

Yes No

Q13) If no, then would you like to take reliance traditional plans ?

Yes No

Q14) Which reliance traditional insurance plan have you bought or would prefer

to buy?(multiple choice)

a)Reliance term plan

b) Reliance whole life plan

c) Reliance child plan

d) Reliance endowment plan

e) Reliance special endowment plan

f) Reliance cash flow plan

g) Reliance credit guardian plan


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h) Reliance special credit guardian plan

Q15) What is the reason for investment in reliance traditional plans?

a)Steady investment/growth b) social security(for family)

c) Security of money d) Tax saving

e) social security (for self) f) Low premium

Q16) How would you rate Reliance traditional life insurance plans?

Fair Average Good

Best

Q17) Whom Do you prefer first for investment?

ULIP Traditional Plans

Q18) Whom do you prefer for protection or risk coverage?


Q19) Whom do you think yields better returns?



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Q20) According to you, in what area should the company work upon?

a) Less complicated procedures b) Fewer premiums

c) More returns d) transparency

Documents

study of traditional policy vs ulips