A project Report On
“To study the Life Insurance Industry and various factors which are responsible for enhancing the life insurance proposal to the customers”.
Submitted for partial fulfillment of the degree of Masters of Business Administration to Rajasthan technical university, Kota (Rajasthan)
Submitted To: Submitted By:
RAJASTHAN ASHISH SHARMA TECHNICAL M.B.A PART-II UNIVERSITY SESSION: 2006-08
1 2 Acknowledgement
I am deeply indebted to and express my sincere appreciation and gratitude to Mr. Chinmay Sharma of Reliance Life Insurance Company Ltd. for providing their valuable guidance and encouragement throughout the summer training for keeping my morale up and making it possible to complete and submit this project of mine in time. In addition to allowing me to study the insurance sector and recruit the advisor, they provided me many in depth details and enlightened me in the preparation of the study report.
I also thank management of insurance brokerage firms, banks & corporate agents & many people to whom I visited during my training period.
At last I would like to thanks to Mr. S.M. Juniwal (Director) and all Faculty Members of Apex Institute Of Management & Science, Jaipur for encouraging me to go for such a challenging task and sharpen my skills.
2 2 PREFACE
In the Insurance industry, there are two channels of distribution- Alternate Distribution and Tide Agency. Advisor Recruitment is the part of Tide Agency.
My project is about agency recruitment & channel distribution of Reliance Life Insurance. It means company is recruiting advisors for expanding its business. Company adopts chain marketing as a methodology for expansion. In this project, I have to make a cold call to the target market, get the appointment with them, convince them & close the sale positively. The queries, which are asked by the client, should be solved by the discussion with the company guide.
The MBA curriculum has thus been designed such that it imports all the theoretical knowledge assisted by the practical impetus. A student is provided with the study all the subject relevant to him for discharging responsibilities of his job in future. It equips a students with all technical, management and human skills this report is an attempt to achieve practical knowledge of research and for partial fulfillment of MBA.
Curricular research holds the title “STUDY OF INSURANCE DOMAIN” in RELIANCE LIFE INSURANCE LTD.
(Ashish Sharma)
3 2
CONTENTS
1. Objective of research 05
2. Methodology 06
3. About reliance 08 4. Research methodology 17 5. Facts and findings 20
6. Introduction of L.I. 31
7. Major player of insurance sector 33 8. Advantage of L.I. 41
9. Various department of organization 42
10. Regulations “The agency law” 43
11. About IRDA 44
12. About ADVISORS 51 13.Advisors- job profile 52
14. S.W.O.T. analysis 70 15.Limitations 72
16. Recommendations 74 17.Conclusion 75
18. Questionnaires 77
19. Analysis Of Questionare 80 20.Bibliography 93
4 2 OBJECTIVE OF RESEARCH
The main objective of our on the job training is to provide us the relevant knowledge and information regarding the share market and investment in it and also to provide with the practical knowledge of the corporate environment and exposure also.
Learn Selling: The motive of on the job training is to learn selling so that I can illustrate the demo version of product to the customers before selling the company’s product and gain more knowledge about selling skills.
Core objective: The objective is define as the core objective of the research project the research was conduct aiming at fulfill the following object
-To analyze a comprehensive study of Reliance life with others -To analyze comparative analyzes of its products and services with other life insurance companies.
Methodology
The different strategies which are involved in the fulfillment of our targets are:
5 2 Firstly we have to make calls to the client if any client to seems to be interested in our product then we fixed a appointment with him/her then we go to his/her place for a demo and if he is satisfies then we fill the form and make him her our customers.
Data collection
The first strategy of on the job training is to collect secondary data from various sources. Sources can be from either company guide or friends or magazines. However secondary data must have clients phone or mobile numbers.
Telecalling
The second strategy of on the job training adopted by me is to call to the clients or people through telephone. The data is collected by me or given by company guide to me and I telecalling to them by which an appointment is fixed by client and going to him and tell him about our products..
Identified needs of the customers
After collection of secondary data while telecalling the strategy has a different way as to identify needs of customer to serve the product in front of him, and when the customer is persuaded then he buys the company’s product.
Personal selling
Personal selling is a very good strategy for me to achieve the proposed target under on the job training I go to the corporate Offices, banks etc, To sell the company’s products this is the way by which
6 2 the customers can be aware for the products and if they are interested then they buy it.
References I can adopted this kind of strategy also in which I meet my relatives friends etc. and find out the requirements for the company’s products for example my friends made me meet to one client and later he became the customer of the company.
To find out markets in other cities A very good strategy adopted by me is to find out markets in other cities also because generally all the competitors have saturated jaipur market and it is very difficult to find out more customers in jaipur. For example I am seeking good markets for insurance in other cities like Ajmer and Kota.
ABOUT RELIANCEGROUP
The Reliance Group founded by Dhirubhai H. Ambani (1932-2002) is India's largest business house with total revenues of over Rs 99,000 crore (US$ 22.6 billion).
The Group's activities span exploration and production (E&P) of oil and gas, refining and marketing, petrochemicals (polyester, polymers, and
7 2 intermediates), textiles, financial services and insurance, power, telecom and infocom initiatives. The Group exports its products to more than 100 countries the world over. Reliance emerged as India's Most Admired Business House, for the third successive year in a TNS Mode survey for 2003.
Reliance Group revenue is equivalent to about 3.5% of India's GDP. The Group contributes nearly 10% of the country's indirect tax revenues and over 6% of India's exports. Reliance is trusted by an investor family of over 3.1 million - India's largest. One out of every four investors in India is a Reliance shareholder. With globally competitive capital and operating cost positions, Reliance Group dominates the rapidly growing Indian market deriving over 80% of its revenues from the domestic market. There was a split in Reliance group in 2005 and it was broken into two separate companies:
• Reliance Industries Limited • Reliance Anil Dhirubhai Ambani Group (ADA Group)
VISION To build a global enterprise for all our stakeholders, and
A great future for our country,
8 2 To give millions of young Indians the power to shape their destiny,
The means to realize their full potential…
VALUES • Shareholder Interest We value the trust of shareholders, and keep their interests paramount in every business decision we make, every choice we exercise • People Care We possess no greater asset than the quality of our human capital and no greater priority than the retention, growth and well-being of our vast pool of human talent • Consumer Focus We rethink every business process, product and service from the standpoint of the consumer – so as to exceed expectations at every touch point • Excellence in Execution We believe in excellence of execution – in large, complex projects as much as small everyday tasks. If something is worth doing, it is worth doing well. • Team Work The whole is greater than the sum of its parts; in our rapidly-changing knowledge economy, organizations can prosper only by mobilizing diverse competencies, skill sets and expertise; by imbibing the spirit of “thinking together” -- integration is the rule, escalation is an exception
• Proactive Innovation We nurture innovation by breaking silos, encouraging cross- fertilization of ideas & flexibility of roles and functions. We create an environment of accountability, ownership and problem-solving – based on participative work ethic and leading-edge research • Leadership by Empowerment
9 2 We believe leadership in the new economy is about consensus building, about giving up control; about enabling and empowering people down the line to take decisions in their areas of operation and competence… • Social Responsibility We believe that organizations, like individuals, depend on the support of the community for their survival and sustenance, and must repay this generosity in the best way they can. • Respect for Competition We respect competition – because there’s more than one way of doing things right. We can learn as much from the success of others as from our own failures
The Reliance Anil Dhirubhai Ambani Group works in:
• Reliance Communication
• Reliance Energy
10 2 • Reliance Mutual Fund
Reliance Life Insurance
• Reliance General Insurance
• Reliance Health
RELIANCE – ADA GROUP
11 2 • Reliance Capital
12 2 Reliance Capital is one of India’s 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. The company has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. • Reliance Communications Limited The flagship company of the Reliance – ADA Group, Reliance Communications Limited, is the realization of our founder’s dream of bringing about a digital revolution that will provide every Indian with affordable means of communication and a ready access to information. The company began operations in 1999 and has over 20 million subscribers today. It offers a complete range of integrated telecom services. These include mobile and fixed line telephony; broadband, national and international long distance services, data services and a wide range of value added services and applications aimed at enhancing the productivity of enterprises and individuals. • Reliance Energy Limited Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It ranks among India’s top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. It is India’s foremost private sector utility with aggregate estimated revenues of Rs 9,500 crore (US$ 2.1 billion) and total assets of Rs 10,700 crore (US$ 2.4 billion). Reliance Energy Limited distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai, Delhi, Orissa and Goa, across an area that spans 1,24,300 sq. kms. It generates 941 MW of electricity, through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.
The company is currently pursuing several gas, coal, wind and hydro-based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh
13 2 and Uttaranchal with aggregate capacity of over 12,500 MW. These projects are at various stages of development. Reliance Energy Limited is vigorously participating in emerging opportunities in the areas of trading and transmission of power. It is also engaged in a portfolio of services in the power sector in Engineering, Procurement and Construction (EPC) through a network of regional offices in India. • Reliance Health In a country where healthcare is fast becoming a booming industry, Reliance Health is a focused healthcare services company enabling the provision of solution to Indians, at affordable prices. The company aims at providing integrated health services that will compete with the best in the world. It also plans to venture into diversified fields like Insurance Administration, Health care Delivery and Integrated Health, Health Informatics and Information Management and Consumer Health. Reliance Health aims at revolutionizing healthcare in India by enabling a healthcare environment that is both affordable and accessible through partnerships with government and private businesses. • Reliance Media & Entertainment As part of the Reliance - ADA Group, Reliance Entertainment is spearheading the Group’s foray into the media and entertainment space. Reliance Entertainment’s core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms. The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV. Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema.
14 2 Reliance Entertainment has made an entry into FM Radio through Adlabs Radio, having won 45 stations in the recent bidding, which will soon be the Radio station with the largest footprint in India. Reliance Capital Reliance Capital is one of India’s 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. The company has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. • Reliance Communications Limited The flagship company of the Reliance – ADA Group, Reliance Communications Limited, is the realization of our founder’s dream of bringing about a digital revolution that will provide every Indian with affordable means of communication and a ready access to information. The company began operations in 1999 and has over 20 million subscribers today. It offers a complete range of integrated telecom services. These include mobile and fixed line telephony; broadband, national and international long distance services, data services and a wide range of value added services and applications aimed at enhancing the productivity of enterprises and individuals. • Reliance Energy Limited Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It ranks among India’s top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. It is India’s foremost private sector utility with aggregate estimated revenues of Rs 9,500 crore (US$ 2.1 billion) and total assets of Rs 10,700 crore (US$ 2.4 billion). Reliance Energy Limited distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai, Delhi, Orissa and Goa, across an area that spans 1,24,300 sq. kms. It generates 941 MW of electricity, through
15 2 its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. The company is currently pursuing several gas, coal, wind and hydro-based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of over 12,500 MW. These projects are at various stages of development. Reliance Energy Limited is vigorously participating in emerging opportunities in the areas of trading and transmission of power. It is also engaged in a portfolio of services in the power sector in Engineering, Procurement and Construction (EPC) through a network of regional offices in India. • Reliance Health In a country where healthcare is fast becoming a booming industry, Reliance Health is a focused healthcare services company enabling the provision of solution to Indians, at affordable prices. The company aims at providing integrated health services that will compete with the best in the world. It also plans to venture into diversified fields like Insurance Administration, Health care Delivery and Integrated Health, Health Informatics and Information Management and Consumer Health. Reliance Health aims at revolutionizing healthcare in India by enabling a healthcare environment that is both affordable and accessible through partnerships with government and private businesses. • Reliance Media & Entertainment As part of the Reliance - ADA Group, Reliance Entertainment is spearheading the Group’s foray into the media and entertainment space. Reliance Entertainment’s core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms. The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV.
16 2 Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema.
RESEARCH METHODOLOGY
Defining the research objective
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Review the literature
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Research design
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Sample design
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Data collection
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Analysis of data
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Interpretation of data
17 2 1. Defining the research objective: The research was aimed at the effective of product selling of reliance life insurance.
2. Review the literature Since a study of effective insurance sector to be made hence an extensive literature surveys was made at the beginning .The literature and guidance provided by executive and official staff of anand rathi from the base of research work and some of information is directly taken from internet.
3. Research design Since a study of effective trade is to be designed according to trades and made a questionnaire for survey the research design is as simple as questionnaires.
4. Sample design According to project title the sample size is very small and not compatible but due to lack of time I had taken a sample size of 110 only
5. Data collection Primary data are gathered for specific purpose or a specific research project data is collected for the first time the data that is collected from primary source of information is known as primary data it is also known first hand information in this the individual conducts his own research and collects
18 2 data and some data are retrieved from internet and from the corresponding literature.
6. Analysis of data Data is analyze according to questionnaire filled up some mathematic tools are also used to get conclusion
7. Interpretation of data Interpretation of data is made after analyzing it and interpretation.
Primary data Primary data are data gathered for specified purpose or a specific research project data is collected for the first time the data that is collected from primary source of information is known as primary data it is also known first hand information in this the individual conducts his own research and collect data.
Research instruments Like questionnaires and other mechanical devices are used to collect primary data for this study questionnaires and personal interview with the respondents was selected.
19 2 Facts and findings
How many companies do know you are in the insurance business?
All, 25
Few, 60 None, 15
20 2 Please tell name of insurance companies?
4 1 2 3 5 LIC 5 RELIANCE MAXLIFE New York Life Birla Sunlife 13 Tata-AIG Bajaj Allianz
67 SBI Life Insurance HDFC
21 2 According to you, which is the no. 1 private life insurance company?
ICICI PRU
SAHARA
BIRLA SUN LIFE RELIANCE
BAJAJ ALLIANCE
22 2 Do you have purchased any life insurance? If yes, then of which company?
40 YES No 60
23 2 Which product of life insurance you like most ?
MONEY BACK ENDOWMENT KIDS PLAN PENSION PLAN ULIP
24 2 Would you like to associate with “RELIANCE LIFE INSURANCE COMPANY LTD”. ?
YES NO
25 2 Age of respondents
Table no. 1
Age group No. of respondent Percentage 20-30 82 75% 30-40 16 15% 40-50 6 5% Above 50 6 5% Total 110 100%
Age group
20-30 30-40 40-50 above 50
Most of the respondent from 20-30 age groups. Only 15% of respondent are from 30-40 age group.
26 2 Occupation of respondent
Table no 2
Occupation No. of respondent Percentage Self employed 16 14% Professionals 8 7% Businessman 14 13% Employees 62 57% Govt. employee 10 9% Total 110 100%
self employed professionals businessman emploees govt. servent
Most of the respondent 57% are employed in private organizations and most of them are belonging to 20-30 age group. Then after self employed or businessman 27% self employed and businessman Only 9% respondents’ are government employee and rest of professionals
27 2 Product of anand rathi which respondents having
Table no 3 products No of respondents Percentage Demat a/c 42 33% No Products 36 28% IPO 12 9% Insurance 30 23% Mutual funds 8 7% Total 128 100%
Demat a/c No product INSURANCE IPO Mutual fund
33% respondents are having de mat a/c with Reliance and from these people most of are from the group of 20-30 and 28% people are not having any products of. Reliance. 23% of respondents are having INSURANCE. Only 7% respondents are having mutual funds from Reliance.
28 2 Mode of awareness or mode of advertisement
Table no 5
Mode of awareness No of respondents Percentage Print media 9 17% Sales executive 35 65% Any other source 10 18% Total 54 100%
PRINT MEEDIA SALES EXICUTIVES ANY OTHER SOURCE Slice 4
65% of respondents are aware about anand rathi on some extent by sales executives. Advertisement took very small part in awareness only 17% and rest 18% awareness created by mouth publicity.
29 2 Customers thinking about Reliance.
Table no 6
Options No of respondents Percentage Insurance 52 47% Mutual fund 20 18% Demat a/c 38 35% Total 110 100%
INSURANCEDEMAT A/C MUTUAL FUND DEMAT A/C
47% people take it as a broker house. 35% people think it is a insurance provider. Only 18% of respondents knows about its mutual fund services.
INTRODUCTION
30 2 Company Profile: Reliance Capital Ltd RCL is registered as a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. RCL has sponsored the Reliance Mutual Fund within the framework of the Securities and Exchange Board of India (Mutual Fund) Regulations, 1996.RCL primarily focuses on funding projects in the infrastructure sector and supports the growth of its subsidiary companies, Reliance Capital Asset Management Limited, Reliance Capital Trustee Co. Limited, Reliance General Insurance Company Limited and Reliance Life Insurance Company Limited. As of March 31, 2005, the company’s investment in infrastructure projects stood at Rs. 1071 Crores. The investment portfolio of RCL is structured in a way that realizes the highest post-tax return on its investments.
Board of Directors Amitabh Jhunjhunwala, Vice-Chairman Rajendra Chitale, Independent Director Shri C. P. Jain
Reliance Life insurance
Reliance Life Insurance is an associate company of Reliance Capital Ltd., which along with its associates has acquired 100% shares in AMP Sanmar Life Insurance Co Ltd. Reliance Life Insurance has a pan presence and a range of products catering to individual as well as corporate needs. Reliance Life Insurance would strive hard to achieve the following goals:- Emerge as transnational Life Insurer of global scale and standard Achieve impeccable reputation and credentials through best business practices Vision : Empowering everyone live their dreams Mission : Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans Guiding Principles
31 2 -Customer Care and Satisfaction - Corporate Governance - Creativity and Innovation - Competitiveness
Introduction of Insurance:
Life is a roller coaster ride and is full of twists and turns. You cannot take anything for granted in life. Insurance policies are a safeguard against the uncertainties of life.
Insurance is system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered.
Insurance policies cover the risk of life as well as other assets and valuables such as home, automobiles and jewelry. On the basis of the risk they cover, insurance policies can be classified into two categories:
1. Life Insurance
2. General Insurance
32 2 Major Players In Insurance Sector
LIFE INSURANCE NON-LIFE INSURNACE BUSNIESS BUSNIESS Life Insurance Corporation General insurance Corporation ICICI Prudential Life National Insurance Company Insurance HDFC Standard Life The New India Assurance Company Insurance Max New York Life Insurance The Oriental Insurance Company Birla Sun Life Insurance United India Insurance Company OM Kotak Mahindra Life Reliance General Insurance Insurance Reliance Life Insurance TATA-AIG Insurance Allianz Bajaj Life Insurance Royal Sundaram Alliance General Ins. Dabur CGU Life Insurance Bajaj Allianz General Insurance ING Vyasa Life Insurance ICICI Lombard Insurance SBI Life Insurance
Life Insurance
33 2 Life is very fragile and death is a certainty. We cannot control the uncertainties of life. But, we can cover the risks surrounding us. Life insurance, simply put, is the cover for the risks that we run during our lives. It protects us from the contingencies that could affect us. Life insurance is not for the person who passes away, it for those who survive. It is the responsibility of every bread earner to guard against the events that could affect the family in the unfortunate circumstance of his / her demise. Thus, having a life insurance policy is very vital. Insurance sector is enjoying a healthy growth in recent year. Many private companies are also coming into this sector. Reliance life insurance is one of them. Reliance life insurance Company limited is a part of reliance capital limited of reliance –Anil Dhirubhai Ambani Group. Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group. The company acquired 100 per cent 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.
Today a large number of people are investing in the insurance market, and it would be interesting to know that the number of investors in this market is increasing day by day with the launch of the new ULIP plans which provide for returns above 40%. Due to the increase in the Indian economy, more and more people are taking active participation in this industry as investors, advisors, or may be on-roll employees in this industry.
34 2 The project is targeted to study the need of life insurance among the people. As Indian economy is rising, the people need and behavior are also changing. Firstly people want there life to be insured but now they want healthy returns on their investment with the risk cover.
Before going for a life insurance policy it is imperative that you know about various types of life insurance policies. Major among them are: Endowment Policy
Whole Life Policy Term Life Policy Money-back Policy Joint Life Policy Group Insurance Policy Loan Cover Term Assurance Policy Pension Plan or Annuities Unit Linked Insurance Plan
Endowment Policy
An endowment policy covers risk for a specified period, at the end of which the sum assured is paid back to the policyholder, along with the bonus accumulated during the term of the policy. An endowment life insurance policy is designed primarily to provide a living benefit and only secondarily to provide life insurance protection. Therefore, it is more of an investment than a whole life policy. Endowment life insurance pays the face value of the policy either at the insured's death or at a certain age or after a number of
35 2 years of premium payment. Endowment policy is an instrument of accumulating capital for a specific purpose and protecting this savings program against the saver's premature death.
Whole Life Policy A whole life policy runs as long as the policyholder is alive. As risk is covered for the entire life of the policyholder, therefore, such policies are known as whole life policies. A simple whole life policy requires the insurer to pay regular premiums throughout the life. In a whole life policy, the insured amount and the bonus is payable only to the nominee of the beneficiary upon the death of the policyholder. There is no survival benefit as the policyholder is not entitled to any money during his / her own lifetime. Term Life Policy Term life insurance policy covers risk only during the selected term period. If the policyholder survives the term, the risk cover comes to an end. Term life policies are primarily designed to meet the needs of those people who are initially unable to pay the larger premium required for a whole life or an endowment assurance policy.
No surrender, loan or paid-up values are granted under term life policies because reserves are not accumulated. If the premium is not paid within the grace period, the policy lapses without acquiring any paid-up value.
Money-back Policy
36 2 Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is alive. They differ from endowment policy in the sense that in endowment policy survival benefits are payable only at the end of the endowment period. An important feature of money back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components. The bonus is also calculated on the full sum assured.
Joint Life Policy Joint life insurance policies are similar to endowment policies as they too offer maturity benefits to the policyholders, apart form covering risks like all life insurance policies. But joint life policies are categorized separately as they cover two lives simultaneously, thus offering a unique advantage in some cases, notably, for a married couple or for partners in a business firm. Under a joint life policy the sum assured is payable on the first death and again on the death of the survivor during the term of the policy. Vested bonuses would also be paid besides the sum assured after the death of the survivor. If one or both the lives survive to the maturity date, the sum assured as well as the vested bonuses are payable on the maturity date. The premiums payable cease on the first death or on the expiry of the selected term, whichever is earlier.
Group Insurance Policy
37 2 Group insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives, weaker sections of society, etc. It also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. Group insurance plans have low premiums. Such plans are particularly beneficial to those for whom other regular policies are a costlier proposition. Group insurance plans extend cover to large segments of the population including those Who cannot afford individual insurance.
A number of group insurance schemes have been designed for various groups. These include employer-employee groups, associations of professionals (such as doctors, lawyers, chartered accountants etc.), members of cooperative banks, welfare funds, credit societies and weaker sections of society
Loan Cover Term Assurance Policy Loan cover term assurance policy is an insurance policy, which covers a home loan. Such a policy covers the individual's home loan amount in case of an eventuality. The cover on such a policy keeps reducing with the passage of time as individuals keep paying their EMIs (equated monthly instalments) regularly, which reduces the loan amount.This plan provides a lumpsum in case of death of the life assured during the term of the plan. The lumpsum will be a decreasing percentage of the initial sum assured as per the policy schedule. Since this is a non-participating (without profits) pure risk cover plan, no benefits are payable on survival to the end of the term of
38 2 the policy. Various insurance companies offering loan repayment protection insurance policy are HDFC Standard Life Insurance Tata AIG ING Vysya LIC Pension Plan or Annuities A pension plan or an annuity is an investment that is made either in a single lump sum payment or through installments paid over a certain number of years, in return for a specific sum that is received every year, every half-year or every month, either for life or for a fixed number of years. Annuities differ from all the other forms of life insurance in that an annuity does not provide any life insurance cover but, instead, offers a guaranteed income either for life or a certain period. Typically annuities are bought to generate income during one's retired life, which is why they are also called pension plans. By buying an annuity or a pension plan the annuitant receives guaranteed income throughout his life. He also receives lump sum benefits for the annuitant's estate in addition to the payments during the annuitant's lifetime.
Unit Linked Insurance Plan (ULIP) Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time. ULIP provides multiple benefits to the consumer. The benefits include:
39 2 Life protection Investment and Savings Flexibility Adjustable Life Cover Investment Options Transparency Options to take additional cover against Death due to accident Disability Critical Illness Surgeries Liquidity Tax planning
40 2 Advantages of Life Insurance
1. It is superior to an ordinary saving plan: Unlike other saving plans, it affords full protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy; whereas under saving scheme the total accumulated saving alone will be available. The later will be considerably less than the sum assured, if death occurs during early years.
2. Easy settlement & protection against creditors: The life assured can name person(s) called Nominee to whom the policy money would be payable in the event of his death. The proceeds of a life policy can be protected against the claim of the creditors of the life assured by effecting a valid assignment of the policy.
3. Ready marketability & suitability for quick borrowing: After an initial period, if the policyholder finds him unable to continue payment of premiums, he can surrender the policy for a cash sum. Alternatively, ha can tide over a temporary difficulty by taking loan on the sole security of the policy without delay. Further, a life insurance policy is sometimes acceptable as security for a commercial loan.
4. Tax Relief: The Indian Income-Tax Act allows deduction of certain portion of the taxable income, which is diverted to payment of life insurance premiums from the total income tax liability. When this tax
41 2 relief is taken into account, it will be found that the assured is in effect paying a lower premium for his insurance.
The various departments in the organization are:
1. The Human Resource Department
2. Investment Department
3. Customer Service and Operations Department
4. Information Technology Department
5. Strategy Department
6. Marketing Department.
42 2 Regulations - The Agency Laws
The basics of the insurance business in India are governed by the Agency Law, which is part of the Indian Contracts Act, 1872. Further, after the industry got opened up the regulatory authority has been the Insurance Regulatory & Development Authority (IRDA).
Agent- The Definition. According to the section 182 of the Indian Contract Act, 1872, “an agent is a person employed to do any act for another or to represent another in dealing with a third person”. In the insurance sector the term “Agent” is ordinarily applied to a person engaged by the insurer to procure new business.
Powers of the Agent An agent can act only to the extent of authority may be expressed or implied. An authority is said to be expressed when it is given by words spoken or written. It is implied when it is to be inferred from the circumstances of the case.
Life Insurance Agent
The Insurance Act, 1938 defines an agent as “one who is licensed under the act & is paid consideration of his soliciting or procuring insurance business including business relating to continuance, renewal or revival of policies of insurance”.
43 2 The Insurance Regulatory & Development Authority
Duties, Powers & Functions
Section 14 of IRDA Act, 1999 lays down the duties, powers & functions of IRDA.
Subject to the provisions of the Act & any other law for the time being in force, the Authority shall have the duty to regulate, promote & ensure orderly growth of the insurance business & re-insurance business.
Without prejudice to the generality of the provisions contained in sub- section (1), the powers & functions of the Authority shall include,
1. Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. 2. Protection of the interests of the policy holders, insurable interest, settlement of insurance claim, surrender value of policy & other terms & conditions of contracts of insurance. 3. Specifying requisite qualifications, code of conduct, & practical training for intermediary or insurance intermediaries & agents; 4. Specifying the code of conduct for surveyors & loss assessors; 5. Promoting efficiency in the conduct of insurance business;
44 2 6. Promoting & regulating organizations connected with the insurance & re-insurance business; 7. Levying fees & other charges for carrying out the purpose of this Act; 8. Calling for information from, undertaking inspection of, conducting enquiries & investigations including audit of the insurers, intermediaries, insurance intermediaries & other organizations connected with the insurance business; 9. Control & regulations of the rates, advantages, terms & conditions that may be offered by insurer in respect of general insurance business not so controlled & regulated by the Tariff Advisory Committee under the section 64U of the Insurance Act, 1938 (4 of 1938); 10.Specifying the firm & manner in which books of account shall be maintained & statement of accounts shall be rendered by insurers & other insurance intermediaries; 11.Regulating investments of funds by insurance companies; 12.Regulating maintenance of margin of solvency; 13.Adjudications of disputes between insurers & intermediaries or insurance intermediaries; 14.Supervising the functioning of the Tariff Advisory Committee; 15.Specifying the percentage of premium income of the insurer to finance schemes for promoting & regulating professional organizations referred to in clause (f); 16.Specifying the percentage of life insurance business & general insurance business to be undertaken by the insurer in the rural or social sector; & 17.Exercising such other powers as may be prescribed.
45 2 Essentials for the License
The IRDA has prescribed both qualifications & the disqualifications for a person to be given a license
Qualifications
The person must be Be at least 18 years old.
Must have passed at least 12th standard or more (if he is appointed in a place with population of 50,000 or more), 10th standard otherwise. Have undergone training for at least 100 hours in life or general insurance business as the case may be from an institute, approved & notified by the authority. Should have also passed the pre-recruitment examination conducted by the Insurance Institute of India or any other examination body recognized by the authority. In case of an applicant for the composite insurance agent, he/she should have completed at least 150 hours practical training in life & general insurance business, which may be spread over six to eight weeks.
46 2 Disqualification
The factors that would debar a person from obtaining a license are that he/she Has been found to be of unsound mind by a court of competent jurisdiction Has been found guilty of criminal breach of trust, misappropriation, cheating, forgery or abetment or attempt to commit any such offence.
The license once issued can be cancelled whenever the person acquires a disqualification. In the case of companies & firms who want to become agents, the test of qualification & disqualification would be applied to all the directors or partners. There are two separate forms, one for individuals & another for those other than individuals, in which the applications are to be made. The two forms are numbered by IRDA-Agent VB & are annexed to the regulation. The applications in the respective forms have to be made to the designated person appointed buy the insurer sponsoring the application.
The application for the license should be accomplished by proofs. 1. Of fee having been remitted to the authority. 2. Of age 3. Of having completed the training & passed the prescribed examination.
47 2 The fee to be sent to the authority directly is Rs. 250 for new license & for renewals applied for within the prescribed period, viz, at least 30 days before the date of expiry. If the application is made after the date of expiry it would be normally refused. But, if the authority is satisfied that hardship would be caused otherwise, the license may be renewed. Prior to renewal of the license of the license the agent should have completed at least 25 hours practical training in life or general insurance business or at least 50 hours practical training in life & general insurance business in the case of a composite insurance agent.
The Duties & Obligations of the Agent
As per the IRDA guidelines every advisor must be trained & licensed to sell life insurance. The responsibilities & obligations of the advisors have been clearly defined. Every insurance agent should himself & the insurance company that he represents along with the license particulars. The advisors should take into the actual needs of the clients before recommending a plan. All requisite information in respect of the products recommended should be provided with a ‘Sales Illustration’ & the premium to be paid. The agent is obligated to disclose the scales of commission likely to be earned by him through sale of the recommended product, should the client wish to know it.
48 2 The nature of information required in the application form should be adequately explained along with the requirement for supporting documents. Once the proposal is submitted, the advisor shall inform the status of decision by insurer promptly. In case of a claim, the advisor is required to render necessary assistance in complying with the requirements for settlement of claims by the insurer. He/she should not interfere with any proposal introduced by any other any insurance advisor/agent or force the client to terminate an existing policy taken from him/her & take a new proposal within 3 years. An advisor cannot induce the client to omit any material information or submit any wrong information in the proposal form. Further no rebating or offering any inducements in lieu of taking a policy is allowed.
Code of Conduct for the Agent
The licensing of Insurance Agent Regulations, 2000 lays down a code of conduct for the agents, which state that, the agent shall Disclose the license to the prospect on demand. Explain all available options to the prospect. Disclose the scales of commission, if asked for by the prospect. Impress upon the prospect need to disclose all information Inform the insurer about any adverse habits & materials facts of the person to be insured.
49 2 Convey to the proper about the acceptance or rejection of the proposal. Render necessary assistance to policyholders or claimants or beneficiaries in complying with the requirements, asked for by the insurer. Advise policyholders to affect nomination. Make every attempts to ensure remittance of premiums by the policyholders within the stipulated time by giving notice orally or in written. Not induce the prospect to submit any wrong information. Not interfere with the proposal introduced by other insurance agents. Not demand or receive share of proceeds under an insurance contract. Not cause the termination of an existing policy with a view to effect a new proposal.
50 2 Advisors
The importance of advisors
Reliance Life Insurance Co. Ltd. aspires to provide state of the art of customers’ service & opportunities & avenues for enterprising people to grow & prosper. The company wish to grow exponentially that is backed by the latest technology, hence offering its customers:
Complete & diversified product portfolio. Faster & more accurate service. Multi-channel distribution systems. Highly trained professional sales people offering quality pre & post sales service.
It is in the above mentioned areas of personal specialization where the importance of an advisor clearly stands out the advisor not only contribute in brining in new business for the company, but also plays an important part in offering world-class pre & post sales service to the clients to the clients with the support of the organization. But the company in its principles clearly states out that an advisor to means “much more than a salesman or a saleswoman, we Reliance at recognize our advisors as the ambassadors of our organization in the market place & we consider the advisor force would be our biggest differentiating factor in the coming years”. The advisor is an important asset not only for the organization from the business
51 2 point of view but also to the society on the whole as he/she is someone who provide valuable service to the community be helping people attain financial security & build funds for their future needs thereby assisting them in getting their financial freedom.
If looked from the other side of the business where the company is operating the competitive Indian market & more so in the business of life insurance where the customers looks for self-belief & faith then the advisor certainly holds the vital link in the overall business proposition. They represent the company’s face & words on which the customers can trust because the customer knows that face. The advisor helps to create a web fro the business to grow & driving the customer to come to the company with complete trust & faith.
THE PROFILE OF AN ADVISOR
Qualifications
1. Age should be ideally between 25-60 years. 2. Minimum education qualification is 10 + 2. 3. Good & convincing communication skills. 4. Capacity to build an impressive network. 5. Engaged in gainful business or corporation. 6. Willing to undergo extensive training & development programs 7. Pleasing personality.
52 2 Skills & Competencies
As quoted by Mr. Pratap gorde, Head HR, Reliance Life Insurance the company is always on a look out for people who have the following the skills & competencies that we require in business are:
Actuarial skills. Investment management skills. Core operation skills. Core underwriting skills. Relationship management skills. Project management skills.
Leadership & Team skills
A passion for achieving results. High energy levels & infectious enthusiasm Open to ideas Strong team players High caliber & ability And above all, unyielding integrity.
53 2
Job profile
As an advisor for the company, the role of the individual is no way limited to sell the policies of the company. But the role basically starts from the basics of explaining the life insurance aspects & the potential benefits to the customers. Further he is required to assist them in deciding upon the plan that suits them the best in terms of finance and security provided. Therefore the opportunity provided to the advisor is unlimited in no way and the typical benefits can be mentioned as followings: There is absolutely no need of a startup capital. There is the benefit of flexible working hours. The freedom to work from anywhere & being one’s own boss. The unlimited earning benefits in form of remuneration & incentives. And the privilege of being a part of a world class sales team.
The role of an advisor is multifaceted in the sense that his work scope is in no way limited. But in a nut shell the expectations from an advisor has been laid down by the management in the following manner under two main headings:
1. Providing continuous financial advise to clients Identifying prospective clients. Making appointments Conducting reviews with the prospective/existing clients. Closing the sales contracts
54 2 Getting more referrals so as to increase the network Providing pre & post sales services to clients
2. The advisor is also required to regularly follow the internal sales & the internal reporting system so as to get the feed back & further leads for the prospective areas of business & improvement.
Benefits & Support Provided
The benefits have already been mentioned very often in the previous section but it’s necessary to look into them as a comprehensive criterion. The main benefits & supports that an advisor would be availing of are the distinct Reliance Life Insurance advantages:
Rewarding career
The job profile as mentioned earlier is unlimited & an advisor will help people realize their dreams & provide them the financial & psychological security & faith. The ultimate rewards will be the differences made to all these lives & that would be most satisfying in the real sense.
Successful Team
Being at Reliance Life Insurance gives the opportunity to be a part of India’s best team of life insurance advisors. The company is numero uno among the private players in the industry & has won numerous recognition & awards that give it the international edge.
55 2 Attractive remuneration Reliance offers the most competitive remuneration benefits at person in the industry, which proves to be very useful from long term perspective of financial security. There is absolutely no limit to one’s earnings & the added incentives just help as advisor to get more than what he/she expects.
Independence. At, Reliance the advisor is a boss in himself & in the real sense. There is the freedom to choose the workplace, the work timings & the amount of earnings one wants to have. Moreover there is no need of any initial capital investment, yet one can become an entrepreneur in the most unexpected manner.
World Class Team The company leverages on the international linkages that it has got to provide the best training available in the industry at the present. The company aims to impart the necessary skills & competencies to all even if there is no previous experience with the individual. The presence of trained in-house trainers & professionals provide the necessary aspects of training required. Moreover, the training is being provided with the help of professional institutions & centers like the RNIS College.
Career Agency System
56 2 Reliance’S commitment to Career Agency System imparts support to the advisors at every stage of the business. The company believes in encouraging the advisors to the highest level of success all through their career. One of the distinct factor is the opportunity & the option of a management career option for the successful performers.
Best Infrastructure The huge investments that the company has made to develop the state of art infrastructure throughout the business. The infrastructure provides the necessary tools, technology & human support that enable to build a profitable long term relationship.
Extensive Product Portfolio The company has got more than four hundred policies for its customers. This consists of the unique individuals, groups, & rider policies. This extensive, diversified & comprehensive range provides the competitive edge that no other advisor would be having in the market.
Sales & Marketing Support The company has got unique sales & marketing tools to help & support the advisors at every stage of the career. The sales, promotions & marketing collaterals that the company posses help to achieve just that.
Financial Strength
57 2 Reliance offers the advisors & the customers’ unmatched financial strength & solidity. The huge amount of paid up capital & growing revenues are an indicator of the same.
Support provided by the Sales Manager
Field visits for the incumbents Training on products & selling skills Regular business reviews to monitor the progress
The SM acts both as a coach & a mentor
The SM recognizes the high performers Helps in becoming financially independent
But- the expectations from the team
To achieve the sales targets given To participate in all the meetings being placed Attending all the training programs being arranged Report for the weekly reviews at the office Regularly following the sales process And the advisors are also required to follow the weekly reporting process.
58 2 Career progression
The Tiger team
It is exclusive program achievers among the advisors but the scope of progression is limited only to a few hand picked all round performers. The TIGER TEAM represents a fast track career path for the advisors. The successful candidates are recognized as Tigers. One continues to do his/her business but the benefits come added on. The criteria for selections are: Age 25-40 years At least one year of working in the system Case count should be at least of two per month.
The Mobile Tigers
This program offers the following benefits: Part time career as a trainee To conduct foundation programs Opportunity to share the best field practices Chance to replicate one’s own business Freedom to continue with one’s business
The selection criteria for this program are: Age 25-40 years At least six months of working in the system
59 2 Case count of at least two per month
The Pinnacle Program
This program is for the high achievers in the system & the major benefits that are on offer are as following:
A full time career as a Sales Manager The possibility of growth within Reliance Greater earning potential The scope for personal development
The selection criteria for this program are: Age 25-40 years At least six months of working in the system Case count of at least two per month
Fast Track Pinnacle Program
This program offer following features:
Offering a full time career as a Asst Sales Manager Opportunity of growth within Reliance Scope of greater earning potential The scope for personal development
The selection criteria for this program are:
60 2 Age 25-40 years At least six months of working in the system Case count of at least five per month (for 6 months) Agency Champion
This is the highest level of career progression on offer. It has got several distinct features, which sets it apart from all the above-mentioned programs. This program aims at rewarding the super-achievers working with the company. The features of this program are as follows: The chance of taking one’s business to higher level. To develop one’s own business, i.e. to develop into an entrepreneur The freedom of recruiting new advisors & making one’s own team The potential of increased reach of network
The selection criteria for this program are as following: At least one year of working I the system Minimum of 36 policies & Rs. 3.60 lacs premium Selection process (assessment center)
61 2 The Typical Career Progression Path
SM Trainer 12-18 ASM Months Agency TRAINER 12-18 Manager
MONTH ADVISOR
SALES MANAGER Trainer Role BSM
Commission Structure
The production targets shall be split into two stages: 1. Minimum Business Guarantee (MBG) 2. Bonus Target
62 2 The procedures of becoming an advisor
Reliance believes in getting who can align with the company’s principle & beliefs well enough to grow on their own. In the words of the top management the company believes that one can become an advisor for the leader only & only if he/she has the following: Confidence Self-motivation Persuasion Urge to be financially independent Relationship skills
The broad steps that best describe the procedure of becoming an advisor in the company are as following: Confirmation of mutual interest as between the company & the individual Appearing & clearing the selection interview Profiling of the test dates between parties Draft payment favoring ‘Reliance Life Insurance Co. Ltd.’, payable Mumbai Finalizing of the training dates & the venue
The company provides for the all-round development of the individual & any previous experience or inexperience in the related field is not an obstacle. The professional approach of the company in the training module helps it to train the incumbents in the best possible manner. The company
63 2 has got a professional in-house training staff that is one of the best in the practice. The company has laid down for a State-of-art training on: Selling skills Product knowledge Relationship skills
The training is delivering through several convenient options keeping in view the requirements of the individuals & the target of the company. The training is done at the timing & venue decided upon by the parties concerned. The incumbents have to complete hundred hours of training in any model that they choose from. The guidelines laid down for the training are as per the books IRDA. The training concept can be classified according to very different aspects, which can be the delivery medium, & the time involved. On the basis of the delivery medium the process can be of: Face to face training Online training Self learning On the basis of the time involved the process can be of: Full time- involving 15 days Part time- involving 27 days Online training- involving 2 months So if we summarize the steps & formalities involved in the whole process, the formalities for a candidate to become the advisor as per the IRDA are: Filling up the insurance advisor form Documents required
64 2 7 passport size photographs Acceptable age proof Acceptable education proof Acceptable residence proof Payment through the demand draft Completion of the training Reporting of the form with the DOPS
Different types of Reliance Life Insurance:
65 2 Reliance Automatic Investment plan Reliance Cash Flow plan Reliance Child Insurance plan Reliance Connect 2 Life Insurance Reliance Credit Guardian Insurance Reliance Insurance plan Reliance Golden Years plan Reliance Market return plan Reliance Money Guarantee plan Reliance Simple Term plan Reliance Special Credit Guardian plan Reliance Special Endowment plan Reliance term Plan Reliance Whole Life Insurance plan Reliance Secure Child Plan Reliance Wealth+ Health Plan
ULIPs vs Mutual Funds
Parameter’s ULIP’s Mutual fund
66 2 Investment Determined by the Minimum investment amount investor and can be amounts are determined modified as well. by the fund house.
Expense’s No upper limits, Upper limits for expenses expenses determined chargeable to investors by the insurance have been set by the company. regulator. Portfolio Not mandatory. Quarterly disclosures are disclosure mandatory. Modifying Generally permitted Entry/exit loads have to asset for free or at a nominal be borne by the investor. allocation cost. Tax Benefit’s Section 80C benefits Section 80C benefits are are available on all available only on ULIP investments. investments in tax-saving funds.
Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e.
67 2 diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. 4 Reasons why ULIP’s get and edge over others 1. Insurance cover plus savings- ULIPs serve the purpose of providing life insurance combined with savings at market-linked returns. To that extent, ULIPs can be termed as a two-in-one plan in terms of giving an individual the twin benefits of life insurance plus savings. This is unlike comparable instruments like a mutual fund for instance, which does not offer a life cover. 2. Multiple investment options- ULIPs offer a lot more variety than traditional life insurance plans. So there are multiple options at the individual's disposal. ULIPs generally come in three broad variants: Aggressive ULIPs (which can typically invest 80%-100% in equities, balance in debt) Balanced ULIPs (can typically invest around 40%-60% in equities) Conservative ULIPs (can typically invest upto 20% in equities) 3. Flexibility-The difference lies in the flexibility that ULIPs afford the individual. Individuals can switch between the ULIP variants outlined above to capitalise on investment opportunities across the equity and debt markets. Some insurance companies allow a certain number of `free' switches. This is an important feature that allows the informed individual/investor to benefit from the vagaries of stock/debt markets. 4. Works like an SIP -Individuals have probably already heard of the Systematic Investment Plan (SIP) which is increasingly being advocated by
68 2 the mutual fund industry. With an SIP, individuals invest their monies regularly over time intervals of a month/quarter and don't have to worry about `timing' the stock markets. These are not benefits peculiar to mutual funds. Not many realise that ULIPs also tend to do the same, albeit on a quarterly/half-yearly basis.
S.W.O.T. ANALYSIS
STRENGTH Reliance Life Insurance Company Limited is right now the market leader in Private Insurer segment.
WEAKNESS
69 2 The company right now has lesser number of agents (i.e. financial advisors) than LIC of India, which affects their sales in comparison to LIC of India.
OPPURTUNITY Reliance Life Insurance Company Limited can give LIC of INDIA agents an opportunity to join Reliance Life Insurance Company Limited as Reliance has got more incentive packages & servicing quality better than LIC of INDIA. Doing this they can reduce their cost of training and can exploit their experience.
THREAT Other big brand names like ICICI Prudential, BIRLA’S, TATA, HDFC, SBI, and AVIVA. etc.
POLITICAL Right one Reliance Life Insurance Company Limited, can go for opening up more & more offices, as the present political environment is business friendly.
ECONOMIC Insurance as we have already discussed is very essential for every person on this face of earth. Being an insurance company, the responsibility of the company also increases by many multiples, as they have to keep an eye on each & every happening going around & provide better & fast service to customers. Along with this, insurance is also very important for building up the infrastructure of any country. The money collected from the people is
70 2 invested in many sectors to develop the infrastructure & hence ultimately make the life of the citizens better.
SOCIAL Reliance Life Insurance Company Limited enjoys a good brand name; they can use it for their profit.
TECHNOLOGICAL Reliance Life Insurance Company Limited uses latest technology for their operations, which give them an edge over the competition.
LIMITATIONS
As the movement throughout the city is not possible due to certain constraints so the movement was quite restricted.
People are not ready to go for training. As the training period is of 17 days and it involves full day, so it becomes difficult for them to leave their offices or shops for such a long time.
71 2 The compulsion of selling 12 policies in a year also restricts them from becoming advisors. If they do not fulfill this target, then their license is cancelled after a year.
Lack of trust on any company of Private Sector.
Lack of knowledge about the products of Reliance and their total and blind faith on LIC.
Sometimes, fresh graduates want to become advisors but the company denies making them an advisor as they are very fickle-minded and also unreliable.
There is a problem in targeting Chartered Accountants. ICAI, which is the governing body of Chartered Accountants, does not allow them to become advisors. However, now they have permitted some CA’s to become advisors, but these are only those ones who are doing jobs somewhere and not allowed the ones who are doing their practice. So, still this decision is very dicey.
Sometimes, even those people want to become advisors for the company who are not a locality but then the major problem that they face is that they have got no natural market, so they are very susceptible about their performance and whether they will be able to generate business for the company or not, so they avoid to take up this challenge.
It was a great problem to get appointments from people in the month of March, as most of them were busy in filing their returns.
72 2 Some people ask about comparative analysis with LIC.
Some people consider IRDA fees of Rs. 1000 as a constraint.
Non-availability of part-time training.
All small towns are not open for doing this business.
One person cannot take Life Insurance Agency of two different Companies.
Time constraint is the biggest constraint in taking up the study.
73 2 Recommendations
After going through the above table regarding market share of various companies in the financial year 2007-2008, there is no reason why Reliance should rejoice of being the number one company in the country. The growth that companies like ICICI PRUDENTIAL, BIRLA SUNLIFE, SBI LIFE INSURANCE, TATA-AIG, BAJAJ ALLIANZ, OM KOTAK MAHINDRA, AVIVA, ING VYASA, METLIFE, & AMP SANMAR have produced that can be quite a big unseen threat for the company in the coming years. So the company should start thinking of what they want from the market & where they want to see themselves after a span of 10 years because if the popularity of these companies continues then one day they will become good competitors of Reliance & then the consequences can be quite disturbing for the company.
74 2 Conclusion
1. RELIANCE LIFE INSURANCE COMPANY has great goodwill in market in liberalized Indian market there are approximately 13 big companies in Indian market and RELIANCE is the No.1 Group . I found this fact in my recent survey.
2. There are lots of scope of life insurance in India only 2.5 people are secure with life insurance so the insurance sector is its booming stage this boom will more increase in 2 or 3 years.
3. Good profile insurance advisor could do the better job. If RELIANCE mentions the level of advisor then they may give great sales to the company.
4. RELIANCE has tuff competition with LIC as well as ICICI PRUDENTIAL, TATA AIG, BAJAJ ALLIAZE, BIRLA SUNLIFE INSURANCE, SAHARA, ING VYSVA, OM KOTAK MAHINDRA, HDFC INSURANCE AND SBI LIFE.
5. If the company starts to concentrate on village segment market. Then company can get great business.
6. RELIANCE has interested and profitable planes for different age group.
75 2 7. I got the good profile people near by bank and share market. When I concentrated on the 20-25 year age group people I found good result. 8. Within 20-25 year age group the sincerity level is high. They are career oriented and want to earn more.
9. In this age group people made interest to purchase the kids plan and pension plan and money back plan.
10. In the age group of 30-35 year the people who earning more than 3 lakh p.a. made interest to purchase ULIP.
11. I found that in insurance sector a person should have great communication and convenience skill.
12. People made interest in the business opportunity of RELIANCE because there are lots of chances to increase earnings and make high place in the company.
13. People took interest in pinnacle programmed and also life the professional environment of the company.
14. In my survey I found that low percentage of people is aware with the life insurance.
76 2 QUESTIONNAIRE
Study of ‘LIFE INSURANCE’ needs and habits among people AGE: ______GENDER: EDUCATION: ______OCCUPATION: ______
Q1) what is your preference for Any Financial Investment? (Please Rank) A) Bank/ Fixed Deposits B) Company Fixed Deposits
C) Share D) Mutual Funds
E) Real Estate F) Gold/ Silver
G) Insurance Cover- Life H) Insurance General- (Non Life/life) Q2) what do you think of Life Insurance primarily? A) As a risk cover B)As an investment C) As a mixture of both D) any other………… Q3) what are the important features of an insurance investment for you? (Please Rank) A) Safety B) Liquidity
C) Growth D) Insurance risk for self E) Insurance risk for family members F) Income tax saving
G) Risk against theft (General Insurance) H) Premium amount
77 2
I) Money back J) Service rendered
K) Ease in payment L) Responsiveness
M)Online details N) Availability of a Company Representative in need Q4) whom do you rely on before buying an insurance policy? (Please Rank) A) Self (through comparison of various policies) B) Self (through comparison of various companies) C) Agent D) Parents/ Elders E) Past experience with the company F) Friends G) Spouse H) Company advertisement I) Any other (Please specify…………….) Q5) If you rely on an insurance agent please rank the following attributes you look for in him/ her? A) Product knowledge B) Competitive knowledge
C) Attitude/ Agreeability D) Ability to calculate my insurance needs E) Ability to communicate well F) Responsiveness
G) Familiarity H) Confidence
I) Any other (Please specify….)
78 2
PFSCA
Q6) Do you think you will like to buy an insurance policy after scrutinizing features online? Yes No Q7) how do you think you will like to pay premiums? (Please rank) a) Deposit Cheques in insurance companies office b) Deposit Cheques in collection boxes c) Agent comes to collect cheque d) Online payment through credit card e) Automatic debit through bank account Q8) what is your preferred premium payment frequency? (Please tick one) A) Monthly B) Quarterly C) Half Yearly D) Yearly Q9) what is your preferred time period of insurance? (Please tick one) A) 1 year B) <5year C) 5 to 10 year D) 10 to 15 year E) >15 year
ANALYSIS OF QUESTIONNAIRE:
79 2
The sample size of the survey is 40 and people of different age, occupation, gender and education been considered in this survey because life insurance is just not for elite class as an investment but it is also a need of every individual to protect his life and his family from unforeseen circumstances. So it was the requirement of this survey to include people of every age, occupation, gender and education to generate a comprehensible outcome so that is beneficial for the company to understand the customers and their requirements. In earlier times people use to buy life insurance just to cover the risk but now days the trend has changed during my survey I realized with launch of ULIP’s people have started taking life insurance as a financial investment and it provides with the tax benefit under section 80C so many people prefer to invest in ULIP plans. Q1) what is your preference for Any Financial Investment? (Please Rank) A) Bank Fixed Deposits B) Company Fixed Deposits
C) Share D) Mutual Funds
E) Real Estate F) Gold/ Silver
G) Insurance Cover- Life H) Insurance General- (Non Life/life
80 2 25
20
15
10
5
0 bank F.d share real state LI
1 2 3 4 5 6 7 8
From the above question it is very much clear that 1st preference of many people for any financial investment is Life Insurance (ULIP’s Plan) and Mutual Funds the reason behind this is that growing market and economy and now days they are the best option as there are numerous plans in the market with pleasing feature like Tax Benefit, SIP, STP etc.But for people who would like to invest a large amount they still prefer investing in real estate. The elder people still prefer to invest in bank fixed deposit or company fixed deposit on which they can trust and they have been dealing with them in past as they are not much aware of mutual fund and ULIP’s Plan . Mostly females preferred to invest in gold and silver as they find it easy to buy as a financial investment. And they were 12% people whose 1st preference was investing in share’s they were those people who could analyze the share market with time. Basically for any financial investment people’s preference depend on the amount he has to invest, the time period for which he has to invest and off course on its risk appetite.
81 2 Q2) what do you think of Life Insurance primarily? B) As a risk cover B)As an investment C) As a mixture of both D) any other…………
25 23
20 as risk cover 15 mixture of both 8 9 10 investment
5
0
From the above Pie Chart it very much clear that most of the people take up life insurance as mixture of both risk cover and investment because before the launch of ULIP Plan there were many plans in which u can invest and after its maturity or on some uncertainty the insurer or its family gets the sum assured. 25% of people take up life insurance as a investment because it provides with tax benefit and upon that by investing in ULIP’s one can earn higher returns such people were already have other life insurance policy which was taken up for the risk and they now invest in life insurance as an investment. there were few people who has taken up life insurance as a risk covering policy and for there financial investment they prefer other option.
82 2 Q3) what are the important features of an insurance investment for you? (Please Rank) A) Safety B) Liquidity
C) Growth D) Insurance risk for self E) Insurance risk for family member’s F) Income tax saving G) Risk against theft (General Insurance) H) Premium amount I) Money back J) Service rendered K) Ease in payment L) Responsiveness M) Online details N) Availability of a Company Representative in need
Im portant feature for Insurance investm ent
1 5 % 1 0 % 5 % 0 % R a n k 1 R a n k 2 R a n k 3 R a n k 4 R a n k 5 R a n k 6 R a n k 7
S a f e t y L iq u id i t y G r o w t h Insurance risk for self Insurance risk for fam ily IncomeTax Saving R isk against theft Premium amount M o n e y b a c k Service renderd Ease in payments Responsiveness O nline details Availability of a C ompany R epresentative in need
From the analysis of the above question the most important feature which people prefer in any insurance investment are the service rendered by that
83 2 DE
insurance company ,availability of a representative in need ,Premium amount, the tax saving factor in there scheme’s. There were many people who opted there 1st preference as safety and growth of there money. Basically everybody’s 1st three or four preferences were these only as anyone investing in life insurance judge the policies on these parameter’s because other things are secondary one can compromise on other factor’s but these are the most important features which customer’s require in the policies before investing in them . The most important feature which almost every people consider an the most important feature which affects its performance is the service rendered and the premium amount as the USP of any policies lies in the service’s which they provide and the USP only takes it to the first position because now days there is a cut throat competition everywhere to create a market for one’s product they should be able to retain its customers and create new customers with there USP’s.
Q4) whom do you rely on before buying an insurance policy? (Please Rank) A) Self (through comparison of various policies) B) Self (through comparison of various companies) C) Agent D) Parents/ Elders E) Past experience with the company F) Friends G) Spouse H) Company advertisement I) Any other (Please specify…………….)
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20 policy comp. company 15 agent parents 10 past exp. friends 5 spouse company adv. 0 1st 3rd 5th 7th
While deciding upon buying an insurance the most important factor which affects is the past experience of the company or the policy .If a customer had a bad experience in past like delay in its services, late settlements of claims etc. Then this will surely hampers its present performance as that customer will not invest with that company again and will discourage others to invest so through the survey the first and the foremost factor which the buying of insurance is the customer’s past experience with that company. Now days as there is lot of competition people do self comparison of different insurance companies and its policies before buying one. And before buying a policy a customer consult many other people and they may change his mind if they think he has some better option or they have invested in
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better option .therefore there are many factors but the past experience affects a lot so one should try his level best to satisfy its customers and there needs so that they convince other’s also to invest and he also retained.
Q5) If you rely on an insurance agent please rank the following attributes you look for in him/ her? A) Product knowledge B) Competitive knowledge
C) Attitude/ Agreeability D) Ability to calculate my insurance needs E) Ability to communicate well F) Responsiveness
G) Familiarity H) Confidence
I) Any other (Please specify….)
86 2 A ttributes in an agent
2 5 % 2 0 % 1 5 % 1 0 % 5 % 0 % R a n k 1 R a n k 2 R a n k 3 R a n k 4 R a n k 5 R a n k 6 R a n k 7 R a n k 8
Product Knowledge C om petitive Knowledge A ttitude/A greeability A bility to calculate m y Insurance needs A bility to com m unicate Responsivensswell F a m i la r i t y C o n f i d e n c e
A customer expects at least an agent should have enough product knowledge and should have the capability to communicate well to its customers as there should be no confusions into customers mind everything should be clear to him so that he can take suitable decision .An agent is also expected that he should be able to calculate its customers insurance needs and should have
87 2 competitive knowledge and is expected to prove its product better than its competitor’s so that the customer is convinced to buy his product . An agent should have confidence in whatever he tells his customers as he is the one who is introducing them to the company and its products. Basically one should be able make his customer understand his product and all its features and should prove it to be better that other’s.
Q6) Do you think you will like to buy an insurance policy after scrutinizing features online? Yes No
How many people prefer to buy Insurance after screening its feature online
No of people, Yes, 6, 15%
No of people, No, 34, 85%
Yes No
88 2 Now as we are into 21st century and where India has progressed a lot. Computer’s and internet is available in the remote parts of the country then also there are very few people who would prefer to invest after screening the feature of an Insurance investment online .Now also more that 85% people included in this survey prefer that a representative or an agent should come and explain as they trust word of mouth more or than there eyes. Customer’s think that by having a face to face conversation he will be able to understand more and clear all his doubts which he may not be able to clear through net even through live chat’s which are now days available .so most of the people feel comfortable with the old trend rather than adapting the new one.
Q7) how do you think you will like to pay premiums? (Please rank) A) Deposit Cheques in insurance company’s office. B) Deposit Cheques in collection boxes . C) Agent comes to collect cheque. D) Online payment through credit card . E) Automatic debit through bank account.
89 2 C ustom ers m ost prefered w ay of paym ent
4 0 % 3 0 % 2 0 % 1 0 % 0 % R a n k 1 R a n k 2 R a n k 3 R a n k 4 R a n k 5
D eposit C heques in insuranceD eposit C hequesco office in collection boxes Agent com es to collectO nline cheque paym ent through credit card Autom atic debit through bank account
Now days also most of the customer’s prefer to pay there insurance premium by either depositing it in the insurance company office or they want an agent should come to collect it from them but there are many other ways where it could be paid very easily through credit card but it was not the 1st preference of many people . There are people who have time problem so they prefer to either automatic debit from there account or by payment through credit card. Basically people according to there comfort prefer to pay in whatever they feel easy.
90 2 Q8) what is your preferred premium payment frequency? (Please tick one) A) Monthly B) Quarterly C) Half Yearly D) Yearly
People's prefered payment Frequency
Monthly, 4, 10% Quaterly, 8, Yearly, 20, 20% 50%
Half yearly, 8, 20%
Monthly Quaterly Half yearly Yearly
Basically most of the customer’s prefer to pay there premiums annually because they feel it is easy as they don’t have to make payment very frequently and there are many other bills etc . Which they have to pay monthly or quarterly .but there were few people for prefer to pay half
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yearly ,quarterly or monthly because they said its difficult to pay it in lumsum.
Q9) what is your preferred time period of insurance? (Please tick one) A) 1 year B) <5year C) 5 to 10 year D) 10 to 15 year E) >15 year
Prefered time period of Insurance
> 15 years, 5, 13% 1 year, 3, 8%
< 5 years, 11, 10 to 15 years, 27% 9, 23%
5 to 10 years, 12, 29%
1 year < 5 years 5 to 10 years 10 to 15 years > 15 years
92 2 BIBLOGRAPHY
Books: Barley, Fundamental of investment, pearson third edition Haugen, Morden investment theory, pearson sixth edition
Mathew,M J, Fundamental of insurance, Tmh second edition
Web sites:
www.reliancelife.com
www.rel iance.com
www.icici.com
www.irdaindia.org
www.indiacore.com
www.maxnewyorklife.com Magazines: Insurance Plus Business India Economic Times Material provided by the company Survey
Search Engines:
www.google.com
www.yahoo.com
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