A project report on comparitive study of unit linked policies and its market research

COMPARITIVE STUDY OF UNIT LINKED POLICIESANDITS MARKET RESEARCH

CONTENTS
PART I
1. Industry overview 1

2. Company profile 15
3. Comparison study 21
PART II

1. Research methodology 27
Problem definition
Objectives
Sample profile
Sample size
Sampling technique
Data collection procedure
Data analysis technique
Limitations of the survey
Scope of the project
2. Findings 32
3. Analysis 39
Respondents in general
Respondents whose income is more than Rs 3,00,000
Respondents who knows about Unit Linked Policy
4. Suggestions 57
5. Conclusions 60
6. Bibliography 62
7. Appendix 64

BABASAB PATIL PROJECT REPORT ON MARKETING Page 1


EXECUTIVE SUMMARY

After privatization and liberalization in 1991,private sector is growing very fast
across wide spectrum of Indian economy. A major part of such liberalization process is
finance sector.

That is also applicable to Insurance Industry. Large number of multinational
companies in collaboration with the Indian companies is competing with the strong LIC.

At the same time bank rates are going down. So investors are going for
alternatives. They are investing in market for good returns.

This report titled Comparison study of unit linked policies and its market research
contains detail study of unit-linked policies and comparison unit linked schemes of
different companies and also their market potential in Bangalore city.

The main object behind taking this project is to find outstanding terms and
conditions of different companies who issue unit linked policies and market potential for
unit linked policies.

At the same time we are interested to know
1. Whether people are aware about unit linked policies or not?
2. What factor they are consider while purchasing unit linked policy?
3. What is their expectation from unit linked policy?
4. How much they want to invest in Life Insurance?
5. In which type of fund they prefer to invest.?

Based on this an appropriate questionnaire was prepared. Data was collected
through market survey . The data is analyzed using code sheet, percentages, averages,
sums and weightages .



Findings

1. 96% of the people know about life insurance and 18% know about unit linked
policy
2. Responded people ranked LIC as first, ICICI as second and Allianz Bajaj as third
3. Most people want to invest in Life insurance in the range of Rs 300000 to
Rs 500000
4. The Responded people mostly want to invest in balanced fund.
Above study shows that awareness of Allianz Bajaj is very low.
But there is a potential market for unit-linked policies. So ALBJ should come up with
some salient features to tap the market. They should come up with some special offers
like giving bonus or fixing some minimum guarantee amount.



BACKGROUND



AN INTRODUCTION:

The insurance industry in India is evolving and assuming different
proportions since it was privatized. There was a time when only traditional insurance
products used to dominate the arena, but with innovation coming into play, unit-

linked/market-linked products have also found a place.

It is worth mentioning here that world over unit-linked products
constitute quite a substantial chunk of the total portfolio of insurance companies.

The emergence of unit-linked insurance policies combines the
characteristics of both endowment insurance policies and mutual funds. With falling
interest rates questioning the economics of traditional products, most insurers are
launching unit-linked policies.

In the developed market, products more in common with mutual
funds have overtaken traditional life insurance products. Customers too are looking for
products that give stability of returns in the long run and total protection.

In India, Birla Sun Life, ICICI Prudential, Allianz Bajaj, LIC are
the some life insurance companies dealing in unit-linked insurance products.



HOW THE UNIT LINKED PLAN WORKS?

Unit linked plans combines the protection of life insurance and
benefits of mutual fund .The main reason for increasing interest towards unit linked plans
is that they allow you to earn more return on your investment in this declining interest
scenario, and at the same time offer financial protection to your family in unfortunate
event of your death. They also allow you the flexibility of withdrawing or surrendering
your unit wholly or partially to meet any contingency like your children’s education
marriage, etc.

Unit linked plans come in the form of units where the premium
paid by you is used to buy units and an investment fund is allotted to you. Most of the
companies offer two or more options to you with regard to the fund. The choice of the
fund allows you to determine as to how much premium paid by you should be invested
and in which financial instrument. The performance of the fund depends upon the current
value of units in the market.

For e.g. if current value of unit is Rs 10/- and you pay annual
premium of Rs 10000/-, than the number of units you buy with this premium is 1000
units. If the market is bullish and the value of a unit become Rs 13 /- then you can
surrender the units for a profit.



According to the IRDA, a company offering unit linked plans must
give the investor an option to choose among debt, balanced and equity funds.

If you opt for a unit-linked endowment policy, you can choose to
invest your premiums in debt, balanced or equity funds. If you choose a debt fund, the
majority of your premiums will get invested in debt securities like gilts and bonds.

If you choose equity, then a major portion of your premiums will
be invested in the equity market. The type of fund you choose would depend on your risk
profile and your investment need.

In case of death during the premium paying term or the term of the
policy, the sum assured, or value of policy fund, whichever is higher, is paid to the
beneficiaries.

In case of survival up to maturity, the value of the fund is paid out.
Therefore, the risk here is transferred to the policyholder and nothing is guaranteed. So, if
the fund value falls below the amount invested, the policyholder will receive a lower
amount.

Taking a closer look at charges and feesone comes to knows that,
there is an initial administrative charge deducted every month from units. This could be
very high, around 15% per annum in the first year, around 7% p a in the second and
around 2-3% p a thereafter.

Suppose you buy a policy wherein the annual premium works out
to Rs 10,000, in the first year, Rs 1,500 would be deducted towards administrative
charges, Rs 700 in the second year and around Rs 300 from the third year. These rates
vary from company to company but are more or less in this range.



There is an investment management charge too, which would vary
according to the fund selected; for instance, an equity fund would attract a higher
investment management fee of around 1% p a compared with a debt fund that might
attract a fee of 0.25%.

So continuing with the same example, a sum of Rs 100 would be
deducted from the annual premium if an equity fund is opted for. Next, companies charge
an annual administration charge. In case of some companies this charge is a flat rate, say,
Rs 20 per month. In the case of others, this charge is again a percentage of net assets for
each fund.

Finally, there is a deduction for risk cover. This goes towards
contribution to the sum assured or the life insurance cover. It is based on mortality rates
as calculated by actuaries. For comprehensively summarising our example, we will
assume the age of the male policyholder to be 30 years and sum assured Rs 1,00,000.

Of a total premium of Rs 10,000 paid in the first year, Rs 1,500 is
deducted towards initial administration fees, Rs 100 towards investment management
fees (assuming the fund opted for is equity) and Rs 240 towards annual administration
fees.

That leaves a balance of Rs 8,160 in the first year. Out of this, Rs
169 would be deducted towards risk cover. Hence, finally Rs 7,991 would be invested in
the fund. In the second year, the figure would stand at Rs 8,791 and third year onwards,
around Rs 9,191 for the term of the policy. So, every time you make your premium
payment, only a part of it is actually invested in the fund of your choice.



Combination of mutual fund and insurance cover:

Unit-linked plans are a combination of an investment fund and an
insurance policy. A major part of the premium amount received on such policies is
invested in the stock market by the insurer in select funds depending on the risk level
chosen by the customer. Mind you, this is after deducting administration charges and
management expenses that may vary from one fund to the other.

Choice of Funds:

The customer has the option of choosing from debt, balance and equity funds. If the
individual chooses a debt fund, a major part of his premia is invested in debt securities
like gilts and bonds. But if it is equity, a major portion goes towards investments in the
stock market. So depending on the risk profile the individual may choose his investment
option.

Survival Benefits:

As regards survival benefits the fund value as on that date is paid to the individual.

Death Benefits:

In case of death the individual is paid higher of the sum assured or the fund value
standing to his account.

Fund Value:

The fund value is the value of your investment as on a given date. This is influenced by
the ups and downs in the sensex.
So Fund Value = Unit Price x Number of Units



Switching between Funds:

The advantage one gets in case of a unit linked fund is that the working is similar to a
mutual fund. One can ship out of a fund if he feels its performance is not up to the mark.
Companies allow certain number of free switches in a year. For any more switches one
may have to pay.

Risk Element:

On the face of it investment in unit-linked plans are not entirely safe. An
element of risk is definitely in the hands of the individual. An individual choosing to park
his funds in equities stands to gain or lose depending on the bull run in the stock market.
When the market is buoyant he stands to gain handsomely but on the other hand he may
lose heavily when it tanks out.

Unit-linked insurance plans are all of a sudden much talked about,
publicized and sold. While these are not a recent phenomenon, since a number of
insurance companies already had these products as a part of their portfolio, of late these
plans have seen sudden frenzy.

It is perhaps the bull phase or the lure of market-linked returns that
insurance companies have been shouting hoarse about that is responsible for these
products outselling others.

While this is not to dissuade from purchasing unit linked covers it would
be once own interest to take a peek at the ‘market linked returns’ you can expect. And if
you think that the entire premium you pay is invested in avenues chosen by you to



maximize returns you could be wrong.

Expenses during the first year:

The insurance company towards various charges reducing the investable
amount considerably deducts a substantial amount from your premium income. In the
first year Allianz Bajaj through its Unit Gain SP Plus claims to allocate 100 percent of
the single premium you invest but cancels units on a monthly basis towards various
charges from your fund.

Accordingly Kotak Safe Investment Plan allocates 86 percent and
LifeTime of ICICI Pru Life allocates 80 percent for amounts less than Rs 50,000 and 82
percent for those above Rs 50,000 towards investments.

Administration expenses:

The fund expense is the highest in the first year. ICICI Pru Life charges
administration expenses of 20 percent of the premium for amounts below Rs 50,000 and
18 percent for amounts over Rs 50,000 in the first year while it is 7 percent for amounts
upto Rs 20,000 in case of Kotak Safe Investment plan.

Again there are annual administrative charges that are as high as 1.25
percent per annum of net assets on Life Link of ICICI Pru Life and on Unit Gain SP Plus
of Allianz Bajaj Life Insurance.

Mortality charges:

While the annual administrative charges stand at 1.25 percent of net assets for ICICI Pru
Life and Allianz Bajaj Life Insurance the differences in mortality charges is quite a bit.
ICICI Pru Life charges 1.48 per thousand of sum assured at age 30 while Allianz Bajaj
charges 1.29 at age 31.



Switching:

Now what if you plan to switch from one fund to the other. ICICI Pru Life
offers only one free switch every year and charges a switching fee of 1 percent for extra
switches. In contrast Allianz Bajaj offers three switches free with subsequent switches
charged at the rate of 1% of switch amount or Rs 100 which ever is higher while with
OM Kotak’s Safe Investment plan you can switch any number of times at no extra cost.

Besides there are fund management charges that varies depending on the
type of fund you choose to park your funds. OM Kotak charges 0.6 percent if you choose
to invest in money market funds, on gilt funds it is 1 percent, on balanced funds it is 1.3
percent and on growth funds it is 1.5 percent.

Transaction costs:

Also Allianz Bajaj charges transaction costs at 0.5 percent but not
exceeding 0.7 percent of the equity investment while it is 0.1 percent not exceeding 0.2
percent of the debt investments. Moreover, there exist underwriting charges on the basis
of the age of the individual.

Know that when you buy unit-linked insurance products, a major part of
the risk is transferred to you from the insurance company. Unit linked risk products may
not be a good investment option when taken into account the high costs and the risk
associated with volatile markets.

These products will entail regular monitoring since they are market linked
and may perhaps be a good bet when the market is at a peak but if the market bottoms out
you may lose heavily. So know that you are playing with your risk cover.



Unit-linked vs. traditional insurance products.

While in a unit-linked insurance product part of the premium paid
by the policyholder goes towards administrative and mortality charges (that provides life
cover) and the balance into an investment account, in a traditional policy (with or without
profit policy), the premiums are put in a common fund, part of which is invested and part
goes into paying for the risk cover.

However, the entire profit from investment is not declared as
bonus in a traditional policy. Some is held back by the insurance company to build
reserves to pay end bonus and other returns.

Also, there is a chance of using the money to cross-subsidise other
products i.e. paying more returns towards single premium products. The performance of
the investible portion of premium in a unit-linked scheme is monitored in the form of
mutual fund units.

Unit-linked insurance products allow policyholders to define their
underlying investment with choices varying from a conservative to an aggressive option.

In effect, a customer can create his/her own personal investment
plan backed by an insurance policy with at least a minimum guaranteed return, in some
cases. On the contrary, a traditional policyholder has to rely on the investment manager.



Besides, unit-linked products offer benefits like transparency,
liquidity and flexibility. The insured has the flexibility of changing the investment option
after completing one policy year taking advantage of market movements to plan
investments and earn returns, giving him complete control of his funds.

Thus, in a scenario when the equity market is not performing well,
a policyholder with high exposure to equities can switch to the option, which has a high
proportion of fixed income instruments.

Above all, as in the case of other insurance products, the premiums
are taxing deductible and the benefits i.e. the maturity benefit, withdrawal, surrender and
death benefits are all tax-free.

Mode of premium payment:

Paying single premium or regular premium in the form of yearly
/half yearly, quarterly and monthly installment and premium paid by you is used to buy
units.

Hence unit linked policies multiply your profits and brings you the
return and liquidity of the stock market and the safety of the insurance at the same time.



Allianz Bajaj Life Insurance Company Limited

Allianz Bajaj Life Insurance Co. Ltd. is a joint venture between
two leading conglomerates- Allianz AG, one of the world's largest insurance companies,
and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the world.

Allianz AG with over 110 years of experience in over 70 countries
and Bajaj Auto, trusted for over 55 years in the Indian market, together are committed to
offering you financial solutions that provide all the security needed for once family and
oneself

Allianz Bajaj Life Insurance

• Is the fastest growing private life

• Insurance company in India

• Currently has over Rs 3,00,000 p.a. satisfied customers

• Is backed by a network of 68 Customer Care Centers spanning 55 locations
across the country

• One of India's leading private life insurance companies



COMPANY PROFILE
Allianz Group

Allianz Group is one of the world's leading insurers and financial services providers.

Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost
174,000 employees. At the top of the international group is the holding company, Allianz
AG, with its head office in Munich.

Allianz Group provides its more than 60 million customers worldwide with a
comprehensive range of services in the areas of

• Property and Casualty Insurance,
• Life and Health Insurance,

• Asset Management and Banking.

ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE

• Worldwide 2nd by Gross Written Premiums - Rs.4, 46,654 cr.

• 3rd largest Assets Under Management (AUM) & largest amongst Insurance cos. -

AUM of Rs.51, 96,959 cr.
• 12th largest corporation in the world



• 49.8 % of global business from Life Insurance

• Established in 1890, 110 yrs of Insurance expertise

• 70 countries, 173,750 employees worldwide

Bajaj Group

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the
largest manufacturer of two-wheelers and three-wheelers in India and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image & brand
loyalty synonymous with quality & customer focus.

A STRONG INDIAN BRAND- HAMARA BAJAJ

• One of the largest 2 & 3 wheeler manufacturer in the world
• 21 million+ vehicles on the roads across the globe

• Managing funds of over Rs 4000 cr.

• Bajaj Auto finance one of the largest auto finance cos. in India

• Rs. 4,744 Cr. Turnover & Profits of 538 Cr. in 2002-03

• It has joined hands with Allianz to provide the Indian consumers with a distinct.
Option in terms of life insurance products



• As a promoter of Allianz Bajaj Life Insurance Co. Ltd., Bajaj Auto has the
following to offer - Financial strength and stability to support the Insurance
Business

• A strong brand-equity.

• A good market reputation as a world-class organization.

• An extensive distribution network.

• Adequate experience of running a large organization.

Shared Vision

A household name in India teams up with a global conglomerate...

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj
group is the largest manufacturer of two-wheelers and three-wheelers in India and one of
the largest in the world.

A household name in India, Bajaj Auto has a strong brand image
& brand loyalty synonymous with quality & customer focus. With over 15,000
employees, the company is a Rs. 4000 crore auto giant, is the largest 2/3-wheeler
manufacturer in India and the 4th largest in the world. AAA rated by Crisil, Bajaj Auto
has been in operation for over 55 years. It has joined hands with Allianz to provide the
Indian consumers with a distinct option in terms of life insurance products.

As a promoter of Allianz Bajaj Life Insurance Co. Ltd., Bajaj
Auto has the following to offer



• Financial strength and stability to support the Insurance Business.

• A strong brand-equity.

• A good market reputation as a world class organization.

• An extensive distribution network.

• Adequate experience of running a large organization.

• A 10 million strong base of retail customers using Bajaj products.

• Advanced Information Technology in extensive use.

• Experience in the financial services industry through Bajaj Auto Finance Ltd

BOARD OF DIRECTORS OF ALLIANZ BAJAJ ARE

1. Rahul Bajaj
2. Niraj Bajaj
3. Sanjivnayan Bajaj
4. Ranjit Gupta
5. Govind Prasad Laddha
6. J.Shridhar
7. Bajaj Auto Limited
8. Dr Wemer Zedelius
9. Heinz Dollberg
10. Don Nguyen
11. Alan Wilson



Allianz Bajaj brings several innovative products, the details of which as followes

ALLIANZ BAJAJ’S PRODUCTS

Individual Plans

 UNITGAIN
A Unit Linked Plan

 UNITGAIN SP
A Single Premium Unit Linked Plan

 INVESTGAIN
An Endowment Plan

 CHILDGAIN
Children's Policy

 CASHGAIN
Money Back Plan

 SWARNA VISHRANTI
Retirement Plan



 RISK CARE
Pure Term Plan

 TERM CARE
Term Plan with Return-of-Premium

 LIFETIME CARE
Whole Life Plan

 SAVE CARE ECONOMY SP
Single Premium Endowment Plan

 LOAN PROTECTOR
A Mortgage Reducing Term Insurance Plan

 KEYMAN INSURANCE
A Promising Business Opportunity

.

Group Plans

 GROUP CREDIT CARE
Available for Employer - Employee Groups
and Non Employer-Employee Groups

 GROUP TERM LIFE
Available for Employer - Employee Groups
and Non Employer-Employee Groups

 GROUP TERM LIFE SCHEME
in lieu of EDLI (Employees Deposit Linked Insurance)



COMPARISON STATEMENT
Particulars Allianz Bajaj Birla sun life ICICI LIC
1) Types of a) Unit Gain a) Flexi Save Plus a) Lifetime a) Life Time
policy b) Unit Gain SP Endowment Plan b) Life link b) Life Time SP
Issued b) Flexi cash flow
money back Plan
c) Flexi Life Line
Plan

2) From 1year to 60 From 30 days to From 0year to From 12 years to
Eligibility years 65 years 60 years 55 years
3)Minimum Rs 10,000 regular 50,000 for minor 18,000 p.a. or 5,000regular
premium Rs 25,000 single 75,000 for adults 9,000 for half 20,000 single
amount premium yearly and 1,500
( in Rs) for monthly.

4) Term of Death or low balance As per policy term At the age of 10 years
the Plan whichever is first 5,10,15,20,25or30 100
or as per maturity
age 15,20,25,30or
35years for minor
& 60,65,70,80 for
adult
5) Premium Yearly, Half yearly, Yearly, Half Yearly, Half Yearly, Half
payment Quarterly and Single yearly, yearly, and yearly,
frequency premium Quarterly and Monthly Quarterly and
[Monthly –with salary Single premium Single premium
deduction scheme.] [Monthly –with
salary deduction
scheme.]



6) Maturity Total value of that Total value of that Total value of Bid value of the
benefit you hold in fund you hold in fund that you hold in fund along with
/funds /funds fund /funds maturity bonus at
5% of sum
assured.
7) Death Sum assured chosen Face amount + Sum assured -Death in 1st
benefit or value of units Policy fund chosen or value 6months –30% of
Whichever is higher of units S.A+fund value
Whichever is -Death in 2nd half
higher of 1st year –60%
of S.A + fund
value
-1st year & above
S.A + fund
Value
-On 10th year
5% bonus of SA
+ bid value of
fund```

8) Free Three free switches One free switch One free switch Twice during the
switches every year. every year. every year. term of
plan.


9)Minimum For Single Premium Amount For Single
and Min=1.01 time the SP chosen by Prem
maximum Max=Y time the SP the customer ium
Sum Where Y as per following table Min =Rs
Assured A 0- 31- 36- 41- 46- 20,000
g 30 35 40 45 60 Max =Rs
e
Y 45 40 25 15 5 10,00,000
For Regular Premium
Min=5 time AP For Regular
Max=Y time the AP Prem
Where Y as per following table ium
A 0- 31 36- 41- 46- 56 Min =Rs
g 3 - 40 45 55 60
50,000
e 0 35
Y 1 10 75 55 30 20 Max =Rs
2 5 10,00,000
5

10) Cash You may withdraw money any You may You may After ‘3’
withdrawal time after ‘3’ full years withdraw withdraw years
option money any money any time the
time after after ‘3’ full polic
‘4’full years years y
hold
er
can
withdraw
max
of
50%.
11)Investm • Equity Fund • Protector • Maximiser • Secured
ent option • Balanced fund • Builder • Protector fund

• Debt fund • Enhancer • Balancer • Balance

• Cash fund d fund
• Risk
fund


The fund value is always depend upon the market
condition. On the total premium the deductions are
• Allocation charges
• Other charges

ALLOCATION RATES

Allianz Bajaj Birla Sunlife ICICI Om Kotak
Yearly Cumulati Comm Yearly Cumul Comm Yearly Cumul Co Yearly Cumulati Commiss
Alloca ve ission Alloca ative ission Alloca ative mm Alloca ve ion
tion Allocatio (%) tion Alloca (%) tion Alloca issi tion Allocatio (%)
(%) n (%) (%) tion (%) tion on (%) n(%)
(%) (%) (%)
Year 1 30 30 40 35 35 35 80 80 8 86 86 10
Year 2 98 128 5 96.5 127.5 5 92.5 172.5 5 86.5 182.5 3.50
Year 3 99 227 5 95 222.5 5 96 268.5 3 86.5 279 3.50
Year 4 100 327 5 95 317.5 5 96 364.5 2 86.5 375.5 3.50
Year 5 100 427 5 95 412.5 5 96 460.5 2 86.5 472 3.50
Year 6 100 527 5 95 507.5 5 96 556.5 2 86.5 568.5 3.50
Year 7 100 627 5 95 602.5 5 96 652.5 2 86.5 665 3.50
Year 8 100 727 5 95 697.5 5 96 748.5 2 86.5 761.5 3.50
Year 9 100 827 5 95 792.5 5 96 844.5 2 86.5 858 3.50
Year 10 100 927 5 95 887.5 5 96 940.5 2 86.5 954.5 3.50
Year 11 100 1027 5 95 982.5 5 96 1036.5 2 86.5 1051 3.50
Year 12 100 1127 5 95 1077.5 5 96 1132.5 2 86.5 1147.5 3.50
Year 13 100 1227 5 95 1172.5 5 96 1228.5 2 86.5 1244 3.50
Year 14 100 1327 5 95 1267.5 5 96 1324.5 2 86.5 1340.5 3.50
Year 15 100 1427 5 95 1362.5 5 96 1420.5 2 86.5 1437 3.50
Year 16 100 1527 5 95 1457.5 5 96 1516.5 2 86.5 1533.5 3.50
Year 17 100 1627 5 95 1552.5 5 96 1612.5 2 86.5 1630 3.50
Year 18 100 1727 5 95 1647.5 5 96 1708.5 2 86.5 1726.5 3.50
Year 19 100 1827 5 95 1742.5 5 96 1804.5 2 86.5 1823 3.50
Year 20 100 1927 5 95 1837.5 5 96 1900.5 2 86.5 1919.5 3.50
Average 1927/20 1837.5 1900.5 1919.5/2
allocati = /20 /20 0
on per 96.35% =92% =95% =96%
year

Non allocated amount



Particulars Allanz Bajaj Birla Sunlife ICICI Om Kotak
Year 1 70% 65% 20% 16%
Year 2 2% 7.5% 7.5% 3.5%
Year3 1% 5% 4% 3.5%
Year4 5% 4% 3.5%
Year5 5% 4% 3.5%
Year6 5% 4% 3.5%
Year7 5% 4% 3.5%
Year8 5% 4% 3.5%
Year9 5% 4% 3.5%
Year10 5% 4% 3.5%
Non allocation
charge(cumulative) 73% 112.5% 59.5 47.5

In the long run say 20 years, the non allocation will be

Particulars Allanz Birla Sunlife ICICI Om Kotak
Bajaj

Non allocation 73% 162.5% 99.5% 82.5%
Charges(cumulative)

Average non
allocation per year 3.65% 8.125% 5% 4.125%
will be



The main determinant of how policy operates is allocation of fund
and growth rate of the company. The growth rates are available in the
newspaper.

However, some insurers do guarantee a part of the return. Birla, for
instance, guarantees a minimum return of 6% in case of Protector option, 4.5% in Builder
and 3% in Enhancer. Birla, as of November 2003 has declared, since inception, a return
of 13.55 % on Protector, 18.23% on Builder and 25.61% on Enhancer.



RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY



PROBLEM DEFINITION

` In the market, bank interest rates are coming down and peoples
prefer other investment avenues like mutual funds. The main focus of this project is to
know about unit-linked policy ( combination of mutual fund and life coverage), how this
plan works in the market and how people consider its attributes and factors.

OBJECTIVE

The main objective of the research is to find potential market for
the unit linked plans in Bangalore city.

SUB OBJECTIVES

1. To know potential market for life insurance.
2. To know awareness of different insurance companies.
3. To know which attributes people consider most important.
4. To know what factor people consider while purchasing unit linked policy.
5. To know the investment criteria
6. To know in which range people want to invest.

Keeping above objective in mind a questionnaire was designed and
field survey conducted in Bangalore city.

SAMPLE PROFILE



Businessmen, Employees and other are population for this project.
Efforts were made to get the respondents with income of Rs 3,00,000 & more. Sampling
units are taken from the Bangalore city.

SAMPLE SIZE

Sample size was 100 in Bangalore city

SAMPLING TECHNIQUE

Samples were chosen from different areas of Bangalore i.e. Jayanagar, M G
Road, Corporation area, Electronics city and tried to maintain 1:1:1 ratio of businessman,
employees and other among the respondents

DATA COLLECTION PROCEDURE

Data collection for unit linked policy
• Secondary data collected from following source
1. Literature from Allianz Bajaj office
2. Articles from Economictimes
3. Article from Insurance Cover
• Primary data was collected through field survey by framing the
questionnaire

DATA ANALYSIS TECHNIQUE



The data collected was consolidated, the sum average was
calculated. Various charts were prepared which helped to analyze the data better .Data
analysis involved converting of recorded observation in to descriptive statement.

LIMITATION OF THE STUDY

1. The findings are relevant only to Bangalore city , however a generalized view can
be applicable to cities with similar characteristics.
2. Since the sampling technique was random, the finding might not give an accurate
picture.
3. Since the time and cost were the a constraints, result may not be accurate, as
surveyor could not survey the entire customer and potential investors.
4. Some of the customers could not give an accurate response to some of the
questions

SCOPE OF THE STUDY



The project includes

1. Study of unit linked policy.
2. The eligibility criteria of the applicant
3. Brief idea about the company called Allianz Bajaj life insurance company
limited.
4. Comparison study of different unit inked policies of different companies
5. Terms and conditions of different companies unit linked policies
6. Different types of policies issued by Allianz Bajaj



FINDINGS

Findings:



1) Have you bought any Insurance policy/ know about unit linked policy?

Awareness of life insurance

4%

know insurance
policy
don’t know
96% insurance policy

Awareness of unitlinked policy

18%

know unit linked
policy
don’t know unit
82% linked policy

2) Rank the Insurance companies you are aware of?



Respondents ranked life insurance companies as below

Ranking of Insurance Companies
based on composite score
35
30
composite score

25
20
15
10

5
0
I

G
C

a
j

if e
IC

ja

iv
LI

AI
IC

Ba

nl

Av
ta

Su
nz

Ta

rla
lia

Name of companies
Bi
Al

The ranking is
1. Life Insurance Corporation
2. ICICI
3. Allianz Bajaj Life Insurance Company Limited
4. Tata AIG Life Insurance Company Limited
5. Aviva Life Insurance Company Limited



3) Have you bought any unit linked policy?

Out of 100 samples only 2 people bought unit linked policy.

Percentage of respondents who
have bought unit linked policy

120

100

80

60

40

20

0
Bought unit linked Doesn’t bought
policy unitlinked policy



4) Are you interested in buying unit linked policy?

Percentage of respondents who are
intereste to buy unit linked policy

100
90
80
70
60
50
40
30
20
10
0
Interested to buy Not interested to
unit linked policy buy unit linked
policy



5)Rank the below attributes do you consider while purchasing?

Consideration of attributes
Charges
Creation of
levied
estate
9%
16%
Saving
component
15%

Life
coverage
16%

Maturity
benefits
15%
Mode of
Withdraw al paying
benefits premium
15% 14%



6) Rank the factors do you consider while purchasing Life Insurance/Unit Linked
policy?

Consideration of factors while buying
Life Insurance
Market
Brand image
condition
14%
18%

Relatives&frien
Risk factor
ds
19%
12%

Age
18% Income
19%

7) How much do you want to invest?



Respondent's interest of investment in
percentage(In Rs p.a)

Above 5 Lakhs Above 1Lakh
14% 20%

3 Lakhs -
5Lakhs 1Lakh-2 Lakhs
28% 22%
2 Lakhs-3
Lakhs
16%

8) In which fund do you prefer to invest(rank them accordingly)



Composite ranking of various fund

300 280
246
250 232 222
200

150

100

50

0
Equity fund Debt fund Cash fund Balance
fund



ANALYSIS

ANALYSIS HAS BEEN MADE IN THREE
PARTS

• Respondents in general
• Respondents whose income is more than
Rs Rs 3,00,000 p.a.
• Respondents who knows about Unit Linked Policy



RESPONDENTS IN GENERAL

INCOME OF THE RESPONDENTS

Income of respondents

In Rs
22%
28% Below 150000
150000-300000
300000-500000
Above500000

30% 20%

Four types of income group has been responded, accordingly respective percentage has
been given.
1. Below Rs 1,50,000 28%
2. Rs 1,50,000-Rs 3,00,000 p.a. 20%
3. Rs Rs 3,00,000 p.a.-5,00,000 30%
4. Above Rs 5,00,000 22%



AWARENESS OF LIFE INSURANCE

Awareness of Life Insurance

120

100

80

60

40

20

0
Know insurance policy Don’t know insurance
policy

Awareness of the life insurance is out of the 100 samples 2 peoples
don’t know about the life insurance.



AWARENESS OF UNITLINKED POLICY

Awareness of unitlinked policy

22%
know unit linked
policy
don’t know unit
linked policy
78%

Out of 98 people 22% know about the unit linked policy.

RANKING OF LIFE INSURANCE COMPANIES



Respondents ranked life insurance companies as below

Ranking of Insurance Companies
based on composite score
35

30

25
composite score

20

15

10

5

0
C

I

G

iva
ife
j
IC

ja
LI

AI

Av
Ba
IC

nl
Su
ta
nz

Ta

rla
lia

Name of companies
Bi
Al

The ranking is
1. Life Insurance Corporation
2. ICICI
3. Allianz Bajaj Life Insurance Company Limited
4. Tata AIG Life Insurance Company Limited
5. Aviva Life Insurance Company Limited

Respondents ranked Allianz Bajaj as 3rd among 6 life insurance companies.That means
awareness is less about the company. Therefore company should take some measure to
create awareness.



While purchasing unit linked policy, people consider the attributes
like Creation of estate, Life coverage, Mode of paying premium, Withdrawal benefits, Saving
component echo much importance they give to each attribute is given below

Consideration of attributes
Charges levied Creation of
9% estate
16%

Saving
component
15%

Life coverage
16%

Maturity
benefits
15%

Mode of
paying
Withdraw al
premium
benefits
14%
15%

While purchasing life insurance people considered most
important is life coverage than Creation of estate than saving component than other
attributes like maturity benefits, withdrawal benefits and mode of paying
premium .the least important attribute is charges levied.

As people consider most important as life coverage, in the
policy of Unit gain they should concentrate on Death benefits and life coverage period.

After consideration of attributes the next step towards the purchase of life
insurance by the prospective buyer are following factors



1. Brand Image
2. Risk Factor
3. Income
4. Age factor
5. Influence of relatives and friends
6. Market condition

Consideration of factors while
buying Life Insurance
Brand image
Market condition
14%
18%

Relatives&friend
Risk factor
s
19%
12%

Age
18% Income
19%

Respondents considered very important as Risk factor than the
factors like Income, Age, and Market conditions. Brand image as less important and
Influence of relatives and friends as very least important.
As people are tend to avoid risk and give more importance to risk
factor it shows that people are willing to take risk.



PEOPLE’S INTEREST OF INVESTING IN LIFE INSURANCE

Respondent's interest of investment in
percentage
(in Rs p.a )
Above 5 Lakhs Above 1Lakh
14% 20%

3 Lakhs -
5Lakhs 1Lakh-2 Lakhs
28% 22%
2 Lakhs-3
Lakhs
16%

Respondents got a option of five categories as shown above. The response was
• Below Rs 1,00,000 13%
• Rs 1,00,000 –2,00,000 18%
• Rs 2,00,000 – Rs 3,00,000 p.a. 27%
• Rs Rs 3,00,000 p.a.- 5,00,000 29%
• Above Rs 5,00,000 13%

Most peoples are interested in taking the policy of Rs 3,00,000
p.a. to 5,00,000.Next to it is the policy of Rs2,00,000 to Rs 3,00,000 p.a..



PEOPLE ‘S PREFERENCE OF INVESTING PREMIUM AMOUNT

Customer got several option to invest their premium .The preference according to
respondents are given below

Graph showing Composite ranking
of various fund

300 280
246
250 232 222
200
150
100
50
0
Equity fund Debt fund Cash fund Balance
fund

Rankings are given below
1. Balanced fund 28%
2. Equity fund 25%
3. Cash fund 24%
4. Debt fund 23%



RESPONDENTS WHOSE INCOME IS MORE THAN
RS Rs 3,00,000 p.a.

Ranking of Life Insurance
companies based on their
composite score

35
30
25
20
15
10
5
0
Lic Birla ICICI Allianz Aviva Tata
Sunlife Bajaj AIG

Ranking according to respondents whose income is more than Rs 3,00,000 p.a.
1. LIC
2. ICICI
3. Birla Sunlife
4. Allianz Bajaj
5. Tata AIG
6. Aviva



Respondents whose income is more than Rs 3,00,000 p.a.
considered attributes as below

Consideration of Attributes
Charges lavied Creation of
8% estate
16%
Saving
component
16%

Life coverage
16%

Maturity benefits
14%

Mode of paying
Withdraw al premium
benefits 15%
15%

Respondents considered very important attribute as Creation of estate,
Saving components and life coverage. Next important as Mode of paying premium
and next is Withdrawal benefits next is Maturity benefits and the least important is
Charges levied.
Respondents even consider Saving component and creation of estate as
very important.



Respondents whose income is more than Rs 3,00,000 p.a. considered
factors affecting to buy life insurance as below

Factors considered while
buying Life Insurance

Market condition Brand image
19% 14%

Relatives&friends Risk factor
11% 18%

Age Income
19% 19%

Respondent considered all the above-mentioned attributes as most
important In percentage most important is Age, Income, Market conditions, Risk
Factor and least important is Brand image and influence of relatives and friends.



Respondents whose income is more than Rs 3,00,000 p.a. considered the
investment criteria as follows

Respondents interest of
investment in percentage
(in Rs p.a)
Below
Above
100000 100000-
500000
4% 200000
19%
23%

350000-
500000 200000-
31% 350000
23%

Respondent interested to invest money more between Rs3,50,000-5,00,000 p.a.
Next is Rs2,00,000-3,50,000 p.a. and same percentage of people wants to invest in
Rs1,00,000-2,00,000 p.a. and 19% want to invest in above Rs 5,00,000 p.a. and least
people want to invest in below Rs 1,00,000 p.a.


Respondents whose income is more than Rs 3,00,000 p.a. considered
investing their money in following funds



Preference of respondents
interest of investing Premium in
various funds
Equity fund
22%
Balance fund
31%

Debt fund
22%

Cash fund
25%

2. Cash fund 25%
3. Equity fund 22%
4. Debt fund 22%

OPINION OF THE RESPONDENTSWHO KNOW ABOUT
THE UNITLINKED POLICY.



ATTRIBUTES CONSIDERED BY
RESPONDENTS WHILE PURCHSING
UNIT LINKED POLICY
Charges Creation of
Saving lavied estate
componen 10% 15%
t Life
15% coverage
17%
Maturity
benefits Mode of
14% Withdrawa
paying
l benefits
premium
16%
13%

Respondents considered very important attribute as Life coverage next
important as Withdrawal benefits next is Saving components and Creation of estate
next important as Maturity benefits next important attribute is Mode of paying
premium and the least important is Charges levied.
Here most important to note is every attribute is considered
important because all the percentage is more than 10%.



CONSIDERATION OF THE FACTORS WHILE BUYING UNIT
LINKED POLICY

Market condition Brand image
17% 15%

Relatives&friends
10%

Risk factor
20%

Age
19% Income
19%

Very important Risk factor
Less important Income, age
Important Market conditions
Not important Brand image
Least important Influence of relatives &friends



GRAPH SHOWING PERCENTAGE
OF PEOPLE & THEIR INTEREST
OF INVESTMENT (IN RS P.A.)

60

50

40
30

20

10

0
Below 10000- 50000- 100000- Above
10000 50000 100000 200000 200000

Respondents got an option of five categories as shown above. The response was
• Below Rs 1,00,000 09%
• Rs 1,00,000 –2,00,000 00%



• Rs 2,00,000 – Rs 3,00,000 p.a. 09%
• Rs Rs 3,00,000 p.a.- 5,00,000 55%
• Above Rs 5,00,000 27%

PEOPLE'S CRETERIA TO INVEST
IN VARIOUS FUNDS
Equity fund
Balance 25%
fund
32%

Debt fund
20%
Cash fund
23%




2. Equity fund 25%
3. Cash fund 23%
4. Debt fund 20%

SUGGESTIONS:

1. The above study showed that the awareness about Allianz Bajaj is less . People
ranked it 3rd in the life insurance companies .So companies should take some
measure to create awareness in the minds of customer .For that it may go for
aggressive advertising campaign or sponsor for some events, go for banners or
hoardings

2. The competitor companies of ALBJ is very strong in unit linked policies Birla
Sunlife and LIC are going extremely well in the market.their growth rates are very
high .So ALBJ should highlight their strong points like
 Choosing the sum assured
 Low allocation charges in the long run



 Good service
 Low switching charges
 Term of policy is unlimited
 Salary deduction schemes

3. The unit-linked policies are suitable to those who are active investors and at the
same time they want to cover their life.

4. There are various categories of people who can be differentiated like
• Men and Women
Men usually take the risk, where as women hesitate to take risk. So this policy
is more suitable to men
• Age factor
Young people are more willing to take the risk, where old people are not. So it
is suitable to young income people
• Income group
If income of the person is high than he can take risk but low-income group
cant take the risk. So this policy is suitable to high-income group people.

5. Life insurance is the classical example of unsought goods. The nature of that is
the consumer does know about or does not normally think of buying.
It requires personal selling support. So agents should be fully informative and
they should be able to tell the entire information customer needed.



6. As awareness is less , Allianz Bajaj should open some more branches
so that acccess becomes easy. So that people can approach the company and take
service.
7. As people consider risk factor as very important company should give minimum
guarantee of money so that people may consider this policy as most secured and
also giving good profit.
8. Company should come up with group unit linked plans so that people may have
option to go for unit-linked policy.

CONCLUSION

In new economy things are moving at a nanosecond pace; that our markets are

characterised by hyper competition; that disruptive technologies are changing every

business and every business must adapt to the empowered consumer. In such an

environment ALBJ is performing on a consistence basis. It is not a result of luck, trick

plays or misfortune of the competitors, but service and attractive schemes of ALBJ.

Allianz Bajaj sustained efforts are yielding superior long-term result.



The above study showed that unit linked policy has attractive market. But main

problem is awareness. So Allianz Bajaj should create awareness among the people. They

should explain the advantages they are getting out of unit-linked policy. They should

come up with some salient features like different investment criteria, group investment

plans etc.In India people are not willing to invest their money in market but they make

idle investment. So it is the work of middlemen win the willingness of people to invest in

market. Also company should concentrate on death benefit and term of policy.

BIBLIOGRAPHY

1. Donald .S.Tull & Hawkins – Marketing research measurement and method,

Prentice Hall of India Private Limited,New Delhi-2001

2. Literature available at Allianz Bajaj Branch office, Bangalore.

3. www.AllianzBajaj.com



4. www.economictimes.com



APPENDIX

MARKET SURVEY ON UNIT LINKED POLICIES

Sir/Madam,
I am MBA student studying in. I am doing survey on unit linked plans .
Please co-operate and spare a few minutes of your time to fill up the following
questionnaire. The information provided by you will be kept confidential since this project
is for academic purpose.

Name :
Address :



Ph .No :

Gender : Age :

Profession/Occupation:

Annual income: a) below 150000 b)150000-300000

c) 300000-500000 d) above 500000

1. Have you bought any Insurance policy / know about unit linked policy?

Yes No

2. Rank the insurance companies you are aware off

LIC Allianz Bajaj

Birla Sunlife Aviva

I CI C I Tata AIG

3. Have you bought any unit linked policy?
Yes No
If Yes
Company name :
If No
4. Are you interested in buying unit linked policies
Yes No
If yes
From which company
And why

5 . Rank the below attributes do you consider while purchasing Life Insurance/ Unit
Linked policies (For very important 5 to least important 1)



Attributes 5 4 3 2 1
Creation of estate
Life coverage
Mode of paying premium
Withdrawal benefits
Maturity benefits
Saving component
Charges levied

6. Rank the below factors are you consider while purchasing Life Insurance/ Unit Linked
policies (For very important 5 to least important 1)

Factors 5 4 3 2 1
Brand image
Risk factor
Income
Age
Relatives and friends
Market conditions

7. How much do you want to invest?
Below -10000 100000-200000
10000-50000 Above 200000
50000-100000
8. In which fund do you prefer to invest (rank them accordingly)
Equity fund Cash fund
Debt fund Balance fund

Thank you


A project report on comparitive study of unit linked policies and its market research

Recomendados

Recomendados

Mais conteúdo relacionado

Mais procurados

Mais procurados (20)

Destaque

Destaque (20)

Semelhante a A project report on comparitive study of unit linked policies and its market research

Semelhante a A project report on comparitive study of unit linked policies and its market research (20)

Mais de Babasab Patil

Mais de Babasab Patil (20)

Último

Último (20)

A project report on comparitive study of unit linked policies and its market research