To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
EXECUTIVE SUMMERY 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 industries is competing 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 Comparison study of unit linked policies and its market research contains detail study of unit-linked policies and comparison study of different companies and also market potential in Bangalore. 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 questionnaire was prepared. Data collected through market survey and secondary data is also collected. The data is analyzed using code sheet, percentages, averages, sums and weightings. Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Findings 1. 96% of the people know about life insurance and 18% know about unit linked policy 2. Respondent people ranked Bajaj Allianz as third 3. Most people want to invest their money in between 300000 to 500000 4. Responded people mostly want to invest in balanced fund. Above study shows that awareness of Bajaj Allianz is very low. But there is a potential market for unit-linked policies. So BJAL should come up with some salient features to tap the market. They should come up with some special offers
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BACKGROUND
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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, unitlinked/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, Bajaj Allianz, LIC are the some life insurance companies dealing in unit-linked insurance products.
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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.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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. Let us take a closer look at charges and fees. 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.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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 our 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.
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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
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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.
If returns is your aim don’t you think you should be opting for other investment avenues rather than risk your risk cover?
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. While this is not to dissuade you from purchasing unit linked covers it would be in your 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 Bajaj Allianz 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 Bajaj Allianz Life Insurance.
Mortality charges: While the annual administrative charges stand at 1.25 percent of net assets for ICICI Pru Life and Bajaj Allianz Life Insurance the differences in mortality charges is quite a bit. Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. ICICI Pru Life charges 1.48 per thousand of sum assured at age 30 while Bajaj Allianz 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 Bajaj Allianz 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 Bajaj Allianz 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 Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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
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.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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. Babasabpatilfreepptmba.com
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Bajaj Allianz Life Insurance Company Limited
Bajaj Allianz 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 you need for your family and yourself.
Bajaj Allianz Life Insurance
•
Is the fastest growing private life
•
Insurance company in India
•
Currently has over 3,00,000 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
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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 Babasabpatilfreepptmba.com
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•
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.
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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 Bajaj Allianz 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 Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. Indian consumers with a distinct option in terms of life insurance products.
As a promoter of Bajaj Allianz 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 BAJAJ ALLIANZ ARE
1. Rahul Bajaj 2. Niraj Bajaj 3. Sanjivnayan Bajaj 4. Ranjit Gupta 5. Govind Prasad Laddha 6. J.Shridhar 7. Bajaj Auto Limited Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 8. Dr Wemer Zedelius 9. Heinz Dollberg 10. Don Nguyen 11. Alan Wilson
Bajaj Allianz brings several innovative products, the details of which as followes
BAJAJ ALLIANZ’S PRODUCTS
Individual Plans
UNITGAIN A Unit Linked Plan
UNITGAIN
SP
A Single Premium Unit Linked Plan
INVESTGAIN An Endowment Plan
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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 Available
CREDIT for
Employer
CARE -
Employee
Groups
and Non Employer-Employee Groups
GROUP Available
TERM for
Employer
LIFE -
Employee
Groups
and Non Employer-Employee Groups
GROUP
TERM
in lieu of EDLI (Employees Deposit Linked
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LIFE
SCHEME
Insurance)
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COMPARISON STATEMENT Particulars Bajaj Allianz 1) Types of a) Unit Gain
Birla sun life ICICI a) Flexi Save Plus a) Lifetime
LIC a) Life Time
policy
Endowment Plan
b) Life Time SP
b) Unit Gain SP
Issued
b) Life link
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 3)
years 10,000/25,000
Minimum
65 years 50,000 for minor
60 years 18,000 p.a. or
75,000 for adults
9,000 for half
55 years 5,000/20,000
premium
yearly and 1,500
amount 4) Term of Death or low balance As per policy term
for monthly. At the age of 10 years
the Plan
100
whichever is first
5,10,15,20,25or30 o as per maturity age
–
15,20,25,30or 35years for minor & 60,65,70,80 for adult Yearly,
Half Yearly,
Half Yearly,
payment
Quarterly and Single yearly,
yearly,
and yearly,
frequency
premium
5) Premium Yearly, Half yearly,
Quarterly
and Monthly
[Monthly –with salary Single premium deduction scheme.]
[Monthly salary
Quarterly
and
Single premium
–with
deduction
scheme.]
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Half
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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%
7)
Death Sum assured chosen Face amount +
benefit
or value of units
Policy fund
Whichever is higher
Sum
of
sum
assured. assured -Death in
1st
chosen or value 6months –30% of of units Whichever higher
S.A+fund value is -Death in 2nd half 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 plan.
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of
9)Minimum
For Single Premium
Amount
For
Single
Min=1.01 time the SP chosen by To find outstanding terms and conditions of different companies who issue unit maximum Max=Y time the SP the customer linked policies and market potential for unit linked policies. Sum Where Y as per following table Min
Prem
and
Assured
ium =Rs
A
0-
31-
36-
41-
46-
20,000
g
30
35
40
45
60
Max
e Y
45
40
25
15
5
10,00,000
=Rs
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
g
3
-
40
45
55
60
e Y
0 1
35 10
75
55
30
20
2
5
Min
=Rs
50,000 Max
=Rs
10,00,000
5
10)
Cash You may withdraw money any You
withdrawal
time after ‘3’ full years
option
may You
withdraw money time
may After
withdraw
years
any money any time after after
‘4’full years
‘3’
‘3’
the
full
polic
years
y hold er can withdraw max of
11)Investm
•
Equity Fund
•
Protector
•
Maximiser
ent option
•
Balanced fund
•
Builder
•
Protector
•
Debt fund
•
Enhancer
•
Balancer
• Cash fund Babasabpatilfreepptmba.com
•
50%. Secured fund
•
Balance d fund
Page •24 Risk fund
To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. The fund value is always depend upon the market condition. On the total premium the deductions are •
Allocation charges
•
Other charges
ALLOCATION RATES
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Average allocati on
per
Bajaj Allianz Yearly Cumulati
Comm
Birla sunlife Yea Cumulati
Comm
ICICI Yea Cumulati
Co
Om kotak Yearly Cumulative
allocat
ve
ission
rly
ve
ission
rly
ve
mm
allocat
ion
Allocatio
allo
Allocatio
allo
Allocatio
issi
ion
n
cati
n
cati
n
on
80 172.5 268.5 364.5 460.5 556.5 652.5 748.5 844.5 940.5 1036.5 1132.5 1228.5 1324.5 1420.5 1516.5 1612.5 1708.5 1804.5 1900.5 1900.5/2
8% 5% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%
30 98 99 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
30 128 227 327 427 527 627 727 827 927 1027 1127 1227 1327 1427 1527 1627 1727 1827 1927 1927/20 = 96.35
40% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
on 35 96.5 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95
35 127.5 222.5 317.5 412.5 507.5 602.5 697.5 792.5 887.5 982.5 1077.5 1172.5 1267.5 1362.5 1457.5 1552.5 1647.5 1742.5 1837.5 1837.5/2
35% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
on 80 92.5 96 96 96 96 96 96 96 96 96 96 96 96 96 96 96 96 96 96
0
0
=92
=95
86 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5 86.5
Commission
Allocation
86 182.5 279 375.5 472 568.5 665 761.5 858 954.5 1051 1147.5 1244 1340.5 1437 1533.5 1630 1726.5 1823 1919.5 1919.5/20
10% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%
=96
year
Loss to the customers
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Year 1 Year 2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10 Loss
Allanz bajaj 70% 2% 1%
Birla sunlife 65% 7.5% 5% 5% 5% 5% 5% 5% 5% 5%
ICICI 20% 7.5% 4% 4% 4% 4% 4% 4% 4% 4%
Om kotak 16% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
73%
112.5%
59.5
47.5
to
the customers
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In the long run say 20 years the loss 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 Loss will be Average
73%
162.5%
99.5%
82.5%
8.125%
5%
4.125%
loss
per year will be 3.65%
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.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY PROBLEM DEFINITION
`
In the market, bank interest rates are coming down and peoples
prefer mutual funds. The main focus of this project is to know about unit-linked policy
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. i.e. 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.
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 I designed the questionnaire and conducted field survey in Bangalore city.
SAMPLE PROFILE
All Businessmen, Employees in good concerns are population for this project. People whose income more than Rs 3,00,000 is mainly targeted. Sampling units are taken from the Bangalore city.
SAMPLE SIZE Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Sample size was 100 in Bangalore city
SAMPLING TECHNIQUE Sample was chosen from different areas of Bangalore i.e. Jainagar, 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 As far as collection of samples for unit linked policy is concerned, the secondary data such as Primary data was collected through field survey.
DATA ANALYSYSY 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
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
1. The findings are relevant only to Bangalore city 2. Since the sampling technique was random, the finding might not give an accurate picture. 3. Since the time and cost was a constraint, result may not be accurate, as I could not survey the entire customer and potential buyer. 4. Some of the customer could not give an accurate response to some of the questions 5. Survey is done only in Bangalore city place.
SCOPE OF THE STUDY
The project include
1. Study of unit linked policy. 2. The eligibility criteria of the applicant 3. Brief idea about the company called Bajaj Allianz life insurance company limited.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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 Bajaj Allianz
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
FINDINGS
Findings: 1) Have you bought any Insurance policy/ know about unit linked policy?
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Awareness of life insurance
4%
know insurance policy don’t know insurance policy
96%
Awareness of unitlinked policy 18%
82%
know unit linked policy don’t know unit linked policy
2) Rank the Insurance companies you are aware off?
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Respondents ranked life insurance companies as below
ai g ta ta
av iva
ba ja j
ic ic i
al lia nz
su nl ife
bi rl
a
lic
ranking of insurance company
The ranking is 1. Life Insurance Corporation 2. ICICI 3. Bajaj Allianz Life Insurance Company Limited 4. Tata AIG Life Insurance Company Limited 5. Aviva Life Insurance Company Limited
3) Rank the below attributes do you consider while purchasing?
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Consideration of attributes Charges lavied 9%
Creation of estate 16%
Saving component 15% Life coverage 18% Maturity benefits 14%
Withdraw al benefits 14%
Mode of paying premium 14%
consideration of attributes Creation of Charges lavied 8%
estate 16%
Saving component 16%
Life coverage 16% Maturity benefits 14%
Withdraw al benefits 15%
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Mode of paying premium 15%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 4) Rank the factors do you consider while purchasing Life Insurance/Unit Linked policy?
Importance of the factors
Market condition 18%
Brand image 15%
Relatives&frie nds 12%
Risk factor 19%
Age 18%
Income 18%
Consideration of factors affecting to buy life insurance Market condition 19%
Brand image 14%
Relatives&frie nds 11%
Risk factor 18%
Age 19%
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Income 19%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
5) How much do you want to invest?
Person want to invest
13%
13% 18%
29% 27%
Below 1Lakh 1Lakh -2Lakh 2Lakh-3Lakh 3Lakh-5Lakh Above 5Lakh
6) In which fund do you prefer to invest(rank them accordingly) Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Preference of investing premium Balance fund 28%
Cash fund 24%
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Equity fund 25%
Debt fund 23%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
ANALYSIS ANALYSIS HAS BEEN MADE IN THREE PARTS • Respondents in general • Respondents whose income is more than Rs 3,00,000 • Respondents who knows about Unit Linked Policy Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
RESPONDENTS IN GENERAL
INCOME OF THE RESPONDENTS
Income of respondents 22% 29% below150000 150000-300000 300000-500000 29%
above500000 20%
Four types of income group has been responded, accordingly respective percentage has been given. 1. Below Rs 1,50,000
29%
2. Rs 1,50,000-3,00,000
20%
3. Rs 3,00,000-5,00,000
29%
4. Above Rs 5,00,000
22%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
AWARENESS OF LIFE INSURANCE
awareness of life insurance 2%
know insurance policy 98%
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.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
AND 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% of them know about the unit linked policy.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
RANKING OF LIFE INSURANCE COMPANIES
Respondents ranked life insurance companies as below
ai g ta ta
av iva
ba ja j
ic ic i
al lia nz
su nl ife
bi rl
a
lic
ranking of insurance company
The ranking is 1. Life Insurance Corporation 2. ICICI 3. Bajaj Allianz Life Insurance Company Limited 4. Tata AIG Life Insurance Company Limited Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 5. Aviva Life Insurance Company Limited Respondents ranked Bajaj Allianz 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 Creation of estate 16%
Charges lavied 9% Saving component 15%
Life coverage 18% Maturity benef its 14%
Withdraw al benefits 14%
Mode of paying premium 14%
While purchasing life insurance people considered most important is life coverage than Creation of estate than saving component than other
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. attributes like maturity benefits, withdrawal benefits and mode of paying premium .the least important thing 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
Importance of the factors
Market condition 18%
Brand image 15%
Relatives&frie nds 12%
Risk factor 19%
Age 18%
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Income 18%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Respondents considered very important as Risk factor than the things 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
Person want to invest
13%
below 100000
13% 18%
29% 27%
100000-200000 200000-300000 300000-500000 above 500000
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 – 3,00,000
27%
•
Rs 3,00,000- 5,00,000
29%
•
Above Rs 5,00,000
13%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Most peoples are interested in taking the policy of Rs 3,00,000 to 5,00,000.Next to it is the policy of Rs2,00,000 to 3,00,000.
PEOPLE ‘S PREFERENCE OF INVESTING PREMIUM AMOUNT Customer got several option to invest their premium .The preference are according to respondents is given below
Preference of investing premium Balance fund 28%
Cash fund 24%
Equity fund 25%
Debt fund 23%
Rankings are given below Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 1. Balanced fund
28%
2. Equity fund
25%
3. Cash fund
24%
4. Debt fund
23%
RESPONDENTS WHOSE INCOME IS MORE THAN RS 3,00,000
Ranking of the company
Lic
Birla sunlife
ICICI
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Allianz bajaj
Aviva
Tata aig
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. Ranking according to respondents whose income is more than 3,00,000 1. LIC 2. ICICI 3. Birla Sunlife 4. Bajaj Allianz 5. Tata AIG 6. Aviva
Respondents whose income is more than 3,00,000 considered attributes as below
consideration of attributes Charges lavied 8%
Creation of estate 16%
Saving component 16%
Life coverage 16% Maturity benefits 14%
Withdraw al benefits 15%
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Mode of paying premium 15%
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
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 3,00,000 considered factors affecting to buy life insurance as below
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Consideration of factors affecting to buy life insurance Market condition 19%
Brand image 14% Risk factor 18%
Relatives&friends 11%
Age 19%
Income 19%
Respondent considered all the above-mentioned attributes most important but most important is Age, Income, Market conditions, Risk Factor and least important is Brand image and influence of relatives and friends.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Respondents whose income is more than 3,00,000 considered the investment criteria as follows
Person want to invest above 500000 19%
350000500000 31%
below 100000 1000004% 200000 23%
200000350000 23%
Respondent interested to invest money more between 3,50,000-5,00,000 Next is 2,00,000-3,50,000 and same percentage of people wants to invest in 1,00,000-2,00,000 and 19% want to invest in above 5,00,000 and least people want to invest in below 1,00,000.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
Respondents whose income is more than 3,00,000 considered investing their money in following funds
Person want to invest Equity fund 22% Balance fund 31%
Debt fund 22%
Cash fund 25%
Rankings are given below Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 1. Balanced fund
31%
2. Cash fund
25%
3. Equity fund
22%
4. Debt fund
22%
OPENIEN
OF
THE
RESPONDENTSWHO
KNOW
ABOUT THE UNITLINKED POLICY.
ATTRIBUTES CONSIDERED BY RESPONDENTS WHILE PURCHASING UNITLINKED POLICY
Saving component 15%
Maturity benefits 14%
Charges lavied 10%
Creation of estate 15% Life coverage 17%
Withdrawal benefits 16%
Mode of paying premium 13%
Respondents considered very important attribute as Life coverage next important as Withdrawal benefits next is next is Saving components and Creation of Babasabpatilfreepptmba.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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
Brand image 15%
Market condition 17% 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
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
PEOPLES INTEREST OF INVESTMENT
below 100000
100000- 200000- 100000200000 300000 200000
above 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 – 3,00,000
09%
•
Rs 3,00,000- 5,00,000
55%
•
Above Rs 5,00,000
27%
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PEOPLE'S CRETERIA TO INVEST
Equity fund
Debt fund
Cash fund
Balance fund
Rankings are given below 1. Balanced fund
32%
2. Equity fund
25%
3. Cash fund
23%
4. Debt fund
20%
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SUGGESTIONS:
1. The above study showed that the awareness about Bajaj Allianz is very less People ranked it 3 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 BJAL 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 BJAL 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
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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 very less , Bajaj Allianz should open some more branches so that excess becomes easy. So that people can approach the company and take service.
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 7. As people consider risk factor as very important company should give minimum guarantee of money so that people my 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 BJAL 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 BJAL. Bajaj Allianz 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 Bajaj Allianz should create awareness among the people. They should explain the advantages they are getting out of unit-linked policy. They should
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies. 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 & Hawkine – Marketing research measurement and method, Prentice Hall of India Private Limited,New Delhi-2001 2. Bajaj Allianz Branch office, Bangalore. 3. www.allianzbajaj.com 4. www.economictimes.com
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
APPENDIX
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To find outstanding terms and conditions of different companies who issue unit linked policies and market potential for unit linked policies.
MARKET SURVEY ON UNIT LINKED POLICIES Sir/Madam, 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
Bajaj Allianz
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
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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 Brand image Risk factor Income Age Relatives and friends Market conditions
5
4
3
2
1
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
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