8. literature review(11-57)

8/6/2019 8. Literature Review(11-57)

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By Tanmay Mandal, Sec D, Roll 237

1. THE BACKGROUND:

Insurance, in law and economics, is a form of risk

management primarily used to hedge against the risk of

a contingent, uncertain loss. Insurance is defined as

the equitable transfer of the risk of a loss, from one

entity to another, in exchange for payment. An insurer

is the company selling insurance

an insured or policyholder is the person or entity

buying the insurance policy. The insurance rate is a

factor used to determine the amount to be charged for a

certain amount of insurance coverage, called

the premium.

In some sense we can say that insurance appears

simultaneously with the appearance of human society.

We can see insurance in the form of people helping each

other. For example, if a house burns down, the members

of the community help build a new one. Should the same

thing happen to one's neighbor, the other neighbors

must help. Otherwise, neighbors will not receive helpin the future. This type of insurance has survived to

the present day in some countries where modern money

economy with its financial instruments is not

widespread.

Achaemenian monarchs of Ancient Persia were the first

to insure their people and made it official by

registering the insuring process in governmental notary

offices. When a gift was worth more than 10,000 Derrik(Achaemenian gold coin) the issue was registered in a

special office. The purpose of registering was that

whenever the person who presented the gift registered

by the court was in trouble, the monarch and the court

would help him. The Greeks and Romans introduced the


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origins of health and life insurance c. 600 AD when

they organized guilds called "benevolent societies"

which cared for the families and paid funeral expenses

of members upon death.

Separate insurance contracts (i.e., insurance policies

not bundled with loans or other kinds of contracts)

were invented in Genoa in the 14th century, as were

insurance pools backed by pledges of landed estates.

These new insurance contracts allowed insurance to be

separated from investment, a separation of roles that

first proved useful in marine insurance. Insurance

became far more sophisticated in post-

Renaissance Europe, and specialized varieties

developed.

Some forms of insurance had developed in London by the

early decades of the seventeenth century. Insurance as

we know it today can be traced to the Great Fire of

London, which in 1666 devoured more than 13,000 houses.

The devastating effects of the fire converted the

development of insurance "from a matter of convenience

into one of urgency, a change of opinion reflected in

Sir Christopher Wren's inclusion of a site for 'the

Insurance Office' in his new plan for London in 1667."

A number of attempted fire insurance schemes came to

nothing, but in 1681 Nicholas Barbon, and eleven

associates, established England's first fire insurance

company, the 'Insurance Office for Houses', at the back

of the Royal Exchange. Initially, 5,000 homes were

insured by Barbon's Insurance Office.

The first insurance company in the United

States underwrote fire insurance and was formed in

Charles Town (modern-day Charleston), South Carolina,

in 1732. Benjamin Franklin helped to popularize and

make standard the practice of insurance, particularly


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against fire in the form of perpetual insurance. In

1752, he founded the Philadelphia Contribution ship for

the Insurance of Houses from Loss by Fire. Franklin's

company was the first to make contributions toward fire

prevention. Not only did his company warn against

certain fire hazards, it refused to insure certain

buildings where the risk of fire was too great, such as

all wooden houses.

ICICI Prudential Life Insurance Company came in

existence in December 2000 after receiving approval

from Insurance Regulatory Development Authority (IRDA).

Its a joint venture of ICICI Bank and Prudential plc.

Since the liberalization of Indian Insurance sect or,

ICICI Prudential Life Insurance has been one of the

earliest private players. Since the time, ICICI Pru

Life has been the leader in terms of market share as

indicated by the IRDA (Insurance Regulatory and

Development Authority, the regulator for Indian

Insurance Industry) at its website. Arguably the most

innovative Indian Life insurer in terms of customer

services and products, ICICI Prudential has one of the

largest distribution and servicing network with over

2,000 proprietary offices & customer touch points

across India.


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2. THE PROMOTERS:

2.1 ICICI BANK:

ICICI Bank Limited (NYSE:IBN) is Indias largest

private sector bank and the second largest bank in the

country with consolidated total assets of over US$ 100

billion as of March 31, 2010. ICICI Banks

subsidiaries include Indias leading private sector

insurance companies and among its largest securities

brokerage firms, mutual funds and private equity firms.

ICICI Banks presence currently spans 19 c ountries.

2.2 PRUDENTIAL PLC:

Prudential plc established in London in 1848,

Prudential plc is an international retail financial

services group with significant operations in Asia, the

US and UK serving around 25 million customers, policy

holder and unit holders worldwide. The company has

290 billion of assets under management and it is one

of the best capitalized insurers in the word with an

Insurance Groups Directive (IGD) capital surplus

74%

26%

Stake Hold by the two Company

ICICI BANK

PRUDENTIAL PLC

Fig 2.1 Stake hold by the two companies


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estimated at 3.5 billion (at 31 December 2009).

Prudential is a leading life insurer in Asia with a

presence in 12 markets and have the top three position

in seven key locations of Hong Kong, India, Indonesia,

Malaysia, Singapore, Philippines and Vietnam.

2.3 BOARD OF DIRECTORS:

The ICICI Prudential Life Insurance Company Limited

Board comprises reputed people from the finance

industry both from India and abroad.

Ms. Chanda D. Kochhar,Chairperson.

Mr. N. S. Kannan,Director.

Mr. K. Ramkumar,Director.

Mr. Barry Stowe,Director.

Mr. Adrian OConnor,Director.

Mr. Keki Dadiseth,Independent Director.

Prof. Marti G. Subrahmanyam,Independent Director.

Ms. Rama Bijapurkar,Independent Director.

Mr. Vinod Kumar Dhall,Independent Direct.

Mr. V. Vaidyanathan,Managing Director & CEO.

2.4 MANAGEMENT TEAM:

The ICICI Prudential Life Insurance Company Limited

Management team comprises reputed people from the

finance industry both from India and abroad.

Mr. V.Vaidyanathan, Managing Director & CEO.

Dr. Avijit Chatterjee, Appointed Actuary.

Mr. Puneet Nanda, Executive Vice Preside.


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3. THE COMPANY AND ITS PRODUCTS:

3.1 THE COMPANY:

3.1.1 BACKGROUND:

ICICI Prudential Life Insurance Company is a joint

venture between ICICI Bank, one of Indias foremost

financial services companies and Prudential plc, a

leading international financial services group head

quartered in United Kingdom. Total capital infusi on

stands at Rs. 47.80 billion, with ICICI Bank holding a

stake of 74% and Prudential plc holding 26%.

ICICI Prudential Life Insurance Company began their

operation in December 2000 after receiving approval


Today, companys nationwide reach includes over 1900

branches, inclusive of 1074 micro offices, over 210000

advisor; and 7 bank assurance partners.

For three year in a row, ICICI Prudential has been

voted as Indias Most Trusted Private Life Insurer, by

the Economic Times AC Nielsen ORG Marg survey of

Most Trusted Brands. As company grow their

distribution, product range and customer base, company

continues to tirelessly uphold their commitment to

deliver world class financial solutions to customers

all over India.

3.1.2 VISION:

The vision of the company is to be dominant Life,

Health and Pension player built on trust by world-class

people and services.

This they hope to achieve by:


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y Understanding the need of customers and offeringthem superior products and services.

y Leveraging technology to service customers quicklyand efficiently.

y Developing and implementing superior risk managementand investment management strategies to offer

sustainable and stable return.

y Building transparency in all their dealings.The company believes that they are in the threshold of

an exciting new opportunity where they can play a

significant role in redefining and reshaping the

sector. Given the quality of their parentage and the

commitment of their team, there is no limit to their

growth.

3.1.3 VALUES:

Every member of the ICICI prudential team is committed

to 5core values: Integrity, Customer First, Boundary

less, Ownership and Passion. These values shine forth

in all they do, and have become the keystones of their

success.

3.2 THE PRODUCTS:

ICICI Prudential Life Insurance Company understands the

need of their customers may have. It changes at

various stages in customers life, from their childs

education to saving up for their comfortable life post

retirement. It is companys constant endeavor to

innovate products that best suits any requirements they

may have.

Following are the different product range according to

the need of the customer.


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3.2.1 EDUCATION INSURANCE PLANS:

One of the most important responsibilities as a parent

is to ensure that child gets the best possible

education that can be provided.

ICICI Prudential offers a wide portfolio of education

insurance plans that are designed to provide peace of

mind to customer, as a parent, that their child's

education will be secure. These plans ensure that money

is made available at the crucial junctures in a child's

education - Class X, Class XII, graduation and post-

graduation - to fund crucial commitments for the

child's future.Importantly, education insurance plans ensure that in

the unfortunate event of the death of a parent, the

child's education continues unhampered.

Under the education insurance plans platform, ICICI

Prudential brings the following products.

1.ICICI Pru Smartkid Assure2.ICICI Pru Smartkid Maxima3.

ICICI Pru Smartkid Regular Premium

3.2.2 PENSION PLANS:

The primary objective of a pension plan is to help

customer provide for their financial needs in their

post retirement years. They will find a Pension

Planning Calculator on the site, meant to make their

pension plan review as simple as possible. The

calculator is the first step in their Pension Plan

scheme.

1.ICICI Pru LifeTime Pension Maxima2.ICICI Pru LifeStage Pension Advantage3.ICICI Pru Elite Pension II4.ICICI Pru Assure Pension


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3.2.5 HEALTH INSURANCE PLANS:

ICICI Prudential not only assists their customers to

generate money but also help them when they are in

major health problems by offering a range of health

plans. Health plans covers customer against

hospitalization expenses and creates a health fund to

cover any other health expenses. There are plans to

hassle free stay and treatment in hospitals. There are

comprehensive health care policy that covers 35

critical illness, death and disability.

ICICI Prudential offers health insurance plans under

the following major need categories.1. Comprehensive health coverage:

1.1 Health Saver2. Hospitalization coverage:

2.1 MediAssure3. Critical illness coverage:

3.1 Crisis Cover4. FEATURES OF THE PRODUCTS:

The company has a wide number of products keeping the

different need of the customer in mind. But as a

trainee we were given certain limited number of product

that are commonly purchased by the customer. Those

products are as follows:

4.1 Education plan4.1.1 ICICI Pru SmartKid assure4.1.2 ICICI Pru SmartKid Maxima

4.2 Pension plan4.2.1 ICICI Pru Life Time Pension Maxima

4.3 Wealth creation plan4.3.1 ICICI Pru Assure Wealth


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4.1 EDUCATION PLANS

ICICI Prudential offers a wide portfolio of education

insurance plans that are designed to provide peace of

mind to customer, as a parent.

4.1.1 ICICI PRU SMARTKID ASSURE

BACK GROUND:

As a loving and caring parent, customer would like to

ensure that their children get the best of

opportunities to realize their dream. However,

providing these opportunities to their children comes

at a cost and they have to save wisely so that theses

cost are met, even in their absence.

Presenting ICICI Pru Smartkid assure, an ideal

insurance cum saving product which allocate customersassets based on their chosen portfolio strategy and

whose benefit they are not around to take care of their

child.

KEY BENIFITS:

y Complete protection: Lump sum payment of sumassured plus payment of future premiums by the

company in the unfortunate event of death of parent.

y Guaranteed addition: 120% to 170% of one annualpremium allocated their fund value at the end of the

15th.


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y Life cycle based portfolio strategy: A unique andpersonalized strategy to create an ideal balance

between equity and debt.

y Additional allocation of unit: More than 100%allocation to funds on premium payment from the 6 th

policy year.

y Partial withdrawals: Facility to provide money atkey educational milestone for the children.

y Tax benefit: As per the prevailing tax law customerwill get the reduction on the amount of tax paid.

y Top ups: A customer can decide to increase thepremium value during the term of the contact. The

minimum amount of top up is Rs.2000.

y Increase and decrease in sum assured: A customerwill get option to increase or decrease the amount

of sum assured.

y Cover continue option: this option ensures thatcustomers policy and all its benefits continue in

case he is unable to pay the premiums, any time

after payment of first 5 years premium.

HOW DOES THE POLICY WORKS:

Education tension! Dont worry ICICI PRU is just a call

ahead its too simple to apply for the Smartkid Assure.

y A customer need to choose the premium amount, Sumassured, Policy term and policy strategy.

y A guaranteed addition varying from 120% to 170% ofone annual premium would be added to the fund value

at the end of the 15th policy year.

y Fund value would be payable at the time of maturity.Alternatively settlement option can be chosen.


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y In the unfortunate event of death during the term ofthe policy, customers nominee would receive the sum

assured. Future premium of the policy would be paid

by the company till the maturity under companys

payer waiver benefit.

ASSET ALLOCATION DETAILS:

ILLUSTRATION:

Amount of premium: Rs. 20,000

Age of entry 30 years

Mode of premium: Yearly

Portfolio Strategy: Fixed

Sum assured: Rs. 1,00,000

Term = 15 years Term = 25 years

Fund

value at

maturity

Return @

6% p.a.

Return @

10% p.a.

Return @

10% p.a.

Return @

10% p.a.

Rs.

4,19,495

Rs.

5,60,503

Rs.

8,89,217

Rs.

15.51,310

Table 2.1 Asset allocation details

Table 2.2 Illustration


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CHARGES UNDER THE POLICY:

y Premium allocation charge: The first premium paidby the policy holder. For the top up premium 1% will

be deducted.

y Fund management charge: for Opportunity Fund, Multicap Growth Fund, Blue chip Fund, Dynamic P/E Fund,

Multi cap Balanced Fund, Income Fund the charge is

1.35% p.a. and for Money Market Fund the charge is

.75% p.a.

y Mortality charges: the charger to sum assured isdeducted on a monthly basis as follows:

Age(yrs.) 20 30 40 50 60

Male(Rs.) 1.33 1.46 2.48 5.91 14.21

Female(Rs.) 1.26 1.46 2.12 4.85 11.86

y Payer Waiver benefits charge: It would be chargedon a monthly basis which would depend upon age,

gender and outstanding term of the policy.

y Switching charge: four free switches are allowedevery year. Subsequent switches would be charge at

the rate of Rs.100 per switch.

y Miscellaneous charges: If there is any 4 policyalteration during the policy term they will subject

to a miscellaneous charge of Rs.250 per alteration.

Table 2.3 Mortality charge


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ICICI PRU SMARTKID ASSURE AT A GLANCE

.

4.1.2 ICICI PRU SMARTKID MAXIMA:

BACK GROUND:

As parents, a customer wants to provide the best that

they can offer for their children and this includes

planning for the best possible education. With the

rising cost of education, a customer needs a savings

plan that is designed to provide adequate money at key

educational milestones and take care of your loved oneseven if when they are not around. With this objective

in mind, ICICI Prudential Life Insurance presents ICICI

Pru SmartKid Maxima. With this product, customer can

safeguard their child's education and ensure that their

loved ones stay financially secure in their absence.

Table 2.4 SmartKid Assure at a Glance


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Additionally this product also offers the valuable

customer a unique strategy that allows them to protect

gains made through their funds invested in the equity

market from any future equity market volatility.

KEY BENIFITS:

y Complete protection: Lump sum payment of SumAssured plus payment of future premiums by the

Company in the unfortunate event of death of the

parent (Life Assured).

y Trigger Portfolio Strategy: A unique portfoliostrategy to protect gains made in equity marketsfrom any future equity market volatility.

y Guaranteed Additions: Additions of 60% of annualpremium accrue to your Fund Value every five years,

starting from the end of 10th Policy year, on payment

of all due premiums.

y To ups: There is a chance to increase the premium,minimum top up value is Rs.2000. There will be an

increase of Sum Assured when you make a top up and

you will get an option of choosing an increase of

either 125% or 500% of the top up premium amount.

y Partial withdrawals: Facility to provide money atkey educational milestones of your child.

y Tax Benefits: On premiums paid and benefitsreceived, as per prevailing tax laws under 80C and

10(10D).


Education tension! Dont worry ICICI PRU is just a call

ahead its too simple to apply for the Smartkid Maxima.


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y Customer needs to choose the premium, Policy term,Sum Assured and portfolio strategy for your Policy.

y After deducting the premium allocation charges, thebalance amount would be invested as per the

portfolio strategy of customers choice .

y Fund Value would be payable at maturity.Alternatively, settlement options can be chosen.

y In the unfortunate event of death during the term ofthe Policy, Customers nominee would receive the Sum

Assured. Future premiums of his Policy would be

paid by the Company till maturity under companys

Payer Wavier benefit.

ILLUSTRATION:





Sum assured: Rs. 1,00,000

Term = 10 years Term = 15 years

Return @

6% p.a.

Return @

10% p.a.

Return @

10% p.a.

Return @

10% p.a.

Fund

value at

maturity

Rs.

2,37,244

Rs.

2,91,654

Rs.

4,11,701

Rs.

5,65,365

.


y Premium allocation charge: The charges will bededucted from the premium amount at the time of



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payment and units will be allocated thereafter. All

top up premiums are subject to a premium allocation

charge of 1%.

Year 1 Year 2 Year 3 Year 4-5 Year 6

onwards

15% 10% 8% 6% 4%

y Fund management charge: The following fundmanagement charges will be adjusted from the NAV on

a daily basis.

Fund Opportunities

fund, Multi cap

growth fund,

Bluechip fund,

Balanced fund,

Income fund

Return

guarantee

fund

Money market

fund

FMC 1.35% p.a. 1.25% p.a. 0.75% p.a.

.

y Mortality charges: The charger to sum assured isdeducted on a monthly basis as follows:

Age(yrs.) 20 30 40 50 60

Male(Rs.) 1.33 1.46 2.48 5.91 14.21

Female(Rs.) 1.26 1.46 2.12 4.85 11.86

.

Table 2.6 Premium allocation charge

Table 2.7 Fund management charge



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y Payer Waiver benefits charge: It would be chargedon a monthly basis which would depend upon age,

gender and outstanding term of the policy.



y Miscellaneous charges: If there is any policyalteration during the policy term they will subject


y Policy administration charges: There would be afixed policy administration charge of Rs.80 per

month, charged from the first to the fifth policy

year, thereafter no charges will be deducted.

ICICI PRU SMARTKID MAXIMA AT A GLANCE:

.

Table 2.9 ICICI Pru Smartkid Maxima


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4.2 WEALTH CREATION PLANS:

4.2.1 ICICI PRU ASSURE WEALTH

BACK GROUND:

A customer wants his investments to work as hard as he

does in order to help him achieve his goals. He also

wants to be rewarded with lifelong benefits so that he

has the peace of mind he always desired. To give the

benefits as the customer wants ICICI Prudential brought

the ICICI Pru Assure Wealth Super and ICICI Pru Assure

Wealth Plus, a whole life insurance and saving product,

that rewards him with a guaranteed addition and also

provides him an insurance cover so that his loved ones

are taken care of in his absence.

KEY BENIFITS:

y Top up premium: This is the option where thecustomer can increase his premium by top up. The

minimum top up value is Rs.2000.

y Guaranteed Addition (GA): A Guaranteed additionvarying from 120% to 180% of one annual premium is

added to your Fund Value at the end of the 15 th

Policy year.

y Whole Life: Enjoy the benefits of staying investedthroughout your life.

y LifeCycle based Portfolio Strategy: A unique andpersonalized strategy to create an ideal balance

between equity and debt, based on your age.


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time after payment of: i) first 5 premium for Super

ii) first 8 premium for Plus.


y You need to choose the product variant, premiumamount, Sum Assured and portfolio strategy for your

Policy.

y You can enjoy a life cover and stay invested for thewhole of your life.

y Enjoy the flexibility to access your funds throughpartial withdrawals.

y In the unfortunate event of death, your nomineewould receive the Sum Assured (reduced by partial

withdrawals) or the Fund Value, whichever is higher.

y A Guaranteed Addition as a percentage of one annualpremium would accrue to your Fund Value at the end

of the 15th Policy year. It is based on the number

of premiums paid towards the Policy and the variant

chosen.

ICICI

Pru

Assure

Wealth

No of

annual

premium

paid

5 6 7 8 9 10 11 12 13 14 15

Super GA at

15th

policy

year

120% 125% 130% 135% 140% 145% 150% 155% 160% 165% 170%

Plus 15th

policy

year- - 140% 145% 150% 155% 160% 165% 170% 175% 180%

Table 2.10 Guaranteed additions


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y Premium allocation charge: This charge will bededucted at time of payment of premium and fund will

be allocated later. Charge for the top up premiumis 1%. The charges are as follows:

ICICI Pru

Assure

Wealth

Yr 1 Yr

2

Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr

8+

Super 100% 4% 4% 4% 4% 0% 0% 0%

Plus 100% 4% 4% 4% 4% 4% 4% 0%

y Fund management charge: the following fundmanagement charge will be deducted in daily basis.

Fund Opportunities

fund, Multi cap

growth fund,

Bluechip fund,

Balanced fund,

Income fund

Money market

fund

FMC 1.35% p.a. 0.75% p.a.

y Policy administration charges: There will be afixed charge of Rs.50 from 2nd to 10th policy year.

y Mortality charges: The charger to sum assured isdeducted on a monthly basis as follows:




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ICICI PRU ASSURE WEALTH AT A GLANCE:

.

Age(yrs.) 20 30 40 50 60

Male(Rs.) 1.33 1.46 2.48 5.91 14.21

Female(Rs.) 1.26 1.46 2.12 4.85 11.86

Table 2.16 ICICI Pru assure wealth at a glance



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4.3 PENSION PLANS:

4.3.1 ICICI PRU LIFETIME PENSION MAXIMA:

BACK GROUND:

In the prime of ones life and at the peak of his

career, one enjoys all the comforts of life. A happy

family, own home and car, frequent dining out, holidays

in India and abroad... these are pleasures one is used

to do today. Wouldn't he wish to continue enjoying them

even after he stop working? He can, if he plans for it

now. All he needs is a good retirement plan. At ICICI

Prudential Life Insurance, company understands his

needs and helps him plan for a better future. ICICI

Pru brings to you ICICI Pru LifeTime Pension Maxima, a

regular premium, and unit-linked pension product. This

product offers customers the flexibility to invest in

unit-linked funds that generate potentially higher

returns over the long term. This product also offers

him a unique strategy that allows him to protect gains

made through his funds invested in the equity markets

from any future equity market volatility.

KEY BENIFITS:

y Trigger Portfolio Strategy: A unique portfoliostrategy to protect gains made in equity markets

from any future equity market volatility while

maintaining a pre-defined asset allocation.


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y Additional allocation of units: More than 100%allocation to funds on premium payment from the

sixth policy year onwards.

y Loyalty Addition: At the end of every five policyyears, starting from the 10th policy year, paid

irrespective of the premium payment status.

y Tax benefits: Avail tax benefits on premiums paidand receive tax free commutation up to one-third of

the accumulated value on vesting (retirement) date,

as per the prevailing Income Tax laws.

y Death benefit: In the unfortunate event of death ofthe Life Assured during the term of the policy, the

nominee shall receive Sum Assured (reduced by

partial withdrawals) or Fund Value, whichever is

higher. Where the spouse is the nominee, this may be

taken as a lump sum or may be used to purchase an

annuity from the Company.

y Cover Continue option: This option ensures thatyour policy and all its benefits continue in case

you are unable to pay your premiums. This option is

available only after payment of the first three

years' premium.

y Switching: A customer can avail four free switchesin a policy year.

y Change in portfolio strategy: A customer can changehis chosen portfolio strategy once during every

policy year, which includes the period after

postponement of vesting. This facility is providedfree of cost.

y Top up: A customer can decide to increase hisinvestment by investing surplus money over and above

his premiums, at his convenience. The minimum

amount of top up is Rs. 2,000


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y Increase or decrease sum assured: A customer canchose to increase or decrease the sum assured.

y Chose from 5 different options: A customer canchoose from a) Life Annuity, b) Life Annuity with

Return of Purchase Price, c) Life Annuity Guaranteed

for 5/10/15 years & life thereafter, d) Joint Life,

Last Survivor without Return of Purchase Price, e)

Joint Life, Last Survivor with Return of Purchase

Price.

y Choose your pension provider: At the time ofvesting, this option enables you to buy a pension

from any other life insurer of your choice. You have

the freedom to take the best offer available in the

market.

y Commutation or pension fund: You have the option toreceive a lump sum amount up to 1/3rd of the Fund

Value, tax-free, on the vesting date.


y A customer needs to choose the premium amount, SumAssured, term and portfolio strategy for your

policy.

y After deducting the premium allocation charges, thebalance amount will be invested as per the portfolio

strategy of his choice.

y At vesting of your policy on his chosen retirementdate, customer can choose from the available pension

options to receive your pension.

y In the unfortunate event of death during the term ofthe policy (before vesting), customers nominee will

receive Sum Assured (reduced by partial withdrawals)

or Fund Value, whichever is higher.


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ILLUSTRATION:





Sum assured: Rs.0

Term of illustration: 20 years

Annuity option: Life time

Return @ 6% p.a. Return @ 10% p.a.

Accumulated

Savings

Expected

Yearly

Annuity

Accumulated

Savings

Expected

Yearly

Annuity

Rs.

16,30,148

Rs. 1,14,773 Rs.

25,65,130

Rs. 1,84,902

.


y Premium allocation charge: This will be deductedfrom the premium amount at the time of premium

payment and units will be allocated thereafter.

Premium Rs. Yr1 Yr 2-3 Yr4+

=50,000 14% 6% NILL




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y Policy Administration Charge: This charge is apercentage of the annual premium and will be charged

regardless of the premium payment status. This

charge will be levied only for the first five policy

years, post which no policy administration charge

would be levied. The policy administration charges

are set out below:

Policy

year

Annual premium

Rs

Charge %age of

annual premium

1 to 5

=50,000 0.3%

y Fund management charge: the following fundmanagement charge will be deducted in daily basis.

Fund

Opportunities fund, Multi

cap growth fund, Bluechip

fund, Balanced fund, Income

fund

Money

market fund

FMC 1.35% p.a. 0.75% p.a.

.




Table 2.19 Policy administration charge


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ICICI PRU LIFETIME PENSION MAXIMAAT A GLANCE:

Table 2.21 ICICI Pru lifetime pension at a glance


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5. MARKETING STRATEGIES:

ICICI Prudential Life Insurance Company began their

operation in December 2000 after receiving approval


ICICI Prudential now enjoys a brand recall of 92 per

cent next to LIC's 97 per cent, according to AC

Nielsen's Brandtrack 7 study out last year. The

strategies behind this success are well known.

Insurance agents demanded that the companies support

them by advertising. People they are selling to should

at the very least know that the brand they are selling

really exists. Initially, all advertising by ICICI Pru

ended up reinforcing the LIC brand image as the PSU was

still synonymous with life insurance. Historically,

print was the traditional choice for the medium of

advertising. The break with tradition came when ICICI

Prudential arguably became the first private insurance

company to recognize and harness the power of TV

advertising, with its Sindoor campaign in 2001. Then

it brought its retirement solutions campaign with the

tagline Retire from work, not life.

The second campaign saw ICICI Prudential getting into

product-specific advertising. With the Assure Wealth

Plan they came with the new jingle Jeete Raho. The

Jeete Raho jingle and the Sindoor Campaign help ICICI

Pru to reach to its top.

Now, most private players of the insurance industry

have 50-70 per cent of their ad spend skewed in favor

of television. Marketing budgets have been soaring for

the past three years. Reportedly, on a budget of Rs

5.8 crore for February 2005 alone, ICICI Prudentials

Retirement solutions campaign was the highest

spending brand, piping several HLL brands to the post.


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The fact that insurance selling activity reaches a peak

around March also needs to be taken into account.

Not only the advertising through the television, ICICI

Pru does different type of other activities also. This

includes Tele Marketing, Street Campaign, advertising

over News Paper etc. ICICI Pru also organizes Talent

Hunt Program to recruit the Advisors. They are the

base of the company. According to the fulfillment

target they got promotion and help IPRU to grow

farther.

ICICI Prudential Life has one of the largest

distribution networks amongst private life insurers in

India. It has a strong presence across India with over

1,900 branches (including 1,074 micro-offices) and an

advisor base of over 210,000 (as on March 31, 2010).

ICICI Prudential Life has one of the largest

distribution networks amongst private life insurers in

Fig 2.2 Advertisement of IPRU


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India. To reach to the heart of the people and make

their good image they are having a strong presence

across India with over 1,900 branches. Out of that

1,074 micro-offices and an advisor base of over

2,10,000 (as on March 31, 2010), and & bank assurance.

6. THE COMPETITORS:

The first and foremost competitor of the insurance

field for ICICI Prudential is Life Insurance

Corporation of India. The largest life insurancecompany in India, Life Insurance Corporation is fully

owned by the government of India. It provides

individual life insurance, group insurance and pension

plans. Its subsidiaries include Life Insurance

Corporation of India International, LIC Nepal, LIC

Lanka, LIC Housing Finance and LICHFL Care Homes. The

company having their net worth of over Rs. 1,800 crore

and employs over 7,500 employees in its various

businesses. With a presence in 82cities in India and

it services a customer base of over 20,00,000. It has

over 12 million policy holders and over 9 lakh agents.

It has underwritten more than 120 million policies.

Fig 2.3 Advertisement of IPRU through SMS


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ICICI Prudential is the second highest insurer in terms

of worth just after LICI.

The other competitors are some new and old private

insurer. Who has entered in the business after getting

certification from the IRDA after 2000. The other

private players in the same field are as follows

y Bajaj Allianz Life Insurance Company Limitedy Birla Sun Life Insurance Co. Ltdy HDFC Standard life Insurance Co. Ltdy ING Vysya Life Insurance Company Ltd.y Max New York Life Insurance Co. Ltdy Met Life India Insurance Company Ltd.y Kotak Mahindra Old Mutual Life Insurance Limitedy SBI Life Insurance Co. Ltdy Tata AIG Life Insurance Company Limitedy Reliance Life Insurance Company Limited.y Aviva Life Insurance Co. India Pvt. Ltd.y Religare Life Insurancey ICICI Lombard General Insurancey Tata AIG General Insurance

Fig 2.4 Share Market position of the competitors


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7. GOVERNMENT POLICIES:

At the dawn of the twentieth century, insurance

companies started mushrooming up. In the year 1912, the

Life Insurance Companies Act, and the Provident Fund

Act were passed to regulate the insurance business.

The Life Insurance Companies Act, 1912 made it

necessary that the premium rate tables and periodical

valuations of companies should be certified by an

actuary. However, disparage still existed as

discrimination between Indian and foreign companies.

The oldest existing insurance company in India is

National Insurance Company Ltd, which was founded in

1906 and is doing business even today. Insurance

industry earlier comprised of only two state insurers

Life Insurers i.e. Life Insurance Corporation of India

(LIC) and General Insurers i.e. General Insurance

Corporation of India (GIC).

Everything changed with time so did the insurance

industry, the insurance scenario changed from

The Insurance Act, 1938: The Insurance Act, 1938 was

the first legislation governing all forms of insurance

to provide strict state control over insurance

business.

Life Insurance Corporation Act, 1956: Even though the

first legislation was enacted in 1938, it was only in

19 January 1956, that life insurance in India was

completely nationalized, through a Government

ordinance; the Life Insurance Corporation Act, 1956

effective from 1.9.1956 was enacted in the same year

to, inter-alia, form LIFE INSURANCE CORPORATION after

nationalization of the 245 companies into one entity.

There were 245 insurance companies of both Indian and

foreign origin in 1956. Nationalization was


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accomplished by the govt. acquisition of the management

of the companies. The Life Insurance Corporation of

India was created on 1st September, 1956, as a result

and has grown to be the largest insurance company in

India as of 2006.

Insurance Regulatory and Development Authority (IRDA)

Act, 1999: Till 1999, there were not any private

insurance companies in Indian insurance sector. The

Govt. of India then introduced the Insurance Regulatory

and Development Authority Act in 1999, thereby de-

regulating the insurance sector and allowing private

companies into the insurance. Further, foreign

investment was also allowed and capped at 26% holding

in the Indian insurance companies. In recent years

many private players entered in the Insurance sector of

India. Companies with equal strength are competing in

the Indian insurance market.

8. TAXATION ASPECTS:

Section 88(c) this section of the income tax act

provides rebate on the total tax liability of the

individuals. According to this section, investments in

PPF, PF, NSC, post office, saving mutual funds premium

paid for the life insurance products, UTI-ULIP provides

an individual tax rebate.

Investment can be made in any one of the instruments of

a mix of the instruments subject maximum limit of

Rs.100000.Section 80 D allows contribution up to Rs. 10000 by way

of premium for insurance on the health of the

individual, his spouse of any other member. Deduction

is allowed up to Rs. 15000 if the insured is a senior

citizen. Premium has to be paid by cheque.


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Section 10( 10 d) of the income tax act, 1961 deals

with income not to be included to total income with

respect to the taxability of such receipts from life

insurance policies. Section 10 (10 d) provides any sum

received under a life insurance policy including the

sum allocated by way of bonus on such a policy other

than:

a) Any sum received under a Keyman insurance policy:

or

b) Any sum received under an insurance policy issued on

or after the 1st day of April, 2003 in respect of which

the premium payable for any of the year during the term

of the policy exceeds 20% of the actual capital sum

assured.

9. MAJOR PROBLEMS:

Before 2000 AD there was a monopoly in the insurance

field. After 2000, IRDA constructed and permitted the

private player to come and make business.

Potential Entrants (threat of new entrants): The most

attractive segment is one in which the entry barrier is

high but the exit barrier is low. But in the insurance

field the entry and the exit barrier both are low so

any private firm can enter and starts their business,

and increase the competition.

Industry competitor (threat of intense segment

rivalry): The Indian insurance sector is full of

competitors so this segment is unattractive for thecompany. Though IPRU is the leading insurer in the

private field then also there is a threat from the LIC,

old private insurer as well as the new private sector

insurer.


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Suppliers (threat of suppliers growing bargaining

power): As IPRU is a service firm so they are not

having any suppliers, thus they do not have this type

of problems.

Buyers (threat of buyers growing bargaining power):

Here the buyers are the life assured. Day by day they

want more benefit and new features. It is really

difficult to bring new product every day. Further more

buyer s are getting small amount

Substitute (threat of substitute product): There are

so many companies in the same field with almost same

product so it is really difficult to sustain.

Potential

entrants

(Threat of

mobility)

Industry

competitor

(Segment

rivalry)

Buyers

(Buyers

power)

Substitute

(Threat of

substitute)

Suppliers

(Suppliers

power)

Fig 2.5 The five forces model


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OTHER PROBLEMS

ICICI Prudential is a private company and thus dont

get as much benefits as other public insurer like LIC.

The major problems for the company are

y Peoples perception about LIC.y Lack of promotional activities.y Less awareness about the company.y There are many other company with same or sometimes

better benefit.

People use to think many times before investing to

ICICI Prudential, because

y High risk to get a high return.y High premium.y Low assured money.y At unfortunate death people get sum assured/fund

value.

y The fund value at maturity is not tax free.y There are many other players with almost same

benefits to choose.The major problems can clearly be defined by Porters

five forces model.

10. ACHIEVEMENTS:

10.1 AWARDS:

y ICICI Prudential Life Insurance Company, the mosttrusted private insurer has got so many awards from

inception. They are:

y India's Most Customer Responsive Insurance Company.AGC Networks - Economic Times, Customer

Responsiveness Awards, 2010.


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y ICICI Prudential Life Insurance has won the firstrunner up award for the Best Defect Elimination in

Service & Transaction category at Asian Six Sigma

Excellence Summit 2009.

y ICICI Pru Life ranked as the Most Trusted Pvt. LifeInsurance brand in the Brand Equity "Most Trusted

Brands 2009" survey

y ICICI Prudential Life Insurance was awarded with thecoveted 'ICAI Award for Excellence in Financial

Reporting' by the Institute of Chartered Accountants

of India (ICAI) for the financial year ended March

31, 2008.

y ICICI Prudential Life was awarded the Life InsuranceCompany of the Year at the12th Asia Insurance

Industry Awards 2008.

y ICICI Prudential Life won the Award for BrandExcellence in the Banking and Financial services

category at the Asia Brand Congress 2008

Fig 2.6 IPRU on news


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y ICICI Prudential Life won the UK Trade & InvestmentIndia Business Awards 2008 in the Business

Partnership Award-Large Company category

y ICICI Prudential Life won the ICICI Group MarketingExcellence Award 2008 in three key categories for

its marketing initiatives

y ICICI Prudential Life was awarded the INDYs Awardfor Excellence in Mass Communication in the category

of Most Creative Advertisement-Television

y India's Most Customer Responsive Insurance Company.Avaya Global Connect - Economic Times. Customer

Responsiveness Awards, 2007

And many more..

10.2 RECOGNITIONS:

y ICICI Prudential Life was recognized by the mosttrusted brand amongst private life insurers by The

Economic Times Most Trusted Brand Survey 2008.

y IMM Award for Excellence by Institute of MarketingManagement.

y Organization with Innovative HR Practices by IndiraGroup of Institutes.

y Organization with Innovative HR Practices by AsiaPacific HR Congress Awards for HR Excellence.

And many more


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10.3 PICTURES:

Most Trusted Brand Survey, 2009

ICAI Award, 2008

INDYs AwardBest

ife Insurer 2003

And more The

ife Insurance Companyofthe Year, 2008

Fig 2.7 Awards


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11. SHARE MARKET POSITION:

ICICI Prudential Life Insurance has sustained its

leadership position in the private life insurance

industry for over eight years.

The company garnered a total premium (new business plus

renewal) of Rs 9,918 crore for the nine-month period

ended December 31, 2008 (9MFY2009) as against Rs 7,758

crore during the corresponding period last year,

registering a growth of 28%. The companys renewal

premium showed a strong growth of 75%, and stood at Rs

5,427 crore for 9MFY2009.

ICICI Prudential Lifes market share stood at 11.8%,

for 10-month ended January 31, 2009, making it the

leading private life insurance player. As on January

31, 2009, the companys assets under management (AUM)

stood at Rs 28,515 crore. Since inception, ICICI

Prudential Life has sold over 90 lakh policies.

Punjab continues to remain one of the major

contributors for ICICI Prudential Lifes growth.

Currently the state contributes almost 8% to ICICI

Prudential Lifes overall business, garnering over Rs

378 crore for the period April 1, 2008, to February 28,

2009. Since inception, the company has sold over

6,92,000 policies in the state.

The company also has a strong presence in Punjab with

an extensive distribution network of 178 branches

(including 118 small offices in rural India), and

20,201 advisors, in addition to local tie-ups, to

enhance consumer convenience in the state.


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12. NATIONAL AND INTERNATIONAL IMAGE:

ICICI Prudential was the first life insurer in India to

receive a National Insurer Financial Strength rating of

AAA (Ind) from Fitch ratings. As ICICI grow its

distribution, product range and customer base, continue

to tirelessly uphold its commitment to deliver world-

class financial solutions to customers all over India

The ICICI Prudential edge comes from its commitment to

customers, in all that company do - be it product

development, distribution, the sales process or

servicing.

For the past eight years, ICICI Prudential has retained

its position as the No. 1 private life insurer in the

country, with a wide range of flexible products that

meet the needs of the Indian customer at every step in

life.

Prudential is a leading life insurer in Asia with a

presence in 12 markets and have the top three position

in seven key locations of Hong Kong, India, Indonesia,

Malaysia, Singapore, the Philippines and Vietnam.

13. FUTURE PROSPECTS:

ICICI Pru Life ranked as the Most Trusted Pvt. Life

Insurance brand in the Brand Equity. Not only but also

it owned India's Most Customer Responsive Insurance

Company award. From these it is noted that IPRU has the

better image of peoples mind rather than other private

insurer. But the main hurdle of being number one is

LIC.

In the current fiscal year, up to February 28, 2010,

the LIC has increased its market share in terms of


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first year premium to 65.06 per cent and in terms of

policies to 70.79 per cent.

But LIC had been losing its market share since the life

insurance market was opened up to the private sector in

2000-01. As on date, there are 22 private insurance

companies against one public sector life insurer LIC.

In a growing market, where new private players are

entering, the market share of the leading player i.e.

LIC is bound to reduce.

During the same period, the total premium of private

life insurers has risen to Rs 64,503 crore from Rs 273

crore with an accretion of Rs 64,230 crore. This was

against the total premium of LIC that grew to Rs

1,57,288 crore from Rs 49,822 crore with a total

accretion of Rs 1,07,466 crore.

So its clear that IPRU is competing with only LIC

where LIC is fighting with other 22 player in the same

field. Now a days people are changing their views and

keen to earn high return by taking some risk. As IPRU

is leading brand against other 21 private insurers so

their prospect to be the no. 1 over all is very high.

14. CONCLUSION:

The innovative products should be offered as a right

mix of flexibility, risk & return, which will suit the

requirement of the customers and should target specific

niches, which are poorly served or not served at all.Number of formalities should reduce, as customer feels

irritated with lots of formalities.

ICICI Prudential Life Insurance Company should lay more

stress on advertisements, both in print as well as in

other media.


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Opening up the sector will certainly mean new products,

better packaging and improved customer service. Both

new and existing players will have to explore new

distribution and marketing channels. Potential buyers

for most of this insurance lie in the middle class. New

insurers must segment the market carefully to arrive at

appropriate products and pricing. Recognizing the

potential, in the past three years, the nationalized

insurers have already begun to target niches like

pensions, women or children.

8. literature review(11-57)

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