Download - Metlife General
-
8/8/2019 Metlife General
1/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 1
Table of Contents
Executive Summary.......................................................................................................2
HISTORY OF INSURANCE.........................................................................................5
INSURANCE IN INDIA.............................................................................................10
Insurance......................................................................................................................11
LIFE INSURANCE......................................................................................................13
METLIFE PO L I C I E S ..............................................................................................17
INSURANCE AS INVESTMENT..........................................................................23
Literature Review.........................................................................................................25
Life Insurance Companies Are Consistently Coming up With More New Policies....27
OBJECTIVESOF THE STUDY..................................................................................29
RESEARCH DESIGNAND METHODOLOGY.........................................................31
METLIFE PROFILE....................................................................................................34
MetLife`S ACHIEVEMENTS....................................................................................41
Chart showing Market Share of ULIPS in Kashmir region.........................................44
Growth Ranking 2008..................................................................................................45
Financial Status of MetLife..........................................................................................46
From balance sheet ............................................................................................46
BANCASSURANCE...................................................................................................48
Banks as Referral Agent of an insurance company..................................................58Insurance products distribution by banks as Corporate Agents...............................59
INCORPORATION OF METLIFE AS A JOINT VENTURE WITH J&K BANK...61
Introduction to Reinstatement......................................................................................66
Reinstatement of Policies without CI Rider.............................................................67
Data Analysis and Interpretation..................................................................................71
RESEARCH FINDINGS.............................................................................................86
CONCLUSIONS:.....................................................................................................95
Suggestions...............................................................................................................97ANNEXURE................................................................................................................99
Glossary..................................................................................................................100
QUESTIONNAIRE................................................................................................104
Bibliography...............................................................................................................107
Bibliography
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
2/99
-
8/8/2019 Metlife General
3/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 3
3) To know the factors responsible for the lapsed policies.
4) To go for the revival of the policies.
After analyzing the respondents views about the company a feedback were available
to the company which proved to be helpful for the company in knowing the various
strengths and the weaknesses. After knowing the company got a knowledge of the
different fields where it should work if it wants to achieve the sky heights in the
industry. Before this research it was seen that the company was good in introducing
new customers to the organization. But a company cannot be successful if it focuses
on new business only which was practiced in MetLife. The retention rate at the
MetLife was not followed upto that extent as it was needed, this was seen after the
research was conducted inspite the reinstatement guidelines followed by MetLife
were good.
The research was also helpful to the company as various policies were reinstated
and the customers also feel that their investment decision made by them were not
wrong because the company is putting its efforts to get the referrals from the
customers. The company is not keeping the customers interest away after they invest
but the continuously remain in touch with them and make the various departments
customer friendly which makes the image of the company as a customer focused
company. To be a customer friendly is a very good thing for the organization.
The study revealed that wrong selling was made by J&K Bank by the influence of
Advance Managers. This was the prime cause
It was revealed that the various policies lapsed because they were not given proper
knowledge about the product, they purchased those products whose premium was notafforded by them but the commission received by the financial advisors and the
channel sales officers was more from others due to which they advised them to buy
those products.
Limitation o f Research :
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
4/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 4
The main limitation of the research that I feel was Shortage of time. This research
was of vast nature and six weeks time was very little for its complete study. Customer
satisfaction level cannot be fully analyze on the basis of 50 customers only, MetLife
globally perform surveys and this survey will just serve as a part of that in Kashmir
region.
A t l as t I c an s ay t ha t t o a ch ie ve i ts g oa ls o f I ns ur in g 5 M il li on
customers the MetLife can easi ly achieve i t by simply overcoming such
loopholes and there i s a lo t of oppor tuni t ies for the Company to grow
in the country l ike India.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
5/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 5
HISTORY OF INSURANCE
As wi th so many th ings in so many facets of our l ives , Insurance too
was born out of a primary need and shaped by socio-economic real i t ies
o f th i s t ime . The s to ry goes back to a round 2100 BC, to the anc ien t
civi l izat ion of Babylon and a business practice cal led "Bottomry". For
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
6/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 6
all practical purposes form of marine insurance, bottomry enabled ship
owners to borrow money agains t the i r sh ips to pay for the t r ip . With
Piracy rampant on high seas, t raders and seafarers were reluctant to sai l
to o ther lands for fear of the i r lives and goods. Bottomry gave them
some semblance o f secur i ty. The a r rangement was tha t i f on ly the i r sh ip r e tu rned d id t r ade r s have to r epay to loan , a long wi th in te res t ,
which was pegged a t an above market ra te for the r i sk covered. So i f
t h e i r f a i l e d t o m a k e i t b a c k , t h e y d i d n o t h a v e t o r e p a y t h e l o a n ,
thereby recovering some or al l of the loans.
O R I G I N S
With the mar ine route being the bedrock of t rade and commerce
in those days , the prac t ice of bot tomy evolved, and spread. With the
g ro wt h o f t ow ns a nd t ra de i n E ur op e, m ed ie va l g ui ld s ( gr ou ps
organized on the basis of some common objectives, l ike traders) pooled
in money to protec t the i r members f rom loss by f i re and shipwreck, to
pay ransom if they were captured by Pirates, and to provides burial and
suppor t in s ickness and pover ty. By the middle of the 14 t h century, asev idenced by the ea rl i es t known insurance cont rac t (Genoa, 1347) .
Marine insurance was common among marit ime nations of Europe.
Lloyd's of London, the largest marine insurer today, was founded in
1688 , in a co ffee shop in London . L loyd ' s co ffee house became the
preferred place for merchants, ship owners and underwriters to transact
bus iness . Insurance development rapidly wi th the growth of Br i t i sh
co mmer ce i n t he 1 7 t h and 18 t h c en tu ri es a nd s ta rt ed b ec om in gorgan ized , a long the way go ing th rough a pe r iod o f de fau l t e r s and
closures
The Br i t ish b rough t insu rance to India in 1818 , r eple te wi th
imper ia l i s t pre judices . The Orienta l l i fe insurance company, the f i rs t
insu rance company in the coun t ry, in su red on ly European widows,
Br it i sh insu rer s even tua lly began insu r ing Ind ian l ives, bu t fo r a
p re mi um t ha t w as 1 5- 20 p er ce nt h ig he r t ha n t ha t p ay ab le b y t heB ri ti sh . I t w as o nl y i n 1 87 0 t ha t t he d is pa ri ty w as c or re ct ed . S ix
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
7/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 7
Indians , peeved by th is second-Class t r ea tmen t, s e t up by Bombay
Mutual l i fe assurance society, and started Insuring Indian l ives at the
same cos t as Br i ti sh l ives , socia l d iscr iminat ion , in fac t turned out to
be a ca ta lys t fo r Ind ian in i t i a t ive in the insu rance sec to r. In 1909 ,
activist Ishwar Chandra Vidyasagar founded the Hindu family Annuityf un d- t he f ir st i ns ta nc e o f a p en si on - b as ed i nv es tm en t s ch em e
targeted at Indians.
As had happened in England ear l ier, a f lood of new players and
patchy regulat ions snowballed into a crisis . Several insurers defaulted
on the i r cont rac tual obl iga t ions to pol icy holders , c i t ing inves tment
losses ; some even fo lded up. The insurance Act 1938 in t roduced s ta te
contro ls on insurance , but even th is fa i led to safeguard pol icy holder interest .
N AT I O N A L I Z AT I O N
Post - independence , d iscontent agains t insurers reached a p i tch .
Bus iness was chao t ic , fo re ign insu rer were l eav ing the coun t ry and
Indian insurers dr iven by greed and bus iness considera tions werent
earning much c redibi li ty. The c ry fo r na tiona l iz ing insu rance g rew
louder. A move that insurers were of course opposed to.
On 19 t h J an ua ry 1 95 6 t he l if e o f i ns ur an ce b us in es s w as
n at io na li ze d. I n o ne s wo op t he g ov t. s na pp ed u p 2 45 i ns ur er s a nd
provident societ ies. Eight months later the LIC was formed which took
o ve r t he b us in es se s o f t he e rs tw hi le p ri va te i ns ur er s a nd s ta rt ed
expanding a t a f r ene ti c pace . Today th is mono l ith has 2100 b ranch
offices, 800,000 agents, and offers a bevy of insurance and investment
p roduc t s . L IC marked insu rance l e s s a s a r i sk management too and
more as a saving ins t rument wi th a t ax edge . A look a t LICs po l icy
p ro f i l e shows tha t ju s t 18 pe rcen t o f po l i c i e s in fo rce cu r ren t ly a re
p ro te ct io n p la ns ; i ns ur an ce c um i nv es tm en t p la ns a cc ou nt f or 6 0
percent , with the balance being pure investment plans. Sti l l , households
embraced these safe investments avenues, with the sum assured (or the
to ta l va lue o f cover ) inc reas ing f rom Rs . 1476 c ro res in 1957 to Rs .459201 crores in 1998-1999.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
8/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 8
Similar circumstances lead to the nationalizat ion of Non-l ife (or
general insurance). As in l i fe insurance, pre-nationalizat ion, there were
an inordinately large number of insurers, many of whom were notorious
for f loa t ing inves tment norms and delaying se t t lement of c la ims Non-
li fe i ns ur an ce w as n ati on ali ze d i n 1 97 2. A g en er al i ns ur an cec or po ra ti on ( GI C) w as s et up a s a h ol di ng c om pa ny ; a t ot al o f 1 07
p ri va te i ns ur er s w er e m erge d a nd g ro up ed t o f or m G IC s f ou r
subsidiaries.
P R I VAT I S AT I O N
Th er e w er e v ar io us r ea so ns g iv en b y th e g ov er nme nt to
n at io na li ze t he i ns ur an ce s ec to r; t ak e i ns ur an ce t o t he m as se s,
faci l i tate the f low of long-term funds (which insurance companies, by
v ir tu e o f t he b us in es s t he y a re in , h av e r ea dy ac ce ss t o) i nt o
d ev el op me nt o f i nf ra st ru ct ur e i n t he c ou nt ry, a nd s af eg ua rd t he
interests of policyholders. Towards this end, s tate insurers did develop
insurance sector, though most experts believe these monopolies could
have done much, much more.
In the ear ly n inet ies , the government went on a reforms bl inge
a nd s ta rt ed l oo se ni ng c on tr ol s o n I nd ia n i nd us tr y. I n 1 99 3, t he
government appointed the Malhotra commit tee , headed by the former
RBI governor R .N. Malho t ra , t o d raw up a b luepr in t fo r insu rance
s ect or r ef or ms . Th e Pa ne l su bmi tt ed it s re po rt a ye ar l at er ,
r ecommending p r iva ti zat ion , backed by s t if f en try gu ide lines and
str ingent regulat ions, so as to avoid a repeat of the pre-nationalizat ion
fee-for-al l .
The Insurance Regu lato ry and deve lopment Authori ty ( IRDA)
was f or me d to r eg ul ate th e s ect or a nd o ver see t he p ro ce ss o f
privatizat ion. In 2000, the IRDA started giving out l icenses, and a year
la ter the f i rs t of the pr ivate p layers s tar ted opera tions . The wheel had
come full circle.
Under state controls , the insurance sector, both l i fe and non-l ife
grew steadily. Sti l l , Indians are not adequately insured and lag behind
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
9/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 9
most countr ies. Total insurance penetra t ion ( insurance premiums as
percentage of gross domest ic product ) i s d ismal when compared to i t s
economic standing; just 2 percent of the populat ion
h a s s o m e f o r m o f l i f e i n s u r a n c e . B u t i n t h i s h u g e g a p l i e s a h u g e
opportunity, which is why private insurers are queuing up.I n m an y w ay s, t he r e- en tr y o f p ri va te i ns ur er s h as m ar ke d a
s ec on d c om in g f or t he s ec to r. I n j us t t hr ee y ea rs t he s ec to r h as
u nd ergo n e a m ak eo ve r, o ff er in g t he f ru it s o f a f re e m ar ke t; m or e
choice , be t ter service , quicker se t t lement , t ighter regulat ions, greater
awareness. State insurers have been compelled to get their act together.
And, to think of i t , these are st i l l very early days
INSURANCE IN INDIA
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
10/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 10
InsuranceDefinition and Meaning
To insure means to make a contract that promises to payer secure payments of a
specified sum of money in case of accident, damage, loss, injury, death or any other
event taking place.
Sayeem Rafiq Regd No. 10807184
1818 The British introduce life insurance to India, with theestablishment of the Oriental Life insurance company inCalcutta.
1850 Non-life insurance debuts, with Triton Insurance Company.
1870 Bombay Mutual Life Assurance Society is the first Indian-
owned life insurance business1907 Indian Mercantile Insurance is the first Indian non-life insurer.
1912 The Indian Life Assurance Companies Act enacted to regulate
the life insurance business
1938 The Insurance Act, which forms the basis for most current
insurance laws, replaces earlier Act.
1956 Government Steps up LIC.
1958 Life insurance nationalized government takes over 245 Indian
and foreign insurers and provident societies.
1972 Non life insurance nationalized; GIC set up.
1993 Malhotra committee headed by former RBI governor R.N.
Malhotra, setup to draw up a blue print for insurance sector
reforms.
1994 Malhotra committee recommends reentry of private players,
autonomy to PSU insurers
1997 Insurance regulator IRDA (Insurance Regulatory and
Development Authority) setup.
2000 IRDA starts giving licenses to private insurers;ICICI prudential and HDFC standard life first private life
insurers to sell a policy
2001 Royal Sundaram alliance first non-life insurer to sell a policy
2002 Banks allowed to sell insurance plans; as TPAs enter thescene, insurers start setting non-life claims in the cashlessmode
-
8/8/2019 Metlife General
11/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 11
The Dictionary of Business and Finance has defined insurance as a form of
contract or agreement under which one party agrees, in return for a consideration,
to pay an agreed amount of money to another party to make good a loss, damage or
injury to something of value in which the insured has a pecuniary interest as a
result of some uncertain event . It is a device by which the loss likely to be caused by an uncertain event is spread over a number of a person who is exposed to it and
who proposes to insure themselves against such events.
MEANING OF INSURANCE
From the above definition, it becomes clear that insurance is a voluntary
agreement between two parties , viz. the insurer and the insured the former tocompensate the latter against the loss suffered by him on the happening of an event.
Thus , it is a device theough which the loss is spread over a large number parties.
Insurance is the undertaking (assurance) given by a company , society or the State to
provide safeguard against loss, provision against sikness, death etc. in return for a
regular payments called premia (plural of premium). The person or company which
undertakes to make payment in case of loss etc. is called the insurer and the person to
whom such payments will be made is called the insured. The person who pays the
premiums or premia is called insurant. The meaning of insurance can be well
understood from the following example of fire insurance.
Suppose there are ten houses in a particular locality costing Rs 1,000 each. On
an average each year one house gets completely destroyed by fire. This means the
unfortunate owner whose house catches fire has to suffer a loss of Rs 1000. Instead,
this loss can be spread over all the ten owners by means of insurance. By providing
fire insurance, a sum of Rs 100 ( in the form of premium) can be collected from each
owner and the total amount Rs 1000 so collected can be given to the unfortunate
owner to reconstruct the house. In this way, each year one house can be built. Each
owner will annually pay Rs 100 for ten years. Thus, the loss is spread over all the
owners equally. In real practice, however, it is in proportion to the value of insurance.
Thus, insurance is a device by which the loss likely to be caused by an unforeseen
event is spread over a large people who are exposed to it and who proposed to
insurance themselves against such an event.
From the legal point of view, insurance is based on a contract between two parties. It is a written agreement to make good some loss, damage or injury .The terms
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
12/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 12
and conditions agreed to are stated in the contract which is known as insurance policy.
In this way, the risk of loss is transferred from the insured to the insurer. Insurance
has nowadays become so popular that practically everything from a pin to a giant
structure can be insured against a possible risk.
Like any other contract, the contract of insurance must also satisfy the
following conditions:
1 There must be an agreement between the two parties, the insurer and the
insured.
2 The agreement called insurance policy must be in writing.
3 The parties to the agreement must give their free consent to all terms ad
conditions of it.
4 The parties must be competent to enter into contract
5 There must be mutual consideration
6 The object of the contract must be lawful.
LIFE INSURANCE
Of al l forms of insurance, l i fe insurance or assurance occupies a
p rominent p lace in a l l wa lks , o f l i fe . A lmos t every wage-ea rne r i s
n ow ad ay s i nt er es te d i n t ak in g l if e i ns ur an ce . I t h as m ad e s uc h a
tremendous progress that i t has occupied a leading posit ion in the f ield
of insurance . This i s because the r i sk involved is cer tain . The event i s
bound to happen soon or la ter, e .g . death . Hence somet imes the term
" As s ur an ce " i s u se d i ns te ad o f t he t er m i ns ur an ce . A c on tr ac t o f
assurance guarantees the payment of a speci f ied sum of money to the
assured on the happening of a specif ied even. Hence l ife assurance Lifeinsurance or assurance i s def ined as " a contrac t by which the insurer,
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
13/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 13
i n c on si de ra ti on o f a c er ta in p re mi um , e it he r i n a l um p s u m o r b y
pe riodic payments , under takes to pay ce rt a in sum of money to the
assured on his reaching " a par t icular age or to those ent i t led to i t in
the event of h is death" . Thus , l i fe insurance i s a contrac t be tween an
insurance company and the insured whereby the insurer , inconsiderat ion for a premium, undertakes to pay a certain sum of money
on the death of the insured or n expiry of a st ipulated period whichever
occurs ea r l i e r. S ince each one o f us , du r ing our l ives a re f aced wi th
numerous r i sks f a il ing heal th, f inancia l lo sses, acciden t s and even
fatal i t ies , our inst incts drives us to cover ourselves against those r isks.
Though an insurance cover can ' t protec t you agains t emot ional losses
ar is ing out of these r i sks , i f sof tens the economic cr is i s tha t usual ly
accompanies these losses. Contract of l i fe insurance is mainly based on
two pr incip les , v iz . , those of u tmost good fa i th and insurable in teres t .
The pe rson who wan ts to t ake our l i f e insu rance po l i cy mus t possess
insurable in teres t in the l i fe he wishes to get assured.
T he re fo re , a p er so n c an t ak e o ut a l if e i ns u ra nc e p ol ic y f or
h im se lf o r h is w if e, h us ba nd , s o n, d au gh te r, p ar en ts o r a ny o th er
re la t ive in whose l i fe he or she has insurable in teres t . Li fe assurance
contact is not a contract of indemnity. I t is a contract for payment of a
specif ic amount because ac tual loss of human l i fe cannot be measured
in terms of money.
Life insurance differs from other types of insurance in several respects .
First of al l , i t is no protection to the l i fe of insured person. I t is only a
cover under compulsory saving is provided. I t i s a k ind of channel to
mobil ize smal l savings in to inves tment . Thus , i t promotes savings andi n v e s t m e n t . I t i s i n t h e f o r m o f a f i n a n c i a l a i d o f t h e f a m i l y o f a n
insured person in the event of his premature death. In case, he survives
t h r o u g h o u t t h e t e r m o f t h e p o l i c y, h e i s p a i d a l u m p s u m w h i c h i s
no th ing bu t h i s own sav ings kep t wi th the insu rance company in the
form of premiums deposited. Secondly, in l i fe insurance, the amount of
po l i cy i s ce r t a in ly payab le by the insu re r sooner l a t e r excep t in the
ci rcumstances of controvers ia l death of the assured. Third ly, the term
of a l i fe insurance contrac t i s suff ic ient ly long such as 20 years or 25
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
14/99
-
8/8/2019 Metlife General
15/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 15
dispute regarding the se t t lement of c la im, the mat ter i s referred to the
court for arbitrat ion purpose.
THE REAL CONCEPT OF INSURANCE
A f inanc ia l p l anner once sa id th i s abou t l i f e insu rance buy ing
habi t s o f Indians , they dont buy insu rance , and i t s so ld to them.
Unfortunately, but t rue. Individual awareness and understanding of l i fe
insurance products is extremely low, and many among the insured dont
even know whether the l i f e insu rance po li cy they own mee t s thei r
insurance needs, and in large context , their personal f inance needs, . In
most cases, chances are, they could be doing better.
The f i r s t and the most important s t ep towards doing be tt e r
involves being f inancial ly being f inancial ly l i terate, and having, at the
leas t, an e lementary understanding of l i fe insurance i s a l l about . This
means being aware of the var ious types of insurance products on offer
in the marke t , a s we l l a s hav ing the ab i l i ty to unders t and ones l i f e
insurance needs and f ind appropriate f i ts .
Li fe insurance i s chiefly a r i sk management tool , meant to offer
f inancial protection to your dependants in the unfortunate event of your
death. If you are adequately insured, your l i fe insurance should enable
your dependants ( Spouse , Chi ldren , parents) to mainta in the i r current
l i f e s ty le and pursue the i r l i f e goa l s t i l l such t ime as they a re in a
pos i tion to se t up an a l ternat ive income s t ream by themselves. That s
the basic purpose of l i fe insurance.
But in India, as in most other developing markets , l i fe insurance
h as c om e t o r ep re se nt m or e t ha n j us t r is k c ov er. T he b es t s el li ng
insurance p roduct s in the market doub le a s inves tment op tions and
offe r a t tr act ive t ax b reaks. In f act , i t s because o f th is two- in-one
p ro fi le t ha t t he y a pp ea l t o t he a ve ra ge i nd iv id ua ls w ho s ee ks
convenience in personal f inance matters .
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
16/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 16
METLIFE PO L I C I E S
B as ed o n t he ir o bj ec ti ve , b as is p la ns o ff er ed t o i ns ur er s c an b e
classi f ied under three broad ca tegor ies: pure insurance products ( te rm
plans) , pure investment products (pension plans) and investment-cum-
insurance p roduc t s ( endowment , money-back , Inves tment -cum-
insuran ce products (endowment, money-back, whole-life and unit- linked
insurance plans). Increasingly, insurers are launching hybrid variants of these plain vanil la plans.
T E R M P L A N S
Term plans are the pures t form of insurance . These are no-f r il l s
policies that cover only the risk of your death. In the event of your death
during the policy term, your nominee receives the cover amount . In
insurance parlance holders , mutual funds to unit holders , automobile
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
17/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 17
clubs to members, and so on. Factor in such freebies while computing
your life cover.
E N D O W M E N T P L A N S
While term plans cover jus t the r i sk of death , endowment p lans
also offer return on the premiums paid by you. So, i f you die during the
policy term, your nominee gets the sum assured plus some returns; if you
survive the policy term, you st i l l gets back the sum assured and returns.
As much a s this mo ney if you live "Philoso phy is an enticing
proposit ion, i t comes at a price; high premiums, which drag down the
returns from endowment plans, to barely 4-6 percent a year.
In an endowment plan, you pay premiums for pre-defined tenure
and sum assured. The premium will depend on your age, the sum assured,
the plant tenure and the nature of returns. A portion of premium paid by
you is inves ted by the insurer on your behal f. Another port ion goes
towards. Meeting the insurer administrat ive expenses, this lowers the
effective yield on your investment in endowment plans.
WHOLE-LIFE PLAN :
The three ca tegor ies of insurance p lans ment ioned above provide you
l if e c ov er o n ly f o r a d e fi n i t e p e r i o d , u p t o a c e r t a in a g e ( g e n e r a l l y,
7 0 y e a r s ) W h o l e - l i f e p l a n s , o n , t h e o t h e r h a n d , a n d ( ge ne ra ll y, 70
yea r s ) Whole - l i f e p lans , on , the o the r hand , and p rov ides you cover
through your l i fet ime-the only class of insurance policies to do so.
Typical ly, whole- l i fe p lans are s t ructured such the pol icyholder
has the opt ion to pay premiums up to a cer ta in age ( refer red to as the
matu r i ty age , the insu re r p rov ides you the op t ion to e i the r con t inue
through your l i fe t ime ( for which no fur ther premiums wi l l have to be
paid) or encash the maturi ty benefi ts (sum assured plus bonuses) . Some
insure r s do g ive the op t ion to encash the bonus dur ing t e rm i t se l f ,
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
18/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 18
which can serve as a useful income s t ream dur ing your la ter years , i f
you so desire.
But do you rea l ly need l i fe cover through your t ime? Typical ly,
y ou r l if e i ns ur an ce n ee ds s ta rt t ap er o ff a ft er t he a ge o f 5 0. You r
children are earning and probably in need of l i fe cover themselves.
You yourse l f would have accumulated , or are wel l on your way
to accumulating, a sizeable nest-egg to see you through your ret irement
years . Only i f you have f inancia l dependants or have an income s team
to protect during your post-ret irement year does i t make sense to buy a
whole-l ife policy.
UNIT- LINKED INSURANCE PLANS
In insurance-cum-inves tment p lans of the k ind l i s ted above, you have
l it tl e s ay i n w he re y ou r m on ey b e i nv es te d. You r i ns ur er t oo i s
governed by inves tment res t r ic t ions ; i t can inves t jus t 10 per cent of
the premium paid by you in equi ties ; the grea ter chunk of 90 per cent
has to be inves ted in deb t paper. Whi le such re s t r i c t ionsa re int ended
t o e ns ur e s af et y o f y ou r i nv es tm en t, t he y a ls o l ea d t o r ig id it y i n
i nv es tm en t a nd r ei n i n y ou r r et ur ns , t o s in gl e d ig it s. U ni t- li nk ed
insurance p lans ge t a round such rest r ic t ions, by g iving you g rea ter
control over where your premium is invested.
Th ink o f them as insu rance p lans tha t doub le a s mutua l funds .
The annual premium you pay on uni t l inked plans i s l inked to the sum
a ss ur ed a nd t he p ol ic y t en ur e. I n t he i ll us tr at io n g iv en b el ow f or
e x a m p l e , f o r a s u m a s s u r e d o f R s . 1 l a k h o n a 2 0 - y e a r p l a n , t h e
premium payable is Rs 6,000 a year. In the f irst year, typically, around
20 per cent of the premium is deducted by the insurer towards your r isk
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
19/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 19
cover and to meet i t s own adminis t ra t ive expenses ( th is f igure drops
gradually through the plan term, tapering off at around 5 percent) . The
balance 80 per cent in the f i rs t year (more in the subsequent years) i s
inves ted in an inves tment p lan of your choice , and your are a l located
un i t , based on the p reva i l ing ne t a s se t va lue (NAV) o f the p lan youhave opted for. Just l ike in a mutual fund.
The inves tment p lans on offer cover the r i sk reward spect rum.
You c an c ho os e f ro m i nc om e p la ns ( hi gh o n d eb t, l ow o n e qu it y) ,
growth plans (high on equity, low on debt) and balanced plans (roughly
equal distr ibution between debt and equity) .
Insurers , based on the h is tor ica l performance of the i r p lans and
thei r r e tu rn expec ta t ions, t end to p roject a r ange o f r e tu rns fo r each
p lan . Take no te tha t these a re jus t guess t ima tes - wha t end up wi th
could be higher or lower, depending on your plan's performance.
Yo u c a n s w i t c h f r o m o n e p l a n t o a n o t h er f r e e o f c o s t o n c e a y ea r (a
nominal amount i s charged for addi t ional swi tches) . So, i f you th ink
s tocks a re go ing cheap , you can move to the g rowth p lan ; o r, i f you
think s tocks are overvalued, you can move your money to the income
plan . Thus , unl ike endowment p lans , you can contro l your inves tmentin unit- l inked insurance plans.
Uni t -l inked p lans a l so enab le you to pe riodical ly moni tor the
pe rfo rmance o f your inves tmen t . Insu rer s decla re the NAV of the
various p lans pe riodical ly-general ly, once in th ree months. Ex it ing
these p lans i s a l so eas ie r and i t doesn ' t i nv i t e p roh ib i t ive pena l t i e s .
Af te r a lock in pe r iod (genera l ly, one yea r ) , you can wi thdraw your
uni ts anyt ime, in par t or in fu l l , a t the then-prevai l ing NAV; your l i fe
cover wi l l be r educed accord ing ly , You can a l so make inc rementa l
inves tmen t s any t ime , and add a co r respond ing amount to your l i f e
cover.
By thei r very nature , uni t - l inked insurance p lans are meant for
individuals who understand invest ing and the stock market but prefer to
l ea ve i t t o t he e xp er ts t o d o a ct iv e m on ey m an ag em en t ; t he y a re
prepared to forfei t assurance on returns for a chance to take home more
than what a conventional endowment plan would offer.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
20/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 20
Th e c as e to p re fe r u ni t- lin ke d p la ns o ve r co nv en tio na l
endowment p lans i s compel l ing . Insurance p lans are long- term plans ,
wi th tenures s t re tching to 10, 15 , 20 years-dura t ions tha t g ive a good
chance to r eap the t rue r e tu rns po ten t i a l o f equ i t i e s . In endowment
p lans, though your money s tays locked for s imi lar lengths of per iods .At least 90 percent of i t is invested in low yielding debt instruments, as
a r es u lt o f wh ic h re tu rn s fr om t he m ar e p e d e s t r i a n . I n o t h e r w o r d s ,
e n do w me n t p l an s d o n ' t m a xi m iz e returns, especially for
knowledgeable investors. Unit- l inked plans offer that possibi l i ty
PENSION PLANS
P en si on p la ns d if fe r f ro m t he f iv e t yp es o f i ns ur an ce p la ns
mentioned above in a fundamental way: not al l of them offer l i fe cover.So, why are we talking about them here? Because pension plans feature
among the bevy o f p roduc t s o ffe red by insu re r s and a re p i t ched as
r et ir em en t p la nn in g s ch em es , s im il ar t o o th er i nv es tm en t- b as ed
insurance plans.
P en si on p la ns a re i nv es tm en t o pt io ns t ha t l et y ou s et u p a n
income s t ream in your pos t - re t i rement years by rout ing your savings
through an insurer, who invests i t on your behalf for a fee. The precise
re tu rns you wi l l ge t depend on seve ra l f ac to r s : your age when you
b eg in i nv es ti ng , t he c on tr ib ut io ns y ou m ak e, y ou r i nv es tm en t
preferences based on your r isk profi le , the age at which your want the
money to s tar t coming back to you, and the number of years for which
you want the returns.
Immediate or deferred? The payback f rom pens ion p lans genera l ly
takes the fo rm of an annu i ty you a re pa id a ce r t a in sum every yea r.
There are two types of annuit ies, depending on when the insurer begins
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
21/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 21
the annui ty paybacks . With an immedia te annui ty, the payments s tar t
the year you buy the contrac t . You hand over a lump sum (Say, your
superannuat ion benef i t s ) to your insurer and choose the per iodic ity of
payments and the number of years for which you want a pension, based
on your assessment of your l i fe expectancy and needs of your f inancialdependants. Typically, this option would appeal to those who ret ired or
are about to ret ire, are looking to set up an immediate, regular income
stream, and feel i l l -equipped to handle their investments on their own.
T he o th er t yp e o f a nn u it y i s a d ef er re d a nn ui ty, w he re in t he
annu i ty payments a re de fe r red fo r l a t e r yea r s ( a t a p rede f ined age o f
v es ti ng , a s i t i s c al le d) . D ur in g t he a cc um ul at io n p ha se , y ou r
i n v e s t m e n t s e a r n a r e t u r n , a n d g r o w w i t h o u t b e i n g t a x e d - u n t i l y o ureceive your annu ity payments. Consequent ly, investment s in we l l-
managed annui ty p lans have the potent ia l to grow substant ia l ly over a
long per iod. However, you are l iable to tax (a t appropr ia te s lab ra tes)
on your annui ty wi thdrawals , which are t rea ted as income. Therefore ,
de fe r red annu i t i e s make f inanc ia l sense i f you ' r e l ike ly to move to
lower tax bracket af ter your re t i rement .
Defe r red annu i ty schemes en fo rce a savings d i sc ipl ine : un likewi th se l f managed inves tments , you are commit ted to making per iodic
payments . Addi t ional ly, s ince these a re conce ived o f a s long- t e rm
i nv es tm en t v eh ic le s, p re ma tu re w it hd ra wa ls i nv it e p ro hi bi ti ve
penalt ies, so i t ' s important to st ick with them; only then wil l you also
benef it f rom the power o f compound ing . Increas ing ly, in su rer s a re
packing in a few options that provide greater f lexibil i ty to your pension
plan.
Participative or unit-linked? The most important among this relates to
where your money is invested and by extension, how much returns you
can expec t . Based on the su re ty o f r e tu rns (which i s r e f l ec ted in the
manner in which these p lans a re s t ruc tu red) , pens ion p lans can be
classif ied as part icipative or unit- l inked. In a part icipative plan, at the
t ime o f inves t ing , the insu re r wi l l i nd ica te (no t a s su re ) the annu i ty
amount you are l ikely to receive during the benefi t period.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
22/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 22
No such indicative assurances are given under unit- l inked pension
plans . Your contr ibut ions are d i rec ted to an inves tment p lan of your
choice . For each inves tment you make, you wi l l be g iven some uni ts ,
b as ed o n t he s ch em e' s t he n- p re va il in g N AV. A s i n u ni t- li nk ed
insurance p lans , you can choose f rom a va ri e ty o f scheme p ro f i le s(typically, income, growth and balanced) and make a free switch once a
y ea r ( a n om in al c ha rg e i s l ev ie d f or a dd it io na l s wi tc he s) . E ac h
c on tr ib ut io n m ad e b y y ou w il l e nt it le y ou t o a dd it io na l u ni ts .
D ep en di ng o n t he p er fo rm an ce o f y ou r s ch em e, t he v al ue o f y ou r
i nv es tm en t w il l a pp re ci at e o r d ep re ci at e. P en si on p la ns f ac il it at e
disc ip l ined, long- term inves t ing-one of the p i l la rs of weal th crea t ion .
E ac h y ea r, y ou s et a si de a c er ta in , p re -s p ec if ie d s um t ow ar ds y ou
re ti r ement k i tty. Th is money says inves ted fo r long pe riods o f t ime ,
reap ing the benef it s o f compound ing . P rematu re wi thdrawal s invi t e
prohibit ive penalt ies- typically; you lose 7 percent of the current value
of your inves tmen t i f you wi thdraw wi th in a yea r, 3 .5 to 5 pe rcen t
w it hi n 3 y ea rs a nd 3 .5 p er ce nt a ft er t hr ee y ea rs . O n r ea ch in g t he
vest ing age, you can withdraw your money. Alternatively, you can use
it ( in part or in ful l) to buy a part icipative annuity, from your exist ing
insurer or from another insurer. The variable option gives you a play on
e qu it ie s, a nd t he re fo re h as t he p ot en ti al ( bu t n o a ss ur an ce ) t o
outperform the f ixed- re turn opt ion. I t ' s a r i sk- re turn t rade-off , and
you have to f ind your f i t .
Some insure r s , on some o f the i r p l ans , g ive you the op t ion to
bundle l i fe insurance a long wi th these pens ion plans . You can ch oo s e
t h e a m o u n t o f l i f e c o v e r y o u w a n t , b a s e d o n w h i ch a premium
will be deducted from your contribution, which wil l make a differenceto your maturi ty amount: I t wil l show up as marginally lower annuit ies
in part icipative plans and lower sum invested in unit- l inked plans
INSURANCE AS INVESTMENT
Endowment p lans are the bes t se l l ing l i fe insurance product in
the country. This single fact says a lot about how most Indians who get
themselves covered l ike the i r insurance products to be : insurance cum
investment plans. Individuals have been known to banks on endowment
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
23/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 23
plans to get their l ives insured, save on tax, build a ret irement corpus,
and fund the i r ch i ld rens educa t ion and among o the r th ings . Bu t a re
th ey ma ximi zi ng t hei r r et ur ns , o r c an th ey d o b et te r, wi th ou t
compromis ing on the l i fe insurance benef i t s? In o ther words , do l i fe
insurance plans make good investments?The answers to these ques t ions are not s t ra ight forward, g iven
the number of factors that influence returns on your investments. These
include the impossibil i ty of predict ing interest rates and tax rates over
twenty years or more-tenures typically of insurance contracts .Yet , with
some realist ic assumptions, i t is possible to assess if endowment plans
make good investments.
THE RETURN EQUATION
I l lustrat ion : The case of a healthy 30- year old male who wants l i fe
cover of Rs 5 lakh for 20 years. He has two options before him. The
first is to buy an endowment plan which gives him l ife cover of Rs 5
lakh by way of a term plan ( the cheapest l i fe cover) , and invest the
premium differential in investments of his choice.
We have cons ide red Insurance p lans f rom LIC, the coun t ry s
larges t Li fe Insurer. The endowment p lans i s Endowment Assurance
Plan, in which he wil l have to pay an annual premium of Rs 23,978. the
term plan i s Jeevan Anmol , in which a cover of Rs 5 lakh can be had
fo r a p remium of Rs 1 ,528 a yea r. The d i ff e ren t i a l o f Rs 22 ,450 i s
invested in var ious ins t ruments . In order to g ive an idea of the re turn
possibi l i t ies , we looked at three instruments that span the r isk- rewardsspect rum: PPF( r i sk-f ree , modera ted re turns) , debt funds ( modera te
r isks, modera te re turns) and equi ty funds ( h igh r i sk , h igh re turn( . In
an endowment plan they declare an annual bonus of Rs 50 per Rs 1,000
sum assured a rea l i s t ic assumpt ion through the term yie lds Rs 10
lakh ( tax f ree) the end of the term, which t rans lated in to a re turn of
6.6 per cent a year. Thats s ignif icantly less than what in other options
wo ul d y ie ld , e ve n i f t he p re mi um d if fe re nt ia l w as i nv es te d i n a
comparable r i sk-f ree ins t rument , l ike the 8 per cent PPF; the re turns
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
24/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 24
would increase further if the premium differential was able to earn the
his tor ica l re turns debt funds and equi ty funds has been known to g ive
over such long periods.
THE ROAD AHEAD
Returns from endowment plans have fal len sharply; between 1999and 2005, bonus rates have dropped from 9 percent of sum assured to 4
percent and these could drop even further
FALLING RETURNS
There are guidelines on where l i fe insurer can invest the money they
collect by way of premiums from you on endowment plans. Around 90
per cent of i t is to be invested in safe debt instruments, leaving just 10
percent for the high yielding asset class that is equit ies. I t fol lows that
profi ts of insurers wil l closely track returns from debt paper.
Literature Review
1. M. ShriNivas Osmani a University Hyderabad , 2008
This s tudy was a modes t a t tempt to analyze the causes fo r l apsa tion
af ter pr iva tiza t ion on the bas is of the exper iences of the funct ionar ies
l ike b ranch managers , deve lopment o ffi cer s , Agency managers and
insurance agents (CSOs) who are the core marketing staff for MetLife
India Ins. Co . Pv t. L td. Af te r p r iva ti zat ion s ign i fi can t p rogress has
taken p lace in Indian insu rance secto r e spec ia l ly in l i fe insu rance
business. However st i l l lot of potential for l i fe insurance consumption
i s a va il ab le i n I nd ia a s t he I nd ia 's L if e I ns ur an ce p en et ra ti on a nd
densi ty i s low when compared to Asian average or wor ld average . In
s pi te o f r ap id p ro gr es s t he s ec to r i s s uf fe ri ng w it h h ig h r at e o f lapsation of policies . This s tudy reveals tha t forced se l l ing of pol icies
wi thout car ing for matching of MetLife products wi th requirements of
the policy holders plays a vi tal role in lapsation of policies in the f i rs t
year of policy l ife. This is happening due to the fact that beneficiaries
are unaware about the insurance products and their comparative meri ts
and l imitat ions. In addit ion the services after sale of policies are not as
pe r the r equ i rement s o f the po l i cy ho lde rs . Hence there i s a need to
organ ize spec ial t r ain ing camps to agen t s and awareness camps to
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
25/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 25
benefic iaries per iodical ly. At tention has to be paid on not to y ie ld for
forced sel l ing, target oriented last movement sel l ing without caring for
matching of insurance products with that of the requirements of policy
holder.
2. Misbah Showkat, Student of K.U., J&K, 2008
In her s tudy Misbah has c lar if ied tha t For the purpose of identi fy ing
prime causes for lapsation, the perceptions of the core functionaries in
t he m ar ke ti ng n et wo rk o f M et Li fe a re a sc er ta in ed b y c an va ss in g
questionnaire. They include Branch managers , Area Managers , Sales
Managers, Development Officers and Agents. For the purpose strat if ied
random sampl ing is appl ied in se lec t ing sample of Branch managers
(BMs) , Development Off icers (Dos) and Banca Agents . The s tudy isconfined to the ci ty of Srinagar. The f indings include awareness levels
of the customer (about personal r isks, insurance and insurance product
knowledge) , p roduct mismatch ( l ack o f need based se ll ing / fo rced
sel l ing/ wrong se l l ing) , incompetent services (by agent and MetLife) ,
f inancial problems of customers (due to insufficient income, inflat ion,
lack of f inancia l p l ann ing ) , C om pe ti ti on ( wi th o th er f in an ci al
inst i tut ions and other investments with higher returns) .
3. Irfan Ali Zargar, student of Kashmir Univer sity, J&K, 2007
In h is s tudy I r fan Al i has l i s ted tha t purchase of insurance more than
affordabi l i ty, purchase of wrong type pol ic ies , purchase of expensive
pol icies e tc are some of the causes for lapsa t ion. He has inc luded the
Sr inagar c i ty as epicenter, s ince Sr inagar i s the bes t s i te of Kashmir
va l l ey fo r success fu l bus iness . P resen t ly he i s the Area manager o f
Sales Depar tment ; th is i s the resul t of h is s incere effor ts towards themiss ion o f o rgan iza tion. The conc lus ion and recommenda t ions were
very he lp fu l to the management . He has r e ins t a t ed a lmos t 100 (one
hundred) lapsed policies.
4. IRDA journal Aug., 2008:
T he f oc us o f t hi s i ss ue o f j ou rn al i s o n LA PS AT IO N OF LI FE
INSURANCE BUSINESS. I t s tarts with an art icle discussing inter alia
t he v ul ne ra bi li ti es t ha t i ns ur er s a re e xp os ed t o a cc ou nt o f e ar lyl ap sa ti on . I n t he n ex t a rt ic le , a t ea m o f l if e i ns ur an ce d om ai n
Sayeem Rafiq Regd No. 10807184
http://www.britannica.com/EBchecked/topic/207178/financial-planninghttp://www.britannica.com/EBchecked/topic/207178/financial-planning -
8/8/2019 Metlife General
26/99
-
8/8/2019 Metlife General
27/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 27
payment options given by MetLife are monthly, quarterly, semi-annually and
annually. A policy at MetLife will lapse if the renewal premium has not been paid and
the grace period has expired. Grace period at MetLife is a specified period of time,
usually 30 or 31 days after the due date, during which the premium may be paid
without penalty and coverage remains in force. If a renewal premium is not paid bythe end of the grace period, the policy lapses, which means coverage ends and the
company is no longer bound by the insurance contract. Metlife may waive its right to
have premiums paid on the due date.
If your policy lapses because you did not pay the premium by the end of the grace
period, you may be able to reinstate your policy at MetLife with some special ease
than other companies. It is because the reinstatement guidelines followed at MetLife
are quite different from others, they are more customer focused. Policies at may bereinstated after termination. Payment of past due premiums is required. MetLife
require an application and evidence you are insurable under their underwriting rules
then in effect. Reinstatement takes effect on the date Metlife approve the application
of reinstatement. If MetLife do not decline reinstatement in writing within 45 days,
the policy will be reinstated on the 45th day after date of the conditional receipt will
give you in exchange for your payment of all premiums due.
7. Keep your Life Insurance Policy Current
There are two basic types of life insurance, and premium payments are processed
differently for each of them. Failure to pay your premiums will have a different effect
on your policy depending on the type of product purchased. There are many reasons
why policy at MetLife lapses. The two most common reason a customer let's a Life
Insurance Policy lapse is because they forgot to renew it or they don't think they can
afford the premium. Allowing a Life Insurance Policy to lapse is a very bad thing.
Don`t think you can simply call MetLife and reinstate your policy some time after itlapses similar to a cable, cell phone or electricity bill but the fact is you can't. If you
allow your policy to lapse it is very likely you will need to apply for a new policy.
This can be very costly as you may have had a term life insurance policy locked in 10
years ago when you were young and healthy. There is no doubt your premium will
now go up even with the same death benefit but how much the premium goes up
depends on how well your health is. Don't forget to renew it! MetLife have made it
very easy to ensure you never forget to renew it. So before you invest in MetLife
Sayeem Rafiq Regd No. 10807184
http://www.compuquotes.com/term-life-insurance-articles.htmlhttp://www.compuquotes.com/term-life-insurance-articles.html -
8/8/2019 Metlife General
28/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 28
make sure that you are satisfied with the reinstatement procedure so that in will not
prove costly to you
OBJECTIVESOF THE STUDY
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
29/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 29
Objectives of the Study :
The main objective of the study is to know the actual
problem of lapses and loopholes in the whole system/process,
The following objectives were set for the present study :
1) To rectify the errors in the system which led PSPs and Monthlys
to appear in the lapsed list.
2) To find the discrepancy in the data for the rest of the modes.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
30/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 30
3) To know the factors responsible for the lapsed policies.
4) To go for the revival of the pol icies.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
31/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 31
RESEARCH DESIGNAND METHODOLOGY
RESEARCH DESIGN
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
32/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 32
A conclusive Research was adopted to conduct the study in two stages. Firstly, to
know the factors responsible for the lapsed policies, discrepancies in the data of SA,
A and Q and to rectify the errors in PSPs and monthlys. Secondly, to go for the
revival of the policies.
In order to realize the objective of the study, primary data was collected through
SCHEDULE besides the use of Secondary data.
Sampling Plan
The population of interest was the policy holders of Kashmir valley whose policies
has gone lapsed. Three branches of J&K bank were selected for the sample. All the55customers were contacted whose policies fall in lapsed list. The customers were
approached at their respective residences, business establishments or at the concerned
bank branches. Some of the customers were contacted telephonically.
Sample size
Monthly = 10 respondents
Quarterly = 7 respondents
Semi-annually = 15 respondents
Annually = 23 respondents
DATA COLLECTION
Data Source:
Primary as well as secondary were usedPr imary da ta has been co ll ected f rom the su rvey conducted th rough
s ys te ma ti c g at he ri ng o f d at a f ro m s tr uc tu re d s am pl e o f c us to me rs
through questioner
Secondary da ta compr ised main ly o f management books and
various websites.
T he r ep or t m ai nl y c on si st s o f p ri ma ry d at a g at he re d t hr ou gh t he
schedule of quest ions asked to the respondents direct ly.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
33/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 33
Research instrument
In o rde r to f aci l it a te r e spondent s express ion a semi s t ruc tu red non
d is g ui se d t yp e o f s ch ed ul e o f q ue st io ns w as u se d c on ta in in g t he
re levan t ques t ions a s pe r the r eason o f thei r non con t inu ing o f the
policies. The same was done with the FAs of the J&K bank.
INTERVIEWING PROCESS
T he s u rv ey w as c on du ct ed t hr ou gh i nt er vi ew s w it h t he FAs a nd
customers were asked the reason of lapsed policies and the interviewer
n ot ed d ow n t he r es po ns es . T hi s e ns ur ed h ig h r es po ns e r at e a nd
eliminated wrong irrelevant responses.
Pilot survey
The schedule was pre tested for errors and ease of understanding. The errors thus
determined were eliminated. The understanding issues were also eliminated to the
extent they could be without any effect on the intended purpose of the query.
This brought some changes in the schedule regarding phrasing, order, and
number of Queries that were made on time.
Statistical tools
Microsoft Excel was used for tabulat ion of data, percentages are drawn
f or g en er al iz in g t he s tu dy a nd g ra ph s a re u se d f or h av in g b et te r
pictorial representat ion.
.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
34/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 34
METLIFE PROFILE
The spirit of MetLifes commitment..
V I S I O N
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
35/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 35
Build f inancia l f reedom for a l l through leadership in providing
p rofess iona l f inancia l advice and bu ild ing long t e rm re la t ionsh ips
through innovat ive protec t ion , accumulat ion and re t i rement products ,
robus t underwr i ting p rocesses and c rea t ing a world -c las s customer
service experience for our customers.
O U R M I S S I O N
B y 2 01 0, p ro vi de 5 m il li on c us to me rs i n I nd ia w or ld -c la ss
solutions for f inancial securi ty and in the process add significant value
to our shareholders, associates and society.
O U R C O R E VA L U E S1 We lead th rough innovat ion to o ffe r wor ld cl a ss and compet i tive
products to our customers.
2 We bu ild long t e rm re lat ionships with our cus tomers by c rea ting
a wor ld c lass service exper ience through opera tional excel lence
and the innovative use of technology.
3 We c r ea te a c u s to me r c e nt er ed a nd r e s ul t f o cu se d d i vi si on t ha t
insp i res and has the buy in o f a l l ou r a s soc ia t e s and has the i r
buy-in.
4 We are committed to crea t ing a h igh performance organiza t ion by
creating an environment that al lows each one of our associates to
perform at the i r peak. As a result we wi l l a lso be recognized as
an employer of choice.
5 We a r e c o mm it te d t o p a r tn er in g w i th o ur i n t er na l a n d e x te rn al
customers for mutual success.
6 We work wi th in tegri ty, fa i rness and f inancia l prudence in al l our
deal ings keeping the in teres t of our shareholders , cus tomers and
employees paramount.
.Partnering for excellence
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
36/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 36
MetLife proudly inheri ts i ts parent company's over- 136 year-old
r e p u t a t i o n o f h e l p i n g b u i l d f i n a n c i a l f r e e d o m f o r e v e r y o n e .
Ra nk ed 3 8 o n th e F ort un e 5 00 l is t ( Ap ri l 2 00 4) Me tLif e
insurances (MetLife) is one of the largest , s trongest and most respected
f inancia l organiza t ions . MetLife through i t s ' a ff i l ia tes i s the number
one l i fe insurer in the U.S wi th approx. @2.5 t r i ll ion of l i fe insurance
in force (as of Dec. 2002) and has been delivering rel iable, high quali ty
service to i ts customers since 1868.
MetLife is a leader in group benefi ts that serve 88 of the top onehundred FORTUNE 500 companies, and p rov iding benef it s to 37
mill ion employees and family members through i ts sponsors in the U.S.
T h e M e t L i f e c o m p a n i e s a r e a l s o r a n k e d # 1 i n g r o u p l i f e a n d # 1 i n
commercia l denta l in the U.S. Headquar tered in New York. MetLife
through i t s a ff i lia tes, subs idiar ies and representa tive off ices , opera tes
in 15 countr ies throughout the America , Europe and Asia . MetLife ' s
ins t i tu t ional c l ients have approx. 35 mi l l ion employees and members .
MetLife has assets under management worth $255 bil l ion.
(FORTUNE 500 is a registered trademark of FOURTUNE
Magazine, a division of Time, Inc)
MetLife insurance Company private Limited was incorporated in
India on April 11, 2001 as a joint venture between MetLife
international Holdings Inc. , The Jammu and Kashmir Bank, M. Pallonjiand Co . P r iva te L imi ted and o the r p r iva te inves to r s. MetL ife has-
developed and distr ibutes a range of l i fe insurance in India.
MetLife is headquartered in Bangalore with officers and presence
in major Indian c i t ies , and an addi tional 1000 out reach points through
its channel partners.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
37/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 37
Through our highly professional agency system, we are dedicated
to help ing Indian consumers p lan for the i r f inancia l secur i ty through
customized solutions.
MetLife i s dr iven by the pr incip les of uncompromis ing in tegr i ty
and the h ighes t level of profess ional ism. I t s miss ion i s to work wi th
utmost integri ty, fairness and f inancial prudence in al l i ts dealings.
MetLife benef i t s f rom i t s parent company 's g lobal presence in
the f ield of insurance, t rack record of establishing successful insurance
opera t ions in emerging markets and the unique s t rengths of i t s o ther
Indian p romote r s. Drawing f rom these exper iences , MetL ife wi ll be
able to address the needs of the Indian customer.
MetLi fe a sp i res to bu i ld on MetLi fe h i s to ry o f mee t ing po l i cy
holder and contract obligations and the, abil i ty to withstand the impact
of adverse economic facto rs . The MetLife brand, known for
empowering people to fee l protec ted , guided and hopeful about the i r
l ives, wil l do the same for i ts Indian customers.
In the past two years, MetLife has made significant
contribut ions to the growth of MetLife in ternat ional . S ince se l l ing i t s
f i rs t pol icy in January 2002, MetLife has exper ienced s t rong growth
f rom i t s agency fo rce , wh ich inc reased 45% dur ing 2003 a lone . The
company p resent ly has more than 240,00 po li c ie s in p lace and has
recen tly en te red the inst i tu t ional marke t wi th a g roup l i fe p roduct .
Whi le g roup insu rance in Ind ia i s no t cu r ren t ly a l a rge marke t , t he
segment is forecasted to grow rapidly in the next two-to-three years. By
focusing on this untapped market , MetLife can meet the needs of large
corpora t ions , he lp ing them es tabl ish benef i t programs that he lp themat t rac t and re ta in top ta lent . However, i t i s per t inent to mention here
tha t Ind ia ' s Banc as su rance and Corpora te Agency has a l so p layed a
significant role in contributing to this success. The goal is for MetLife
to contribute signif icantly to the MetLife mission of reaching
100 mi l l ion cus tomers by 2010. To help reach tha t goal , MetLife p lan
on launching innovat ive products in the near fu ture , th is wi l l ac t as a
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
38/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 38
major d i fferent ia tor among compet i tors . In addi t ions , wi th the launch
of the new MetLi fe t e l ev i s ion commerc ia l s , wh ich i s a f i r s t fo r our
I nd ia o pe ra ti on , t hi s w il l a dd g re at ly t o M et Li fe 's g lo ba l b ra nd
r ec og ni ti on . Th e c omb in ati on o f t his b ra nd a nd t he c on ti nu ed
outstanding efforts wil l provide the fuel to drive MetLife further up theroad of success.
MetL ife de liver s va lue and world -c las s se rv ice to customers
through i t s f inancia l advisors and corpora te sa les representa tives . The
miss ion o f MetL ife Insu rance i s to bu ild f inancia l f r eedom fo r a l l.
What is f inancial freedom? It is al l about securing one's future. I t about
approaching l ifes major milestones without any worries. True f inancial
f r eedom a r ises f rom iden t ify ing your f inancia l capab il i ti e s , s e tt ingreal i st i c goal s based on your d reams and aspi rat ions and achieving
them through a comprehensive p lan . Most impor tant ly, whi le you se t
out to draw up f inancial plans for your l i fe- you need to understand that
i t i sn ' t a one - t ime p lan . The p lann ing tha t goes in to a t t a in ing your
f inancia l f r eedom should be dynamic , s ince l i fe i t se l f i s dynamic .
What 's good for you today might not be next year.
Du ri ng th e c ou rs e o f yo ur l ife yo u n ee d to a ch ie ve yo ur
aspi ra t ions ( l i fe owning of house) , meet cer ta in f inancia l obl iga t ions
( li fe e du ca ti ng y ou r c hi ld re n o r- ge tt in g t he m m ar ri ed ), r id e o ve r
unforeseen contingencies and plan a f inancial ly independent ret irement
phase . The Met Advice Financia l P lanning could be the f i rs t s tep in
your p lann ing exe rc i se . I t a t t empts to g ive you on overv iew of the
various investment options available in the market today.
P R O D U C T S O F M E T L I F E
1. MET 100
2. MET SUKH
3 . MET M ORTA GAGE P RO TECTOR S ING LE PAY
4 . M ET P LATI NUM ( PA RT IC IPATI VE E ND OW NM EN T)
5 . MET 10 0 GO LD (PA RTI CI PATI VE WHO LE LI FE)
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
39/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 39
6 . M ET 1 00 PL AT IN UM (PARTI CI PATI VE WH OL E L IF E)
7 . M ET G OL D ( NO N PARTI CI PATI VE E ND OW NM EN T)
8. MET BHAVISHYA
9 . M ET SU VI DH A ( NO N PARTI CI PATI VE RE GU LA RPAY )1 0. M ET S UV ID HA ( NO N PA RT IC IPAT IV E LI MI TE D PAY)
11. M ET S UV ID HA ( NO N PARTI CI PATI VE SI NG LE PAY )
1 2. M ET S UV ID HA ( NO N PARTI CI PATI VE SI NG LE PAY )
1 3. M ET SU VI DH A ( PA RT IC IPAT IV E LI MI TE D PAY )
1 4. M ET SU VI DH A ( PA RT IC IPAT IV E LI MI TE D PAY )
1 5. M ET SU VI DH A ( PA RT IC IPAT IV E S IN GL E PAY )16. MET PENSION ( PARTICI PATIVE SINGLE PAY)
1 7. M ET PE NS IO N ( PA RT IC IPAT IV E R EG UL AR PAY)
1 8. M ET PE NS IO N ( PA RT IC IPAT IV E L IM IT ED PAY)
1 9. M ET S UR AK SH A ( NO N PA RT IC IPAT IV E RE GU LA RPAY )
2 0. M ET S UR AK SH A ( NO N PA RT IC IPAT IV E LI MI TE DPAY )
2 1. M ET S UR AK SH A (N ON PARTI CI PATI VE S IN GL EPAY )
2 2. M ET SU RAKS HA LI MI TED TO A GE 6 0 ( NO N PA RTI CI PATI VE
REGULAR. PAY)
2 3. M ET SU RAKS HA LI MI TED TO A GE 6 0 ( NO N PA RTI CI PATI VE
LIMITED PAY)
2 4. M ET SU RAKS HA LI MI TED TO A GE 6 0 ( NO N PA RTI CI PATI VE
SINGLE PAY)
25. MET SMART PLUS-RP
26. MET SMART PREMIER- RP
27. MET SMART PLUS SINGLE
2 8. MET S MART PREM IER SI NG LE
29. MET ADVANTAGE PLUS-
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
40/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 40
MetLife`S ACHIEVEMENTS MetLife enjoyed a golden performance on May 15, 2009 (New York) - At the
15th Annual FCS Annual Portfolio Awards, the Financial Communications
Society (FCS): four awards, all Gold trophies, plus the Best-in-ShowMulticultural award for its "South Asian Brand Television Campaign," created
by IW Group. The award was sponsored by Forbes. MetLife also won Gold in
the new ROI category, which recognized the success of marketing campaigns
for their stated return on investment.
MetLifes corporate vision to build financial freedom for everyone guides
the companys response to peoples growing need for first-rate financial
products and services through various life stages and economic cycles.MetLifes trusted brand, capital strength, and existing relationships with
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
41/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 41
millions of individual and institutional customers around the globe uniquely
position MetLife among its competitors. The "everyone" in MetLifes vision took on added meaning in 2000 as the
company welcomed an important new constituency: shareholders. MetLife
transformed itself from mutual to stock ownership in April of that year through a demutualization and initial public offering that was completed in
just 18 months after Board authorization. The year 2001 was a true test of the qualities that define MetLife. The
companys core values, brought to life in what MetLife does every day, were
no more evident than in MetLifes response to the tragic events that shook our
nation on September 11. MetLife responded quickly. The company served its
customers, communities and employees during this difficult time. At the same
time, MetLife invested $1 billion in a broad array of publicly-traded common
stocks. In 2001, MetLife was the first insurance company to establish a financial
holding company with a nationally chartered bank. Leveraging its unparalleled
distribution channels, MetLife entered the retail-banking arena with the launch
of MetLife Bank, making it an easy and convenient way for MetLifes
customers to realize their financial goals.
MetLife announced in 2002 that it would be continuing its long-standing
relationship with Snoopy and the rest of the PEANUTS characters. The
company signed a new contract that would allow the characters to appear in
MetLifes domestic and international advertising for the next 10 years. The sale of State Street Research & Management Company to BlackRock, Inc.
was announced in 2004. In line with MetLifes strategy to focus on core
business growth, the sale benefited many of the companys Individual and
Institutional Business clients who held investments through State StreetResearch, as it became part of one of the largest publicly traded investment
management firms in the U.S. The companys stated long-term goal is to become the recognized leader
throughout the world for relationship building, connectedness and caring in
financial services in the "giant league" with over 100 million people as
MetLife customers by the year 2010. MetLife took a major step toward realizing this goal in 2005, when it acquired
Travelers Life & Annuity and substantially all of Citigroups international
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
42/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 42
insurance businesses for $12 billion. Completed on July 1, 2005, the Travelers
acquisition made MetLife the largest individual life insurer in North America
based on sales, the second largest provider of retail annuities and the largest
provider of institutional annuities.
Working Mother magazine honoured MetLife in 2005 by naming the companyone of the "100 Best Companies for Working Mothers," for the seventh
consecutive year. In 2005, the company was named to Diversity Inc.s list of
the Top 50 Companies for Diversity. In early 2006, MetLife was also named
to the National Association for Female Executives annual list of Top 30
Companies for Executive Women. In 2006, MetLife appointed C. Robert (Rob) Henrikson chairman of the board
of directors, president and chief executive officer of MetLife, Inc. Henrikson
was appointed CEO on March 1, 2006 and chairman of the board on April 25,
2006. Henrikson has been the architect of an aggressive growth strategy that
included double-digit organic growth, the divestiture of non-core businesses,
and an M&A strategy which resulted in market leadership in all of MetLifes
core product lines. Before it was commonly talked about, Henrikson
recognized the opportunities presented by the changing demographics in a
global marketplace and set the company on a course for continued success by
developing innovative products and services and strengthening the companys
distribution power in the U.S. and 16 markets in Asia Pacific, Latin America
and Europe. Today, a time when consumers are feeling a greater financial burden than ever
before, MetLife is helping millions of customers create their own personal
safety net. At no time in the companys history has MetLife been as well
positioned to capitalize on its history, its reputation for security and stability,and its innovative products and services as it is today.
In the future, MetLife will continue to grow its business with focus, innovation
and profitability. This will be accomplished by drawing on the reservoir of
history that has produced an enduring set of corporate values based on more
than 138 years of integrity, social responsibility, strong leadership and
financial strength.
Some other achievements
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
43/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 43
Largest life insurer in the US with approximately $3.4 trillion of life insurance in
force 1
Serves 70 million customers and experiences the existence of over 140 years in
the industry
Ranked 39 on the FORTUNE 500 listing Ranked 6 th In Fortune Magazine 2009 List of Americas Most Admired
Companies Named by Forbes magazine as The Best Managed Insurance Company in
America (2008) 3rd Runner up in customer loyalty survey Conducted by Business Standard & AC
Nielson in 2008
Chart showing Market Share of ULIPS in Kashmirregion
Inference and analysis:The Graph shows that 31 .39 Cr i s the market share of Kashmir region
regarding ULIPS(Uni t L inked Insurance Po li c ie s ) , 27 Cr i s that o f
ICICI prudential and 22.5 Cr that of Bajaj All ianz.
Inference :
I t implies that major port ion of ULIPS market is that of MetLife
India Insurance Ltd . But there i s a tough complet ion among the three1Metlife inc. through its affliates
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
44/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 44
tha t i s Bajaj Al l ianz , ICICI Prudent ial and MetLife . So, MetLife have
an edge over others and sho uld continue the same in the market .
Growth Ranking 2008
Sayeem Rafiq Regd No. 10807184
0 %
1 %
2 1
2 1
3 7
3 7
3 9
5 1
5 7
7 3
8 2
8 8
9 1
1 0 3
N AN AN A
N AN AN A
- 2 0 % 0 % 2 0 % 4 0 % 6 0 % 8 0 % 1 0 0 % 1 2 0 %
B h a r a t i A x a L i f eF u t u r e G e n e r a l iID B I F o r t is L if e
C a n a r a H S B C O B CA e g o n R e lig a r eD L F P r a m e r ic a
A v i v aB a j a j A llia n z
IC I C I P r u d e n t ia lIN G V y s y a
S h r ir a m L if eH D F C S t a n d a r d
Ta t a A IGM a x Ne w Y o rk
S a h a r aO m K o ta k
B i r la S u n lif eM e t L if e
R e lia n c e L i f eS B I L i f e
-
8/8/2019 Metlife General
45/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 45
Financial Status of MetLife{See annexure for fin. report}
From balance sheet
The f igure of total assets has increased f rom $ 356,808.0(2004) to $559,149.0(2007) during past four years but i t
showed drastic decline in the financial year 2008,
[$ 501,678.0]. This might be the resul t o f huge economic
meltdown which effected all over the world. There is increase
in cash amount but the long term investments have declined
due to high risk in the slowing down economic scenario. Alsothe good will of company has increased to satisfactory level.
S imilar ly the l iabi li ti es f igure has increased f rom 2004
($ 333,984.0) t o 2007 ( $ 523,970.0) but dec lined in 2008
financial year up to $ 477,944.0. The h ighest fi gure
($ 408,961.0) is of policy liabilities i.e. the amount which the
company owes to i ts pol icy holders in case of their c la im/accident. The amount of long term debt has shown an
increasing trend from past five years ( $ 7,412.0 to $ 13,425.0).
There i s a huge amount of retained earnings ( $ 6,608.o to
$22,403.0) which depicts that the company is not distributing
its all net profit after tax in its shareholders. So the figure of
total liability & shareholders equity is $ 501,678.0 in financial
year 2008.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
46/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 46
From income statement Total revenue figure shows increasing trend i .e. $38,701 to
$50,989 where the total p remium earned increases f rom
$25,067 to $31,295. Gross profit shows small inclination from
2004 to 2007 but slows down in 2008 ($24,189 to $23,155).
The company is doing increased expenses year after year, in
2005 it was $7,553 but in 2008 it was $7,907.0.
Net income after tax fi gure shows incline from 2004
($2,572.0) to 2007 ($4,102.0), but in 2008 the net income after
tax amount is US $3,510. The EPS has increased in last 4 years
but in 2008 it remains low at 4.72.
From past ten years income statement predicts similar increase in coming
financial year but there might the effect of economic slowdown. Figure
moves from EBIT $1,175 to US $5,762 [In mil lions] (up to 2007),
and in 2008 it declines to US $5,090 [In mill ions] Also ES
(earning per share) varies from 0.83 to 5.2 (4.54 in 2008).From past 10 years balance sheet similar trend is viewed i.e.
Cur rent Asse ts var ies f rom $225,232 .0 (in mil li ons) t o
$501,678, up to 2008. Also cur rent l iabi li ti es vary f rom
$211,542 to $477,944. In addition long term debt increases
from $2,514.0 to $13,425.0.
All above figures are forecasting better future of MetLife but
C.A. should be utilized properly and lowering the liabilities. It
is better to retain earnings than long term debt by discussing
the same issue with share holders.
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
47/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 47
BANCASSURANCE
B A N C A S S U R A N C E
Sayeem Rafiq Regd No. 10807184
-
8/8/2019 Metlife General
48/99
M e t L i f e I n d i a I n s u r a n c e C o m p a n y L t d P a g e | 48
B an c a ss ur an ce i n i ts s im pl es t f or m i s t he d is tr ib ut io n o f
insurance products through a bank 's d is t ribut ion channels . In concrete
terms banc assurance , which i s a lso known as Allfinanz - descr ibes a
p ac ka ge o f f in an ci al s er vi ce s t ha t c an f ul fi ll b ot h b an ki ng a nd
insurance needs at the same t ime.
I t takes var ious forms in var ious countr ies depending upon the
demography and economic and l egi s la t ive c l ima te o f that coun t ry.
Demographic prof ile of the country decides the k ind of products banc
assurance shal l be deal ing in wi th , economic s i tua t ion wi l l de termine
the t rend in terms of turnover, market share , e tc . , whereas legis la t ive
cl imate wi l l decide the per iphery wi th in which the bane assurance has
to operate.
The mot ives behind banc assurance a lso vary. For banks i t i s a
means of product diversif icat ion and a source of addit ional fee income.
Insurance companies see banc assurance as a tool for increas ing the i r
market pene t ra t ion and p remium tu rnover. The customer sees banc
assurance as a bonanza in terms of reduced price, high quali ty product
and delivery at doorsteps. Actually, everybody is a winner here.
Benefi ts to bank
Using bank as a d is t ribut ion channel benefi t s both the insurance
company and the bank. Benefi ts of using bank as a distr ibution channel
are:
1) Banks provide a readymade infrastructure and, th erefore,
reduces the t ime and cost in est