A TRAINING REPORT

ON
INVESTOR’S BEHAVIOUR TOWARDS
ULIP OF
ICICI PRUDENTIAL LIFE INSURANCE
Submitted to:
SATYUG DARSHAN INSTITUTE OF ENGINEERING & TECHNOLOGY
By:
(CHANCHAL)
Roll No. : 9006354
Batch 2016-2019
In Partial Fulfillment of
Bachelor of Business Administration
(IIFSB)
MAHARSHI DAYANAND UNIVERSITY
(APRIL, 2019)

Satyug Darshan Institute of Engineering & Technology

Bhupani Lalpur road.
Faridabad – 121001, NCR, Haryana , India

1
 DECLARATION

I, Ms. CHANCHAL hereby declare that this training report is the record of authentic work
carried out during the time period from to by me in
the partial fulfillment of the requirement for the award of degree BBA (Industry
Integrated). This piece of work has not been submitted to any other University or Institute for
the award of any degree/diploma earlier.

CHANCHAL

Date:

2
 BONAFIDE CERTIFICATE

This is to certify that Ms. CHANCHAL of Satyug Darshan Institute of Engineering and
Technology has successfully completed the project work titled “INVESTOR’S BEHAVIOUR
TOWARDS ULIP OF ICICI PRUDENTIAL LIFE INSURANCE” in partial fulfillment of
requirement for the completion of Bachelor in Business Administration (IIFSB) course as
prescribed by the Maharshi Dayanand University, Rohtak, (HARYANA).

This project report is the record of authentic work carried out by her during the period from
_______ to _______.She has worked under my guidance.

Mr. RAVI BAKSHI

Assistant Professor,
BBA Department
Project Guide (Internal)
Date:

3
 ACKNOWLEDGEMENT

It is a matter of Great Pleasure for me in submitting the project report on INVESTOR’S

BEHAVIOUR TOWARDS ULIP OF ICICI PRUDENTIAL LIFE INSURANCE for the
fulfillment of the requirement of my course.
I am thankful to and owe a deep gratitude to all those who have helped me in preparing this
report. Words seem to be inadequate to express my sincere thanks to Mr. RAVI BAKSHI &
Mr. SHISHIR SHRESTHA for their valuable guidance, constructive criticism, untiring efforts
and immense encouragement during the entire course of the study due to which my efforts have
been rewarded.

Also not to be forgotten are the Lectures of BBA IIFSB who amplified the theoretical
understanding gained previously.

CHANCHAL

Date:

4
 PREFACE

Many students may have work on this project in different way/styles. I have also tried to work on
this project in a different way.
It was for the first time I got the opportunity to work in such a prestigious and well known
organization and things which I have experienced in my training time are going to help me
throughout my life time. I have worked on this project with great enthusiasm and zeal. I have
tried to cover almost all the things which I have experienced and learned from the company’s
management.
.

CHANCHAL

Date:

5
 TABLE OF CONTENT

S.No. PARTICULARS PAGE NO.

1. Introduction to the study 1-18

2. Company Profile 19-32

3. Review of Literature 33-35

4. Research Methodology 36-41

4.1 Objective of the study
4.2 Scope of the study
4.3 Research Design
4.4 Sample Design
4.5 Data Collection
4.6 Limitations of the study

5. Data Analysis & Interpretation 42-53

6. Findings, Suggestions & Conclusion 54-56

7. Bibliography 57

Annexure 58-60

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 CHAPTER-1
INTRODUCTION
TO
THE STUDY

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 1.1 INDUSTRY PROFILE

OVERVIEW OF CURRENT INSURANCE INDUSTRY

1. WHAT IS INSURANCE?

Insurance is a tool by which fatalities of a small number are compensated out of funds
(premium payment) collected from plenteous. Insurance is a safeguard against uncertain events
that may occur in the future.

It is an arrangement where the losses experienced by a few are extended over several who
are exposed to similar risks. It is a protection against financial loss arising on the happening of an
unexpected event. Insurance companies collect premium to provide security for the purpose.
Loss is paid out of the premium collected from people and the insurance companies act as
trustees to the amount so collected. These companies have proposal forms which are filled to
give details of insurance required. Depending upon the answers in the proposal form insurance
companies assess the risk and decide on the premium.

Insurance companies are risk bearers. They underwrite the risk in return for an insurance
premium. the function of insurance is to provide protection, prevent losses, capital formation etc.
hence insurance can be defined as a tool in which a sum of money as a premium is paid by the
insured in consideration of the insurer’s bearing the risk of paying a large sum .it may also be
defined as a contract wherein one party (insurer) agrees to pay the other party (insured) or his
beneficiary, a certain sum upon a given contingency against which insurance is required.

Insurance industry commands massive funds through sales of insurance products to large
number of clients. Insurers also create liabilities and commit themselves to compensate for losses
occurring to the policyholders on future date. It also plays an important role in process of capital
formation.

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2. NATURE OF INSURANCE

a) Risk sharing and risk transfer:

Insurance is used to share the financial losses that might occur to an individual or his family on
the happening of specified events. The loss arising from such events are shared by all the insured
in the form of premium.
Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Every year one
house gets burnt, resulting into a total loss of Rs 200000.If all the 250 owners come together and
contribute Rs.800 each, the common fund would be Rs200000.This is enough to pay to the
owner whose house gets burnt. Thus the risk of one owner is spread over 250 house owners of
the village.

b) Risk assessment in advance:

Insurance companies are risk bearers. They assess the risk before insuring to charge the amount
of premium.

c) It’s not gambling or charity:

The uncertainty is changed to certainty by insuring property and life because the insurer
promises to pay a definite sum at damage or death. Insurance is antithesis of gambling. Failure of
insurance amounts to gambling because the uncertainty of loss is always looming. Moreover
insurance is not possible without premium. So it is different from charity because charity is given
without consideration.

d) Huge number of insured people:

It is essential to insure larger number of people or property to make cost of insurance less
consequently premium would also be less.

e) Assists in capital formation:

Insurance provides capital to society. Accumulative funds are invested in productive channels.

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3. SEMANTICS

1. Risk: It is defined as an uncertainty of a financial loss. It is the unintentional decline in or

disappearance of value arising from contingency.

2. Policy: It is the document which embodies the insurance contract

3. Whole life policy: It is the policy under which the amount of policy will be paid only on
death of the insured. Premiums may be payable throughout the life or for a limited
period.

4. Endowment policy: Endowment policies entitle the insured to receive the amount of the
policy on his reaching a certain age and premiums also stops. If death occurs earlier,
amount of the policy will be paid at that time and payment of premium will also stop at
that time.

5. Claim: It is the amount which an insurer has to pay against a policy.

6. Reinsurance: It refers to placing a part of the risk by an insurer with another insurer. The
object is to reduce the possible loss to be borne by the original insurer, who pays
premiums at the ordinary rates to the reinsurer. Reinsure must pay commission to the
original insurer.

7. Premium: A periodic payment made on an insurance policy.

8. Insurance penetration: It is defined as insurance premium as a share of gross domestic

product.

9. Insurance density: Insurance density is defined as per capita expenditure on insurance

premium i.e. premium per capita.

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 10. Actuary: The actuary is a specialist who combines an understanding of risks and
mathematical technique to develop financial products to manage these risks, price these
products. He helps in designing insurance plans and then evaluates the financial risk of
the company which it takes while selling an insurance policy.

4. TYPES OF INSURANCE

Insurance is broadly divided in two segments, based on the nature of insurance, those are:

1. Life Insurance &

2. Non-Life Insurance or General Insurance. It can be again subdivided into the following
categories:
 Fire Insurance.
 Marine Insurance.
 Social Insurance &
 Miscellaneous Insurance. (Health insurance, Liability Insurance etc….)

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5. HISTORY OF INSURANCE GLOBAL

For now we know the meaning of insurance, different types of insurance. Now let us
know the history and reasons for and behind different types of insurance.

Insurance has existed for thousands of years. The first ever type of insurance was
Property Insurance. It became popular about 3000 BC in China. It all started when Chinese
merchants, as well as their investors, wanted to ensure that they would see a profit from their
goods that they shipped overseas. In the event that a ship was lost at sea, an insuring partner
would reimburse the owners of the ship and goods. To pay for the loss the merchant would be
sold into slavery to the insurer until the debt was repaid. This was so because, a merchant could
not afford to pay for the lost goods or even to buy a ship unless someone invested.

Property insurance was also seen in Babylon as well. In Babylon, merchants and
investors entered into a contract, in which the supplier of money for a trade agreed to cancel the
loan if the trader was robbed of his goods. The trader who borrowed the money paid an extra
amount for this protection in addition to the usual interest. As for the lender, collecting these
premiums from many traders made it possible for him to absorb the losses of the few. Later this
contract was extended to include provisions for a family's home and even the death of the
insured, where life insurance came into existence. Slowly this concept started to spread across
other places like Greek, Roman.

Since ancient times, communities have pooled some of their resources to help individuals
who suffer loss. Like, about 3500 years ago, Moses instructed the nation of Israel to contribute a
portion of their produce periodically for "the alien resident and the fatherless boy and the
widow."

Later the origin of credit insurance, which was included in the Code of Hammurabi, a
collection of Babylonian laws said to predate the Law of Moses. Credit insurance means, in
ancient times the ship owners obtained loans from investors to finance their trading expeditions.
In case, if a ship was lost, the owners were not responsible to pay back the loans to the investors.

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The risk to the lenders was covered by the interest paid by numerous ship owners, since many
ships returned safely.

By the middle of the 14th century, marine insurance was one of the most popular types of
insurance among nations of Europe. Things changed dramatically in the 17th century in Europe.
In 1666, the Great Fire of London bought the need for fire insurance .The Great Fire of London
burned for four days and nights. It destroyed 436 acres, 13,200 houses, 89 churches (including
Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other public
buildings. Only six people were victims in the flames, but hundreds died from shock and
exposure.

By 1688, Edward Lloyd was running a coffeehouse in London. Where, London

merchants and bankers met informally to do business. There financiers who offered insurance
contracts to seafarers wrote their names under the specific amount of risk that they would accept
in exchange for a certain payment, called premium. These insurers came to be known as
underwriters. Finally, in 1769, Lloyd's became a formal group of underwriters that in time grew
as an insurance company.

The concept of insurance developed at a fast pace with the growth of British commerce in
the 17th and 18th century. The first stock companies to engage in insurance were chartered in
England in the year 1720.

In 1735, the first insurance company in the American colonies was founded at
Charleston. Later in the year 1787, fire insurance corporations were formed in New York. Then
later in the year 1759, the life insurance corporation was started in Philadelphia, America.

The New York fire which occurred in the year 1835 was the main reason to draw
attention to create reserves to meet unexpected losses. In the year 1837, Massachusetts was the
first state to require companies by law to maintain such reserves. After 1840, life insurance
entered a boom period.

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 The Workmen's Compensation Act of 1897 in Britain required employers to insure their
employees against industrial accidents. Public liability insurance, fostered by legislation, made
its appearance in the 1880s.It attained major importance with the advent of the automobile.

Until the 1950s, most insurance companies in the United States were restricted to provide
only one type of insurance, but then legislation was passed to permit fire and casualty companies
to underwrite several classes of insurance. Many firms have since expanded and also were
responsible for many mergers.

From this brief accounting of history we can see how insurance came into existence.
Fortunately for us we no longer have to sell ourselves into slavery if our car is stolen nor we
have to be scared of losses due to absence of reserves. However we can be confident that we will
be compensated for our loss. Without people wanting to secure their investments and great
tragedies throughout history we may not have insurance as we know it today resulting in peace
of mind.

6. HISTORY OF INSURANCE INDUSTRY IN INDIA

The insurance industry in India over the past century has gone through big changes. In
India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from
being an open competitive market to nationalization and back to a liberalized market again.

Insurance industry in India started as a fully private system with no restriction on foreign
participation in the Nineteenth Century. Before independence, a few British insurance companies
dominated the Market. Life insurance was first set up in India through a British company called
the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in
1823 and the Madras Equitable Life Insurance Society in 1829.All of these companies operated
in India but did not insure the lives of Indians. They were there insuring the lives of Europeans
living in India. Some of the companies that started later did provide insurance for Indians. But,
they were treated as "substandard" and therefore had to pay an extra premium of 20% or more.

14
The first company that had policies that could be bought by Indians with "fair value" was the
Bombay Mutual Life Assurance Society starting in 1871.

The first general insurance company, Triton Insurance Company Ltd., was established in
1850. It was owned and operated by the British. The first general insurance company was the
Indian Mercantile Insurance Company Limited set up in Bombay in 1907.By 1938; the insurance
market in India had nearly 176 companies (both life and non-life).

After the independence, the industry went to the other extreme. It became a state-owned
monopoly. The industry started to witness a problem like fraud. Hence many regulations were
put in place to reduce and control the problems in the industry. After which Insurance was
nationalized. In 1956, the then finance minister S. D. Deshmukh announced nationalization of
the life insurance business and then the general insurance business was nationalized in 1972.
Only in 1999 private insurance companies have been allowed back into the business of insurance
with a maximum of 26% of foreign holding.

7. INSURANCE IN INDIAN FINANCIAL SYSTEM:

In India insurance is in practice since 12th century as per the records. The first life
insurance company to operate in India the Oriental Life Insurance company was established in
1818 in Calcutta. However it was a British company. The first Indian Insurance company, the
Bombay Mutual Life Assurance Society started its operation in 1871. The Indian Life Insurance
company Act was passed in 1928.Subsequently, both of these Acts were merged and the
insurance Act 1938 was promulgated.
Independent India amended the Insurance Act in 1950 and in 1956, the then fiancé
minister of the nation Mr. C D Deshmukh nationalized all insurance companies, 154 Indian
Insurance companies and 75 provident societies. Finally the life insurance Corporation was born
on 1st September 1956.
The story of non-life insurance in India is no different. Though Lloyd’s insurance
pioneered the general Insurance way back in 1688, the first non-life Insurance Company
set up shop in India was the Triton Insurance company of Calcutta. In 1907 the first Indian
general insurer the Indian Mercantile insurance company started its operations. The New India

15
 Assurance Company Limited was incorporated in 1919. After independence the India
Reinsurance Corporation was set up in 1956 and in 1957 the office of the controller of the
insurance was constituted. In 1968, that tariff advisory committee was set up to regulate the
investment of the players and finally in 1972, the non-life insurance business in the country was
nationalized and the general insurance company was formed as holding company with four
subsidiaries, the National Insurance, Oriental Insurance, United India Insurance and the new
India Assurance Company Limited. In the same year the National Insurance Company Limited
was amalgamated with 22 foreign and 11 Indian Insurance companies. Thus over a period of
two centuries, the Indian insurance industry has gone through the full circle. From being an
open competitive market, it went through nationalization and has been subsequently liberalized
again. Keeping in mind the national economic and commercial objective of India the
government has set up IRDA on 7th December 1999. Through which the reforms process of the
industry got under way.
Insurance in Indian Financial System – Its Importance
Insurance industry is one of the corner stone of any economy and financial System.
Insurance industry contributes its major part in increasing the saving and the fund collected is
utilized in developmental programs.
The Financial sector in our country is in the process of change with the objective o the
overall growth of the economy. The insurance sector as every one knows constitutes a very
important and vital financial intermediary for the growth of the economy.
Insurance has become part and parcel of the financial system because it:
 Reduces the uncertainty of business loses.
 Increases business efficiency.
 Identifies key men.
 Enhances the credit.
 iTakes care of welfare of the society.
 Protect the wealth of the nation.
 Helps to attain economic growth.
 Reduces the inflation level.

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8. INDIAN SCENARIO

 LIFE INSURANCE

After the entry of new players and increase in the penetration levels, could see the
insurance sector cross the Rs 2,00,000-core mark in business by 2010.The current size of the
sector is estimated to be at Rs 50,000 crore, which has seen a compound annual growth rate
(CAGR) of around 175 percent in the last few years.

The insurance sector, both life and non-life, is likely to grow by over 200 percent, and
private insurers are expected to achieve a growth rate of 140 percent as a result of aggressive
marketing technique. It added that state owned insurance companies are likely to be 35-40
percent.

On account of intense marketing strategies adopted by the private insurance players, the
market share of state-owned insurance companies like GIC, LIC and others has come down to 70

17
percent in last 4-5 years from over 97 percent. Despite regulation, the private players are offering
35 percent rate of return to is policy holders against 20 percent by public-sector insurers.

The industry body also noted that India’s life insurance premium is 1.8 percent as a
percentage of GDP whereas it is 5.2 percent in the US, 6.5 percent in the South Korea.

The services sector offers immense opportunities for expansion opportunities for
expansion opportunities and the rural market, also, offers tremendous growth opportunities for
insurance companies.

 GENERAL INSURANCE

General insurance in India has been expecting growth except in some portfolios like
motor insurance, fire and engineering. These portfolios are still under tariff- this means that
premium depends on a fixed predetermined rate structure.

In India, GDS as a proportion of GDP at current prices increased from 26.1% in 2002-03
to 28.1% in 2003-04.house hold sector continued to be the major contributor to GDS at 24.3% in
2003-04.this can be attributed to soft interest rates prevailing in housing sector. General
Insurance has low market penetration. It is 1.95% and ranks 51st. However in collection of
premium it is ranked 23rd. The ratio of the premium collected to that of GDP is 0.58. The main
reason for the general insurance industry to perform very poorly was because of the slow
settlement of claims. Moreover the rates of claim in India were highest in the world. It was 70
percent compared to 40 percent internationally. This meant that out of 100 people who had
insured their commodities 70 claimed for a loss or damage. The main reason for the lack of
demand for general insurance is that people consider it as an unnecessary expenditure. However
it must be noted that the general insurance has been earning consistent profits and has an
efficient dividend paying record accompanied by a steady growth in its financial resources. The
industry is recognized as one of the largest financial Institutions in the country. Some of the
private players in this sector are- ICICI – Lombard, Reliance, Royal-Sundaram,
Chholamandalam etc.

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 9. PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR
The different private players in the life insurance sector and their associations with foreign
companies are being given below:

COMPANY INDIAN FOREIGN TOTAL FDI FOREIGN

PROMOTER/PARTNER INSURER CAPITAL (%) CAPITAL
(RS MN.) (RS MN.)
AMP RELIANCE GROUP(ADAG) None 2,170 0 0
SANMAR
Aviva Life Dabur Aviva (UK) 4,590 26 1193.4
Bajaj-Allianz Bajaj Auto Allianz (Germany) 3680 26 960
Birla Sun Life Aditya Birla Group SunLife (Canada) 4,000 26 1,040
HDFC HDFC StandardLife (UK) 2,500 18.9 470
Standard
ICICI ICICI Bank Prudential (UK) 10,850 26 2,820
Prudential
ING Vysya Vysya Bank ING 4,400 26 680
Ins.(Netherlands)
Kotak Kotak Mahindra Bank OldMutual (South 2,600 26 680
Mahindra Old Africa)
Mutual
Max Newyork Max India NewYorkLife (US) 5,000 26 1,300
Met Life J&K Bank Met Life (US) 3,550 26 920
Sahara Life Sahara India None 1,000 0 0
Ins. I
SBI Life SBI Cardiff (France) 3,500 26 910
TATA AIG TATA Group AIG (US) 3,810 26 990
Shriram Shriram Sanlam Life Ins.
Bharti AXA Bharti Group AXA(Australia)

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10. CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN
ECONOMY

Some surveys have predicted that India and China will play a very vital role in the years
to come. Indian economy can be termed as an emerging economy as it is doubling its GDP in 3
to 5 years and moreover it is not dependent on any particular sector for its GDP.
If we look at the GDP of the Indian economy very closely over the years, we can easily
come to know the changing structure of the economy. We can also come to know the changing
contribution of the various sectors like agriculture, manufacturing and the service sector. In the
financial year 1993-94, agricultural sector contributed to 31%, manufacturing accounted to
26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus over the
years as India became an emerging economy in 2003-04 manufacturing sector contributed for
21.7 %, manufacturing contributed for 26.8 whereas service sector contributed for 51.4% of the
total GDP.
There has been 7.5% growth in the total GDP of the country and is estimated to grow at
8.0% in 2006-07. The Indian economy has shown signs of strong performance despite a rise in
oil prices, high inflation rate and abnormal rains in many parts of the country. The overall growth
of the Indian economy has been equally supported by all the three sectors of the economy, i.e.
the agriculture, manufacturing and the service sector. Insurance, together with the banking
sector, contributes to about 7.3 % of the total GDP of India, and the gross premium collected
contributes to about 2% of the total GDP of the country
The insurance sector in India has completed a full circle from being an open competitive
market to nationalization and back to a liberalized market again. Tracing the developments in the
Indian insurance sector reveals the 360 degree turn witnessed over a period of almost 200 years.

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11. GOVERNMENT POLICIES REGARDING LIFE INSURANCE

Insurance Regulatory and Development Authority (IRDA) 1999

Reforms in the insurance sector were initiated with the passage of the IRDA bill in December
1999.it was set up as an independent body and it has been able to frame globally compatible
legislations.
The IRDA was set up to protect the interests of holders of insurance policies ,to regulate
,promote and insure orderly growth of the insurance industry and for matters connected therewith
or incidental thereto.
This act extends to whole of India. With the establishment of this act, government amended
Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972.
IRDA was formed on the recommendations of Malhotra Committee. In 1999 government of
India has set up Malhotra Committee to examine the structure of insurance industry and
recommend changes, under R.N Malhotra –former governor of RBI.

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 INTRODUCTION TO THE ULIP

What is a Unit Linked Insurance Plan?

A unit linked insurance plan (ULIP) is an investment product that provides for insurance payout
benefits. ULIP offerings are primarily concentrated in India. The investment vehicle requires a
premium payment which is invested in investment products for capital appreciation.

Understanding Unit Linked Insurance Plans (ULIP)

A unit linked insurance plan can be utilized for various benefit payouts including life insurance,
retirement, education and more. A ULIP offers varying provisions to the investor as benefits. A
ULIP is typically opened by an investor seeking to provide coverage for beneficiaries. It is paid
into by the owner in the form of premiums, with the intention of the plan’s worth to be paid out
at a specified time frame for a specific purpose. With a life insurance ULIP, the beneficiary
would receive payments following the owner’s death. Plans can include varying provisions for
triggering payments.

A unit linked insurance plan’s investment options are structured similar to a mutual fund. The
assets in a ULIP vehicle are managed to a specified objective. The vehicle calculates a daily net
asset value. The vehicle is market-linked and appreciates with increasing share value. When an
investor purchases units in a ULIP, he or she is purchasing units along with a larger number of
investors, just like an investor would purchase units in a mutual fund. Different ULIPs offer
different qualified investments. Investors can buy shares in a single strategy or diversify their
investments across multiple market-linked ULIP funds.

ULIPs require a premium. Premiums vary with the terms of each ULIP. An initial lump sum is
typically required along with annual, semi-annual or monthly premium payments. Premium
payments are proportionally invested towards specified coverage and in the designated
investments.

Unit linked insurance plan investors can make changes to their fund preferences throughout the
duration of their investment. The funds offer transferring flexibility. Numerous investment
options are also available including stock funds, bond funds and diversified funds.

22
 Unit linked insurance plans allow for the coverage of an insurance policy with premium
payments allocated to funds that are expected to increase at market rates over time. Be sure to
read the plan's prospectus before purchasing any ULIP.

ULIP INVESTMENTS
ULIP investment offerings are primarily concentrated in India where they were first launched.
HDFC Life is a leading provider of ULIP investments. The firm’s plans offer varying provisions,
terms and investment options. Other ULIP providers include Aegon Life, PNB MetLife, Kotak
Life, ICICI, IndiaFirst, SBI Life and IDBI Federal.

What are the different types of ULIP Investments?

1. Equity Funds: These ULIPs invest primarily in high-risk equities and stocks on companies.
They are the riskiest ULIP investment, and also the one offering the highest rewards. If you
have a medium-to-high risk appetite, and think that fortune favors the bold – go for one of
these plans. If you win here you win big.
High risk, high reward.
2. Income, fixed-interest, and bond funds: Under these ULIPs, your funds will be invested in
government securities, fixed-income securities, corporate bonds, and the like, which offer a
medium and risk, and medium reward.
Medium risk, low to medium reward.
3. Cash Funds: Investments in these ULIPs will see your corpus directed towards money market
funds, cash and bank deposits and other money market instruments which are in the lowest
risk category.
Low risk (almost no risk) and low reward.
4. Balanced Funds: These are the most stable and prudent investment based on the very fact that
they vary the amount of investment that goes to different places. It invests in proportion, and
divides the total investible amount between equity investments in high risk equities, company
stocks, etc. and fixed-interest instruments which pose a lower risk.
Medium risk, high reward.

23
 ULIPs based on the investment objectives:

1. To fund your child’s education: This is one of the more popular reasons for choosing a ULIP
– as it meets the requirements of securing your children and dependents against financial
suffering in the event of your death, and plans pay-outs in such a way that they will be used for
the intended purpose. These ULIPs usually pay benefits out once a year, when it’s needed for
the specific purpose for which it was taken.
2. To build a corpus of funds: Idle savings can be put to work through investment plans, and
one that also gives you the option of life insurance cover basically kills two birds with one
stone. Instead of navigating through hell to find the right investment at the right interest rate
and the right tenure, people tend to let the insurance company manage their funds. Building a
large corpus is a time consuming venture, when approached through the regular method of
hard work, ULIPs limit your involvement in the management of funds and let your enjoy a
piece of the profit cake

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25
CHAPTER-2

COMPANY
PROFILE

26
 COMPANY OVERVIEW
ICICI Prudential Life Insurance is one of the most dominant players in the insurance sectors in
India. They are known to offer products such as term insurance plans, endowment plans, etc. in
order to match its customers various financial needs.

ICICI Prudential Life Insurance Company (ICICI Prudential Life) is a joint venture between
ICICI Bank Ltd., one of India's largest private sector bank, and Prudential plc, a leading
international financial services group headquartered in the United Kingdom. ICICI Prudential
Life was amongst the first private sector life insurance companies to begin operations in
December 2000 after receiving approval from Insurance Regulatory Development Authority of
India (IRDAI).

ICICI Prudential Life's capital infused stands at Rs. 48.16 billion (as of March 31, 2015) with
ICICI Bank Ltd. and Prudential plc holding 74% and 26% stake respectively. For the financial
year 2015, the company garnered a total premium of Rs. 153.07 billion. The company has assets
under management of Rs. 1001.83 billion as on March 31, 2015.

For over a decade, ICICI Prudential Life has maintained its dominant position (on new business
retail weighted basis) amongst private life insurers in the country, with an array of products to
match the different life stage requirements of customer and enable them to achieve their long
term financial goals.

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  .PRODUCT PORTFOLIO

 ICICI Pru iProtect Smart

 ICICI Pru iCare II
Term insurance plans  ICICI Pru Life Raksha
 ICICI Pru POS iProtect Smart
 ICICI Pru POS Life Raksha

 ICICI Pru Heart Cancer Protect

Health insurance plans
 ICICI Prudential Smart Health Cover

 ICICI Pru1Wealth Plan

 ICICI Pru Lifetime Classic
 ICICI Pru Elite Life Super
Unit linked insurance plans  ICICI Pru Elite Wealth Super
 ICICI Pru Guaranteed Wealth Protector
 ICICI Pru Smart Life
 ICICI Prudential Smart Kid Solution

 ICICI Pru Cash Advantage

Traditional Savings/Money  ICICI Pru Savings Suraksha
Back plans  ICICI Pru Assured Savings Insurance Plan
 ICICI Pru Future Perfect

 ICICI Pru Easy Retirement

Retirement plans
 ICICI Pru Immediate Annuity

 ICICI Pru Loan Protect

 ICICI Pru Loan Protect Plus
 ICICI Pru Group Term Plus
 Group Gratuity Plan
 Group Superannuation Plan
 Group Leave Encashment
Group Plans  Group Immediate Annuity Plan
 ICICI Pru Group Loan Secure
 ICICI Pru Group Insurance Scheme for Pradhan Mantri
Jeevan Jyoti Bima Yojana
 ICICI Pru Shubh Raksha Credit
 ICICI Shubh Raksha One
 ICICI Pru Shubh Raksha Life

 ICICI Pru Sarv Jana Suraksha Micro Insurance Plan

Rural plans
 ICICI Pru Anmol Bachat

28
  ICICI Prudential Term Insurance Plans

Type of
Basic sum assured Policy term
the plan

 Minimum
 Minimum sum assured - will be subject to the policy term - 5
ICICI Pru
minimum premium amount years
iProtect
 Maximum sum assured - No limit (subject to  Maximum
Smart
underwriting policies) policy term -
20 years

 Minimum sum assured - if age is 60 years with a policy

 For regular pay
term of 5 years, then the minimum sum assured will be:
policies - 5, 10,
For option I - Rs.87,423 and for option II - Rs.85,875.
15, 20, 25, and
ICICI Pru If age is 18 years and chosen policy term is 30 years,
30 years
iCare II then minimum sum assured for option I will be
 For single pay
Rs.3.6478 lakh and for option II it will be Rs.2.88257
policies - 5 and
lakh
10 years
 Maximum sum assured - No limit is set herein

ICICI Pru  For regular pay

 Minimum sum assured - Rs.50,000
Life policies - 5
 Maximum sum assured - Rs.5 lakh
Raksha years

 ICICI Prudential Health Insurance Plans

Type of the plan Basic sum assured Policy term

 Minimum policy term that can be

Sum assured must be determined
ICICI Pru chosen is 5 years. Policyholders
after analysing future treatment
heart/cancer can purchase ICICI Pru
costs, hospitalisation costs,
protect Heart/Cancer Protect between the
additional expenses, and so on
ages of 18-65 years

ICICI
Prudential  Maximum sum assured - Rs.25  Minimum policy term - 10 years
Smart Health lakh  Maximum policy term - 30 years
Cover

29
 ICICI Prudential Unit-Linked Insurance Plans

Type of the
Basic sum assured Policy term
plan

 If entry age = less than 50

years, then minimum sum
assured = 1.25 times
Single Premium and
maximum sum assured =
10 times Single Premium
ICICI
 If entry age = more than 5 and 10 years
Pru1Wealth
50 years, then minimum
sum assured = 1.10 times
Single Premium and
maximum sum assured =
1.10 times Single
Premium

 If the entry age of the

policyholder is between 0 and
 If the entry age of the
39 years, then
policyholder is between 0
 Policy term will be 10, 15,
and 44 years, then the
to 25 years for a premium
minimum sum assured
payment term of either 7
will be Higher of (10 X
years or less than 7 years
Annualised Premium) and
 If the entry age of the
(0.5 X Policy term X
policyholder is between 40
Annualised Premium)
ICICI Pru and 44 years, then
 If the entry age of the
Lifetime  Policy term will be 10, 15,
policyholder is 45 years
Classic to 20 years for a premium
or more, then the
payment term that is either
minimum sum assured
7 years and above or less
will be Higher of (7 X
than 7 years
Annualised Premium) and
 If the entry age of the
(0.25 X Policy term X
policyholder is between 45
Annualised Premium)
years and 46 years, then
 Maximum sum assured -
 Policy term will be 10
No limit
years (minimum) and 15
years (maximum) for a
30
 premium payment term of
less than 7 years or 7 years
and more than 7 years
 If the entry age of the
policyholder is between 47
years and 55 years, then
 Policy term will be 10
years for a premium
payment term of less than 7
years or 7 years and more
than 7 years

 For single pay policies: If  For regular and limited pay

the entry age of the policies:
policyholder is between 0  If the entry age of the
and 41 years, then policyholder is between 0
minimum sum assured and 39 years, then:
will be 1.25 X Single  For less than 7 years’
Premium and maximum premium payment term -
sum assured will be 10 X the policy terms will be
Single Premium. If the 10, 15, to 30 years
entry age of the  For either 7 years or
policyholder is 42 years more than 7 years’
or more, then minimum premium payment term -
sum assured will be 1.25 the policy terms will be
X Single Premium and 10, 15, to 30 years
maximum sum assured  If the entry age of the
ICICI Pru will be 1.25 X Single policyholder is between 40
Elite Life Premium and 4 years, then:
Super  For regular and limited  For less than 7 years’
pay policies: If the entry premium payment term -
age of the policyholder is the policy terms will be
between 0 and 44 years, 10, 15, to 25 years
then the minimum sum  For either 7 years or
assured will be Higher of more than 7 years’
(10 X Annualised premium payment term -
Premium) and (0.5 X the policy terms will be
Policy term X Annualised 10, 15, to 25 years
Premium). If the entry age  If the entry age of the
of the policyholder is 45 policyholder is between 45
years or more, then the and 51 years, then:
minimum sum assured  For less than 7 years’
will be Higher of (7 X premium payment term -
Annualised Premium) and the policy terms will be
(0.25 X Policy term X 10, 15, to 20 years

31
Annualised Premium)  For either 7 years or
more than 7 years’
premium payment term -
the policy terms will be
10, 15, to 20 years
 If the entry age of the
policyholder is between 52
and 56 years, then:
 For less than 7 years’
premium payment term -
the policy term will be
10 years
 For either 7 years or
more than 7 years’
premium payment term -
the policy term will be
10 years
 For single pay policies:
 If the entry age of the
policyholder is between 0
and 24 years, then:
 For Sum Assured
Multiple of 1.25 times,
the policy term will be 5
to 30 years and For Sum
Assured Multiple of 10
times, the policy term
will be 5 to 30 years
 If the entry age of the
policyholder is between 25
and 31 years, then:
 For Sum Assured
Multiple of 1.25 times,
the policy term will be 5
to 30 years and For Sum
Assured Multiple of 10
times, the policy term
will be 5 to 20 years
 If the entry age of the
policyholder is between 32
and 37 years, then:
 For Sum Assured
Multiple of 1.25 times,
the policy term will be 5
to 30 years and For Sum

32
 Assured Multiple of 10
times, the policy term
will be 5 to 10 years
 If the entry age of the
policyholder is between 38
and 41 years, then:
 For Sum Assured
Multiple of 1.25 times,
the policy term will be 5
to 30 years and For Sum
Assured Multiple of 10
times, the policy term
will be 5 years
 If the entry age of the
policyholder is between 42
and 75 years, then:
 For Sum Assured
Multiple of 1.25 times,
the policy term will be 5
to 30 years

 For single-premium single

zpay policies, the sum
assured will be 1.25 X
Single Premium
 For five-year premium
policies, the sum assured
will be:
 10 × Annual Premium,
 For single-premium policies,
ICICI Pru if the age of the life
the policy term will be 10
Guaranteed assured is between 8
years
Wealth and 44 years
 For five-year policies, the
Protector  7 or 10 × Annual
policy term will be 10 years
Premium, if the age of
the life assured is
between 45 and 54
years
 7 × Annual Premium, if
the age of the life
assured is between 55
and 60 years

33
  If the entry age of the life
assured is between 20 and
25 years, then the
minimum sum assured
will be Higher of (10 X
Annual Premium) and
(0.5 X Policy term X
Annual Premium), and the
maximum sum assured
multiple will be 30
 If the entry age of the life
assured is between 26 and
30 years, then the
minimum sum assured
will be Higher of (10 X
Annual Premium) and
(0.5 X Policy term X
Annual Premium) and the
maximum sum assured
multiple will be 25
 If the entry age of the life
 Minimum policy term - 10
assured is between 31 and
ICICI Pru years
35 years, then the
Smart Life  Maximum policy term - 25
minimum sum assured
years
will be Higher of (10 X
Annual Premium) and
(0.5 X Policy term X
Annual Premium) and the
maximum sum assured
multiple will be 15
 If the entry age of the life
assured is between 36 and
40 years, then the
minimum sum assured for
him/her will be Higher of
(10 X Annual Premium)
and (0.5 X Policy term X
Annual Premium) and the
maximum sum assured
multiple will be 15
 If the entry age of the life
assured is between 41 and
44 years, then the
minimum sum assured for
him/her will be Higher of

34
 (10 X Annual Premium)
and (0.5 X Policy term X
Annual Premium) and the
maximum sum assured
multiple will be 15
 If the entry age of the life
assured is between 45 and
54 years, then the
minimum sum assured for
him/her will be Higher of
(7 X Annual Premium)
and (0.25 X Policy term X
Annual Premium) and the
maximum sum assured
multiple will be 10

 For regular pay policies:

 If the entry age of the
life assured is less than
45 years of age, then
minimum sum assured
for him/her will be
Higher of (10 X Annual
Premium) and (0.5 X
Policy Term X Annual
Premium) and
maximum sum assured
will depend on the
 For regular pay policies, the
respective multiples
ICICI minimum policy term is 10
according to entry age
Prudential years and the maximum
of the life assured
Smart Kid policy term is 25 years
 If the entry age of the
Solution  For single pay policies, the
life assured is either 45
policy term is 10 years
years or more than 45
years, then the
minimum sum assured
will be Higher of (7 X
Annual Premium) and
(0.25 X Policy Term X
Annual Premium) and
the maximum sum
assured will depend on
the respective multiples
according to entry age
of the life assured

35
  For single pay policies:
 If the entry age of the
life assured is equal to
35 years or less than 35
years old, then the
minimum sum assured
for him/her will be 1.25
X Single Premium and
the maximum sum
assured will be 10 times
that of the single
premium
 If the entry age of the
life assured is more
than 35 years old, then
the minimum sum
assured for him/her will
be 1.25 X Single
Premium and the
maximum sum assured
will be 1.25 times that
of the single premium

 ICICI Prudential Traditional Savings/Money Back

Plans
Type of
Basic sum assured Policy term
the plan

 If the entry age of the life assured is

less than 45 years old, then the sum
assured on death multiple will be 10
 If the entry age of the life assured is The policy terms are 15, 17
ICICI Pru
between 45 and 54 years, then the years, and 20 years which
Cash
sum assured on death multiple will be will include PPT and the
Advantage
either 7 or 10 payout term
 If the entry age of the life assured is
more than 5 4 years old, then the sum
assured on death multiple will be 7

36
  If the entry age of the life assured is
less than 45 years old, then the sum
assured on death will be 10 times the
annual premium
 If the entry age of the life assured is
ICICI Pru between 45 and 54 years, then the
Savings sum assured on death will either be
Suraksha 10 times the annual premium or 7
times the annual premium
 If the entry age of the life assured is
more than 54 years, then the sum
assured on death will be 7 times than
the annual premium

ICICI Pru
Assured Sum assured on death of the life assured The policy terms available to
Savings will be 10 times than the annual individuals are 10, 12, and
Insurance premium amount 12 years
Plan

 For premium payment

term of 5 years, the policy
 For premium payment term of 5
terms are 10 to 15 years
years, the minimum basic sum
 For a premium payment
assured on death will be Rs.4 lakh
term of 7 years, the policy
 For a premium payment term of 7
terms are 12 to 17 years
years, the sum assured on death will
 For a premium payment
be Rs.1.8 lakh
term of 10 years, the
ICICI Pru  For a premium payment term of 10
policy terms are 15 to 20
Future years, the basic sum assured on death
years
Perfect will be Rs.1.20 lakh
 For a premium payment
 For a premium payment term of 15
term of 15 years, the
years, the basic sum assured on death
policy terms are 20 to 25
will be Rs.96,000
years
 For a premium payment term of 20
 For a premium payment
years, the basic sum assured on death
term of 20 years, the
will be Rs.84,000
policy terms offered are 25
to 30 years

37
  ICICI Prudential Retirement Plans

Type of the
Basic sum assured Policy term
plan

Life assured may choose

ICICI Pru When the policy matures, or after vesting, the life
to opt for a policy with a
Easy assured will be qualified to receive the Fund Value
policy term of 10, 15, 20,
Retirement or Assured Benefit, whichever is higher in worth
25 or 30 years.

Does not provide sum assured at the end of the

The policy is essentially
policy term. This plan, on the other hand, gives out
ICICI Pru purchased to replace
monthly income upon payment of a purchase price.
Immediate income after retirement,
Policyholders have the option to receive the
Annuity hence it does not have a
installments either on a monthly, quarterly, yearly,
defined policy term
or half-yearly basis

 ICICI Prudential Group Plans

Type of the
Basic sum assured Policy term
plan

ICICI Pru The minimum sum assured provided  Minimum policy term - 5 years
Loan Protect under the plan is Rs.5 lakh  Maximum policy term - 30 years

 If it is a reducing cover - one can

choose to have a policy term of 5-
ICICI Pru Gives out a lump-sum amount to the
20, 25 or 30 years
Loan Protect family of the life assured in case of an
 If it is a 5 or 7-year moratorium, one
Plus unfortunate occurrence
can choose to have a policy term of
8-20, 25 or 30 years

38
 ICICI Pru Group Term Plus:
This plan provides financial cover to the members who are a part of the plan. In case of an
unfortunate occurrence, the members’ loved ones are provided with lump-sum payments to tide
over any financial losses. This plan is most commonly preferred by employers for their
employees as it provides a Life Cover for the family members. Some of the benefits offered
under the plan are:

 Life cover without the need to submit medical test reports up to the free cover limit.
 Coverage provided to the employees in case of an unfortunate occurrence.

Group Gratuity Plan: This plan is suitable for employers as it gives them the opportunity to pay
the gratuity amount to their employees and settle liabilities accordingly. The minimum entry age
for an employee is 15 years under this plan, however, the maximum entry age must not exceed
85 years. ICICI Group Gratuity Plan offers a renewal policy on a yearly basis. This means that
the policy undergoes auto-renewal on the anniversary.

Group Superannuation Plan: With this plan, employers can choose to provide a pension or
superannuation benefits to their employees. The employees are presented with the opportunity to
grow their savings according to their individual risk appetite and the plan also provides them
with a corpus when they retire.

Group Leave Encashment: This plan takes care of the leave encashment liabilities of employers
as it helps them build a savings pool that will ultimately pay out the leave encashment amounts
to their respective employees. A flat cover of Rs.1,000 is provided to the employees under this
plan. The minimum entry age for an employee is 15 years under this plan, however, the
maximum entry age must not exceed 85 years.

Group Immediate Annuity Plan: As the name suggests, this plan is suitable for employers who
want to provide retirement benefits to their employees. With the help of this plan, an employer
can provide pension benefits to his/her employees, to help them sail through the period of
retirement swiftly, without any financial burden. The payouts given to the employees can be
yearly, half-yearly, monthly or quarterly, depending on which mode the employer selects.

39
  ICICI Prudential Rural Plans

Type of the plan Basic sum assured Policy term

 Minimum sum assured that can be opted for -

ICICI Pru Sarv Rs.5,000 For regular pay policies - policy
Jana Suraksha  Maximum sum assured that can be opted for - term is 5 years
Rs.2 lakh

 For single premium policies - the

policy terms are 5 and 10 years
 For a premium payment term
(PPT) of 5 years, the policy term
will be 10 years
Upon death of the life assured, a sum assured is
ICICI Pru  For a PPT of 7 years, the policy
paid to his/her family to help them tide over
Anmol Bachat term will be 10 years
financial losses
 For a PPT of 10 years, the policy
term will be 10 years
 For a PPT of 10 years, the life
assured can also choose a policy
term of 15 years

 ICICI Prudential Life Insurance Claim Settlement

Ratio:
ICICI Prudential Life Insurance Claim Settlement Ratio and Total Earned Premium for the Year
2017-18:

Claim Settlement Ratio 97.88%

Total Earned Premium (in Crore) Rs.27068.77 crore

40
 CHAPTER-3

REVIEW
OF
LITERATURE

41
 REVIEW OF LITERATURE

Life insurance sector is highly regulated, governed by The Insurance Act, 1938 and IRDA
Regulations & Guidelines. IRDA formed under IRDA Act, 1999 is the sole authority responsible
for proper regulation, governance and functioning of the sector. It is imperative for IRDA to
make regulatory changes from time to time that it may deem necessary for protecting &
promoting the interests of the policyholders. In this light, it is very important to first review in
detail the new guidelines issued by IRDA on ULIPs that became effective from October 2010,
changing the entire regulatory landscape of the life insurance sector and providing a detailed
scope for conducting this study on ‘Structure, Regulations & Sustainability of ULIPs in India’.
These ULIP regulations form the most important part of the literature review required for this
study.

The debate between SEBI and IRDA was first studied in detail by Varghese, J. (2010) in his
paper ‘Unit Linked Insurance Products (ULIPs) and Regulatory Tangle’. He argued that the main
point of dispute was whether the ULIPs are insurance products or “collective investment
scheme” as defined in Section 2(ba)1 read with Section 11 AA2 of Securities and Exchange
Board of India Act, 1992 (SEBI Act). Even in the traditional life insurance products, the
investment aspect and the payout on maturity happens by liquidating the value of the collective
investment, through a complex actuarial calculation, and if the logic adopted by SEBI in its order
dated April 9, 2010 is applied, all life insurance products would come within the purview of
SEBI.

In this paper, the author states that regulatory competition at least in the case of ULIPs was
perfectly unavoidable had SEBI took into account all aspects of law and regulation. However, it
should not go unseen that existence of multiple regulatory bodies will create such scenes in
future, since regulation means control and control means power. Hence it is important to create
an appropriate dispute resolution mechanism, which would preempt regulatory issues and resolve
them before those issues go ugly. The most appropriate mechanism should be a higher body,
with legal experts in board, which would judiciously decide on issues of regulatory competition
taking all the parties into confidence and which has powers to withhold the orders before they are
issued. It would be only appropriate that such issues are resolved before it goes public since the

42
impact of such regulatory issues would be much higher on individual investor than any of the
regulators can imagine. (Varghese, J., 2010).

Dash, Lalremthuangi, Atwal and Thapar (2009) in their paper on ‘Study of Risk-Return
Characteristics of Life insurance policies’ propose a methodology to measure the risk-adjusted
rate 22 of return. They measure the unadjusted and risk-adjusted rate of return for mostly
traditional products. They use the discounted cash flow model to calculate their returns. Their
study reveals that unadjusted and risk-adjusted rates of return follow a linear relationship.
Mortality is one of biggest risk in a life insurance contract. The major factor that affects the
overall return in any life insurance contract is the probability of death and survival.

Parchure R., Joshi, M. (2001) in their paper ‘Life & Death in Portfolio Theory’ state that the
purpose is to augment the universe of securities and include life and death contingencies into the
framework of portfolio theoretic choice. The idea clearly is to investigate the place that life
products occupy in the optimum portfolios of customers and to identify factors that influence the
demand for them. The major objective therefore is to estimate the expected returns and risks of
life insurance products by incorporating the probabilities of death and survival in each policy
year. Based on their analysis, for a typical LIC traditional participating endowment plan, the
difference between the mortality-based IRR and survival IRR comes to approximately 1.5% p.a.

Hunt, J. (2007) in his paper ‘Variable Universal Life Insurance: Is it Worth it?’ talks about how
VULs are sold. They are projected as tax saving devices with added advantage of investments
and insurance. The tax advantage of cash value life insurance is that investment earnings credited
to the policy each year produce no taxable income to the policy owner. If the policy is later
surrendered with a taxable gain, the gain is lowered by the value of the insurance protection
received. He also talks about how a VUL works, describing it as a typical Mutual Fund.
Highlighting the only difference that deductions for charges are made on a monthly basis. The
paper focuses on hidden charges which people buying insurance fail to see. The author gives
example about a typical VUL and monthly COI.

Sunder and Venkatesh (2007) in their paper ‘Life-style Wraps: Cost-efficient Alternative to
ULIPs’ argue that ULIPs in India have higher deductions for insurance & mortality charges
andhave higher investment content, when compared to traditional term insurance. The paper tries
to convey the idea that ULIPs are viewed as an investment vehicle with a small element of

43
insurance content. The idea discussed in the paper is that ULIPs in India are more investment
product with a supplemental insurance content. The ULIPs have lower insurance content than
traditional term insurance plans, and that former have more investment content.

Varma, T. (2010) in her article ‘A ULIP with 100 per cent allocation is a myth’ presents an
excerpt from interview of Andrew Cartwright, Chief Actuary of Kotak Life Insurance, in which
he tells why unit-linked insurance plans are a hit among policyholders in India. According to
him, insurance has various advantages over other products, including the flexibility to switch
investments and realise gains without tax implications. Unit-linked insurance policies offer a
transparent approach along with several investment choices. Unlike traditional endowment plans,
most ULIPs do not offer guaranteed returns, but they score in terms of tax advantages and net
yield. All insurance companies have adequate disclosures in place, but a 100 per cent allocation
plan claimed by ULIP is a myth. Although all costs are stated upfront, it is not easy to compare
policies based on cost as it can be expressed in many ways. The code will reduce the advantages
of investments in general, but there is no indication that it will happen retrospectively. In India,
investment in insurance is mainly driven by tax savings. Earlier, investments were predominantly
in endowment plans, but with the introduction of ULIPs and the interest in equities, many people
are investing in this category too. Unlike the international trend, where much of the investment is
in pension products, in India it is limited as the taxation of these products is not so conducive.
Two-thirds of the maturity proceeds are taxed irrespective of how they are withdrawn, and
contributions are exempt from tax only up to Rs 1 lakh. Talking about the factors that the
investor should consider before investing in ULIPs, The most important factor is the reduction in
yield, which has been regulated after the new cap on charges. Secondly, investors must buy the
ULIP that is most suitable for their objective. Finally, they must consider the level of cover that
they need.

44
 CHAPTER-4

RESEARCH
METHODOLOGY

45
4.1 OBJECTIVES OF THE STUDY

 To Proper understanding of ULIP at ICICI Prudential Life Insurance.

 To know the investors’ view towards ULIP.
 To know the importance and awareness of investment in ULIP
 To know the risk perception investment relating to the financial management
 To know the elements of risk and returns in ULIP
 To examine the performance of the plan.

4.2 NEED OF THE STUDY

 The study will help to find out the current performance of ULIP at ICICI Prudential

Life Insurance.

 The study will help to know the expectations of the ULIP in future.

 The study will help to find out the satisfaction level of the ULIP of their product plans.

 The study will help the investors to do their choice of investment.

 It will help to provide the flexibility to switch between funds to investors.
 This study will help companies to customize the service and product, according to the
investor’s need.
 This study will also help the companies to understand the experience and expectations of
the existing customers.

46
4.3 RESEARCH DESIGN

The research design is the structure with in which research is conducted. A research design is the
arrangement of conditions for the collections and analysis of the data in a manner that aims to
combine to the research purpose. It constitutes the collection, measurement & analysis of data.
Research design gives an outline of everything from defining the problems in terms of objectives
to final analysis of data.

4.3.1 Types of research design

 Descriptive Research
 Analytical Research
 Fundamental Research
 Exploratory Research
 Conceptual Research

The research is primarily both Exploratory as well as Descriptive in nature. The information
has been collected from Primary Resources.
A well-structured questionnaire was prepared and personal interviews were conducted to collect
the customer’s perception and buying behavior, through this questionnaire.

Research Design

Conclusive Research Exploratory

Design Research Design

Descriptive
Resarch
Design

Casual
Research
Design

47
4.4 SAMPLE DESIGN

A sample design is made up of two elements. Sampling method refers to the rules and procedure
by which some elements are included in the sample. Sampling refers to the method of selecting a
sample from a given universe with a view to draw conclusions about that universe. A sample is a
representative of the universe selected for study.

TECHNIQUES OF SAMPLING

PROBABILITY
SAMPLES

SIMPLE SYSTEMATIC MULTI-STAGE

STRATIFIED
RANDOM RANDOM CLUSTER

NON-
PROBABILITY
SAMPLES

CONVENIENCE SNOWBALL QUOTA THEORITICAL

48
4.4.1 Sample Size
Large sample gives reliable result than small sample. However, it is not feasible to target entire
population or even a substantial portion to achieve a reliable result. So, in this aspect selecting
the sample to study is known as sample size. Hence, for my project my sample size is 50.
For the questionnaire I have taken the sample size of 50 customers of ICICI Prudential Life
Insurance.
The sample size consists of both the Professional & Business class people.

4.4.2 Sampling Technique

Convenience Sampling Technique is used in the survey conducted.

4.4.3 Tools of Analysis

Data has been presented with the help of Pie Charts.

4.4.4 Plan of Analysis

Tables were used for the analysis of the collected data. The data is also neatly presented with the
help of statistical tools such as Pie Charts to represent data clearly & effectively.

4.5 DATA COLLECTION

The task of data collection begins after a research problem has been defined and research design
chalked out. Collection of data is the first step in any statistical investigation.
Collection of data is a very important function. The success and failure of investigation mainly
depends upon the quality of data. Adequacy and accuracy of data is essential to arrive at correct
conclusion. The person who is collecting statistical data has to observe self-restraint, confidence,
Patience, caution and unbiased attitude while collecting data. .
There are two types of data by which analysis can be done. These are as follows:

49
  PRIMARY DATA

The data that is collected first hand by someone specifically for the purpose of facilitating the
study is known as primary data. Primary Data is collected in the course of doing experiments,
performing surveys or by observation or direct communication with respondents.

 SECONDARY DATA

It is needed for conducting this research work collected from the various:
 Business magazines,
 Bank broachers,
 Statistical and management book,
 Market research books etc.

In this project, researcher has decided to do PRIMARY DATA COLLECTION method

because the study does not permit to apply observational method.
In survey approach researcher has selected a questionnaire method for taking a customer view
because it is feasible from the point of view of our subject & survey purpose.
50
4.6 Limitations of the study

 The research is confined to a certain parts of Faridabad and does not necessarily shows a
pattern applicable to all of Country.
 Lack of awareness about ULIP funds in rural areas.
 Some respondents were reluctant to divulge personal information which can affect the
validity of all responses.
 In a rapidly changing industry, analysis on one day or in one segment can change very
quickly. The environmental changes are vital to be considered in order to assimilate the
findings.
 It is difficult to know if all the respondents gave accurate information; some respondents
tend to give misleading information.

51
 CHAPTER-5

DATA ANALYSIS
&
INTERPRETATION

52
Q1. OCCUPATION

OCCUPATION No. of RESPONDENTS

BUSINESSMEN 16

PROFESSIONALS 14

STUDENTS 8

OTHERS 12
TABLE 5.1

OCCUPATION

BUSINESSMEN
32%
OTHERS
24%

STUDENTS
16%

PROFESSIONAL
S
28%

FIG 5.1
INTERPRETATION:

The above fig 5.1 shows that 32% of respondents are Businessmen, 28% of respondents are
Professionals, 16 % of respondents are Students & 24% of respondents belong to other category.
It indicates that all of these respondents are having knowledge of insurance and they are capable
to pay premium on time.

53
Q2. ANNUAL INCOME

ANNUAL INCOME No. of RESPONDENTS

BELOW & 1,00,000 8

1,00,000- 3,00,000 14

3,00,000- 5,00,000 19

5,00,000 & ABOVE 9

TABLE 5.2

ANNUAL INCOME
5,00,000 & BELOW &
ABOVE 1,00,000
18% 16%

1,00,000-
3,00,000- 3,00,000
5,00,000 28%
38%

FIG 5.2
INTERPRETATION:

The above fig 5.2 shows Income of collected sample. Which indicates that 38% of respondents
are having income between 3Lakh- 5 Lakh, 28% belongs to 1 Lakh- 3 Lakh, 18% belongs to 5
lakh and above & 16% of respondents are having income of 1 Lakh and less than 1 Lakh. Which
simply shows that most of the respondents are having good income and they are compatible to
pay the premium on time.

54
Q3. WHICH OF THESE ARE IMPORTANT WHILE CHOOSING THE
LIFE INSURANCE?

ATTRIBUTES No. of RESPONDENTS

INVESTMENT 7
SECURITY 5
SAVINGS 10
TAX BENEFITS 8
RETURNS 9
FINANCIAL FUTURE NEEDS 11
TABLE 5.3

ATTRIBUTES
FINANCIAL INVESTMENT
FUTURE NEEDS 14%
22%

SECURITY
10%

RETURNS
SAVINGS
18%
20%

TAX BENEFITS
16%

FIG 5.3
INTERPRETATION:

The fig 5.3 indicates the important attributes which should be kept mind by the investor while
choosing the insurance. In which, 22% of respondents consider Future needs, 20% consider
Savings, 18% consider Returns, 16% consider Tax Benefits, 14% of consider Investment &
10% of respondents are considering Security. Which indicates that most of the respondents give
preference to meet their Financial Future Needs because of future is uncertain and they want to
reduce their risk for the same.

55
Q4. WHEN YOU HAVE TAKEN UNIT LINKED PLAN OF ICICI
PRUDENTIAL LIFE INSURANCE?

TIME No. of RESPONDENTS

1 YEAR BEFORE 12

2 YEARS BEFORE 20

MORE THAN 3 YEARS BEFORE 18

TABLE 5.4

TIME

1 YEAR
MORE THAN 3
BEFORE
YEARS BEFORE
24%
36%

2 YEARS
BEFORE
40%

FIG 5.4
INTERPRETATION:

The fig 5.4 shows time period of ULIP taken by investors. In which 40% of respondents have
taken ULIP before 2 Years, 36% of respondents have taken it before more than 3 years &
24% have taken it before just before 1 year.

56
Q5. REASONS FOR INVESTING IN UNIT LINKED PLANS OF ICICI
PRUDENTIAL LIFE INSURANCE?

No. of
REASONS OF INVESTMENT
RESPONDENTS
Returns 17

Schemes are good 8

Recommended by Family & Friends 11

Needs to save tax 5

Offers Multiple benefits like
9
investment + insurance +Tax Saving
TABLE 5.5

Offers Multiple
benefits like REASONS OF INVESTMENT
investment +
insurance +Tax
Saving
18%

Returns
Needs to save 34%
tax
10%

Recommended
by Family & Schemes are
Friends good
22% 16%

FIG 5.5
INTERPRETATION:

The fig 5.5 shows the reasons of investment of respondents in which 34% of respondents
invested for Good Returns, 22% have invested through their Reference, 18% have invested for
Multiple Benefits, 16% have invested just because of Good Schemes & 10% have invested for
Saving Their Tax. It indicates that most of the respondents are willing to invest in ULIP reason
being to get more rate of return with more assurity.

57
Q6. WHICH ULIP PLAN WOULD LIKE TO INVEST IN ICICI
PRUDENTIAL?

No. of RESPONDENTS
ULIP PLAN

SMART KID PLAN 13

SMART LIFE 16

ELITE LIFE SUPER 11

OTHER 10
TABLE 5.6

ULIP PLAN

OTHER
20% SMART KID
PLAN
26%

ELITE LIFE
SUPER
22% SMART LIFE
32%

FIG 5.6
INTERPRETATION:

The fig 5.6 indicates the interest of investors in different plans of ULIP. It shows 32% of
respondents have taken plan of Smart Life, 26% of have taken Smart Kid Plan, 22% have
chosen Elite Life Super Plan & 20% of respondents have taken other plans of ULIP. From this it
came to know that majority of respondents have opted PRU SMART LIFE of ULIP which shows
plan consists Complete Protection, Growth of Money, Tax Benefits and some more benefits.

58
Q7. HOW DO YOU RATE THE PREMIUM AMOUNT TO BE PAID IN
UNIT LINKED PLANS OF ICICI PRUDENTIAL LIFE INSURANCE?

RATE No. of RESPONDENTS

HIGH 23

MEDIUM 25

LOW 2
TABLE 5.7

RATE THE PREMIUM AMOUNT

LOW
4%

HIGH
46%
MEDIUM
50%

FIG 5.7

INTERPRETATION:

Fig 5.7 shows the rating to premium amount to be paid by the investor in which 46% of
respondents are Highly Satisfied with premium, 50% of respondents are having a Moderate
Level of satisfaction for premium amount & only 4% of respondents give less preference to
premium as they rated it as low. The study indicates that plan surely gives some benefits to
investors like customer can pay policy premiums through convenient options like cheque, cash,
and online pay and also provides the auto pay facility for future payments.

59
Q8. HOW DO YOU RATE THE RETURNS IN UNIT LINKED PLANS OF
ICICI PRUDENTIAL LIFE INSURANCE?

RATE No. of RESPONDENTS

GOOD 21

AVERAGE 26

POOR 3
TABLE 5.8

POOR
RATE THE RETURNS
6%

GOOD
42%

AVERAGE
52%

FIG 5.8

INTERPRETATION:

The above fig shows the satisfaction level of investors towards the Return from plans. In which
52% of respondents give average rating to Returns of ULIP, 42% are happy and feeling good
with returns & only 6% of respondents give low rating to returns. So it indicates that rate of
returns are good and fulfill the expectations of investors which makes them satisfied.

60
Q9. HOW DO YOU RATE THE RISK ASSOCIATED WITH UNIT LINKED
PLANS OF ICICI PRUDENTIAL LIFE INSURANCE?

RATE No. of RESPONDENTS

GOOD 20

AVERAGE 25

POOR 5
TABLE 5.9

RATE THE RISK

POOR
10%

GOOD
40%

AVERAGE
50%

FIG 5.9
INTERPRETATION:

Fig 5.9 shows the association of risk in ULIP. The 50% of respondents give average rating, 40%
of respondents give good rating to risk associated in ULIP & only 10% gives low rating. The
study shows that plan doesn’t consist more risk as it is a wealth creation tool and protects life
from uncertain turns or risk.

61
Q10. HOW DO YOU RATE THE SCHEMES WITH UNIT LINKED PLANS
OF ICICI PRUDENTIAL LIFE INSURANCE?

RATE No. of RESPONDENTS

GOOD 19

AVERAGE 28

POOR 3
TABLE 5.10

POOR
RATE THE SCHEMES
6%

GOOD
38%

AVERAGE
56%

FIG 5.10
INTERPRETATION:

According to the fig 5.10, 56% of respondents give average rating to schemes of ULIP, 38%
gives good rating to schemes which basically means there is positive response for schemes of
ULIP but 6% of respondents didn’t give good rating. The study indicates that schemes are
Flexible, Tax Benefits, Offers Transparency, and aims to Secure the Future of investor.

62
Q11 HOW DO YOU RATE THE FLEXIBILITY WITH UNIT LINKED
PLANS OF ICICI PRUDENTIAL LIFE INSURANCE?

FLEXIBILITY No. of RESPONDENTS

HIGHLY FLEXIBILE
24
AVERAGELY FLEXIBLE
22
NOT AT ALL FLEXIBLE
4
TABLE 5.11

NOT AT ALL
FLEXIBLE
FLEXIBILITY
8%

HIGHLY
FLEXIBILE
48%
AVERAGELY
FLEXIBLE
44%

FIG 5.11
INTERPRETATION:

The fig 5.11 shows the level of Flexibility in ULIP. In which 48% of respondents find plans
with highly flexibility, 44% find it with moderate flexibility and 8% of respondents considered
it as inflexible. It indicates that most of respondents found flexibility while investing in ULIP
means investor can easily Switch Funds between equity & debt. The study also finds that ULIPs
also give the opportunity to move your money between different funds in order to help you earn
maximum returns.

63
Q12. ARE YOU SATISFIED WITH UNIT LINKED PLANS OF ICICI
PRUDENTIAL LIFE INSURANCE??

SATISFACTION LEVEL No. of RESPONDENTS

HIGHLY SATISFIED 22
SATISFIED 14
MODERATE 10
DISSATISFIED 2
HIGHLY DISSATISFIED 1
TABLE 5.12

HIGHLY
DISSATISFIED SATISFACTION LEVEL
DISSATISFIED
2%
4%

MODERATE
20%
HIGHLY
SATISFIED
44%

SATISFIED
30%

FIG 5.12
INTERPRETATION:

The fig 5.12 shows the satisfaction level of respondents in ULIP. 44% of respondents are highly
satisfied, 30% are satisfied, 20% of respondents are having moderate level of satisfaction & 6%
are neither satisfied nor dissatisfied. The study shows that investors are satisfied with the
performance of ULIP as it provides the benefit of Protection, Savings, Flexibity and much more
benefits for future.

64
 CHAPTER – 6

FINDINGS,
SUGGESTIONS &
CONCLUSION

65
 FINDINGS

 It was found that survey consist 32% of respondents are Businessmen, 28% of
respondents are Professionals, 16 % of respondents are Students & 24% of respondents
belong to other category.
 It was found that people are having awareness and good knowledge in ULIPs according
to my survey.
 It was found that most of the people belong to good income group i.e. 3Lakh- 5Lakh
which shows that they are compatible to pay their premium on time.
 It was observed that 22% of respondents consider Financial Future Needs as an
important attribute while making investment in ULIP.
 It was found that 34% of people made investment for receiving good returns in future.
 Most of respondents have invested for getting multiple benefits like investment,
insurance, tax saving etc.
 It was found that 32% of respondents liked to invest in PRU SMART LIFE plan of
ULIP as compared to other plans.
 It was found that people are getting good returns through investment in ULIP.
 It has been observed that ULIP is a wealth creation tool that provides protection of life
from uncertain turns or risk.
 It was found that schemes of ULIP are flexible, provides Tax Benefits, offers
Transparency etc.
 The investor has an option to switch between Equity & Debt funds.
 It was found that people are satisfied with their opinion of choosing ULIP as an
investment tool.

66
  SUGGESTIONS
For ICICI to have a larger market share it has to widen the customer base, so it should come up
with intensive market strategy and aggressive publicity stunts such as:

 Deployment of addition sales force for proper marketing.

 Continuous bombardment of Advertisement by ICICI Prudential as a Life Insurance
 Company for a common man as well as for well-educated and good salaried people.
 Hoardings in and around the important areas(public concentrated areas)
 The company should concentrate on the people aged between 18-25 for individual and
also the age category 35-55 for family.
 Since individuals are interested in insuring their family members the company should
concentrate on insuring the individual’s family members.
 ICICI Prudential should concentrate on geographical areas for its expansion and to
penetrate through rural areas it should tie-up with rural banks..
 Top of mind insurance company is LIC, because of its trust what people keep in it and
its awareness. So ICICI Prudential should emphasis heavy advertisement.
 ICICI to provide different financial future satisfaction plans to the people.

67
  CONCLUSION
These are the basic parameters for choosing an ULIP or Unit Linked Insurance Plan. Some plans
also have a different benefit payment structure. For instance, death benefit in some plans are
payable in monthly installments. However, this feature should not be a parameter as the benefit
structure is individualistic in nature and depends on individual requirements.

So, in a nutshell, we must know what a Unit Linked Insurance Plan or ULIP is, understand its
structure, its features and its benefits. After you have understood the plan, make an attempt to
research and compare the available plans which will suit you the most. Use these yardsticks
enumerated above and select the plan best suited for you.

68
 CHAPTER-7

BIBLIOGRAPHY

69
 WEBSITES
 www.icici.com
 www.iciciprudential.com
 www.policybazaar.com
 www.google.com
 www.moneyoutlook.com
 www.bankbazaar.com
 www.economictimes.com
 www.coverfox.com

 NEWSPAPERS

 The Economic Times

 Financial Express
 The Times of India
 Business Standard

 BOOKS

 STUDY GUIDE- PRINCILES & PRACTICES OF LIFE / GENERAL INSURANCE,

by AIMA.

 Books published by INSURANCE INSTITUTE OF INDIA

 LIFE-INSURANCE, by Mc GILL

 Insurance: Concepts & Coverage by Marshall Wilson Reavis III PhD

70
ANNEXURE

71
 Questionnaire to Analyze Investors View towards Unit Linked
Plan (ULIP) of ICICI Prudential Life Insurance

Unit Linked Plans offer Multiple Benefits i.e. Insurance + Investment + Tax Benefits. Demand
of ULIP is increasing due to aggressive marketing done by Insurance Companies. You can use
this questionnaire to analyze the investors view towards Unit Linked Plan (ULIP) of ICICI
Prudential Life Insurance:

1) Name: _________________________________________________

2) Age: __________________________________________________

3) Gender: Male Female

4) Occupation:
Business man Professional
Student Others __________________

5) Annual Income:
 Below & 1,00,000
 1,00,000 – 3,00,000
 3,00,000 – 5,00,000
 5, 00,000 & Above

6) Which of these are important while choosing the life insurance?

Investment Security Savings

Tax Benefits Returns Financial

72
7). When you have taken Unit Linked Plan of ICICI Prudential Life Insurance?
a. 1 Year Before
b. 2 Years Before
c. More than three years before

8) Reasons for investing in Unit Linked Plans of ICICI Prudential Life Insurance?
a. Returns
b. Schemes are good
c. Recommended by Family & Friends
d. Needs to save tax
e. Offers Multiple benefits like investment + insurance +Tax Saving

9) Which ULIP Plan Would Like To Invest In ICICI Prudential?

a. SMART KID PLAN

b. SMART LIFE PLAN
c. ELITE LIFE SUPER PLAN
d. Other

10). How do you rate the Premium Amount to be paid in Unit Linked Plans of ICICI
Prudential Life Insurance?
a. High
b. Medium
c. Low

11) How do you rate the returns in Unit Linked Plans of ICICI Prudential Life Insurance?
a. Good
b. Average
c. Poor

73
12). How do you rate the risk associated with Unit Linked Plans of ICICI Prudential Life
Insurance?
a. Good
b. Average
c. Poor

13). How do you rate the schemes with Unit Linked Plans of ICICI Prudential Life
Insurance?
a. Good
b. Average
c. Poor

14). How do you rate the flexibility with Unit Linked Plans of ICICI Prudential Life
Insurance?
a. Highly Flexible
b. Averagely Flexible
c. Not at all flexible

15). Are you satisfied with Unit Linked Plans of ICICI Prudential Life Insurance??
a. Yes
b. No

74