2. 2
1.1) Indian Financial System
Financial System of any country consists of financial markets,
financial intermediation and financial instruments or financial products
for the purpose of performance of economic activities.
Financial System is a set of inter-related activities or services working
together to achieve some predetermined purpose or goal.
According to Robinson, financial system is, “To provide link between
savings and investment for the creation of new wealth.”
A financial system is the system that covers financial transactions and
the exchange of money between investors, lender and borrowers. A
financial system can be defined at the global, regional or firm specific
level. Financial systems are made of intricate and complex models that
portray financial services, institutions and markets that link depositors
with investors.
Components of Financial System
Financial
institutions
Financial
markets
Financial Instruments Financial Services
Financial
Regulators
Financial
Intermediary
Institutions
Financial Non-
Intermediary
Institutions
Other
Financial
institutions
Short-term Instruments Middle-Term
Instruments
Long-term
Instruments
Fund or
Resource
Based
Fee or
Advice
basedMoney Market Capital Market
3. 3
The Indian Financial Market, can be broadly classified into the
formal (organized) financial system and the informal (unorganized)
financial system. The formal financial system comes under the
purview of the Ministry of Finance (MOF), Reserve Bank of India
(RBI), Securities Exchange Board of India (SEBI) and other
regulatory bodies.
The informal financial system consists of:
(i) Individual money lenders such as neighbors, relatives,
land lords, traders, store owners and so on.
(ii) Groups of persons operating as funds or ‘associations’.
These groups function under a system of their own rules.
(iii) Partnership firms consisting of local brokers, pawn
brokers and non-banking financial intermediaries such as
chit fund companies. In India the spread of banking in
rural areas has helped in enlarging the scope of the
formal financial system.
Financial Markets in India comprises the money market,
government securities market, capital market, insurance market and
the foreign exchange market. Recently, the derivative market has
also emerged. With banks having already been allowed to
undertake insurance business, bank assurance market has also
emerged in a big way.
Till the early 1990s most of the financial markets were
characterized by controls over the pricing of financial assets,
restrictions on flow or transactions, barrier to entry, low liquidity
rate and high transactional costs. There characteristics came in the
way of development of the Indian Financial Markets as a result
restructuring became a priority. From 1991 onwards financial
market reforms have emphasized the strengthening the price
discovery process, easing restrictions on transactions, reducing
transaction cost and enhancing system liquidity.
4. 4
Different Types of Financial Products
Shares: These represent ownership of a company. While shares
are initially issued by corporations to finance their business
needs, they are subsequently bought and sold by individuals in
the share market. They are associated with high risk and high
returns. Returns on shares can be in the form of dividend
payouts by the company or profits on the sale of shares in the
stock market. Shares, stocks, equities and securities are words
that are generally used interchangeably.
5. 5
Bonds: These are issued by companies to finance their business
operations and by governments to fund budget expenses like
infrastructure and social programs. Bonds have a fixed interest
rate, making the risk associated with them lower than that with
shares. The principal or face value of bonds is recovered at the
time of maturity.
Treasury Bills: These are instruments issued by the government
for financing its short term needs. They are issued at a discount
to the face value. The profit earned by the investor is the
difference between the face or maturity value and the price at
which the Treasury Bill was issued.
Options: Options are rights to buy and sell shares. An option
holder does not actually purchase shares. Instead, he purchases
the rights on the shares.
Mutual Funds: These are professionally managed financial
instruments that involve the diversification of investment into a
number of financial products, such as shares, bonds and
government securities. This helps to reduce an investor’s risk
exposure, while increasing the profit potential.
Certificate of Deposit: Certificates of deposit (or CDs) are
issued by banks, thrift institutions and credit unions. They
usually have a fixed term and fixed interest rate.
Annuities: These are contracts between individual investors
and insurance companies, where investors agree to pay an
allocated amount of premium and at the end of a pre-
determined fixed term, the insurer will guarantee a series of
payments to the insured party.
Complex financial products include the following:-
a) Credit Default Swaps (CDS)
b) Collateralized Debt Obligations (CDO)
7. 7
Life Insurance- An Overview, Concept
& Importance
Life insurance (or life assurance between an insurance policy holder
and an insurer or assurer, where the insurer, especially in the
Commonwealth of Nations), is a contract promises to pay a
designated beneficiary a sum of money (the benefit) in exchange for a
premium, upon the death of an insured person (often the policy
holder). Depending on the contract, other events such as terminal
illness or critical illness can also trigger payment. The policy holder
typically pays a premium, either regularly or as one lump sum. Other
expenses, such as funeral expenses, can also be included in the
benefits.
Life policies are legal contracts and the terms of the contract describe
the limitations of the insured events. Specific exclusions are often
written into the contract to limit the liability of the insurer; common
examples are claims relating to suicide, fraud, war, riot, and civil
commotion.
Life-based contracts tend to fall into two major categories:
Protection policies – designed to provide a benefit, typically a
lump sum payment, in the event of a specified occurrence. A
common form - more common in years past - of a protection
policy design is term insurance.
Investment policies – the main objective of these policies is to
facilitate the growth of capital by regular or single premiums.
Common forms are whole life, universal life, and variable life
policies.
8. 8
TYPES OF LIFE INSURANCE
Given below are the basic types of life insurance policies. All other
life insurance policies are built around these basic insurance policies
by combining various other features.
Term Insurance Policy:
A term insurance policy which is now also available as E-term
insurance policy is a pure risk cover policy that protects the person
insured for a specific period of time. In such type of a life insurance
policy, a fixed sum of money called the sum assured is paid to the
beneficiaries if the policyholder expires within the policy term.
Whole Life Policy:
A whole life policy covers a policyholder against death, throughout
his life. The validity of this life insurance policy is not defined and
hence the individual enjoys the life cover throughout life.Under this
life insurance policy, the policyholder pays regular premiums until his
death, upon which the corpus is paid to the family.
TYPES OF LIFE INSURANCE
Term -Life
Policy
Whole Life
Policy
Endowment
Policies
Money Back
Policy
ULIPs
Annuities
and
Pension
9. 9
Endowment Policies:
Endowment policies are among the popular life insurance policies as
they combine risk over and financial savings. Policyholders benefit in
two ways from a pure endowment insurance policy. In case of death
during the tenure, the beneficiary gets the sum assured. If the
individual survives the policy tenure, he gets back the premiums paid
with other investment returns and benefits like bonuses.
Money Back Policy:
This life insurance policy is preferred by many people because it
gives periodic payments during the term of policy. In other words, a
portion of the sum assured is paid out at regular intervals. If the
policyholder survives the term, he gets the balance sum assured.
ULIPs:
ULIPs are market-linked life insurance products that provide a
combination of life cover and wealth creation options. A part of the
amount that people invest in a ULIP goes toward providing life cover,
while the rest is invested in the equity and debt instruments for
maximizing returns.
Annuities and Pension:
In these types of life insurance policies, the insurer agrees to pay the
insured a stipulated sum of money periodically. The purpose of an
annuity is to protect against financial risks as well as provide money
in the form of pension at regular intervals.
Thus, whatever your financial requirements, there is a wide variety of
insurance policies to ensure that your requirement is fulfilled as per
your needs and planning.
10. 10
Overview & Concepts
I. Parties to contract: The person responsible for making
payments for a policy is the policy owner, while the
insured is the person whose death will trigger payment of
the death benefit. The owner and insured may or may not
be the same person.
The beneficiary receives policy proceeds upon the insured
person's death. The owner designates the beneficiary, but the
beneficiary is not a party to the policy. The owner can change
the beneficiary unless the policy has an irrevocable beneficiary
designation.
II. Contract terms: The face amount of the policy is the
initial amount that the policy will pay at the death of the
insured or when the policy matures, although the actual
death benefit can provide for greater or lesser than the face
amount. The policy matures when the insured dies or reach
a specified age (such as 100 years old).
Special exclusions may apply, such as suicide clauses, whereby
the policy becomes null and void if the insured commits suicide
within a specified time.
Concepts
Parties-to-
Contract
Contract
Terms
Cost of Insurance Death Proceeds
Accidental
Deaths
11. 11
III. Cost of Insurance: The insurance company calculates the
policy prices (premiums) at a level sufficient to fund
claims, cover administrative costs, and provide a profit.
The cost of insurance is determined using mortality tables
calculated by actuaries. Mortality tables are statistically
based tables showing expected annual mortality rates of
people at different ages.
IV. Death proceeds: Upon the insured's death, the insurer
requires acceptable proof of death before it pays the claim.
The normal minimum proof required is a death certificate,
and the insurer's claim form completed, signed, and
typically notarized. If the insured's death is suspicious and
the policy amount is large, the insurer may investigate the
circumstances surrounding the death before deciding
whether it has an obligation to pay the claim.
V. Accidental Death: Accidental death insurance is a type of
limited life insurance that is designed to cover the insured
should they die as the result of an accident. Such insurance
can also be accidental death and dismemberment
insurance or AD&D. In an AD&D policy, benefits are
available not only for accidental death but also for the loss
of limbs or body functions such as sight and hearing.
AD&D, either because the cause of death is not covered by
the policy or because death occurs well after the accident,
by which time the premiums have gone unpaid. Accidental
death insurance can also supplement standard life
insurance as a rider. If a rider is purchased, the policy
generally pays double the face amount if the insured dies
from an accident. This was once called double indemnity
insurance. In some cases, triple indemnity coverage may
be available.
12. 12
Importance & Roles of Life
Insurance
There are three roles that define the importance of life
insurance.
Role 1: Life insurance as an “investment”.
While most people recognize the risk hedging and tax saving
potential of insurance, many are not aware of its advantages as
an investment option as well. Insurance products yield more
compared to regular investment options, and this is besides the
added incentives or bonuses offered by insurers. One cannot
compare an insurance product with other investment schemes
for the simple reason that it offers financial protection from
risks, something that is missing in non-insurance products. In
fact, the premium you pay for an insurance policy is an
investment against risk. Thus, before comparing with other
Importance
Risk
Cover
Investment Tax Planning
13. 13
schemes, one must accept that a part of the total amount
invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings. In life insurance, unlike
non-life products, one gets maturity benefits on survival at the
end of the term, like:
If a person take a life insurance policy for 20 years and survive
the term, a part of the amount invested as premium in the policy
may come back to him with added returns.
In the unfortunate event of death within the tenure of the policy,
the family of the deceased will receive the sum assured. Thus,
insurance is a unique investment avenue that delivers sound
returns in addition to protection.
Role 2: Life insurance as “Risk cover”
First and foremost, insurance is about risk cover and protection -
financial protection, to be more precise - to help outlast life’s
unpredictable losses. Designed to safeguard against losses
suffered on account of an unforeseen event like death, insurance
provides you with that unique sense of security that no other
form of investment provides. By buying life insurance, you buy
peace of mind and are prepared to face any financial demand
that would hit the family in case of an untimely demis
Role 3: Life insurance as “Tax planning”
Insurance serves as an excellent tax saving mechanism too. The
Government of India has offered tax incentives to life insurance
products in order to facilitate the flow of funds into productive
assets.
Buying a life insurance plan entitles you tax benefits on:
Premiums under Section 80Maturity or death claim proceeds
under Section 10 (10D).
14. 14
Analysis of Life insurance
Industries in India
The insurance industry of India consists of 53 insurance
companies of which 24 are in life insurance business and 29 are
non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from
that, among the non-life insurers there are six public sector
insurers. In addition to these, there is sole national re-insurer,
namely, General Insurance Corporation of India (GIC). Other
stakeholders in Indian Insurance market include agents
(individual and corporate), brokers, surveyors and third party
administrators servicing health insurance claims.
Government's policy of insuring the uninsured has gradually
pushed insurance penetration in the country and proliferation of
15. 15
insurance schemes are expected to catapult this key ratio beyond
4 per cent mark by the end of this year, reveals the
ASSOCHAM latest paper.
The number of lives covered under Health Insurance policies
during 2015-16 was 36 crore which is approximately 30 per cent
of India's total population. The number has seen an increase
every subsequent year as 28.80 crore people had the policy in
the previous fiscal. During April 2015 to March 2016 period, the
life insurance industry recorded a new premium income of Rs
1.38 trillion (US$ 20.54 billion), indicating a growth rate of 22.5
per cent.
India’s life insurance sector is the biggest in the world with
about 360 million policies which are expected to increase at a
Compound Annual Growth Rate (CAGR) of 12-15 per cent over
the next five years. The insurance industry plans to hike
penetration levels to five per cent by 2020.
The Indian insurance market is a huge business opportunity
waiting to be harnessed. India currently accounts for less than
1.5 per cent of the world’s total insurance premiums and about 2
per cent of the world’s life insurance premiums despite being
the second most populous nation. The country is the fifteenth
largest insurance market in the world in terms of premium
volume, and has the potential to grow exponentially in the
coming years. Furthermore, life insurance is projected to
comprise 35 per cent of total savings by the end of this decade,
as against 26 per cent in 2009-10.
The future looks promising for the life insurance industry with several
changes in regulatory framework which will lead to further change in
16. 16
the way the industry conducts its business and engages with its
customers.
List of Life Insurance
Companies as of 2016-17
Claim Settlement Ratio
Kotak Life Insurance 97%
HDFC Standard Life 99%
ICICI Prudential Life 97%
SBI Life 98%
Birla Sunlife 94%
Tata AIA Life 95%
PNB Metlife 93%
Bajaj Allianz 92%
Exide Life 86%
Life Insurance Corporation of
India
98%
Bharti AXA Life Insurance 80%
About some of the leading Life Insurance companies in India:-
Life Insurance Corporation of India:
Life Insurance Corporation of India is the oldest insurance
sector of our country. Established in 1956, one of the largest
insurance company of India is a state owned insurance group
and investment firm that offers a range of insurance products to
its customers. Some of the common products that is offered by
the company are life insurance plans, pension plans, child
insurance plans, unit linked plans, special plans and group
scheme. With a networkof 2,048branches the company has a
huge number of employees operating in different cities and town
17. 17
all over the country. LIC has a claim settlement ratio of 98.19%
with maximum grievances settled over year.
Kotak Mahindra Life Insurance Company:
Headquartered in Mumbai the J.V between Kotak Mahindra
Group and Old Mutual Fund is Kotak Mahindra Life Insurance.
It is one of the fastest growing insurance company in India that
has a 4 million trusted policyholder nationwide. Keeping their
customers in high priority the company provides a much
affordable range of term plan, ULIP plan, child plan, saving
plan, investment plan, protection plan and retirement plan. The
company has much gained name in the market for delivering
outstanding value to its customer through customized products
and excellent service. The Kotak Mahindra Life Insurance
provide plans with a maximum tenure of 30 years and eligibility
criteria with minimum 18 years to maximum 65 years.
Birla Sun Life Insurance Company:
With a 2.5 million of customer base the Birla Sun Life Insurance
is one of the leading insurance company in India. Birla Sun Life
Insurance came in to existence with the joint venture between
Aditya Birla Group and Sun Life Financial Inc. The company is
known as a pioneer of Unit Linked Life Insurance plans and has
over 600 branches spread over 500 cities across the country. A
complete range of insurance services is offered by Birla Sun
Life Insurance like protection plan, child plan, health and
retirement solution, ULIP plan, customized group product and
life stage product to provide compete satisfaction to the
customers. With a claim settlement ratio of 88.45 % the
company offers the best plans for the customers.
18. 18
Bharti AXA Life Insurance Company:
Headquartered in Mumbai Bharti AXA Life Insurance is a life
and general insurance provider company. The company is a joint
venture between Bharti Enterprises and AXA Group. The
customers can choose from the wide range of policies offered by
the company ranging from investment plans to traditional plan
or life insurance plan to child plan. The company is flourishing
immensely and has a network of 123 offices in different cities
across India. The customers has witnessed a maximum
grievances resolved by the company in a year and had
experienced a claim settlement ratio of 80.00%. The policies
offered by the company has a maximum tenure of 65 years and
the age criteria for the plans starts from minimum 18 years to
maximum 65 years.
ICICI Prudential Life Insurance Corporation of India:
ICICI Prudential Life Insurance Corporation of India is a joint
venture between ICICI Bank Ltd.; one of the India’s leading
private sector bank and Prudential Plus; one of the largest
international financial service group. The company began its
operation in December 2000 as the first private sector Life
insurance in India. For over a decade the company has
maintained its top most position amongst the private life insurer
in country. To fulfill the different life stage requirements of the
customer, ICICI Prudential Life Insurance provides an array of
products that enables the buyers to achieve the long term goal.
ICICI Prudential life insurance offers products like term plan,
ULIP plan, Pension Plan, Child Plan and Investment Plan.
TATA AIA life Insurance Company:
TATA Sons and the AIA Group teamed up to form a joint
venture and has launched TATA AIA life Insurance Company.
19. 19
In this venture the majority of stake i.e. 75% is held by TATA
Sons and 26 % by AIA Group of company. The company works
with a customer centric approach and offers an extensive range
of Insurance Product to people, association and corporate
insurance buyers. Started working in year 2001 the company
provides various plan in multiple segments like group plan,
child plan, wealth plan, protection plan, saving plan and micro
insurance plan.
Future & Prospects of Life Insurance in
India
India had significant structural reforms over the last three-four years
to accelerate overall GDP growth in the country. From a reforms
perspective, there has been GST, RERA, UDAY and also a host of
reforms based on which we expect India’s GDP to grow over a longer
period of time. It is estimated to grow at about over 7% over a longer
term periods. Of course, there have been short-term blips. In the last
five years’ data, financials savings as percentage of GDP is now close
to 8% growing at anywhere between 14% and 15% CAGR. Clearly,
Life Insurance have been one of the bigger beneficiaries of this along
with the rest of the financial services industry which includes banks
and mutual funds.
The second aspect of these reforms is a significant financialisation of
savings and whether it is demonetization or GST or even the
restrictions which came as part of this budget putting caps on what
you can spend as cash, you will find that the financial savings are
20. 20
going to grow at a much faster pace than what they have been
growing in the past.
Putting this in context, coming to life insurance numbers, last in FY16
the industry grew at about 8%, in FY17 it grew at over about 22% and
a fair bit of increase actually happened in the second half. Whatever
we may talk of about demonetization, one statistics really stands out,
the currency in circulation. The currency in circulation even today
when we are almost one year post demonetization is less by about
three-and-a-half trillion rupees on an aggregate basis, which is 20%
less.
Current Market trends in Life Insurance in India:
Evolution of Alternative channels of Distribution
Individual agency channel was the only mode of distribution in
LIC days (currently 20 lakh). Direct Marketing is a popular
channel for reaching customers and generating leads or selling
through a telephone.
Corporate Agency system introduced in 2002 with IRDAI
framing regulations allowing Corporate to form Agencies
(currently 428).
This was followed by the Insurance Broking model which
allowed the entity to be a distributor for multiple insurers
(currently 370)
Micro Insurance Agent channel to procure New Business from
rural and remote rural areas. (currently-27,041)
Web Aggregators are online operators who provide choice of
products to customers online (currently 16).
21. 21
Insurance Marketing Firms (IMF) – Encourage
Entrepreneurship– Ability to sell other financial products.
(currently-81)
Common Service Centers (CSC) – Encourage Rural
Entrepreneurship to take insurance to the remote areas through
Village Level Entrepreneurs (VLE). (currently-5373)
Due to such extensive distribution channel and government
intervention there has been a lot of growth of Life Insurance Sector in
rural areas of India. The chat is as follows:-
Digitization – the buzzword in the industry
Online policies picking up in a big way – Term policies are
becoming popular.
Web Aggregators use online space, providing comparable
quotes and generating leads for insurers.
22. 22
Usage of Tablets for demonstrating customers with ease under
various scenarios – with various returns and charge structures
become very easy.
Form filling has become a less painful exercise and anywhere
any time insurance through mobile applications has also become
popular.
Comparing products of various Insurers has become easy and
faster.
Premium payments made online –Instant Payment through
online portals have revolutionized the premium collection
process.
IVRS, online mobile applications etc. have also become
popular premium payment methods.
E-Insurance Account – a Revolution
First of its kind in the world – holding all insurance policies in
electronic form by opening a single e-insurance account with an
Insurance repository.
Free for the customer and the charges are paid by the Insurance
Company.
A single KYC process done for e-insurance account instead of
each policy – reduces the paper work.
24. 24
Company Overview
Kotak Life Insurance Company is a joint venture between Kotak
Mahindra Bank (74%) and Old Mutual Plc (26%) headquartered in
London. The company started its operations in the year 2001. The
official name of the company is Kotak Mahindra Old Mutual Life
Insurance Company. The company has more than 200 branches in
India.
The Kotak Mahindra Group is one of India's trusted names in
financial services. It was established in 1985 and currently caters to
the entire spectrum of financial products. Kotak Mahindra Bank is
one of its flagship businesses with an established presence as a private
bank in the country. Its other established lines of businesses include
asset management, broking, investment banking and realty funds.
Old Mutual, based in London, UK has a 165 year old history and has
operations in 34 different countries around the world. Its major
operations are in US and the UK. It has a portfolio of insurance, asset
management, banking and long term savings products.
List of Board of Directors:-
Mr. Uday Kotak Non-Executive Chairman
Mr. Sailesh Devchand Non-Executive Vice-Chairman
Mr. Shivaji Dam Non-Executive Director
Mr. Prakash Apte Independent Director
Mr. Prakash Parasnis Independent director
Ms. Anita Ramchand Independent Director
Mr. Depak Gupta Non-Executive Director
Mr. Guarang Shah Non- Executive Director
Mr. G. Murlidhar Managing Director
25. 25
Market Share of Kotak Life Insurance Company
The following table shows Kotak Life Insurance market share.
This is based on the Business premium collected in each of the
financial year from 2011-2016.
Year 2011-12 2012-13 2013-14 2014-15 2015-16
Market
Share
1.0% 1.1% 1.1% 1.4% 1.6%
Claim ratio of Kotak Mahindra insurance Company
Year 2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
2013-
14
2014-
15
2015-
16
Claim
Ratio
77.08 86.97 89.30 92.10 92.04 90.69 90.73 89.09
0%
0%
0%
1%
1%
1%
1%
1%
2%
2%
Market share
Market Shareof Kotak Mahindra LifeInsurance
2011-12 2012-13 2013-14 2014-15 2015-16
65.00%
70.00%
75.00%
80.00%
85.00%
90.00%
95.00%
Claim-Ratio
Claim-Settlement Ratio
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
26. 26
Miles Stones of Kotak Mahindra Group
1986 Kotak Mahindra Finance Limited starts the activity of Bill
Discounting.
1987 Kotak Mahindra Finance Limited enters the Lease and Hire
Purchase Market
1990 The Auto-Finance division started
1991 The Investment Banking Division is started. Takes over
FICOM, one of India’s largest financial retail marketing
networks
1992 Enters the Funds Syndication sector
1995 Brokerage and Distribution Business incorporated into a
separate company- Kotak Mahindra Securities. Investment
Banking division incorporated into a separate company-
Kotak Mahindra Capital Company
1996 The Auto Finance Business Division is hived off into a
separate company- Kotak Mahindra Primus Limited. Kotak
Mahindra takes a significant stake in Ford Credit Kotak
Mahindra Limited, for financing ford vehicles. The launch
of Matrix Information Services Limited marks the Groups
entry into information Distribution.
1998 Enters Mutual Fund Market with the launch of Kotak
Mahindra Asset Management Company
2000 Kotak Mahindra launches kotakstreet.com- its online
broking site. Formal Commencement of private equity
activity through setting up of Kotak Mahindra Venture
Capital Fund.
2001
2003 Kotak Mahindra Finance LTD. Coverts to Kotak Mahindra
Bank
27. 27
Mission & Vision Statement of Kotak
Mahindra Life Insurance
The Global Indian Financial Services Brand
Our customers will enjoy the benefits of dealing with a global Indian
brand that best understands their needs and delivers customized
pragmatic solutions across multiple platforms.
We will be a world class Indian financial services group. Our
technology and best practices will be bench-marked along
international lines while our understanding of customers will be
uniquely Indian.
We will be more than a repository of our customers' savings. We, the
group, will be single window to every financial service in a
customer's universe.
The Most Preferred Employer in Financial Services
A culture of empowerment and a spirit of enterprise attracts bright
minds with an entrepreneurial streak to join us and stay with us.
Working with a home grown professionally managed company, which
has partnerships with international leaders, gives our people a
perspective that is universal as well as unique.
The Most Trusted Financial Services Company
We will create an ethos of trust across all our constituents. Adhering
to high standards of compliance and corporate governance will be an
integral part of building trust.
Value Creation
Value creation rather than size alone will be our business driver.
28. 28
Why Kotak Mahindra Life Insurance?
Kotak Mahindra Old Mutual Life Insurance is one of the fastest
growing insurance companies in India, trusted over 4 million policy
holders nationwide. The company is differentiated because of its
ability to deliver outstanding value to its customers through high
customer empathy and understanding, lifetime of exceptional services
and suite of products that best leverage the combined prowess o
Protection and Long term savings- the two key elements that
determine any winning life insurance product. The company also has
among the best claim ratios in the industry, a solemn testimony to its
business practices.
29. 29
SWOT ANALYSIS OF KOTAK MAHINDRA LIFE
INSURANCE
Company Information
Parent Company Kotak Mahindra & Old mutual Plc.
Category NBFC
Sector Insurance & Finance
Tagline “zindagi se ek kadam aage’
USP Expertise in local market with global exposure
STP
Segment Personal and Group Insurance
Target Group Urban & Rural Investors
Positioning Complete Insurance and financial solutions
SWOT MODEL:
Beneficial Harmful
Internal Strengths:
1. State of art Actuarial I.T Infrastructure
2. Has network across 300 towns
3. Innovative Product range with
transparent practices
4. The company covers over 4 million
customers and is one of the fastest
growing insurance companies in India.
Weakness:
1. Lack of presence in various
parts of country
2. Limited Advertising and low
brand visibility as compared to
leading competitors
External Opportunities:
1. Growing potential in the
semi-urban and rural market
2. Better investment
awareness amongst the
younger generation
Threats:
1. Fluctuating economic
scenarios
2. Entry of new NBFCs in
the sector increasing
competition
30. 30
PRODUCT PORTFOLIO
Kotak Mahindra Product Portfolio:
1. Kotak Mahindra Insurance Term Plans:
These Life Insurance Plans provide a pure risk cover plan that helps
you with a high level of protection at nominal costs.
I. Kotak Preferred e-Term Plan
II. Kotak Saral Suraksha
III. Kotak Preferred Term Plan.
IV. Kotak Term Plan
2. Kotak Life Insurance ULIP Plans:
These ULIP plans with low charges along with convenient
premium payment options that provide premium payment
options that provide you with a great combination of funds and
help you build substantial wealth for yourself.
I. Kotak Assured Income Plan
II. Kotak Platinum
III. Kotak Single Invest Advantage
IV. Kotak Ace Investment Plan
V. Kotak Invest Maxima
Kotak Mahindra Plans & Products
Kotak Life
Insurance term
Plans
Kotak Life Insurance
UPLI Plans
Kotak Life Insurance
Pension Plans
Kotak Life
Insurance
Children’s Plan
Kotak Life
Insurance
Investment
Plans
31. 31
3. Kotak Life Insurance Child Plans:
Child Plans help you accumulate good amount of money and provide
defined benefits at specific milestones in your chil’s life to support
his/her education
I. Kotak Head-start Child Assure
4. Kotak life Insurance Investment Plans:
I. Kotak Sampoorn Bima Miccro-Insurance Plan
II. Kotak Assured Income Accelerator
III. Kotak Gramin Bima Yojana
IV. Kotak Premier Moneyback Plan
V. Kotak Assured Savings Plan
VI. Kotak Premier Endowment Plan.
Unique Features of Kotak Plans
Low Cost Insurance:
If you are a woman or if you do not consume tobacco*, you will be
eligible for discounted premiums
*Available with Kotak e-Preferred Term only.
Step-Up option:
You may avail this option at the time of purchase of the policy. It
guarantees you your additional insurance cover at certain important
stages in your life in a cost-effective and hassle free manner.
32. 32
Increase your sum assured without having to undergo any further
medical examination. The increase in Sum Assured depends upon the
event in which you want to exercise this option.
Events Maximum Increase in Sum
Assured
Marriage
Purchase of house in India
after commencement of
the policy (subject to
maximum of loan)
50% of original Sum Assured
Birth or legal adoption of a
child
On the 1st, 3rd& 5th policy
anniversary
25% of original Sum Assured
The ‘Step-Up’ option can be revised at one or more of the events
listed above, provided that the revised Sum Assured is not more than
3 times the original Sum Assured and the life insured has not attained
45years of age.
An increase in Sum Assured will also reflect to corresponding
increase in the premium amount. The Step up charges as a percentage
of the basic premium are as follows:-
Step Up Option Fees
Policy Term Fees*
Up to 15 years 3% of Basic Premium
Above 15 years 5% of Basic Premium
*This fee will be charged till the age of 45 or the end of policy term,
whichever is earlier.
33. 33
Flexibility:
You may convert your online term plans to any other plan offered by
Kotak Life Insurance (except for another term plan). This benefit is
available at any time during the term of the policy, but at least 5 years
before cover ceases. The premium rates applicable at new plan would
apply.
Eligibility Criteria:
Before you purchase these plans; you need to fulfill the following
criteria:
Entry Age (as on last Birthday) Min. 18years, Max.65 years
Policy Term Min. 5 Years, Max. 30 Years
Maturity age Max. 70 years
Sum Assured Kotak e-term: Min. Rs 3,00,000,
Max- 24,99,999
Kotak e- Preferred Term: Min.
Rs25,00,000, Max.-(Suject to
Underwriting)
Annual Premium Min.- Rs1800, Max.- (based on
Sum Assured)
34. 34
Plan Snapshot:
Given Below are premiums for a few combinations of entry ages &
policy terms for a Sum Assured of Rs30lakhs.
TERM
Age 10 Years 15 Years 20Years 25 Years
25 3100 3105 3120 3140
30 3195 3215 3355 3640
35 3680 3835 4245 4800
40 4895 5360 6075 7140
0
1000
2000
3000
4000
5000
6000
7000
8000
25 30 35 40
Chart Title
10 Years 15 Years 20 Years 25 Years
35. 35
Terms and Conditions
1. Death Benefit:
The death benefit payable would be Sum Assured less the
balance of premium (if any) payable in the year of death.
2. Maturity Benefit:
These being risk plans, no maturity benefit will be payable.
3. Grace Period:
There is a grace period of 30 days from the due date for
payment of premium for the yearly, half-yearly & quarterly
mode. For the monthly mode there is a grace period of 15 days.
In case of death during the grace period, Death Benefit is
payable.
4. Lapse:
If during the policy term, any premium due)including the Step-
Up option fee, if applicable) are not paid within the grace
period, the policy shall lapse from the date of the first unpaid
premium and the insurance cover shall cease.
5. Policy Revival:
A lapsed policy can be revived within two years from the date of
the first unpaid premium else the contract shall be terminated. If
the outstanding premiums are paid with handling charges within
six-months, the policy can be revived without proof of good
health. Thereafter to revive the policy, proof of good health
would also be required.
6. Surrender:
No payout will be made in case you wish to surrender the policy
(Up to 3 years).
36. 36
7. Free Look Period:
The policyholder is offered 15days free look period, from the
date of the receipt of the policy wherein the policyholder may
choose to return the policy within 15days of receipt if he is not
agreeable with any of the terms and conditions of the plan.
Should he choose to return the policy, he/she shall be entitled to
refund of the premium paid after adjustment for expense on
medical examination, stamp duty and proportionate risk
premium for the period of cover.
8. General Exclusion:
In case the life insured commits suicide within one year of the
date of issue of the plan or date of revival, the policy shall be
void and no benefits shall be payable.
9. Service Tax and Education Cess:
Service Tax and Education Cess shall be levied on all applicable
charges as per the prevailing tax laws and/or any other law. In
case of any statutory levies, cess, duties etc. as may be levied by
the Government of India from time to time, the company
reserves its right to recover such statutory charges from the
policyholder(s) either by increasing the premium and/or by
reducing the benefits payable under the plan.
Tax Benefit- You can avail tax benefit under Section 80C and
Section 10(10D) of the Income Tax Act, 1961.
37. 37
Recruitment Process of Financial
Advisor in Kotak Mahindra Life
The recruitment and selection process is a major function of the
Human Resource Development process. It is the first steps towards
creating the competitive strength and giving a strategic advantage to
the organization. Recruitment process involves a systematic
procedure from sourcing the candidate to arranging and conducting
the interviews. It is time consuming and requires a lot of resource. A
general recruitment process are as follows:-
Identifying the vacancy:
The recruitment process begins with the human resource department
receiving requisition for recruitment from any department of the
company, these contain the following:-
Post to be filled
Number of people required
Duties to be performed
Qualification Required
Preparing job description and person
specification
Locating and developing the resource of
required number and type of employees
Short-listing and identifying the
prospective employees with the required
number and type of employees
Arranging the interviews with selected
candidates
Conducting the interview and decision
making
38. 38
Factors Affecting Recruitment
In today’s rapidly changing business environment, a well-defined
recruitment policy is necessary for the organization to respond to its
human resource requirement time. Therefore, it’s important to have a
clean and concise recruitment policy in place, which can be executed
efficiently to recruit the best talent for selection of the right candidate
at the right place.
Components of Recruitment Policy:
The recruitment policies and terms of the organization
Recruitment services of consultants
Recruitment of temporary employees
Unique recruitment situation
The selection process
Job description
External Factors
1. Supply & Demand
2. Labour market
3. Image/Goodwill
4. Political, Social &
legal environment
5. Unemployment rate
6. Competitors
Internal Factor
1. Recruitment Policy
2. Human resource
Planning
3. Costof recruitment
4. Size of the firm
5. Growth and Expansion
39. 39
Terms and conditions of employment:
A recruitment policy in an organization should be such that:
It should be focused on recruiting the best people with high
potential
Ensuring that the applicant and employee are treated with
utmost dinity and respect
Unbiased policy is to be formulated
To aid and encourage employees in realizing their full talent
Tansparent, task oriented selection process should be
implemented that suits the organizational needs
Optimizing manpower
Defining competent authority to approve each selection
Factors Affecting Recruitment Policy:
Organizational Objectives
Personnel policies of the organization and its competitors
Government Policies on reservations
Preferred source recruitment
Need of the organization
40. 40
Recruitment of Financial Advisors at
Kotak Mahindra Life Insurance
Qualifications required to become Financial Advisors:-
The person must be:-
1. Not a Minor
2. Have passed at least class 12 standard or equivalent examination,
if he is to be appointed in a place with a population of 5000 or
more. (10th standard otherwise).
3. Have undergone practical training for at least 100 hours in life or
general insurance, as the case may be, from and institution
approved and notified by IRDA. In the case of a person wanting
to be a composite insurance agent, the applicant should have
completed at least 75 hours practical training in life and general
insurance business, which may be spread over six to eight weeks.
4. Have passed the pre-recruitment examination conducted by
IRDA.
Functions of Financial Advisors:-
Understanding the prospects needs and persuade him to
buy a plan of life insurance with complete formalities of
paperwork, medical examination etc. which are necessary
to get the policy approved.
Keep in touch to ensure that changing circumstances are
reflected in the arrangements relating to premium
payments, nomination and other necessary alterations.
Facilitate quick settlement of claims.
Be totally honest with both the prospect and the insurer.
Not to indulge the prospect to submit wrong information
41. 41
Need of the Study
The project is all about market research to find out the best sold
plan of Kotak Mahindra Life Insurance and to measure the
satisfaction level of consumers of Kotak Mahindra Life
Insurance.
Market Research helps to know the best plan of Kotak Mahindra
Life Insurance purchased by its customers and measure their
satisfaction level helps to know whether customers are satisfied
by services and plans of Kotak Mahindra Life Insurance.
42. 42
Scope of Study
The study will help understand the marketing scenario of
Insurance industry in Kolkata region.
It may help the company to know its strengths and
weaknesses
The study may help to know the drawbacks of Kotak
Mahindra Life Insurance as a competitor in the Insurance
Industry
This study may help the company to know its position as a
competitor in the Insurance Industry
This will add value to know most preferable product of the
Company among the customers.
43. 43
OBJECTIVE OF THE STUDY
1. To determine the present position and satisfaction of customers
in Kotak Mahindra Life Insurance. The main objective of the
project was to analyze customer satisfaction of Kotak Mahindra
Life Insurance & also present position of the company.
2. To determine the market share of different brands. The second
objective of the project was to determine the market share of
different brands available in the market. There was tough
competition of brands in the market. Therefore to get
established, company had to make analysis of its competitors
and need to determine where do they stand.
3. Response of customers were collected through survey and
questionnaire method.
4. Benefits derived by assessing consumer satisfaction are:
Feedback to organization regarding products.
Understanding customer requirements
Providing superior service to customer
Strengthen the relationship with customers
5. The objective of the project was not only to find out problems
but also identifying solutions and providing suggestions of the
problem.
44. 44
Research and Methodology
Research is an art of scientific investigation through search for
new facts in any branch of knowledge. It is a moment from
known to unknown. Research always starts with a question or
problem. Its purpose is to find answers to question through the
application of scientific methods. It is a systematic and intensive
study directed towards a more complete knowledge of the
subject studied. A research design is the framework or plan for a
study which is used as a guideline in and analyzing the data. It is
a blue print which is much useful in completing the study.
Therefore research design is mandatory thing for every research.
It specifies the methods and procedures for acquiring the
information needed to conduct the research efficiently. It is the
overall operational pattern of the project that stipulates what
information needs to be collected, from which source and by
what method. I used a questionnaire to collect the necessary data
from the managers of Kotak Mahindra Life Insurance
Company.
46. 46
Preference of Life Insurance survey
Age Group No. of
Respondents
Percentage
21-30 5 10
31-40 7 14
41-50 23 46
51-60 15 30
Total 50 100
Inference: From the above table it is inferred that, most of the Life
Insurance Policy Holders say 46% fall in the age group of 41-50 &
30% are in the age-group of 51-60 which shows elder people give
more preference to Life Insurance. On the other hand, 10% are in the
age group of 21-30 & 14% are in the age group of 31-40 which shows
that the younger generation are not much interested in investing their
money in Life Insurance.
14%
20%
64%
2%
Percentage (%) of Respondents as per Age-Group
21-30 31-40 41-50 51-60
47. 47
Gender No. of Respondent Percentage
Male 17 34%
Female 33 66%
Total 50 100%
Inference: From the above chart, we can see that 34% respondents are
male and 66% are female, which shows that women are more
interested towards investing in Life Insurance than male.
Table 3: No. of Respondents who has taken Life Insurance as per
Marital Status
Marital Status No. of Respondents Percentage (%)
Married 44 88
Unmarried 6 12
Total 50 100
Inference: From the above table we can see that, 88% respondents are
married and give more importance to Life Insurance than unmarried
people.
34%
66%
Percentage(%)of Respondents as per Gender
Male
Female
Percentage (%) of Respondents as per Marital status
Married Unmarried
48. 48
Particulars No. of Respondents Percentage (%)
LIC 24 48
Kotak Mahindra Life 7 14
HDFC LIFE 4 8
Birla Sunlife 7 14
Others 8 16
Total 50 100
Particulars No. of Respondents Percentage (%)
Tax Benefit 20 40
Security 16 32
Investment/Savings 14 28
Total 50 100
0
10
20
30
40
50
60
LIC Kotak Mahindra Life HDFC Life Birla Sunlife Others
Preferred Life Insurance Companies
Percentage (%) of prefered Insurance Companies
Percentage (%) of respondents who have taken Life Insurance
for different Motives
Tax Benefit Security Investment/Savings
49. 49
Customer Satisfaction and Product
Survey of Kotak Mahindra Life
Insurance
Particulars No. of Respondents Percentage (%)
ROI 28 56
Tax Benefit 10 20
Safety/Security 5 10
Low Premium Rates 7 14
Total 50 100
Inference: From the above table, we can see that 56% people chose
Kotak Life Insurance for good ROI (Return on Investment), 20%
chose because of Tax Benefits, 10% because of safety/security
reasons & 14% because of the affordable premium rates.
56%
20%
10% 14%
ROI TAX BENEFIT SAFETY/SECURITY LOW PREMIUMRATES
Percentage (%) of respondentswho chose
Kotak Life Insurance for different reasons
Percentage (%) of respondents who chose Kotak Life Insurance for different reasons
50. 50
Particulars No. of Respondents Percentage (%)
Term Plan 20 40%
Money back Plan 7 14%
Kotak Endowment
Plan
8 16%
Kotak Child
Advantage Plan
4 8%
Unit Linked Plan
(UPLI)
11 22%
Total 50 100
Inference: From the above chart we can see that, Kotak Term Plan is
the most preferred plan by Kotak Mahindra Life Insurance followed
by UPLI, Kotak Endowment Plan, Kotak Money back Plan, Kotak
child advantage plan being 22%, 16%, 14% & 8% respectively.
40%
14%
16%
8%
22%
Percentage (%) of respondents who have invested in
various plans by Kotak Mahindra Life
Term Plan Money Back Plan Kotak Endowment Plan Kotak Child Advantage Plan UPLI
51. 51
providers?
Particulars No. of respondents Percentage (%)
Easy accessibility to
Deposit Center
15 30%
Time to Time
premium collection
10 20%
Provision in case of
Dues
3 6%
Bonus & other
schemes
22 44%
Total 50 100
Inference: From the above table we can see that, out of %0
respondents 68% people are looking for Bonuses & other schemes,
while others are looking for easy accessibility to deposit center, time
to time premium collection & provision in case of dues with
17%,11% & 4% respectively.
17%
11%
4%
68%
Percentage (%) of expected services from
Insurance Provider
Easy accessibility to deposit Center
Time to Time premium collection
Provision in case of dues
Bonus & other schemes
52. 52
Particulars No. of Respondents Percentage (%)
Poor Nil Nil
Average 16 32%
Good 28 56%
Excellent 6 12%
Total 50 100
Inference: From the above table we can see that, 50 respondents have
rated service of Kotak Mahindra Life under four heads- poor, average,
good, excellent as 0%, 32%, 56% and 12% respectively. Therefore we
can conclude that overall Kotak Mahindra Life has a satisfactory
service.
0%
32%
56%
12%
Percentage (%) of repondents satisfied with service
of Kotak Mahindra Life Insurance
Poor Average Good Excellent
53. 53
Particulars No. of Respondents Percentage (%)
Better Returns 8 22%
Effective Service 4 11%
Tax Planning 13 36%
Security/Safety
Benefits
11 31%
Total 36 100
Inference: From the above chart we can see that, out of 36
respondents majority of respondents have moved from other
Insurance Providers to Kotak Mahindra Life because of better Tax
Planning & Safety/Security benefits.
22%
11%
36%
31%
B ETTER R ETU R NS EF F EC TI V E S ER CI CE T AX P L AN N ING S EC U R I TY/ S AF ETY
B EN EF I TS
PERCENTAGE (%) OF RESPONDENTS WHO
HAVE MOVED FROM OTHER INSURANCE
PROVIDERS TO KOTAK LIFE INSURANCE
54. 54
Particulars No. of Respondents Percentage (%)
Advertisements 10 20%
Friends & Relatives 12 24%
Direct Selling Agents 21 42%
Others 7 14%
Total 50 100
Inference: From the above chart we can see that, maximum number of
respondents have received information of Kotak Mahindra Life
Insurance products from Direct selling Agents followed by friends &
relatives, advertisements & other sources. This proves that Direct
Selling Agents are an integral part of marketing in Kotak Mahindra
Life.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Advertisements Friends & Relatives Direct Selling Agents Others
PERCENTAGE (%) OF RESPONDENTS
RECEIVED INFORMATION ABOUT KOTAK
FROM VARIOUS SOURCES
Percentage (%) of respondents received information about Kotak from various sources
55. 55
Particulars No. of respondents Percentage (%)
Highly Satisfied 9 18%
Satisfied 12 24%
Moderate 10 20%
Unsatisfied 11 22%
Highly unsatisfied 8 16%
Total 50 100
Inference: From the survey it was found that amongst 50 respondents)
18% of the respondents are Highly Satisfied, 24% of the respondents
are Satisfied, 20% of the respondents are Moderate, 22% of the
respondents are Unsatisfied, 16% of the respondents are Highly
Unsatisfied.
18%
24%
20%
22%
16%
Highly Satisfied Satisfied Moderate Unsatisfied Highly Unsatisfied
Percentage (%) on Customer responses
Percentage (%) on Customer responses
56. 56
Particulars No. of respondents Percentage (%)
Yes 40 80%
No 10 20%
Total 50 100
Inference: From the above chart we can see that, 80% of the
respondents think emergence of private players have improved the
Insurance Sector & 10% of respondents think the contrary.
80%
20%
Percentage (%) of RespondentsVeiws
Yes No
57. 57
Findings
According to my survey the noteworthy points are:
Most of the people buy life insurance as just a tax benefit tool or
as a life cover while only a few of the respondent take it as a
saving option. The reason for this is lack of knowledge of
insurance benefits among the people.
A Majority of the respondent buy insurance products because of
the need reason while rest of the respondents buy for the brand
value.
A Majority of the people come to know about the policies from
the Direct Selling Agents.
A Majority of the people are satisfied by the incentives
associated with their policies.
Most of the respondents are satisfied by the services offered by
their insurance company while some says that they are not
satisfied by the services.
Most of the respondents want more Transparency from the side
of the company.
58. 58
Conclusion
After overhauling all the situation we come to the conclusion that:
There are very tough competition among the private insurance
companies on the level of new trends of advertising to lull a major
part of Customers.
• Kotak Mahindra Life Insurance is not left behind in the present race
of advertisement.
• The entry of more private players in the Insurance Sector have
expanded the product segment to meet the different level of the
requirement of the customers. It has brought about greater choice to
the customers.
• Kotak Mahindra Life Insurance has vast market and very firm grip
on its traditional customers and a wide range of life insurance
products with huge ROI and tax benefits.
IRDA, is also playing very comprehensive role by regulating norms &
mandating the private players in this sector, which increases the
confidence level of the customers towards the private players.
59. 59
Suggestions
The study has provided with the useful data from the respondents.
There are a lot to be recommended.
Following are the recommendations:
There is a need for better promotion for the investment products
& services. Kotak Mahindra Life should advertise its products
through television because it will reach to the masses.
More returns and security benefits should be provided on
insurance Plans
Kotak Mahindra Life Insurance should setup workshops in rural
areas so that the rural people can also become a part of the
insurance sector.
Kotak Mahindra Life should make more plan which would suite
the middle class society.
Kotak Mahindra Life should make products according the
customer needs so customers are well benefitted.
Development of insurance sector should be promoted as funds
acquired from this sector can be used for infrastructure
development and other facilities.
60. 60
Annexure
Questionnaire
1) In which age group do you belong?
(a) 21-30 (b) 31-40 (c) 41-50 (d) 51-60
2) Which is your preferred Life insurance Company?
(a) LIC (b) Kotak Life Insurance (c) HDFC Life (d) Birla Sunlife
(e) Others
3) What is you choose Kotak Life Insurance?
( a) ROI (b) Tax Benefit (c) Safety Security (d) Low Premium rates
4) Which of the following plans are you insured?
(a) Term Plan (b) Money-back Plan (c) Kotak endowment Plan
(d) Kotak Child Advantage plan (e) Unit Liked Plan
5) What kind of services do you expect from Insurance Providers?
(a) Easy accessibility (b) Time to time premium (c) Provision in case
of dues (d) Bonus and other dues
6) How will you rate Kotak Mahindra Life Insurance?
(a) Poor (b) Average (c) Good (d) Excellent
7) What difference do you find between Kotak & previous insurance
providers? ( if any )
(a) Better returns (b) Effective service (c) Tax Planning
(d) Safety/Security
61. 61
8) How did you come to know about Kotak Mahindra Life Insurance?
(a) Advertisements (b) Friends and Relatives (c) Direct selling agents
(d) Others
9) Are you satisfied with the incentives (Bonuses or tax Benefits)
associated with your policy?
(a)Highly Satisfied (b) Satisfied (c) Moderate (d) Unsatisfied (e)
Highly Satisfied
10) Do you think services have improved after allowing private
players in Insurance Sector?
a) Yes b) No
