1525905-635 SCHOOL OF MANAGEMENT STUDIES A MAJOR PROJECT REPORT ON “A STUDY ON RISK AND RETURN OF ULIP PLAN AT IDBI FEDERAL INSURANCE COMPANY LIMITED” Submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Submitted By KIRAN G R16MB106 Under the guidance of DIWAKAR NAIDU Rimini Knowledge Park Kattigenahalli

1525905-635
SCHOOL OF MANAGEMENT STUDIES
A MAJOR PROJECT REPORT
ON
“A STUDY ON RISK AND RETURN OF ULIP PLAN AT IDBI FEDERAL
INSURANCE COMPANY LIMITED”
Submitted in partial fulfillment of the requirement for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted By
KIRAN G
R16MB106
Under the guidance of
DIWAKAR NAIDU
Rimini Knowledge Park
Kattigenahalli, Yelahanka, Bengaluru – 560064
www.reva.edu.in
Chapter 1
INTRODUCTION
In the today’s corporate and competitive world. I find that insurance has the maximum growth potential as compared to the other sectors. Insurance has the maximum growth rate of 70-80% while as FMCG sectors have 12-15% of the growth rate. Despite recession this sector has noticed a growth rate of around 35-40%. The growth potential attracts individuals to enter this sector and IDBI- Federal Life Insurance Company Ltd. has given me the opportunity to get a peek of highly
competitive and enhancing sector.

The major factors affecting the purchase of an insurance product are trust, service, product features and relationship with advisors. Firms like LIC are still favored only because of being a government undertaking units.

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The concept of misspelling has paralyzed the sector itself. People find it hard to have faith in advisors. Their job is really very hard. People are now getting aware of the various investment tools available in the market.

The masses in urban cities like Pune have started comparing the products. While talking to different people, I found that their purchase decision was highly influenced by their family and colleagues.

They purchased the insurance products at the time when they needed it most, which according to them was at the time of tax planning, whereas any insurance product must be bought when the individual needs it least so that they can actually calculate the amount of life cover they need and the type of investment they want. They can spread awareness by organizing various camps, sending mails or through free counseling for interested people.

ULIP Plan:
A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan.

The first ULIP was launched by Unit Trust of India (UTI). With the Government of India opening up the insurance sector to foreign investors in 2001and the subsequent issue of major guidelines for ULIPs by the Insurance Regulatory and Development Authority (IRDA), now Insurance Regulatory and Development Authority of India (IRDAI), in 2005, several insurance companies forayed into the ULIP business leading to an over abundance of ULIP schemes being launched to serve the investment needs of those looking to invest in an investment cum insurance product.

OVERVIEW
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.

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
Features
A portion of premium goes towards mortality charges i.e. providing life cover. The remaining portion gets invested funds of policyholder’s choice. Invested funds continue to earn market linked returns.

ULIP policy holders can make use of features such as top-up facilities, switching between various funds during the tenure of the policy, reduce or increase the level of protection, options to surrender, additional riders to enhance coverage and returns as well as tax benefits.

Types
Depending upon the death benefit, there are broadly two types of ULIPs.

Type-I ULIP, the nominee gets the higher of Sum Assured and Fund Value while under
Type-II ULIPs, the nominee of the policy holder gets the Sum of Sum Assured and Fund Value in the event of demise of the policy holder.

There are a variety of ULIP plans to choose from based on the investment objectives of the investor, his risk appetite as well as the investment horizon. Some ULIPs play it safe by allocating a larger portion of the invested capital in debt instruments while others purely invest in equity. Again, all this is totally based on the type of ULIP chosen for investment and the investor preference and risk appetite.

Tax Benefits
Investment in ULIPs is eligible for tax benefit up to a maximum of Rs 1.5 lacs under Section 80C of the Income Tax Act.

Objectives Of The Paper
To Study The Types Of ULIP Plan
To Study and Measures Of Risk And Returns With ULIP Plan
To Suggest A Strategy To IDBI Life Insurance For Creating Awareness About ULIP And Getting An Competitive Advantage Over Other Investment Plan
To analyze the current progress of IDBI Federal insurance company limited.

To understand the challenges and impact of ULIP plan with regard to IDBI Federal insurance company limited.

Chapter-2
COMPANY PROFILE
Overview
IDBI Federal Life Insurance is one of India’s growing life insurance companies and offers a diverse range of wealth management, protection and retirement solutions to individual and corporate customers.

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Ageas, a multinational insurance giant based out of Europe.

Having commenced operations in 2008, IDBI Federal was able to achieve breakeven within just 5 years; the Company’s passion for innovation and growth helped it achieve this feat.

Through a nationwide network of 2,964 branches of IDBI Bank and Federal Bank, and a sizeable network of advisors and partners, IDBI Federal Life Insurance has achieved presence across the length and breadth of the country. As on March 31, 2017, the company has issued nearly 10.29 lakh policies with a sum assured of over Rs. 58,653.76 crore. IDBI Federal Life Insurance has total assets under management of 6,090 crore and a robust capital base of over 800 crores, as on March 31, 2017
PLANS OFFERINGS:
Term Plans
Child Plans
ULIP Plans
Savings Plan s
Retirement Plans
Group Plans

TypeJoint VentureIndustry Life insuranceFounded March 20081Headquarters Headquarters in Mumbai, IndiaKey people Vighnesh Shahane, CEO ; Whole Time Director
Products Life insurance
Number of employees 1,941 employees on-roll; over 10,000 agents
Website Official WebsiteBoard of Directors:
Mr. Vighnesh Shahane
Chief Executive Officer ; Whole-Time Director
Mrs. Bhagyam Ramani
Independent (Non-Executive) Director
Mr. Jayaraman Balasubramanian
Independent (Non-Executive) Director
Mr. Mahadev Narendra Rao
Independent (Non-Executive) Director
Mr. Ashutosh Khajuria
Non-Executive Director
Mr. Philippe Latour
Non-Executive Director
Mr. Gopalkrishna Annaji Tadas
Non-Executive Director
Mr. Shyam Srinivasan
Non-Executive Director
Mr. Filip Coremans
Non-Executive Director
ORGANIZATION STRUCTURE

Product Profile:
1. BONDSURANCE
Get guaranteed return on your investment with life insurance IDBI federal bondsurance plan is designed for customers looking for guaranteed returns which will not get affected by financial market conditions. It offers guaranteed return on investment along with life insurance cover.

Investment in this plan is eligible for deduction under sec 80C of the Income Tax Act and the maturity amount is tax-free under Sec 10(10D) of the Income Tax Act.

If you are looking for a safe and steady approach to meet your dreams, you need a plan that will give you steady and assured returns that are not dependent on market conditions. IDBI federal Bondsurance Plan is the deal plan to beat the ups and down around you.

2. WEALTHSURANCE
Wealthsurance plan combine wealth creation with insurance protection into one powerful financial solution. Unlike other investment alternatives, it allows you to ensure that your goals of wealth creation are achieved even in the event of serious illness, accident, disablement and death.

3. TERMSURANCE
Happiness ; security for our family is something all of us strive to achieve. However, there are times when you ask yourself – What if something was to happen to me? What would happen to my loved ones? Have I secured my family financially so that they don’t? Have to face life’s burdens? Different people have different needs and seek different things from an insurance plan. Some look for a large cover option at a low cost, while others seek return of premium on maturity of the policy. There are some who may want their plan to keep in touch with inflation, while others may seek flexible premium payment options.

4. INCOMESURANCE
Grow your Guaranteed Annual Income each time you pay premium some goals cannot be left to chance. Like educating your child, or planning for her marriage, or providing financial security to a loved one, or ensuring a comfortable retirement income. Or you may just want to ensure a future additional income stream.

5. RETIRESURANCE
It is difficult to predict the future but with more of us living longer, the possibility of outliving our savings could become a harsh reality. In fact, you could easily spend almost20-25% of your life in retirement. This is the time in your life when you will face the retirement challenge. As time goes by, your responsibilities grow as well, increasing your expenses. Also let’s not forget the effect of inflation. Inflation increases the cost of living. Take the following increases in basic amenities over the last 20 years and you can understand what you could be up against after 20 years.

6. LOANSURANCE
Loansurance is a cost-effective way to ensure that the outstanding debt is settled in the unfortunate event of death of the insured member. This term assurance plan provides cover to a person directly liable for loan repayment (and the partners, in case of a partnership), as per the benefit schedule.

COMPETITORS OF IDBI FEDERAL INSURANCE COMPANY LTD
SL NO COMPETITORS OF IDBI FEDERAL INSURANCE COMPANY LTD
1 AEGON Life Insurance
2 Aviva Life Insurance
3 Bajaj Allianz Life Insurance
4 Bharti AXA Life Insurance
5 Birla Sun Life Insurance
6 Canara HSBC OBC Life Insurance
7 DHFL Pramerica Life Insurance
8 Edelweiss Tokio Life Insurance
9 Exide Life Insurance
10 Future Generali India Life Insurance
11 HDFC Standard Life Insurance
12 ICICI Prudential Life Insurance
13 IDBI Federal Life Insurance
14 IndiaFirst Life Insurance Company Ltd – India First
15 Kotak Life Insurance
16 Life Insurance Corporation of India
17 Max Newyork Life Insurance
18 PNB MetLife Insurance
19 Reliance Life Insurance
20 Sahara Life Insurance
21 SBI Life Insurance
22 Shriram Life Insurance
23 Star Union Dai-ichi Life Insurance
24 Tata AIA Life Insurance
SWOT Analysis:
Strengths
a) Large pool of technically skilled manpower with in depth knowledge and
understanding of the market.

b) The company also provides innovative products to cater to different needs of
different customers.

c) Dedicated workforce aiming at making a long-term career in the field.

d) Low management expenses and administrative costs.

e) IDBI Federal Life Insurance Company leverages on the strong distribution network
of its promoters and advisors.

f) Finance department helps the organization to keep a track on the administration cost
and all the other expenses.

Weaknesses
a) Customer service staff needs training due to changing human behavior.

b) Product awareness is low in the market.

c) Low customer confidence on the private players.

d) Centralization in the organization, management decisions are taken by top authority
which leads to significant delays in decisions.

e) A centralized administrative system gives way to inequity through the instigation of
excessive regulations or strict conformity to official norms which is redundant or
bureaucratic and that hinders decision-making and delays work.

Opportunities
a) Insurable population : According to IRDA only 10% of the population is insured
which represent around 30% of the insurable population. This suggests more than
300m people, with the potential to buy insurance, remain uninsured.

b) International companies will help in building world class expertise in local market by
introducing the best global practice.

c) Fast-track career development opportunities on an industry-wide basis.

d) An applied research centre to create opportunities for developing techniques to
provide added-value services.

e) There will be inflow of managerial and financial expertise from the world’s leading
insurance markets. Further the burden of educating consumers will also be shared
among many players.

Threats
a) Big public sector insurance companies like Life Insurance Corporation (LIC) of
India, National Insurance Company Limited, New India Assurance Company
Limited and United India Insurance Company Limited. People trust and go to them
More.

b) Legislation could impact and Great risk involved.

c) Very high competition prevailing in the industry.

d) Lack of infrastructure in rural areas could constrain investment
e) People prefer short term investments rather than insurance.

Vision, mission and values
Vision
To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.

Mission
To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner. To be transparent in the way we deal with our customers and act with integrity. To invest and built quality human capital in order achieve our mission.

FINANACIAL STATEMENT

BALANCE SHEET ON FOR THE YEAR ENDED MARCH 31, 2017
Particulars FY 2016-17 FY 2015-16
Premium Income New Business Premium 793.55 588.40
Renewal Premium 771.64 651.27
Total Premium 1,565.19 1,239.67
New business annualized premium equivalent (APE) 434.09 338.12
Profit/ (loss) Before tax 52.06 15.28
Provision for tax – –
Profit / (loss)after tax 52.06 15.28
Sum assured in force 31,652 26,740
Assets under managements 6,090 4,893
Expense ratio (*) 16.37% 18.65%
(*) Expense ratio is calculated as operating cost to gross premium
Corporate Social Responsibility (CSR)
The Company’s CSR Policy outlines the Company’s responsibility as a corporate citizen and lays down the guidelines and mechanism for undertaking activities for welfare and sustainable development of the community at large. Corporate Social Responsibility is followed in its true spirit. The Company has always been at the forefront of discharging its Corporate Social Responsibility (“CSR”) as a responsible corporate citizen, chalking out multiple pioneering models on CSR and inclusion.
We have always believed that a business is an active entity of society and economy, and plays an important role in nation building. The Company believes that the real measure of growth, success and progress goes beyond balance sheets figures or dynamic economic indices. It is best reflected in the difference that business and industry make to the lives of people in the society. The Company being a dedicated corporate citizen, strives to advance social well-being in local communities. The Company believes that CSR is not just a liability or any charity or mere donations but a way of going beyond business as usual, creating shared values and contributing to social and environmental good. The Company takes its responsibility towards society very critically, as it believes that growth of the Company is directly linked with the society where it operates. The actions of the organization and its community are highly inter-dependent.
The Company’s CSR contribution focuses to extend its help in different sections of the society. The Company’s objective is to pro-actively support socio-economic development in the areas where it operates and enable number of people to participate in it and benefit in their social and economic progress. This is based on the belief that growth and development are effective only when they result in wider access to opportunities and benefit a broader section of society.
By our small contribution we tried to touch base with different section of the society which includes children facing lack of immunization; adolescents suffering from anaemia; cancer patients; building facilities at hospital or ambitious young kids to support best of the training in sports which otherwise is not accessible to them.

Children are the future of the nation and hence, nothing can parallel their safety, proper nourishment and care. With this thought, we have focused on providing our helping hand to ensure immunization among children below age of 5 years; reducing prevalence of anaemia amongst children and adolescents; and to cover the cost of medicines, make available affordable/subsidized accommodation for the cancer patients and attendants during the treatment ; cost of food and supplements in Mumbai.
Concern for their health and hygiene has prompted us to support program initiated by SAGA Charitable Trust to make contribution to “Training Lives to Save Lives” as mission to create “Social Doctors” by training non-medical persons. By way of our contribution, Trust was helped in procuring certain specific Trauma Care equipments/mobile Van and Laptops/ Computer etc. to generate reports/records etc.
Apart from focusing on health issues, the Company also took ‘Sports’ as serious field which can help the upcoming bright and deserving talents to go ahead, make their career and make the Country proud. Sports is taken up as one of the fields for contribution; since the Country lacks in world class sports facilities and it has been out of reach to the poor section of the society, despite having the talent and willingness. The Company extended its help to such children who cannot afford the fees associated with sports but are bright and talented.
The CSR Committee approved the activities and monitored the progress of projects/activities undertaken by the Company on regular basis. The Company made CSR contribution to five Trusts viz. Apnalaya, V Care, Dilip Vengsarkar Foundation, The Voluntary Health Services and Saga Charitable Trust to carry out different CSR activities. The Company has been able to spend the mandatory 2% of average net profits of immediately preceding 3 years on various CSR activities.

These projects are in line with the statutory requirements under the Companies Act, 2013, and CSR Policy of the Company. Details of the CSR projects undertaken, their monitoring, details on the implementing agencies, amounts spent and the requisite Responsibility Statement are given under the CSR report which is annexed and forms part of this Directors’ Report.

Literature review
Human life is subject to risks of death and disability due to natural and accidental causes. An individual can protect himself or herself against such contingencies through life insurance. Life insurance is insurance on human beings. Though Human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’ in the case of life insurance. Life insurance products provide a definite amount of money to the dependants of the insured in case the life insured dies during his active income earning period or becomes disabled on account of an accident causing reduction/complete loss in his income earnings. ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. In a ULIP, the investment risk is generally borne by the investor. The investment in ULIPs is denoted as unit and is represented by the value called Net Asset Value (NAV). In a ULIP, the amount of premium to be invested after deducting for all charges and premium for risk cover are pooled together to form a fund. The value of fund at any time is equal to the amount of units multiplied by value of unit at that time.

Karuna (2009) highlighted on ‘Relevance of ULIPs as a good investment tool’ to observe traditional life insurance plans offered by LIC took care of only the insurance needs of people. However, with the ever changing demands of customers a new product called ULIP was launched which combines the benefits of insurance, investment and tax benefits. The author observed that ULIPs were better suited to investors who have 15-20 years as their time horizon to spread the expense over the longer period and reap the benefits
Udayan Samajpati (2012) enhanced the performance evaluation of ULIPs is carried out through Risk-Return Analysis, Treynor’s Ratio, Sharpe’s Ratio and Jensen’s Measures. The schemes selected for study were ICICI Life Stage RP-Maxi miser (Growth) Fund, Bajaj Allianz New Family Gain-Equity Index Fund II and ING High Life Plus-Growth Fund. The results of performance measures suggested that all the three ULIPs schemes have outperformed the market. Among the three schemes ING Vysya ULIP was best performer.

Divya Y. Lakhani (2011) had conducted a research study to identify the relation between returns and Sensex, investors’ preference for ULIP and Equity, growth and penetration of ICICI Prudential and the performance of some of its ULIP schemes. The major finding of this study was that the NAV for equity based fund options moves in tandem with Sensex while for debt based fund options it is not much affected by the movement of Sensex.

James J. Schiro (2006) The insurance industry must deal proactively with all external forces – changes in natural, economic, social and political environments, shifting stakeholder expectations and wide-reaching technological innovations – so that it can continue to assume and expand its role in the economy. Regulation can make a major contribution towards meeting this goal, but it can also be an obstacle – hasty and ill-conceived regulatory responses to external forces represent second-order risks in and of themselves. Legislators and regulators must avoid ad hoc, damage-control regulation that is made up on the spur of the moment and both must be wary of the consequences of regulation through litigation. With respect to insurance, regulation must be specifically geared towards the business it regulates, that is, insurance, not banking or other financial services. Moreover, regulation must be reflective of globally integrating markets and the needs of global players, and regulators must keep alert to regulatory spillovers from one jurisdiction into others. Finally, to reflect the dynamics of markets, regulation should be principles-based as opposed to rules-based
Chapter 3
INDUSTRY PROFILE
History
IDBI Bank was established in 1964 by an Act of Parliament to provide credit and other financial facilities for the development of the fledgling Indian industry. The central government is the owner of this bank and employees will be called as Central Government staffs.

It is one among the public sector banks in India and is a nationalized bank to be treated on par with SBI and other nationalized banks in accordance with the notification dated 26th February 2013 by the finance ministry. At present the government holds 77% stake in IDBI Bank. For the first quarter of the current financial year 2017-18, the bank reported a net loss of Rs.853 crore compared to a profit of Rs.241 crores during the corresponding period last financial year. In the fourth quarter of financial year 2016-17, the bank had reported a loss of Rs.3,200 crore.

While the reported loss was lower than the preceding quarter, bad loans continued to surge. In the quarter ending September 2017 the bank bounced back with a loss of Rs.198 crore compared to a loss of over Rs.2,000 crores in the previous quarter. The bank is expected to return to profit in the near future. It currently has 3,817 ATMs, 1,995 branches, including one overseas branch in Dubai, and 1,382 centers. The bank has an aggregate balance sheet size of INR 3.74 trillion as on 31 March 2016.

Federal Bank is one of India’s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 1060 branches and 1158 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network.

In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers.

The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations.

Ageas  is an international insurance group with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market.

These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships with strong financial institutions and key distributors around the world. Ageas operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK.

Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading non-life player through AG Insurance. In the UK, Ageas has a strong presence as the fourth largest player in private car insurance and the over 50’s market. Ageas employs more than 13,000 people and has annual inflows of more than EUR 21 billion.

Porter’s Five Force Model On Industry Analysis
Threat of new entrants:
As the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:
Barriers to entry that includes copy rights and patents.

High capital requirement
Government restricted policies
Switching cost
Access to suppliers and distributions
Customer loyalty to established brands
THREAT OF SUBSTITUTES:
This describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:
Price performance of substitute
Switching costs of buyer
Products substitute available in the market
Reduction of quality
Close substitution are available
DEGREE OF INDUSTRY RIVALRY:
The lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:
Competitive advantage
Continuous innovation
Sustainable position in competitive advantage
Level of advertising
Competitive strategy
BARGAINING POWER OF BUYERS:
It deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
Bargaining leverage
Switching cost of a buyer
Buyer price sensitivity
Competitive advantage of company’s product
BARGAINING POWER OF SUPPLIERS:
This refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and companies do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:
Input differentiation
Impact of cost on differentiation
Strength of distribution centers
Input substitute’s availability
Chapter 3
PROPOSED RESEARCH
METHODOLOGY
Business research is a systematic enquiry that provides information to guide business decision and aimed to solve managerial problems. Business research is of recent origin and it is largely supported by business organization that hopes to achieve competitive advantages. Research methodology is a way to systematically solve the problems. It may be understood as a science of studying how research is done scientifically. It includes the overall research design, the sampling procedure, data collection method and analysis procedure.
DESCRIPTIVE RESEARCH
Descriptive research study includes surveys and fact- findings enquiries of different kinds, which help the researcher to describe the present situation that makes the analysis about the effectiveness of employee satisfaction among employees and help to reach the objective.

SAMPLING DESIGN/TECHNIQUES
Sampling design is to clearly define set of objective, technically called the universe to be studied. The research has infinite set of universe and the sampling design used in the study is non-probability sampling- convenience sampling.
SAMPLE UNIT/SAMPLE SIZE
The item selected from the population constituent the sample size. The study covers the customers of IDBI Federal Life Insurance Company.

RESERARCH PROCESS
The research process has four distinct yet interrelated steps for research analysis it has a logical and hierarchical ordering:
•Determination of information research problem.
•Development of appropriate research design.
•Execution of research design.
•Communication of results.
Each step is viewed as a separate process that includes a combination of task, step and specific procedure. The steps undertake are logical, objective, systematic, reliable, valid, impersonal and ongoing.

Scope of study
This project helps the company in knowing about the risks a company can have and
what are the different methods using which they can mitigate those risks and improve their
performance and maximize their revenues. It also tells the company about the possible risks to
customers and what company can do for their customers to help them in coping with those
risks
RESEARCH PLAN
To Analyze Investor Preferences For ULIP Plan Investment By Knowing There:
Occupation
Age Group
Period of investment preferences
Investment optional through risk
Their expected returns
Uses secondary data as a source of information for this research e.g. the Annual reports , websites and other publications
Data resources
Sampling procedure
The sample is selected in a random way, irrespective of them being investment or not or availing the services.

The data will be analysis will done on basic statistical tools available
Standard Deviation
Beta
Alpha
CHAPTER: 4
Competitive Analysis
A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan.

History
The first ULIP was launched by Unit Trust of India (UTI).1 With the Government of India opening up the insurance sector to foreign investors in 20012 and the subsequent issue of major guidelines for ULIPs by the Insurance Regulatory and Development Authority (IRDA), now Insurance Regulatory and Development Authority of India (IRDAI), in 2005,3 several insurance companies forayed into the ULIP business leading to an over abundance of ULIP schemes being launched to serve the investment needs of those looking to invest in an investment cum insurance product.

Types of ULIP Plans Classification by Purpose
ULIPs are best classified on the basis of purpose they serve.

ULIP for Retirement – In this plan, you need to make the payment during your tenure with your employer, which is automatically collected in a corpus amount, which is paid in the form of annuities to a policyholder after retirement. ULIPs for Wealth Collection – This plan primarily accumulates your wealth over a period of time. Such plans are recommended for people who are in the late twenties and early thirties and by investing in this plan; they get the flexibility to fund their any future financial goal. ULIP for Children Education – As a parent, you want to ensure that no unforeseen event affects your child’s overall education in any condition. There are several ULIP plans that provide money in small chunks in the key events of your children’s life. This ensures that no unforeseen even hinders their life in any manner. ULIPs for Health Benefits – In addition to some common benefits, ULIPS efficiently provide financial assistance to meet medical contingencies.

Types of ULIP plans in IDBI federal life insurance :
IDBI Federal WealthsuranceSuvidha Growth Insurance Plan–
A unit linked plan to help in maximizing returns and at the same time provide life insurance coverage. The features and benefits of the plan are as follows:
Premiums under the plan can either be paid for the entire tenure of the plan or for a limited tenure.

The premiums paid net of charges can be either invested in a choice of 2 funds or invested under the Systematic Allocator Strategy
Under the Systematic Allocator strategy, the net premium is invested in a specified ratio in the Equity and Income Fund with a higher proportion in the Equity Growth Fund. The ratio changes over time and with the date of maturity approaching, the proportion of investment increases in the Income Fund to protect the fund from market volatility.

The policyholder may himself manage his investments if he does not opt for the above strategy. He has a choice of Equity Growth Fund and Income Fund to invest the net premium
Loyalty Additions are added at the end of the 10th policy year and every 5 years thereafter @3% of the average Fund Value over the last 3 years.

On maturity, the Fund Value is payable which can be availed in lump sum or taken in installments over a period of 5 years through the Settlement Option feature
In case of death of the insured during the plan tenure, the death benefit payable is higher of the basic Sum Assured or the Fund Value subject to a minimum of 105% of all premiums paid till the date of death
Partial withdrawals can be made with a minimum amount of Rs.10, 000 and a maximum of 20% of the available Fund Value
Switching is allowed to change between funds and premium redirection is also allowed for redirecting future premiums into another fund
Income tax benefit on the premium paid as per Section 80C and on claims under Section 10(10D) of the Income Tax Act.

Eligibility Details
Minimum
Maximum
Entry Age
Maturity Age
Policy Term
Premium amount 1 month
18 years
10,15 years

Rs. 15000
65 years
75years
20 years
Rs. 25000
Sum Assured: 10 times the annual premium
Premium Payment Term: 10 years and thereafter in blocks of 5 years
Premium Paying Frequency: Yearly

IDBI Federal Wealthsurance Growth Insurance Plan –
A unit linked plan with the dual benefit of capital appreciation and insurance protection. The features and benefits of the plan are as follows:
Premiums under the plan can either be paid for the entire tenure of the plan or for a limited tenure.

The premiums net of charges can be invested under two objectives – Do-it-yourself where the policyholder has a choice of 9 investment funds in which he can invest the premium in desired proportion or leave-it-to-us where the company manages the funds as per the customer’s risk profile of cautious, moderate and aggressive.

The 9 funds available for investment to the policyholder are – Equity Growth Fund, Midcap Fund, Bond Fund, income Fund, Liquid Fund, Pure Fund, Aggressive Asset Allocator Fund, Moderate Asset Allocator Fund and Cautious Asset Allocator Fund
Loyalty Additions are added at the end of the 10th policy year and every 5 years thereafter @3% of the average Fund Value over the last 3 years.

On maturity, the Fund Value is payable which can be availed in lump sum or taken in installments over a period of 5 years through the Settlement Option feature
In case of death of the insured during the plan tenure, the death benefit payable is higher of the basic Sum Assured or the Fund Value subject to a minimum of 105% of all premiums paid till the date of death
Partial withdrawals are allowed after 5 completed policy years
Switching is allowed to change between funds and premium redirection is also allowed for redirecting future premiums into another fund
The Sum Assured can be increased or decreased subject to certain terms and conditions
Income tax benefit on the premium paid as per Section 80C and on claims under Section 10(10D) of the Income Tax Act.

Eligibility Detail
minimum maximum
Entry age
Maturity age
Policy term
Premium
Amount
Sum Assured
Premium payment
1month
18years
10years
Rs. 25,000
Higher of 10/7 times the annual premium or 0.5/0.25 annual premium
5years 64 years
74years
30years
Rs. 95,000
10/7/15 times the annual premium or premium paying term
Equal to plan tenure
IDBI Federal Wealthsurance Growth Insurance Plan SP –
A unit linked insurance plan with a single premium payment option. The features and benefits of the plan are as follows:
Premium under the plan is payable once at the commencement of the plan
The premiums net of charges can be invested under two objectives – Do-it-yourself where the policyholder has a choice of 9 investment funds in which he can invest the premium in desired proportion or leave-it-to-us where the company manages the funds as per the customer’s risk profile of cautious, moderate and aggressive.

The 9 funds available for investment to the policyholder are – Equity Growth Fund, Midcap Fund, Bond Fund, income Fund, Liquid Fund, Pure Fund, Aggressive Asset Allocator Fund, Moderate Asset Allocator Fund and Cautious Asset Allocator Fund
Guaranteed Loyalty Additions are added at the end of the 5th policy year and every 5 years thereafter @2.5% of the average Fund Value over the last 3 years.

On maturity, the Fund Value is payable which can be availed in lump sum or taken in installments over a period of 5 years through the Settlement Option feature
In case of death of the insured during the plan tenure, the death benefit payable is higher of the basic Sum Assured or the Fund Value subject to a minimum of 105% of all premiums paid till the date of death
Partial withdrawals are allowed after 5 completed policy years
Switching is allowed to change between funds
The Sum Assured can be increased or decreased subject to certain terms and conditions
Income tax benefit on the premium paid as per Section 80C and on claims under Section 10(10D) of the Income Tax Act.

Eligibility Details
Minimum Maximum
Entry Age
Maturity Age
Policy Term
Premium amount
Premium Payment Term
1 month
18 years
5 years
Rs.25, 000
Single Pay
70 years
75 years

25 years
No limit

_

Sum Assured 1.25 or 1.10 times the Single premium Paid depending on age 10 times the Single premium Paid

Working Principle
A Unit-Linked Insurance Plan is essentially a combination of insurance and an investment vehicle. A portion of the premium paid by the policyholder is utilized to provide insurance coverage to the policyholder and the remaining portion is invested in equity and debt instruments. The aggregate premiums collected by the insurance company providing such plans is pooled and invested in varying proportions of debt and equity securities in a similar manner to mutual funds. Each policyholder has the option to select a personalized investment mix based on his/her investment needs and risk appetite. Like mutual funds, each policyholder’s Unit-Linked Insurance Plan holds a certain number of fund units, each of which has a net asset value (NAV) that is declared on a daily basis. The NAV is the value upon which net rates of return on ULIPs are determined. The NAV varies from one ULIP to another based on market conditions and fund performance.

Features
A portion of premium goes towards mortality charges i.e. providing life cover. The remaining portion gets invested funds of policyholder’s choice. Invested funds continue to earn market linked returns.

ULIP policy holders can make use of features such as top-up facilities, switching between various funds during the tenure of the policy, reduce or increase the level of protection, options to surrender, additional riders to enhance coverage and returns as well as tax benefits.

Types
Depending upon the death benefit, there are broadly two types of ULIPs. Under Type-I ULIP, the nominee gets the higher of Sum Assured and Fund Value while under Type-II ULIPs, the nominee of the policy holder gets the Sum of Sum Assured and Fund Value in the event of demise of the policy holder.

There are a variety of ULIP plans to choose from based on the investment objectives of the investor, his risk appetite as well as the investment horizon. Some ULIPs play it safe by allocating a larger portion of the invested capital in debt instruments while others purely invest in equity. Again, all this is totally based on the type of ULIP chosen for investment and the investor preference and risk appetite. 1
Charges
Unlike traditional insurance policies, ULIP schemes have a list of applicable charges that are deducted from the payable premium.4 The notable ones include policy administration charges, premium allocation charges, fund switching charges, mortality charges, and a policy surrender or withdrawal charge.5 Some Insurer also charge “Guarantee Charge” as a percentage of Fund Value for built in minimum guarantee under the policy.

Risks
Since ULIP (Unit Linked Insurance Plan) returns are directly linked to market performance and the investment risk in investment portfolio is borne entirely by the policy holder, one needs to thoroughly understand the risks involved and one’s own risk absorption capacity before deciding to invest in ULIPs.

Providers
There are several public and private sector insurance providers that either operate solo or have partnered with foreign insurance companies to sell unit linked insurance plans in India. The public insurance providers include LIC of India, SBI
Risk involved in unit linked insurance plans
Unit Linked Insurance Plans (or ULIPs) have become quite a popular option among many investors. It is a product that offers a life cover along with an investment option. Part of the premium you would pay in a ULIP goes towards insurance and the balance is invested in a fund of your choice. With every insurance company offering different plans and a variety of funds, a ULIP investment is borne with a certain element of risk. What are these risks?
Let us begin by understanding what is meant by risk.

Understanding Risk
The term risk means the variability in the rate of return of an investment. It is the amount by which the returns of an investment may increase or decrease from your expected value. The wider this gap, the greater is the risk you experience. Your investment time horizon, age, surplus cash position and investment goal all determine your risk taking ability. Also the higher the expected return from an investment, greater is the risk borne by it.

The Risks in ULIP
Even though ULIPs are predominantly an insurance tool, it is fraught with risks owing to the element of capital market investment it bears. As an investor in ULIP here is what you may experience.

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Market Risk: ULIP are directly affected by the ups and downs in the capital market. Whether it is volatility in the equity market or an increase or decline in interest rates, the Net Asset Value of the fund is impacted and may show a rise or fall.

Lack of Guaranteed Returns- ULIP returns is not guaranteed. The investment risk of a portfolio is borne by the policy holder. The performance of the underlying fund and expertise of the fund manager put together determine the gains or losses the investment would make.

Liquidity Risk- ULIP being an insurance product comes with a lock-in period of 3 to 4 years. They are thus low in liquidity and you may loss out a certain percentage of your investment if you wish to redeem during this lock-in period.

Past performance indicator: Though the past performance of the ULIP may seem to be attractive, what one should keep in mind is that this may not follow in future. Past performance of a fund is not an indication of its future performance, as predicting market behavior and volatility is a near to impossible task.

High cost structure- The charges in a ULIP are quite high. A high fee structure especially during a decline in the market, affects the returns on a ULIP.

Type of Funds in ULIPs
Insurance companies offer a range of fund options in a ULIP plan to suit the different objectives and risk profiles of investors. Here are the different funds that are commonly offered. The risk and the returns vary from fund to fund.

EAUITY FUNDS
DEBT/FIXED INCOME FUNDS
MONEY MARKET FUNDS
BALANCED FUNDS
Primarily invests in equity market Primarily invests in bonds, government and fixed income securities. Invested in bank deposits, cash and money market instruments
Combines equity and debt investment
Medium to high risk Low to medium risk Low
Risk
Medium risk
Aims towards capital appreciation Aims at capital preservation Primarily for short term investors
capital preservation with moderate levels of capital appreciation
Getting the best out of your ULIP
Unit Linked Plans offer investors the combination of security as well as growth. To get the most out of your ULIP, here is what you need to do.

Stay invested for the long term: ULIPs are for long term investors with a horizon of 10 to 15 years. In the long term, risks associated with market fluctuations are greatly reduced, and the investment could fetch higher yields. Also, the initial policy years of a ULIP have a high cost structure. Over a period of time, this cost comes down substantially, and therefore a larger part of the premium is invested in the chosen funds, fetching you more from your investment.

Appetite in a ULIP, have a clear understanding of your risk taking ability. Know what you are paying for and what the possible outcomes could be, before investing in plan.

There are several ways to choose the best ULIP plans that will help your money grow. Let’s take a look at some of them briefly:
Buy ULIP’s that insurance companies offer online, these are easier to buy and invest in.Choose ULIP’s that offer investors a large array of options among the various asset classes. This will help you choose a plan that is suitable to you and works with the current market condition.ULIP charges are now regulated. Choose ULIP’s that come with the least expense, e.g. a structure with zero charge for mortality charges and fund management.ULIP’s that offer flexibility and options in premium payment is the one you need to invest in.ULIP’s with a wider term flexibility is much beneficial than the ones spread across a smaller frame of time, e.g. 5-20 years is much better than 10-20 years.Death benefit offered in ULIP’s is higher than sum assured as well as fund value. There are some insurance companies that offer ULIP investments with a third option. Here the insurance company offers to pay a percentage of the premium e.g. 105% of the premium. The investor eventually receives three amounts, fund value, sum assured and premiums. Balanced ULIP Fund (High Equity)
GENERAL INTRODUCTION
MEANING OF RISK:
Risk can be well-defined as a circumstance where probable significances of choice that is to taken are well-known. Risk is all monetary devices. The typical features of implements are also liable for inconsistency in risk. A debt security will be fewer risks than in uncontainable environments.

Unsystematic risk
Systematic risk
TYPES OF RISK

Financial Risk
Business Risk
Market risk

Purchasing power risk
Interest rate risk

SYSTEMATIC RISK:
The systematic risk affects the entire market, changes occur in the economic, political, and social system constantly. These changes have an inspiration on the presentation of companies and so on their stock values. But these variations distress all companies and all securities in varying degrees. For example, economic and political uncertainty unpleasantly affects all industries and companies.
Market risk:
It is a kind of organized risk that disturbs shares. The Market rates of shares move up or down constantly for certain period. A generally increases in share values is mentioned to as a bullish trend, though a categories; decrease in share values is stated to as bearish movement. The unbalanced movements can be simply understood in the movement of share expense indices such as the BSE sensitive index, BSE national Index, NSE index etc. The stock market is realized to be volatile. This instability leads to changes in the profit of shareholders in shares. The difference in return affected by the volatility of the stock market is denoted as the market risk.

Interest rate risk
It is denoted to as standard inconsistency due to depositor’s attitudes and prospects. The depositor’s response towards physical and intangible dealings is the chief reason causing market risk. The primary reduction or increase in market value will make an emotional uncertainty of stockholders and cause a fear of damage or create an undue assurance relating to probability of profit.

Purchasing power risk:
It states the difference in the investor returns affected by inflation. Inflation outcomes in sinking of the purchasing power of currency. When a shareholder buying a security he foregoes the opportunity to buy some goods and services. In other words, he is postponing his consumption. Meanwhile, if there is inflation in the economy, the expenses of goods and services would rises and thereby the investors actually experiences a decline in the purchasing power of his investments and the return from the investment.

UNSYSTEMATIC RISK
The return from a security may sometimes vary because of certain aspects affecting only the company issuing such security. Examples insufficient raw materials, labours strike, management inefficiency. When inconsistency of earnings happens because of such firm –specific factors, it is known as unsystematic risk.

BUSINESS RISK:
Business risk is also related with risks straight affecting the interior environment of the company and those of surroundings outside its controller. The prior is confidential as internal business risk and the future as external business risk. Within these two broad categories of risk the firm. The effect of these operational conditions is revealed in the functioning costs of the company.

FINANCIAL RISK:
Financial risk is a function of financial leverage a company is associated with the method through which it strategies its monetary arrangement. If the capital structure of a business has a tendency to make incomes unbalanced, the company may fail financially.

RETURN:
A yield is a gain or loss of a security in a specific period. The return contains of income and the capital gains relative on a speculation. It is typically covered as a percentage. The yearly profit on an investment, expressed as a percentage of the overall volume financed also called rate of return.

BETA:
Beta is used to describe the connection among the stock’s return and market index’s return. Beta may be positive or negative. A positive beta specifies movement of stock price in tune with the market index and a negative beta reflects a movement of stock price in tune with the market index and a negative beta reflects a movement conflicting to the market. 1% alterations in the market index displays that it is on an average attended by a 1% changes in stock price. Beta is a reasonable measure for portfolio investor because risk further that imitates by betas spread.

DATA ANALYSIS:
Returns are calculated by the net present value from April 2016 to April 2017
ASSUMPTIONS:
An investor wants to invest an amount of 5000 every month in wealth gain insurance plan product of ULIP plan of IDBI Federal
RISK ASSESSMENT
Then i also calculated risk involved in each type of ULIP plan based on their return or NPV
The NPV on 1-4-2016 and the NPV on 1-4-2017
Volatility is calculated as under:
Highest NPV during the period-Lowest NPV during the period
Net present value of IDBI federal life insurance for the year 2016-17
Months NPV April 23.4790 May 23.3460
Jun 21.9805 July 21.9125 August 22.3240 Sep 21.7975 Oct 20.1290 Nov 19.8400 Dec 19.9140 Jan 19.8000 Feb 19.6675 Mar 19.4175 April 20.7340

INTERPRETATION
In the month April 2016 the NPV of the company was 23.4790 then in the month of June 2016 NPV of the company decreased to 21.9805 which is less compare to the NPV in the month April and later on in the month of august the value of the NPV increased to 22.324 later on it went on decreasing due to market slowdown till march 2017. Due to decrease in the value of the NPV the risk comes to 17.2984 and returns come to 39.4156%
Table 1.1 wealth gain insurance plan purchased by investor of IDBI federal
Month NPV Premium Contribution in % Monthly charges Contribution Revenue
April-16 23.4790 5000 73 15 3635 154.8192
May -16 23.3460 5000 73 15 3635 155.7012
Jun-16 21.9805 5000 73 15 3635 165.3739
Jul -16 21.9125 5000 73 15 3635 165.8871
Aug-16 22.3240 5000 73 15 3635 162.8289
Sep-16 21.7975 5000 73 15 3635 166.7922
Oct-16 20.1290 5000 73 15 3635 180.8852
Nov-16 19.8400 5000 73 15 3635 183.3157
Dec-16 19.9140 5000 73 15 3635 182.5349
Jan-17 19.8000 5000 73 15 3635 183.5859
Feb-17 19.6675 5000 73 15 3635 184.8227
Mar-17 19.4175 5000 73 15 3635 187.2023
Apr-17 20.7340 5000 73 15 3635 175.3159
Total revenue 2248.6354
Revenue value 46623.2064
Investment 65000
Returns 39.4156
Calculation of return
Returns = (Total investment – Total revenue value / Total revenue value ) 100
(65000 – 46623.2064 /46623.2064) 100
39.4156
Risk Calculation
Risk =( Highest Net Present Value – lowest Net Present Value / Highest Net Present Value )100
(23.479 – 19.4175 / 23.479) 100
17.2984%
Table 2.1: Monthly income Plan Purchased by the investor of IDBI Federal life insurance
Month NPV Premium Contribution Monthly Contribution Revenue Rs.

in % charges Apr-16 56.3500 5000 73 15 3535 64.5075
May-16 56.6050 5000 73 15 3635 64.2169
Jun-16 48.9250 5000 73 15 3635 74.2974
Jul-16 48.8700 5000 73 15 3635 74.3810
Aug-16 51.4450 5000 73 15 3635 70.6580
Sep-16 49.1450 5000 73 15 3635 73.9648
Oct-16 39.4450 5000 73 15 3635 92.1536
Nov-16 35.6850 5000 73 15 3635 101.8635
Dec-16 36.4000 5000 73 15 3635 99.8626
Jan-17 34.8450 5000 73 15 3635 104.3191
Feb-17 34.2650 5000 73 15 3635 106.0849
Mar-17 33.4050 5000 73 15 3635 108.8160
Apr-17 39.9150 5000 73 15 3635 91.0685
Total Unit 1126.1938
Unit value 44952.0255
Investment 65000
Returns 44.5986
Returns = (65000 – 44952.0255 / 44952.0255) 100
= 44.5986
Risk= (56.605 – 33.405 / 56.605)100
=40.9858
Table 3 : NPV of Secure savings Plan .

Month NPV as on 2016-17
Apr-16 18.0499
May-16 17.7124
Jun-16 17.5374
Jul-16 18.1797
Aug-16 17.9632
Sep-16 15.9740
Oct-16 15.7968
Nov-16 15.6908
Dec-16 15.5100
Jan-17 15.4479
Feb-17 15.1516
Mar-17 15.1597
Apr-17 16.4646
GRAPH

INTERPRETATION:
The Net present value of the IDBI Federal life insurance company was less compare to Bajaj Allianz and LIC of India its NPV start for 18.0499 in the month of April 2016 and it went on decreasing till July in the month of July the Net present value came to normal value which is 18.1797 slightly increased compare to previous month and then it went on decreasing due to Market less productivity because of less productivity net present value of the company decreased till the month of April 2017 so the present NPV of the company is 16.4646
Returns of the company is less compared to Bajaj Allianz and LIC the returns of the company is 37.2856 and the risk involved in the returns is 16.6565 which is Half of the Returns
Table 3:Secure Savings Plan Purchased By Investor Of IDBI Federal
Month NPV Premium Contribution Monthly Contribution Revenue Rs
in % charges Apr-16 18.0499 5000 73 15 3535 201.3862
May-16 17.7124 5000 73 15 3635 205.2235
Jun-16 17.5374 5000 73 15 3635 207.2713
Jul-16 18.1797 5000 73 15 3635 199.9483
Aug-16 17.9632 5000 73 15 3635 202.3582
Sep-16 15.9740 5000 73 15 3635 227.5573
Oct-16 15.7968 5000 73 15 3635 230.1099
Nov-16 15.6908 5000 73 15 3635 231.6644
Dec-16 15.5100 5000 73 15 3635 234.3649
Jan-17 15.4479 5000 73 15 3635 235.3071
Feb-17 15.1516 5000 73 15 3635 239.9087
Mar-17 15.1597 5000 73 15 3635 239.7805
Apr-17 16.4646 5000 73 15 3635 220.7767
Total Unit 2875.6570
Unit value 47346.5422
Investment 65000
Returns 37.2856
Calculation of Returns
(65000 – 47346.5422 / 47346.5422) 100
37.2856
Risk =(18.1797 – 15.1516 / 18.1797 ) 100
16.6565
TABLE 4: NPV OF IDBI Federal Life premium waiver Raider
Month NPV as on 2016-17 April-16 22.2400 May-16 22.1735 Jun-16 21.0585 Jul-16 21.0290 Aug-16 21.4950 Sep-16 21.1155 Oct-16 19.5505 Nov-16 19.3775 Dec-16 19.6165 Jan-17 19.613 Feb-17 19.5395 Mar-17 19.4795 Apr-17 20.5715 GRAPH

INTERPRETATION:
IDBI Federal NPV at the begging is 22.2400 and in the next month its slightly reduced and it went on reducing till the month of March 2017 in the month of March 2017 the NPV is 19.4797 then in the next month its value is increased by 20.5715 which is positive sign for the company and the returns of the company is 36.9065 and risk involved in the returns is 12.4258.

1 Comparative Balance Sheet:-
The Comparative Balance Sheet analysis the study of the trend of the same items, group of items, group of items and computed items in two or more balance sheet of the same business enterprise on different dates. The change in periodic balance sheet reflects the conduct of a business. The change can be observed by comparison of the balance sheet at the beginning and at end of period and these changes can help in formation opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of original balance sheet. A third column is used to show the increase in the figures and the fourth column may be used to show percentage increase and decrease.
Comparative Balance Sheet of IDBI Federal Insurance Co. Ltd.

(For the year ending 31st march, 2016 and 31st march, 2017)

Particulars
31.3.2016 31.4.2017 Increase/ Decrease %
Sources of Funds
Share Capital 7,998,912 8,000,000 + 1088 0.0136
Reserves and surplus – – Credit / (Debit) Fair value change account 897 314 (583) (-)64.9
Sub-Total (A) 7,999,809 8,000,314 + 505 0.0063
Policy Holders Fund Credit / (Debit) Fair value change account 2,639 8788 +6149 Policy liabilities 27,970,448 36,288,477 + 8,318,029 29.74
Provision for linked liabilities 16,054,338 19,012,923 +2,958,585 18.43
Funds for discontinued policies (i) Discontinued on account of non-payment of premium 207,138
248,977 + 41,839 20.19
(ii) Others – Sub Total (B) 44,234,563 55,559,165 11,324,602 25.60
Application of Fund Total C= (A+B) 52,234,372 63,559,479 11,325,107 21.68
Investments Shareholders 4,282,535 4,638,577 + 356,042 8.31
Policyholders 26,844,329 34,736,721 + 7,892,392 29.40
Assets held to cover linked liabilities 16,261,476 19,261,900 +3,000,424 18.45
Fixed assets 1,301,487 1,470,513 169,026 12.98
Loan 15 1203 1188 79.2
Sub-Total (D) 48,689,842 60,108,914 11,419,072 23.45
Current Assets Cash and bank balances 1,074,726 1,618,249 543,523 50.57
Advances and other assets 2,877,496 3,604,346 726,850 25.25
Sub-Total (E) 3,952,222 5,222,595 1,270,373 32.14
Current liabilities 2,095,161 2,917,198 822037 39.23
Provisions 44,087 65,764 21,677 49.16
Sub-Total (F) 2,139,248 2,982,962 843,714 39.43
Net Current Assets/(Liabilities) (G) = (E) – (F) 1,812,974 2,239,633 426,659 23.53
Debit balance in Profit ; Loss Account (Shareholders’ account) 1,731,556 1,210,931 – 520,625 (-)30.06
Sub-Total (H) 1,731,556 1,210,931 – 520,625 (-)30.06
TOTAL (I) = (D) + (G) + (H) 52,234,372 63,559,479 11,325,107 21.68
Table No – 5. 1 (Comparative Balance Sheet of IDBI Federal insurance Co. Ltd.)
An Analysis and interpretation of the above balance sheet reveals
(1) Working Capital is increased from 5154.73 to 5670.21, which is a positive signal for the firm because increase in Working Capital leads to a better financial position and company have more funds to do business activities.

Graph no. – 5.1 Net Asset of IDBI Federal Life Insurance Co. Ltd.

(2) There has been a drastic increase in cash balance 5,43,523. This good an adverse cash position.

(3) Fixed Assets has been increased by 169,026 and even the Share Capital Has been increased by 1088 this show even after arranging the new funds by share capital company unable to increase the Fixed Capital.

(4) Current Assets have been increased by 1,270,373 this shows that company used the funds of share capital to invest in current assets and want to make its liquidity situation better
5.2.2 Comparative Income Statement
Comparative profit and loss account or income statement shows the operating results for a number of accounting periods and changes in data significantly in absolute periods and changes in the data significantly in absolute money terms as well as in relative percentage.
Comparative Profit and Loss of IDBI Federal Insurance Co. Ltd.

(For the year ending on 31st march, 2016 and 31st march, 2017)
Particulars 31.03.2016 31.03.2017 Increase/Decrease %
Amounts transferred from the Policyholders’ A/c (Technical Account)* (see note – 1) 84,503 177,521 93,018 110.07
Income from investments
(a) Interest, dividends ; rent – gross 341,199 308,641 (-32,558) (9.54)
(b) Profit on sale/redemption of investments – 42,078 93,976 51,898 123.33
(c) (Loss on sale/ redemption of investments) –
(88,205) (15,295) 72910 82.66
(d) (Amortization of premium) / discount on investments (net) 47,204 36,941 (-10263) (-21.74)
Other Income
(a) Miscellaneous Income 973 3532 2559 263.00
(b) Fees ; charges 69 70 1 1.45
Total (A) 427,821 605,386 177,565 41.50
Expense other than those directly related to the insurance business 53,124 62,753 9,628 18.12
Bad Debts Written Off – Amount transferred to the Policyholders’ Account (Technical Account) 221,871 22,009 (-199,862) (908.09)
Provision for tax – Fringe Benefits Tax / Wealth tax 7 0 (-7) (-100)
Provisions (other than taxation)
– – – a) For diminution in the value of investments – – – b) Provision for doubtful debts – – – – c) Other – – – Total (B) 275,002 84,762 (-190,240) 69.17
Profit/(Loss) before tax = (A) – (B) 152,819 520,624 367,805 240.6
Provision for taxation – Income Tax Profit/(Loss) after tax 152,819 520,624 367,805 240.6
Appropriations (A) Balance at the beginning of the year (1,884,375) (1,731,556) 152,819 8.16
(b) Interim dividends paid during the year – – – (c) Proposed final dividend – – – (d) Dividend distribution – – – e) Transfer to reserves/other accounts – – – Profit / (Loss) carried to the Balance Sheet (1,731,556) (1,210,932) 520,624 30.06
Earnings per share (Face Value of Rs.10/- each) – Basic and Diluted (in Rs.) 0.19 0.65 Table 5.2 (Comparative Profit and Loss of IDBI Federal insurance Co. Ltd.)

*Note no – 1 Policy holder account means the account made by the insurance company in form of revenue accounts under the format of FORM L-1-A-RA according to the regulations of IRDA. In which it records the total premium receipt. It is similar to sale in case of manufacturing companies like manufacturing companies’ record its produced item sale and insurance company records its product sale.

Apart from this to take a clear snapshot of an insurance company’s sale we can consider the total premium receipt during the year and the premium receipt during the years are as follows
Year Amount (in crores ) % increase
2016 12,40 2017 1565 26.25%

Table No. – 5.3 ( Premium received by the Company)
An Analysis and interpretation of the above Income Statement reveals
Premium received are increased by 26.25%, which is positive signal for the company that business of the company is increasing.

Graph No – 5.2 Premium received by the Company
Since IDBI federal insurance got certificate of incorporation from ROC in year 2008 and it takes certain time to become a break-even company and company is suffering losses, However losses has been decreased by 30.06 % from year 2016 to 2017. This is a positive signal for the company.

Year Amount (in crores ) % increase
2016 152819 2017 520624 2.4%

Graph No. – 5.3 Profit/Loss of Company
Loss on sale of investment has been increased by 2.4% which is showing that the investment decisions are taken by the senior person of the company in an accurate direction.

EPS has been increased from 0.12 to 1, which is good for investors.

5.3 Common Size Statements– In the comparative statements it is difficult to comprehend the changes over the years in relations to the total asset and liabilities and capital or total net sales. This limitation of comparative statements make comparison between two or more firms of industry impossible because there isno common base of comparison for absolute figures. Gain for an interpretation for underlying causes of changes over the time period a vertical analysis is required and this is not possible with comparative statements.
Common Size Statements are those in which figures reported are converted in to percentages to some common base for this financial statement are presented as percentage or ratio to total of the items and a common base for comparison is provided. Each percentage shows the relation of the individual item to its respective total.

5.3.1 Common Size Balance Sheet
In a common size Balance Sheet total assets or liability taken as 100 and all the figures are expressed as percentage of the total. Comparative common size balance sheet for different periods helps to highlight the trends in different items. If it is prepared for different firms in an industry, it facilitates to judge the relative soundness and helps in understanding their financial strategy.

Common Size Balance Sheet of IDBI Federal insurance Co. Ltd.

(for the year ending on 31st march, 2016 and 31st march, 2017)
Particulars
31.3.2016 %
of total1 31.4.2017 %
of total
Sources of Funds
Share Capital 7,998,912 15.31% 8,000,000 12.44%
Reserves and surplus – Credit / (Debit) Fair value change account 897 0.0017% 314 0.0004%
Sub-Total (A) 7,999,809 15..32% 8,000,314 12.44%
Policy Holders Fund Credit / (Debit) Fair value change account 2,639 0.005% 8788 0.013%
Policy liabilities 27,970,448 53.54% 36,288,477 56.43%
Provision for linked liabilities 16,054,338 30.73% 19,012,923 29.56%
Funds for discontinued policies (i) Discontinued on account of non-payment of premium 207,138
0.39% 248,977 0.38%
(ii) Others – Sub Total (B) 44,234,563 84.68% 55,559,165 86.40%
Application of Fund Total C= (A+B) 52,234,372 100% 63,559,479 100%
Investments Shareholders 4,282,535 8.19% 4,638,577 7.29%
Policyholders 26,844,329 51.39% 34,736,721 54.65%
Assets held to cover linked liabilities 16,261,476 31.13% 19,261,900 30.30%
Loan 15 1203 Fixed assets 1,301,487 2.49% 1,470,513 2.31%
Sub-Total (D) 48,689,842 93.21% 60,108,914 94.57%
Current Assets Cash and bank balances 1,074,726 2.05% 1,618,249 2.54%
Advances and other assets 2,877,496 5.50% 3,604,346 5.67%
Sub-Total (E) 3,952,222 7.56% 5,222,595 8.21%
Current liabilities 2,095,161 4.01% 2,917,198 4.58%
Provisions 44,087 0.08% 65,764 0.103%
Sub-Total (F) 2,139,248 4.09% 2,982,962 4.69%
Net Current Assets/(Liabilities) (G) = (E) – (F) 1,812,974 3.47% 2,239,633 3.52%
Debit balance in Profit & Loss Account (Shareholders’ account) 1,731,556 3.31% 1,210,931 1.90%
Sub-Total (H) 1,731,556 1,210,931 TOTAL (I) = (D) + (G) + (H) 52,234,372 100% 63,559,479 100%
Table No–5.4(Common Size balance sheet of IDBI Federal insurance)
5.3.2 Common Size Income Statement
In a Common size income statement the sales figure is assumed to be equal to 100 and all other figures of Costa or expenses ae expressed as percentage of sales. A comparative income statement for different periods helps to reveal the efficiency or otherwise of incurring any cost o+r expenses. If it is being prepared for two firms, it shows the relative efficiency of each cost item for the two firms.

Common Size Income Statement of IDBI Federal insurance Co. Ltd.

(for the year ending on 31st march, 2016 and 31st march, 2017)
Particulars 31.03.2016 %
of total 31.03.2017 %
of total
Amounts transferred from the Policyholders’ A/c (Technical Account) 84,503 100% 177,521 100%
Income from investments
(a) Interest, dividends & rent – gross 341,199 308,641 (b) Profit on sale/redemption of investments – 42,078 93,976 (c) (Loss on sale/ redemption of investments) –
(88,205) (15,295) (d) (Amortisation of premium) / discount on investments (net) 47,204 36,941 Other Income
(a) Miscellaneous Income 973 3532 (b) Fees & charges 69 70 Total (A) 427,821 506.27% 605,386 341.02%
Expense other than those directly related to the insurance business 53,124 62.86% 62,753 35.34%
Bad Debts Written Off – Amount transferred to the Policyholders’ Account (Technical Account) 221,871 262.55% 22,009 12.39%
Provision for tax – Fringe Benefits Tax / Wealth tax 7 0.008% 0 0.000%
Provisions (other than taxation)
– – a) For diminution in the value of investments – – b) Provision for doubtful debts – – – c) Other – – Total (B) 275,002 154.9% 84,762 100.3%
Profit/(Loss) before tax = (A) – (B) 152,819 180.84% 520,624 293.27%
Provision for taxation – Income Tax Profit/(Loss) after tax 152,819 180..84% 520,624 293.27%
Appropriations (A) Balance at the beginning of the year (1,884,375) (1,731,556) (b) Interim dividends paid during the year – – (c) Proposed final dividend – – (d) Dividend distribution – – e) Transfer to reserves/other accounts – – – – Profit / (Loss) carried to the Balance Sheet (1,731,556) (1,210,932) Earnings per share (Face Value of Rs.10/- each) – Basic and Diluted (in Rs.) 0.19 0.65 Table No–5.5(Common Size Income Statement of IDBI Federal insurance)
5.4 TREND RATIOS / Analysis
Trend ratio can be defined as index number of the movement of the various financial items in the financial statement for the number of periods. It is a statistical device applied in the analysis of the financial statement to reveal the trend of the items with the passage of time. Trend ratio shows the nature and rate of movements in various financial factors they provide a horizontal analysis of comparative statements and reflect the behavior of various items with the passage of time. Time ratio can be graphically presented for a better understanding by the management. That is very useful in predicting the behavior of the various financial factors in the future. However it should be noted that conclusions is arrived at. Since trends are sometimes significantly affected by externalities.

Year Asset under Management(in crores)
Premium Received(in Crores) Operating Expense Ratio (with respect to Sales) Net Profit
2013-14 3509 826 23% 80
2014-15 4383 1070 19% 155
2015-16 4893 1240 19% 15
2016-17 6090 1565 16% 52
Table No – 4.6 (Trend Ratios)

Graph No – 5.4 Asset under Management of Company

Graph No – 5.5 Premium Received

Graph No – 5.6 Operating Expense Ratio

Graph No – 5.7 Net Profit of the IDBI Federal Life Insurance Co ltd.

Conclusion of the above Trend Ratio / Analysis
Asset under the companies hand are continuously increasing and the premium received by the company is increased in year 2013-14but after that it is declining but trying to improve the position and increasing in year 2016-17
Operating expenses of the company are decreasing i.e. 19% to 16%. Since the company is just incorporated so having losses in the beginning but company manage the loss in year 2016-17 and now having profit of 52 crores
CHAPTER 6

SUMMARY OF FINDINGS
CONCULSION ;
RECOMMENDATION

SUMMARY OF FINDINGS
FINDINGS
Based on the data which is presented in Chapter 3 here are the results which are drawn from the interpretation of data:
Majority of people recognized the IDBI FEDERAL Life Insurance and recalled its advertisement but still there is a lot of scope of improvement, and the brand name of IDBI associated with IDBI FEDERAL Life Insurance gives customers more trust and I found out that many respondents were even not aware that IDBI FEDERAL Life Insurance is a IDBI Product.

People perceive insurance as necessity and still a very large segment of middle class segment customers is to be tapped i.e. there is a large scope of expansion for companies.

Among all the factors that initiate the customer to an insurance policy respondents have given the top priority followed by features.

The findings drawn during the project are as follows:-
Most of the customers prefer to go for protection plans instead of going for other plans.

Most customers aims at getting much return for their ULIP with less risk
Customers prefer to go for Termsurance and Monthly income plan because in this plan the risk is less and return is more…

IDBI FEDERAL Company gets much of the customers who prefer to go for Termsurance and Monthly income plan where there are more returns compare to other products.

CONCLUSION
Based on the findings it can be said that there is a very bad response from the survey this survey shows that in the present scenario IDBI FEDERAL life insurance is very far away from his competitors. But there are lots of scope of growth in insurance market due to rising level of disposable income of individuals and unsecure future of customers and in addition to these factors the present climatic condition have made a perception among customers that insurance are necessity products just as bank account and loan or any financial scheme etc.

IDBI FEDERAL Life insurance company in this scenario, has a fair image in the minds of customers, though some customers think that IDBI FEDERAL Life insurance was primarily concentrating on high class people and now they are concentrating on every level of market or mass market, but they still have a trust over the brand name of IDBI, and if it continuously upgrades its products and services then it can surely become the successful insurance policy provider company.

Insurance sector in India is growing at a very high rate and it is expected to grow more in future. This study had made an attempt to understand the various risk involves in investing in insurance an how to manage those risk.

I observed that most of the people buy an insurance police under someone’s influence and not according to their requirement. Also there is a very low awareness about need analysis calculation. Many people do not pay their premium as they did not purchase their policies according to their requirement. Customer satisfaction plays a very important role in increasing the market share of the company and it is very hard to get.

RECOMMENDATION
In the existence of the market it has created a sensation by introducing its most profitable Unit-Linked Plans and products. The insurer needs to concentrate to make its products and company much more aware among the public to change the mindset of the people and attract them towards insurance sector. This can make the recruitment of the potential advisors very well. To create the awareness among the people,
Customers should be made more aware of need analysis as there is low awareness level among them.

Insurance companies should take more effort in spreading awareness about need analysis calculation.

Insurance companies should also give training to their advisors to explain about need analysis calculation to customer properly as customer how do need analysis are more satisfied with their policies.

Insurance companies should have a reasonable premium rate as most of the customers prefer so.

Insurance companies must advise the customers to go for the best products which suits them based on their income level, which is beneficial for both of them.

CHAPTER-7
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOK REFERNCES:-
Financial Management
M Y KHAN and P K JAIN
Investments
William F sharp, Gordon J Alexander & Jeffery v Baily
Security Analysis and Portfolio Management
Prasana Chandra
Catalogues
IDBI FEDERAL Life insurance company products.

WEBSITES
www.irdaindia.org
www.IDBIFEDERALlifeinsurance.com
www.wikipedia.org
www.iirm.in
www.selling-well.com
www.insurancejournal.com

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