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NARAINA VIDYA PEETH MANAGEMENTINSTITUTE

A SUMMER TRAINING PROJECT REPORT ON

A study of consumer behavior with Unit Link Insurance

Plan (ULIP) in comparison with other tax saving

investment

SUBMITTED IN LIEU OF PARTIAL FULFILLMENT OF

POST GRADUATE DIPLOMA IN MANAGEMENT

SUBMITTED TO:

Mr. Anuj Kumar Tiwari

(Senior Sales Manager- Bajaj Allianz Life Insurance Company Ltd.)

SUBMITTED BY:

NEHA SHARMA

(2008-10)

NARAINA VIDYA PEETH MANAGEMENTINSTITUTE KANPUR

B A J A J | A l l i a n zPage 1


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AcknowledgementAcknowledgement

I wish to express my most sincere gratitude and thanks to my mentor Mr. Anuj Kumartiwari,Senior Sales Manager Bajaj Allianz Life Insurance CompanyLtd., Kanpur, for hisguidance, support, critical advise and inspiration and keen interest during the course ofresearch . His valuable suggestions and remarks were a major factor in bringing out this workin its present form. I also want to extend my gratefulness to Mr. .Shiv hare tiwari and Mr.Amit Guptafor providing me full guidance and co-operation during the project,whenever it isneeded. I also wish to profusely thanks to soul behind the report, all the faculty members ofmy institute, office staff of Bajaj Allianz Life Insurance, Kanpur. Finally I am thankful to all

my friends, colleagues for their constant co-operation, encouragement, help and support.

Prepared for - Submitted By:

BAJAJ ALLIANZ LIFE INSURANCE CO.LTD NEHA SHARMA

NARAINA VIDYA PEETH MANAGEMENTINSTITUTE KANPUR

.


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Preface

These days institute have started giving more and more stress on the management Training, as it isfirst interface of a management student with the culture of the corporate World and it also gives thefirst hand experience to use the knowledge acquired by them Through their faculty in the classroom.Our institute has also been looking in the same direction and also determined to produce Qualitystudents who are having a balance knowledge of both the theoretical aspects and the practicalknowledge as well and in the same context we have to undergo a summer training of 23days in acompany. To cover this aspect, which is the part of the curriculum as well , I underwent training inBAJAJ ALLIANZ LIFE INSURANCE .Here in I got to do a live project for the company, which

was, A study of consumer behavior with Unit Link Insurance Plan

(ULIP) in comparison with other tax saving investment


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TABLE OF CONTENTS

S. No DESCRIPTION Page No.

1 Title Page 1

2 Acknowledgement 2

3 Preface 3

4 Objective of the report 6

5 Significance of Research 7

6 Industry Profile 8

7 The history of insurance 9-10

8 Insurance in India 11

9 Insurance sector reforms 12-14

10 Liberalization of Insurance sector 15-17

11 Principles of insurance 18-21

12 Indias Life Insurance sector set for boom 22-26

13 Business performance 27-29

14 Company Profile 30-35

15 About tax and tax saving 36-37

16 Different tax saving tools 3817 About Unit link Insurance Plan (ULIP) &Tax

rebate on ULIP39-43

18 About Fixed deposit and tax rebate on Fixeddeposit

44

19 About Mutual fund and tax rebateon Mutual Fund

45-46

20 About Public provident fund and tax rebate onPPF

47

21 About National saving certificate (VIIIIssue)and tax rebate on NSC

48-50

22 About Home lone and tax rebateon Home Lone

51-53

23 About Medical insurance and tax rebate onMedical insurance

54-55


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Meaning of research 5625 Objective of research 5726 Significance of Research 5827 Types of research 5928 Research Process 60-6129 Findings and Interpretations 62-7230 Conclusions 7331 Attractions 7432 Activities Conducted 7533 Suggestions 7634 My learning from the project 77

35 Appendix 78 Questionnaire 79-82


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Objective of the report

The exclusive objective of the study is to analyze the actual effect of the onset of various tax saving

investments on the ulip. It aims at checking out the taste and preference of the investors for the

purpose of tax saving

SIGNIFICANCE OF RESEARCH

Customer satisfaction is the crux of the success of any company. To achieve success, the Foremostthing is to be in pace with the customer needs. Clear consistent and systematic Improvement isnecessary to demonstrate that customer satisfaction is a strategic business objective continuousimprovement implies that business philosophies must change to meet ever Increasing expectationsof the customers, and no doubt it is a challenging job. Hence, a research should be a step towards theawareness of expending needs of the Customers and thereby to meet them. In the present erainvestors want maximum possible returns with minimum risks. Now According to the term insurancecompanies have to present those schemes in the market which provide maximum possible return withminimum cost, less risk and provide a better potion to the investors who are paying a great amount in

the tax and there should be No hidden costs involved in the schemes. A wide variety of schemes ofvarious investment and insurance tools are available in the Market. Each one is having distinctivephilosophy of investment portfolio. There is intense need to compare all of them on the ground ofrisks, return, marketability, Convenience, offerings, portfolio management and tax shield pertained.On the basis of that one can come through the top performing insurance schemes.


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Industry Profile

Insurance, in law and economics, is a form of risk management primarily used to hedge against therisk of potential financial loss. Insurance is defined as the equitable transfer of the risk of a potentialloss, from one entity to another, in exchange for a premium and duty of care. The business insuranceis related to the protection of the economic values of the assets every asset has a value. The assetwould have been created through the efforts of the owner. The asset is valuable to the owner, becausehe expects to get some benefits from it. The benefit may be income or something else. It is a benefitbecause it meets some of its needs. Every asset is expected to last for a certain period of time duringwhich it will perform there is a lifetime for a machine in a factory or a cow or a motorcar. None ofthem will last forever. The owner is aware of this and he can also manage his affairs that by the endof the period or lifetime or a substitute is made available and thus he makes sure that the value orincome is not lost. However, the asset may get lost earlier. An accident or any other unfortunate eventmay destroy it or make it non-functional, in that case, the owner and those deriving benefits there

from would be deprived from theBenefit and the planned substitute would not have been ready. There is an adverse or unpleasant

situation. Insurance is a mechanism that helps to reduce the effect of such adverse situations.


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THE HISTORY OF INSURANCE

The roots of insurance might be traced to Babylonia, where traders were encouraged to assume therisks of the caravan trade through loans that were repaid (with interest) only

After the goods had arrived safelya practice resembling bottom and given legal force in the Code ofHammurabi (c.2100). The Phoenicians and the Greeks applied a similar system to their sea bornecommerce. The Romans used burial clubs as a form of life Insurance, providing funeral expenses formembers and later payments to the survivors. With the growth of towns and trade in Europe, themedieval guilds undertook to protect their members from loss by fire and shipwreck, to ransom themfrom captivity by pirates, and to provide decent burial and support in sickness and poverty. By themiddle of the 14th cent., as evidenced by the earliest known insurance contract (Genoa, 1347), marineinsurance was practically universal among the maritime nations of Europe. In London, LloydsCoffee House (1688) was a place where merchants, ship owners, and underwriters met to transactbusiness.

By the end of the 18th

cent. Lloyds had progressed into one of the first modern insurance companies.In 1693, the astronomer Edmond Halley constructed the first mortality table, based on the statisticallaws of mortality and compound interest. The table, corrected (1756) by Joseph Dodson, made it possible to scale the premium rate to age; previously the rate had been the same for all ages.Insurance developed rapidly with the growth of British commerce in the 17 th and 18th century. Prior tothe formation of corporations devoted solely to the business of writing insurance, policies weresigned by a number of individuals, each of whom wrote his name and the amount of risk he wasassuming underneath the insurance proposal, hence the term underwriter. The first stock companiesto engage in insurance were chartered in England in 1720, and in 1735, the first insurance companyin the American colonies was founded at Charleston, S.C. Fire insurance corporations were formed inNew York City (1787) and in Philadelphia (1794). The Presbyterian Synod of Philadelphia sponsored

(1759) the first life insurance corporation in America, for the benefit of Presbyterian ministers andtheir dependents. After 1840, with the decline of religious prejudice against the practice, lifeinsurance entered a boom period. In the 1830s, the practice of classifying risks was begun. The NewYork fire of 1835 called attention to the need for adequate reserves to meet unexpectedly large losses;Massachusetts was the first state to require companies by law (1837) to maintain such reserves. Thegreat Chicago fire (1871) emphasized the costly nature of fires in structurally dense modern cities.Reinsurance, whereby losses are distributed among many companies, was devised to meet suchsituations and is now common in other lines of insurance. The Workmens Compensation Act of1897 in Britain required employers to insure their employees

against industrial accidents. Public liability insurance, fostered by legislation, made its appearance inthe 1880s; it attained major importance with the advent of the automobile. In the 19th century manyfriendly or benefit societies were founded to insure the life and health of their members, and manyfraternal orders were created to provide low-cost, Members-only insurance. Fraternal orders continueto provide insurance coverage, as do most labor organizations. Many employers sponsor groupinsurance policies for their employees; such policies generally include not only life insurance, butsickness and accident benefits and old-age pensions, and the employees usually contribute certainpercentage of the premium. Since the late 19th century, there has been a growing tendency for the


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state to enter the field of insurance, especially with respect to safeguarding workers againstsickness and disability, either temporary or permanent, destitute old age, and unemployment (seesocial security). The U.S. government has also experimented with various types of crop insurance, alandmark in this field being the Federal Crop Insurance Act of 1938. In World War II, thegovernment provided life insurance for members of the armed forces; since then it has provided other

forms of insurance such as pensions for veterans and for government employees.After 1944, the supervision and regulation of insurance companies, previously an exclusive

responsibility of the states, became subject to regulation by Congress under the interstate commerceclause of the U.S. Constitution. Until the 1950s, most insurance companies in the United States wererestricted to providing only one type of insurance, but then legislation was passed to permit fire andcasualty companies to underwrite several classes of insurance. Many firms have since expanded,many mergers have occurred, and multiple-line companies now dominate the field. In 1999, Congressrepealed banking laws that had prohibited commercial banks from being in the insurance business;this measure was expected to result in expansion by major banks into the insurance arena. In recentyears insurance premiums (particularly for liability policies) have increased rapidly, leaving

unprecedented numbers of Americans uninsured. Many blame the insurance conglomerates,contending that U.S. citizens are paying for bad risks made by the companies. Insurance companies place the burden of guilt on law firms and their clients, who they say have brought unreasonablylarge civil suits to court, a trend that has become so common in the United States that legislation hasbeen proposed to limit lawsuit awards. Catastrophic earthquakes, hurricanes, and wildfires in late1980s and the 90s have also strained many insurance companys reserves societies taken over by thecentral government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with acapital contribution of Rs.5 corers from the Government of India.


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INSURANCE IN INDIA

The insurance sector in India has come a full circle from being an open competitive market tonationalization and back to a liberalized market again. Tracing the developments in the Indianinsurance sector reveals the 360-degree turn witnessed over a period of almost two centuries.

Some of the important milestones in the life insurance business

in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulateThe life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical

information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with theObjective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident assurance business in India, on theOther hand, can trace its roots to the Triton Insurance Company Ltd., the first generalInsurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance

business in India are:

1907: The Indian Mercantile Insurance Ltd. Set up, the first company to transact allClasses of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames aCode of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency

Margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized theGeneral insurance business in India with effect from 1 January 1973.


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INSURANCE SECTOR REFORMS *********************************************************

1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N.Malhotra was formed to evaluate the Indian insurance industry and recommend its future direction.

The Malhotra committee was set up with the objective of complementing the reforms initiated in thefinancial sector. The reforms were aimed at creating a more efficient and competitive financialsystem suitable for the requirements of the economy keeping in mind the structural changes currentlyunderway and recognizing that insurance is an important part of the overall financial system where itwas necessary to address the need for similar reforms In 1994, the committee submitted the reportand some of the key recommendations included:

(1) Structure Government stake in the insssssurance Companies to be brought down to 50%.

Government should take over the holdings of GIC and its subsidiaries so thatThese subsidiaries can act as independent corporations.

All the insurance companies should be given greater freedom to operate.

(2) Competition Private Companies with a minimum paid up capital of Rs.1bn should be allowed

To enter the industry.

No Company should deal in both Life and General Insurance through a single entity.

Foreign companies may be allowed to enter the industry in collaboration with the domestic

companies.

Postal Life Insurance should be allowed to operate in the rural market.

Only one State Level Life Insurance Company should be allowed to operate in each state.

(3) Regulatory Body The Insurance Act should be changed.

An Insurance Regulatory body should be set up.


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Controller of Insurance (Currently a part from the Finance Ministry) should be madeindependent.

(4) Investments Mandatory Investments of LIC

Life Fund in government securities to be reduced from 75% to 50%.

GIC and its subsidiaries are not to hold more than 5% in any company (There currentholdings to be brought down to this level over a period).

(5) Customer Service LIC should pay interest on delays in payments beyond 30 days.

Insurance companies must be encouraged to set up unit linked pension plans.

Computerization of operations and updating of technology be carried insurance industry

.The committee emphasized that in order to improve the customer services and increase the coverageof the insurance industry should be opened up to competition. However, at the same time, thecommittee felt the need to exercise caution as any failure on the part of new players could ruin thepublic confidence in the industry. Hence, it was decided to allow competition in a limited way bystipulating the minimum capital requirement of Rs.100 corers. The committee felt the need to providegreater autonomy to insurance companies in order to improve their performance and enable them toact as independent companies with economic motives. For this purpose, it had proposed setting up anindependent regulatory body.

THE INSURANCE REGULATORY AND


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DEVELOPMENT AUTHORITY

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament inDecember 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiouslystuck to its schedule of framing regulations and registering the private sector insurance companies.The other decisions taken simultaneously to provide the supporting systems to the insurance sectorand in particular the life insurance companies were the launch of the IrDAs online service for issueand renewal of licenses to agents. The approval of institutions for imparting training to agents hasalso ensured that the insurance companies would have a trained workforce of insurance agents inplace to sell their products, which are expected to be introduced by early next year. Since being set upas an independent statutory body the IRDA has put in a framework of globally compatibleregulations. In the private sector 12 life insurance and 6 general insurance companies have beenregistered


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LIBERALIZATION OF INSURANCE SECTOR

Liberalization commitment of the country to help in disciplining future economic policies willinclude the insurance reforms. When world over insurance market has been opened up. India cannotremain in isolation .History has shown that it is very difficult to prosper in isolation. Globalization isthe new economic reality, which is here to stay heralding a new era of Insurance in India. With theopening of the insurance industry, India stands to gain with the following major

Advantages:

Globalization will provide opportunities to the customer for the better production with morereasonable and affordable pricing.

The customer will get quicker services.

It will enhance the saving rate.

It will secure for India larger inflow of foreign capital need to sustain our GDP

Advantages of Liberalization

Opening up will enable the country to save more and invest more for the development ininfrastructure.

With new insurance intermediaries and more distribution channels, the market is bound todevelop by leaps and bounds.

In the next few years it is established that the Indian insurance sector will develop a betterunderstanding of consumer requirement leading to more satisfaction of consumers.

The world-class technology will be available in the market bringing about tremendousimprovement in servicing.

Choice of price will be available to the customers.

Lead to increase in employment.


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Social and rural obligations will also be served as IRDA has come out with clear regulation inthe regards, which markets the development in this regards, which makes the development inthis mandatory.

.Unlike west in India, insurance is sold as the instrument of saving. About 18% of the policies aresold as death risk consideration. Impression about LIC is that they are not meant for the marketrequirements. They are only intended to find customers. Insurance awareness is therefore low .Untillinked insurance product are not available insurance covers are expensive and returns are low. Turnover the agent is high. The choice available to the insuring public is inadequate in terms of services,products and prices. These are the areas of weakness, which may act as opportunities for new playerswho may work to offer policies to the customers with value additions at a competitivePremium with much improved servicing.

MAJOR POLICY CHANGES

Reforms in Insurance Sector

Insurance sector has been opened up for competition from Indian private insurance companies withthe enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As perthe provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) wasestablished on 19 April 2000 to protect the interests of holder of insurance policy and to regulate,promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the

entry of private players into the insurance market, which was hitherto the exclusive privilege of public sector insurance companies/ corporations. Under the new dispensation, Indian insurancecompanies in private sector were permitted to operate in India with the following conditions :

Company is formed and registered under the Companies Act, 1956; The aggregate holdings of equity shares by a foreign company, either by itself or through

its subsidiary companies or its nominees, do not exceed 26%, paid up equity capital of suchIndian insurance company;

The companys sole purpose is to carry on life insurance business or general insurancebusiness or reinsurance business;

The minimum paid up equity capital for life or general insurance business is Rs.100 corers;


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The minimum paid up equity capital for carrying on reinsurance business has been prescribedas Rs.200 crores;

Protection of the interest of policyholders:

IRDA has the responsibility of protecting the interest of insurance policyholders

Towards achieving this objective, the Authority has taken the following steps:

IRDA has notified Protection of Policyholders Interest Regulations 2001 to provide for:policy proposal documents in easily understandable language; claims procedure in both lifeand non-life; setting up of grievance redresses machinery; speedy settlement of claims; and

policyholders servicing. The Regulation also provides for payment of interest by insurers forthe delay in settlement of claim.

The insurers are required to maintain solvency margins so that they are in a position to meettheir obligations towards policyholders with regard to payment of claims.

It is obligatory on the part of the insurance companies to disclose clearly the benefits, termsand conditions under the policy. The advertisements issued by the insurers should not misleadthe insuring public.

All insurers are required to set up proper grievance redress machinery in their head office andat their other offices.

The Authority takes up with the insurers any complaint received from the policyholders inconnection with services provided by them under the insurance contract.


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PRINCIPLES OF INSURANCE

Losses must be uncertain:

The rate of losses must be relatively predictable: In order to set premiums (prices) insurers must beable to estimate them accurately. This is done using the Law of Large Numbers, which states that.The larger the number of homogenous exposures considered, the more closely the losses reported willequal the underlying probability of loss. If the coverage is unique, the insured will pay acorrespondingly higher premium.

The Loss must be significant:

The legal principles of De minimize dictates that trivial matters are not covered. Furthermore,rational insurance uses existing insurance when the transaction costs dictate that filing a claim is notrational.

The Loss must not be catastrophic:

If the insurer is insolvent, it will be unable to pay the insured. In the United States, there is a system

of Guaranty Funds run at the state level to reimburse insured people whoseInsurance companies have become insolvent.[1] This program is run by the National Association of Insurance Commissioners (NAIC).[2] To avoid catastrophic depletion of their own capital, insurers almost universally purchase

reinsurance to protect them against excessively large accumulations of risk in a single area, and toprotect them against large-scale catastrophes.Additionally, speculative risks like those incurred through gambling or through the purchases ofcompany stocks are uninsurable.


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LIFE INSURANCE

Life insurance is protection against financial loss resulting from death. It is insuranceCompanys promise to pay your beneficiary a specific amount of money when you die in exchangefor timely payment of premiums.

Life insurance is a contract that pledges payment of an amount to the person assured(Or his nominee) on the happening of the event insured against the person.The contract is valid for payment of the insured amount during:

The date of maturity, or Specified dates at periodic intervals, or

Unfortunate death, if it occurs earlier.

Life insurance is universally acknowledged an institution, which eliminates risk, Substitutingcertainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death ofthe breadwinner. Mostly, life insurance is civilizations partial solution to the problems caused bydeath. Life insurance, in short, is concerned with two hazards that stand across the life-path of everyperson:

1. That of dying prematurely leaving a dependent family to fend for it.2. That of living till old age without visible means of support.

Why do one need life insurance?

Although one may not think about it, the ability to earn income is a significant asset

And life insurance helps replace lost income in the event of your premature death. Here

Are some reasons people buy life insurance.

The death benefit may be used:

To replace income the family would need to maintain their standard of living after the deathof a wage earner.


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To pay off a mortgage loan and other personal and business debts or to create a rent fund.

To create a fund for childrens education.

To pay final expenses, such as funeral costs and taxes To create a family emergency fund or a fund for a family member with special needs

INDIAN INSURANCE INDUSTRY:

NEW AVENUES FOR GROWTHWith an annual growth rate of 15-20% and the largest number of life insurance policies in force, thepotential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insuranceand banking services contribution to the countrys gross domestic product (GDP) is 7% out of whichthe gross premium collection forms a significant part. The funds available with the state-owned LifeInsurance Corporation (LIC) for investments are 8% of GDPTill date, only 20% of the total insurable population of India is covered under various life insuranceschemes, the penetration rates of health and other non-life insurances in India is also well below theinternational level. These facts indicate the immense growth potential of the insurance sector. Theyear 1999 saw a revolution in the Indian insurance sector, as major structural changes took place withthe ending of government monopoly and the passage of the Insurance Regulatory and DevelopmentAuthority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players toenter the market with some limits on direct foreign ownership. However, the existing rule says that aforeign partner can hold 26% equity in an insurance company, a proposal to increase this limit to49% is pending with the government. Since opening up of the insurance sector in 1999, foreigninvestments of Rs. 8.7 billion have poured into the Indian market and 21 private companies havebeen granted licenses.Innovative products, smart marketing, and aggressive distribution have enabled fledgling privateinsurance companies to sign up Indian customers faster than anyone expected. Indians, who hadalways seen life insurance as a tax saving device, are now suddenly turning to the private sector andsnapping up the new innovative products on offer. The life insurance industry in India grew by animpressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year2004-2005, braving stiff competition from private insurers. This report Indian Insurance Industry:New Avenues for Growth 2012, finds that the market share of the state behemoth, LIC, has clocked21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in2004-05.However, this was still not enough to arrest the fall in its market share, as private players grew by129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04. However, the totalvolume of LICs business increased in the last fiscal year (2004-2005) compared to the previous one,its market share came down from 87.04 to 78.07%. The14 private insurers increased their marketshare from about 13% to about 22% in a years time.


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The figures for the first two months of the fiscal year 2005-06 also speak of the growingShare of the private insurers. The share of LIC for this period has further come down to75 percent,while the private players have grabbed over 24 percent. There are presently 12 general insurancecompanies with four public sector companies and eight private insurers. According to estimates,private insurance companies collectively have a 10% share of the non-life insurance market. Though

the focus of this market research report is on the potential growth on the Indian Insurance Sector, italso talks about the market size, market segmentation, and key developments in the market after1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire,marine, and other non-life insurance. The data is supplied in both graphical and tabular format forease of interpretation and analysis. This report also provides company profiles of the major privateinsurancec


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Indias life insurance market set for boom

Wealthier, aging Indians will help transform the countrys largely untapped life insurance market intoone of the worlds fastest growing over the next five years, a global consultancy says. Life insuranceis already the most popular financial product among Indians because of the tax benefits and incomeprotection it offers in a country where there is no social security. However, with household earningsaccelerating in the fast-growing economy, the life insurance income premiums market could doublefrom 40 billion dollars to 80 billion or even 100 billion dollars by 2012, said McKinsey Co in areport. All factors are in place for the Indian life insurance industry to blossom into one of thefastest-growing financial services markets in the world, said report co-author

Tillman Erhbeck.At the size of the market, we are talking about and potential the only one with similar potential isChina, The next five years will be very exciting. Key to insurers enthusiasm about India is itsincreasing affluence, aging population and low penetration of insurance coverage at a time when themarket in industrialized countries is relatively saturated. The potential in the country of 1.1 billionpeople can be seen from the fact the ratio of life insurance premiums to GDP a common measurefor penetration is 4.1 per cent, far lower than developed market levels of 6-9 per cent. This willchange as India sees strongly accelerating household income and a more favorable demographicprofile over the next two decades, Household disposable income is seen rising by 5.3 per centannually, much more than the 3.6 per cent annual growth over the past two decades. With increasedGDP, growth there will be more income for consumers to put into life insurance.

Research suggests the life insurance industry could witness a rise in insurance sector premiums tobetween 5.1 and 6.2 per cent of GDP in 2012 from 4.1 per cent. Demand for pension cover is alsoseen raising, with 113 million Indians expected to be over 60 by 2016, a figure seen swelling to 179

million by 2026.There is an untapped opportunity in pensions where life insuranceplayers have no meaningful presence, Just 10 to 11 per cent of Indias working population is coveredby formal old-age social security schemes. There are currently close to 30 public and private firms inIndias insurance market with state-owned Life Insurance Corp of India (LIC) still holding astranglehold of over 70 per cent. But private players have moved aggressively, chasing for businessafter being allowed to compete with LIC in 2000. And overseas insurers have raced into the marketdespite rules limiting foreign 21government21stent in domestic insurers to 26 per cent. TheCongress government has been seeking to raise the FDI cap to 49 percent as part of economic

reform but its communist allies fiercely oppose such a step.


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KEY PLAYERS IN THE INDIAN MARKET

While the public sector LIC dominates the Indian life insurance market with nearly 75per cent of themarket share. It has 248 branches, 115,000 employees and over 1 million agents. It has also been

improving internal processes and systems, upgrading skills of its agency force and managers anddeveloping innovative products. LIC sold1.69 crore policies during the year compared to 18 lakhpolicies sold by all the private players. The market share of LIC has increased marginally to 74.2%during FY07 when compared with FY06. The market share of private players has gone downto25.8percentage in FY07 from 26.5% in FY06. This is mainly due to increases growth in newbusiness collection by LIC during FY07. LIC has witnessed significant growth in new businessduring the month of March 07 (404%) when compared with February 07, which resulted in a YOYgrowth of 96%.Among private players ICICI Prudential has a market share of 7% followed by BajajAllianz at 5.7%, SBI Life 3.4% and HDFC Standard Life at 2.2% for the FY 07In terms of policies,the industry has witnessed 30% growth during FY07 when compared with FY06. LIC has registered21% growth during the same period. Among private players, Bajaj Allianz has sold the highestnumber of policies followed by ICICIPrudential, SBI Life & Max New York. Kotak life is using first mover advantage by opening an

office in the most prominent location in a non-metro town. It hires local people who are trained. Itsmantra is to develop only the indispensable infrastructure so that it can match the pricing of LIC.Apart from that, it claims that it is the only private player to provide policy servicing at the branchlevel. Standard Chartered is currently its biggest partner followed by Syndicate Bank and CenturionBank. The biggest challenge that the company faces is the weak infrastructure particularly transportand communications in the smaller cities. It is also facing a challenge in terms of banking channels,particularly for customers who bank with cooperative banks, where delays in clearing cheque areinevitable. Tied agencies comprise the biggest channel (68%) of new business acquisitions for BajajAllianz. Banc assurance (27%) is the other significant channel of growth for the company. Birla SunLife was the first to offer ULIPs in the Indian insurance market. In addition, this has been the primarydriver of its growth over the last one year. The company has been investing in customer educationand feels that as a result customers do not view ULIPs as mutual funds but long term insurance. As of2004, the company had 33 branches, 10,274 agents, 79 corporate relationships and 10 banc assurancepartners.

ROBUST GROWTH RATES CONTINUES.


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After 5 years of opening up of the Indian life insurance industry to foreign JVs, the share of privateplayers have gone up to 28.6% at the end of FY 2007-08 from 1.4% in FY 2001-02.This is becauseunlike China, which imposed severe licensing restrictions, the single licensing norm has seen newbreed of insurance companies established itself and grow market share by rapidly increasing the

premium base. The life insurance market has registered a growth of 35% in terms of new businessduring the FY 2007-2008 over previous year.

Table-: Performance by Policy Count (2008-2009)

LIC sold the most number of policies


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In terms of policy count, the share of private players is just 7.7%. LIC accounts for 92%

Of the new policies

Existing Players in the Market


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For the year (2008-09)


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Robust Growth

The life insurance industry has recorded an impressive growth in term of new business

Premium collected for the FY 2006-07. The new business premium (NBP) or the first year

Premium (FYP) collections have gone up by 94% during the FY 2006-07 when compared

With the same period previous year.

Table 1: New Business Premium (Rs mn)

Chart: Private Insurers FYP & YoY Growth


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The market share of LIC has increased marginally to 74.2% during FY09 when compared With FY08.The market share of private players has gone down to 25.8% in FY09 from 26.5% in FY08. This ismainly due to increases growth in new business collection by LICDuring FY09. LIC has witnessed significant growth in new business during the month of March 09(404%) when compared with February 09, which resulted in a YOY growth of 96%. Among privateplayers, ICICI Prudential has a market share of 7% followed by Bajaj Allianz at 5.7%, SBI Life 3.4% andHDFC Standard Life at 2.2% for the FY 09


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Company Profile

Bajaj Allianz Life Insurance Company Ltd.

The power on your side


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Carl Thieme, Director Munich Re Wilhelm Fink, Banker

Founders of Allianz SE

The word Allianz stands for Trust, solidarity, companionship & Strength


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ABOUT BAJAJ ALLIANZ

Worlds Largest Insurance co. by revenue Rs55, 00,000 Cr (Euro 96.9 billion).

Worldwide 2nd by Gross Written Premiums Rs4, 77,930 Cr (Euro 89 billion).

3rd largest Assets under Management (AUM) & largest amongst Insurance cos. - AUM of Rs95, 94,200 Cr (Euro 1078 billion).

11th largest corporation in the world.

50%ofglobalbusinessfromLifeInsurance, closeto60million lives insured globally.

Established in 1890, 118 yrs of Insurance expertise

More than 70 countries, 173,750 employees worldwide.

Insurance to almost half of the Fortune 500 cos.

ACHIVEMENT OF BAJAJ ALLIANZ

Most Profitable Pvt. Life Insurance Co Rs.63cr (US $ 15.3 mn.) profit for FY 06-07

Over 2 million (20, 79,217) policies in this year highest amongst all put. Sector players andtaking the number 1 position.

Have sold over 3.4 million policies (34, 72,875) issued till date.

Largest distribution network to reach the customers across the country with

2,13,000 agents, present in over 1000 towns, 200 corporate agents & Banc assurance partners

Accelerated Growth

Fiscal Year No of policies New Business in FY

o sold in FY

2001-2002 (6mths) 21,376 Rs 7 cr.

2002-2003 1, 15,965 Rs 69 cr.

2003-2004 1, 86,443 Rs 180 cr.

2004-2005 2, 88,189 Rs 857 cr.

2005-2006 7, 81,685 Rs 2717 cr.

2006-2007 20, 79,217 Rs 4270 cr.

2007-2008 37, 44,742 Rs 6675 cr.

Assets under management Rs 5,500 cr.

Shareholder capital base of Rs 700 cr.


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The other facets of

Allianz


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BAJAJ ALLIANZ GROUP

The Bajaj Group is one of the leading business houses of India. Its business interests span host ofindustries such as automobiles (two-wheelers and three-wheelers), home appliances, lighting, ironand steel, insurance, travel and finance. The Bajaj brand is well-known in over a dozen countries inEurope, South America, the US and Asia. The Bajaj Group comprises 27 companies and its flagshipcompany Bajaj Auto is ranked as the world's fourth largest two- and three- wheeler manufacturer.

Bajaj Group was founded in 1926, at the height of India's movement for independence from theBritish. Jamanalal Bajaj, founder of the group, was a close associate of Mahatma Gandhi. JamanalalBajaj's close involvement in the freedom movement did not leave him with much time for hisbusiness. In 1942, his son Kamalanayan Bajaj took charge of the business. He consolidated the group

and diversified into various manufacturing activities. Rahul Bajaj, the present Chairman andManaging Director of the group took reins of the business in 1965. Under his leadership the grouphas achieved new heights and ranks among the top 10 business houses in India.

Bajaj Auto Ltd, the flagship company of the Rs. 8000 carore Bajaj group is the largestmanufacturer of two-wheelers and three-wheelers in India and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image & brand loyalty synonymouswith quality & customer focus.

A STRONG INDIAN BRAND- HAMARA BAJAJ

One of the largest 2 & 3 wheeler manufacturer in the world

21 million+ vehicles on the roads across the globe Managing funds of over Rs 4000 cr.

Bajaj Auto finance one of the largest auto finance cos. in India


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What is Tax and Tax Saving?

*********************************************

A TAX IS A PAYMENT MADE BY THE PERSON WHO HAS EARNED INCOME

DURING A YEAR TO THE GOVERNMENT.

Tax:

The revamp of personal tax laws proposed by the Finance Minister will have the effect of opening upa wide arrayofinvestmentchoicesfortheinvestor, includingequitymutualfunds and pension plans. Theproposed changes will also allow investors toplantheirinvestments and asset allocation with a long-term perspective. Tax is nothing but it is a charge made by 34government on the goods, on34government, 34government, that is a sort of income to the 34government and this money is usedfor developing purpose. An income tax is a tax levied on the financial income of persons,

corporations, or other legal entities.

Taxes are Income Tax (except tax on agricultural income, which the State Governments can levy),Customs duties, Central Excise and Sales Tax and Service Tax. The principal taxes levied by theState Governments are Sales Tax (tax on intra-State sale of goods), Stamp Duty (duty on transfer ofproperty), State Excise (duty on manufacture of alcohol), Land Revenue (levy on land used foragricultural/non-agricultural purposes)Duty on Entertainment and Tax on Professions & Callings.The Local Bodies are empowered to levy tax on properties (buildings, etc.), Octroi (tax on entry ofgoods for use/consumption within areas of the Local Bodies), Tax on Markets and Tax/User Chargesfor utilities like water supply, drainage, etc.Look beyond section 80C cut your tax burden further. Remember, you will have to spend under a

specific head to claim these sweet little tax breaks. Charity, education loans and medical bills; allqualify for a tax break.

1. 80C

Qualifying products: NSC, notified bank deposits and post office time deposits, EPF and PPF, ELSS,life insurance plans, deferred pension plans Mandatory requirements: Payment has to be made before31 March 2008.

Explanation as under:

Threshold limit for all income tax assesses raised by Rs 40,000 for men to Rs 1.5 lakh, by Rs35,000 for women to Rs 1.8 lakh and by Rs 30,000 for senior citizens to Rs 2.25 lakh. Those who paymedical insurance premium for their parents can claim an additional deduction of Rs 15,000 underSection 80 D, thus increasing the total deduction available to Rs 30,000. Amendment to the IncomeTax Act proposed so that reverse mortgage would not amount to transfer and the stream of revenuereceived by the senior citizen would not be considered as income. The Senior Citizens Savings


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Scheme 2004 and the Post Office Time Deposit Account added to the basket of tax-savinginstruments under Section 80C of the Income Tax.

Flashback

The threshold limit of exemption in the case of all assesses was increased by Rs 10,000 thus givingmen and women below the age of 65 a relief of additional Rs 1,000. Senior citizens got a relief of Rs2,000. The deduction allowed under section 80D for payment of medical insurance was increased to amaximum of Rs 15,000 and senior citizens were allowed deduction up to a maximum of Rs 20,000.Employee stock option plans were brought under the ambit of Fringe Benefit Tax. The education cesswas increased to 3 per cent from 2 per cent.


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Tax saving investment***********************************

Unit link Insurance Plan (ULIP)

Fixed Deposits

Mutual Funds

Public Provident Fund

National saving certificates

Home loan

Medical insurance


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Unit link Insurance Plan (ULIP)

A Unit Link Insurance Plan is a life Insurance policy which provides a combination of life insuranceprotection and investment .ULIPs contribute nearly 50% of premium for some insurers and more than85%of the premium for some others.

Features of ULIP

The premiums, in excess of risk cover, is invested as desired by the policyholder.

The investment return may vary depending on the market movement and the investment riskis borne entirely by the policy holder.

With drawls are allowed. Loss, if any, depends on NAV loans are not allowed.

There are no bonuses, except loyalty bonus in some cases.

The amount of the premium used for the insurance coverage, other charges and purchase ofunits are unbundled and transparent.

Benefits are variable.

Loss is likely.

Gains likely depend on the market movements.


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Deduction in respect of life insurance premium

A new section 80C has been inserted from the assessment year 2006-07 onwards. Section 80cprovides deduction in respect of specified qualifying amounts paid or deposited by the assessed in theprevious year.

Salient features of Section 80C

The following are the main provisions of the newly inserted section 80C

Under section 80C deduction is available for the gross total income.

Deduction under section 80C is available only to an individual or Hindu undividedfamily.

Deduction is available on the basis of specified qualifyinginvestments/contributions/deposits /payments made by the tax payer during theprevious year

The gross qualifying amount (subject to a maximum of Rs.1 lakh) would be allowedas deduction irrespective of the fact whether (or not) such amount is paid or depositedby the tax payer out of his income chargeable to tax

The maximum amount deductible under section 80c can not exceed Rs. 1 lakh


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Computation of deduction under section 80cThe deduction is calculated as per the following steps:

Step 1-Gross qualifying amountStep 2-Amount of deduction

Step 1-Gross qualifying amount

Gross qualifying amount is the aggregate of the following

Life insurance premium9including payment made by government employees to the centralgovernment employees Insurance scheme and payment made by a person under childrens

deferred endowment assurance policy) [subject to a maximum of 20% of sum assured (sumassured does not include any premium agreed to be returned or any benefit by way of bonus)]

Subscription of national saving certificates, VIII Issue

Contribution for participation in the unit link insurance plan (ULIP) of unit trust of India

Contribution for participation in the unit link insurance plan (ULIP) of LIC mutual fund

Subscription towards notified units of mutual funds or UTI

Any sum paid (including accrued interest) as subscription to home loan account scheme ofnational housing bank or contribution to any notified pension fund set up by the NationalHousing Bank

Step 2-Amount of deductionGross qualifying amount is the figure derived from the step 1 .However, amount

Deduction under Section 80C is computed as under:

-Gross qualifying amount; or

-Rs.1, 00,000

Whichever is lower?


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Other points regarding computation of gross qualifying amountThe following points are also relevant while calculating the gross qualifying amount

Investment / Deposits are qualified on payment basis-For the purpose of tax deduction under section 80C on payment basis. Payment made under the

Aforesaid heads, during the previous year are qualified for the purpose of deduction underSection80C, regardless of the fact whether the payments relate to the previous year or the yearspreceding or ensuring the previous year.

Minimum period of holding in some cases:In respect of the investments / Deposits /contributions eligible for tax deduction under

Section 80C in some cases, the law provides a minimum period of holding. Such cases are

Given below:

Nature of Investments/ Deposits Minimum period of

holding

Unit link insurance plan (ULIP)

Life insurance premium

cost of purchase /construction of aresidential house property includingrepayment of loan

5 Years2 Years5 Years

Where a member participating in the Unit link insurance plan, terminates his participation beforemaking contribution for 5 Years, then the following consequences should be noted

Whether any deduction would be

available in respect of any contribution

towards the above plan in the previous

year in which the tax payer terminates

participation in the above plan before

completing 5 Years

Any contribution made towards the

above plan in the said previous year will

not be qualified for deduction under

Section 80C


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Fixed Deposits

In Budget 2006, the government extended tax benefits to five-year tax-saver deposits. As per theexisting provision, you are eligible for exemption on five-year deposits on investments up to Rs 1


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lakh. These fixed deposits will be locked for a five-year period from the effective policy date. So, youcannot exercise the option of premature withdrawal. Secondly, you cannot pledge the term deposit ascollateral to secure a loan to meet your liquidity needs. Similarly, banks do not offer overdraft facilityon tax-saver deposits.

Unlike the plain vanilla fixed-deposit products, these tax-saver FDs do not have the sweep-in facility.This implies, you cannot link fixed deposit to the savings account whereby the surplus funds in thesavings account can be automatically invested in this fixed deposit.

In addition, there is no overdraft facility available on the tax-saver FD. As this instrument of savingmoney is special due to its tax-saving status, banks do not extend relationship benefits on the tax-saver FD.

Mutual Funds

Tax Saving with ELSS


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Every one in the Finance Fraternity is talking around Tax Planning, 80C, Investments, PPF

& NSC. But do you know there is a new kid in the Block i.e. ELSS (Equity Linked

Savings Schemes). What is this ELSS? Equity Linked Saving Schemes (ELSS) are Mutual

Fund schemes which generally diversify the equity risk by investing in a wider array of

Stocks across sectors. It offer tax rebates to the investor u/s 80C of the Income tax act,

1961. One gets a tax rebate on the amount contributed to ELSS schemes subject to a

maximum investment of Rs. 100000/-.While there are other options for Tax Planning like

Infrastructure/RBI Relief bonds, Fixed Deposits etc but ultimately it boils down to PPF,

NSC & ELSS.Lets not waste your time and show you an interesting comparative Study.

Comparative analysis of options with Sec 80C Benefits

Instrument NameMinimumLock in period(years)

Risk level(among 80Cgroup)

Rate of return (%p.a.)

Tax status onreturns

Maximuminvestment

Public Provident Fund (PPF) 7 Low 8% Tax Free 70,000

National Savings Certificate(NSC)

6 Low 8% Taxable 1,00,000

Equity Linked Saving Schemes

(ELSS)+ 3 High 45.99%* Tax 1,00,000

The Comparison Chart is Self Explanatory and I need to convince you only about the Risk

Level which appears to be High only when compared with the other tax saving

Instruments that fall under this category. Its Simple, lets assume out of total 36 ELSS

Funds we invested 1 Lac in two of the best and two of the poor performing funds viz a viz


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the other Tax Saving Instruments

Features PPF NSC ELSS Remarks

Flexibility Can be modified as per needs

Liquidity 3 Yrs Locking Period

Returns Proved Attractive Safe Returns

Convenience Doorstep Service, E Mail Updates

Public Provident FundThe central government has established the Public Provident Fund for the benefit of the Generalpublic to mobilize personal savings. Any member of the public (whether a salaried employee or a selfemployed person) can participate in the fund by opening a Provident fund account at the state bank ofIndia or its subsidiaries or other nationalized bank. Even a salaried employee can simultaneouslybecome member of employees provident fund and Public Provident Fund .Any amount (subject tominimum of Rs. 500 and maximum of Rs. 70,000 per annum) may be deposited under this account.The accumulated sum is repayable after 15 years (it may be extended). This provident fund, at


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present carries compound interest at the rate of 8 % per annum. Interest is credited every year butpayable only at the time of maturity.

Tax Treatment

The table given below highlights the exemption and deduction available in respect of

Contribution to and payment from Public Provident Fund (in case of salaried employees)

Public Provident Fund

Employers contribution to provident fund Employer does not contribute

Deduction under section 80C on Employeescontribution

Available

Interest credited to provident fund Exempt from Tax

Lump sum payment at the time of retirement ortermination of service Exempt from Tax

National Savings Certificate (VIII issue)

As far as tax-savers go, the National Savings Certificate is second on the popularityCharts, but that isnt enough reason for you to go out and buy them.


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Who can subscribe?

Individuals and Hindu Undivided Families (HUFs) In the case of individuals, a certificate canbe bought by an adult individual (single holder type) or jointly by two adults (joint holdertype). A certificate can also be purchased on behalf of minor children.

Where can you apply?

All departmental post offices authorized to transact savings bankbusiness.

Nomination.

This facility is available in all cases, except in the case of certificates

purchased on behalf of the minor.

Is it transferable?

Yes, but only after a year from the date the certificate was bought andunder specific circumstances -- such as transfer to a near relative, to anheir if the holder dies or under a court order. An application has to bemade out to get the transfer registered at a post office.

Maturity period and return.

An NSC certificate matures six years from the date it was bought. Therate of interest it earns is 8 per cent per annum.

Withdrawal.

A certificate can be encashed on maturity at the post office at which it isregistered or at any other post office in the country. Premature

encashment (any time before 6 years) is allowed under specificcircumstances like the death of the holder or a court order.

Tax benefits.

The interest that accrues is automatically reinvested and is eligible forrebate of up to 30 per cent. This means, if you invested Rs 60,000 lastyear and the same amount this year, then this year you claim rebate not


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just on Rs 60,000 (current years investment), but also on the amountaccrued on last years investment (and previous years investments inNSCs as well, if there are any). In other words, in this case you will nothave to invest/contribute full Rs 70,000, but still claim the maximum

possible rebate under section 88. However, for NSCs maturing this year,the interest due for the year will not be deemed to be reinvested andhence will not be eligible for rebate under section 88.The interestqualifies for deduction under section 80L up to Rs 12,000 p.a.

NSC scorecard

Risk No risk

Returns Average-good

Liquidity Medium

Other tax benefits Average

Pluses

The interest that accrues is eligible for a deduction of up to Rs12,000 from your taxable income. In other words, the interest thataccrues (and is not received) is exempt from income tax up to Rs12,000.

The interest that accrues is automatically reinvested and is eligiblefor rebate of up to 30 per cent, thereby reducing the requirementlimit for investment next year.

You can pledge NSCs with banks and other lending institutions toget a loan of 75 per cent of the value of the certificates. This isparticularly useful for contractors and other people who regularlyneed loans against security.

The lock-in period is for six years only.

Minuses

The post-tax returns are lower than that offered by the PublicProvident Fund (PPF) and infrastructure bonds.

Premature withdrawals are not allowed.


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Interest income is subject to a maximum exemption of Rs12,000; interest income in excess of Rs 12,000 is taxable.

What should you do?

Buy NSCs only if you need to pledge them to a bank/lending institutionfor a loan. This is because NSCs will continue to earn interest for you at arate higher than the rate earned by bank fixed deposits. If you dont needa loan, PPF and infrastructure bonds are a better investment option.

Home Loan


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A loan is four-letter word. But when it happens to be a home loan, there is a lot going in your favour.Here are the tax implications on the home loan and how to make it work for your benefit.

I. Interest paid can be deducted from your tax

Section 24 of the Income Tax Act allows you to deduct the total interest paid on your loan from yourtaxable income of the same financial year.

Let's see how this works with some figures.Taxable income = Rs 350,000Interest paid towards home loan = Rs 165,000

I If you are residing in the house

If you actually stay in the house for which you took a loan, then the tax man refers to this as selfoccupied property. In such a case, there is a maximum limit of Rs 150,000 on this deduction. But ifyou have taken the loan before March 1, 1999, it will reduce to Rs 30,000.So now your taxableincome will only be Rs 200,000 (Rs 350,000 - Rs 150,000).

ii. If you have rented out the house

If you are not staying in that house but are renting it out, you can deduct the full interest amountagainst rental income from that house. Lets say you earn a monthly rent of Rs 6,000.That means anannual rent income of Rs 72,000 (6,000 per month x 12 months). You will be able to knock off the

Rs 72,000 rent against the Rs 165,000 that you paid as interest. The balance interest outgo of Rs93,000 (165,000 - 72,000) will be written off as a loss against your salary income. This willsubsequently reduce your taxable income.

How your tax is calculated

II. Take advantage of the rebate

A home loan entitles you to a rebate under Section 88 of the Income Tax Act. There is ceiling of Rs20,000 on this amount. The actual amount of the rebate varies:

If your gross total income does not exceed Rs 150,000, you will get a 20% rebate. If your gross total income exceeds Rs 150,000, you will get a 15% rebate.
http://www.rediff.com/getahead/2004/dec/22tax.htmhttp://www.rediff.com/getahead/2004/dec/22tax.htm


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If your gross total income exceeds Rs 500,000 lakh, Section 88 will not be applicable.

To understand what a rebate is and what investments are covered under Section 88, read

Smart tax-saving solutions.

III. You can include your spouse as the borrower

Tax benefits are available to both, the main applicant and the co-applicant. Joint applicants, who arealso joint owners, are eligible for tax benefits in the proportion of their share in the loan. Theinteresting part is that the maximum limits of tax benefits are per assessee. So both spouses can claimbenefits up to the maximum limit. Lets say a couple buys a home jointly (each owning 50%) andtake a loan for it. If the interest and principal paid for a loan is Rs 1, 50,000 and Rs 60,000respectively, each of them can claim Rs 75,000 as interest deduction Rs 20,000 as principal rebate.For the purpose of tax planning, the spouse earning the higher income should claim the higher share

to maximize his/her tax relief.

IV. You can take more than one loan

The maximum limits for rebate and deduction still hold. They will be calculated taking

Into account both the loans.

V. What's not great about the loan

I. All benefits don't apply if the property is in another state

If the property is located in another city, not the one where you are currently residing, the

Rebate on the loan will not hold.

The only deduction is the interest you are paying on the home loan, which is restricted to

A maximum of Rs 1, 50,000.

ii. All the benefits don't apply for a plot of land
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The total taxable gross income of an individual is calculated under five heads:

Salary Capital gains

House property Business or Professional Income Other sources.

A loan taken for a residential house is assessed under the head 'Income from house Property'. Thiswill be eligible for deduction under Section 24. But if you have taken a loan to buy a plot of land, itwill be assessed under the head Income from business or profession'. The interest paid towards thehome loan can be claimed as expenses against income. If you don't have a salary income, the interestpaid can be put as a loss under the head 'Income from house property'. This is set off against incomefrom other heads.

VI. Use the loan as a basis for tax planning

Plan your tax savings only after you take all the loan benefits into account, which are the rebate andthe deduction. All home finance companies and banks usually issue a provisional certificate at thestart of the year. This is based on the Equated Monthly Installments payable in the financial year,with the break-up of the interest and principal paid. This will give you a very fair indication of howmuch principal has to be repaid and how much interest has to be paid in that year. Accordingly, seehow this translates to a rebate or interest deduction.

Based on such projections, you can assess your income and plan for other investments like tax-savingbonds and life insurance -- to save tax. At the end of the year, you will get an original certificate

based on the actual EMIs paid for that year. This certificate has to be submitted along with theincome tax returns to claim the deduction.


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Medical Insurance

Deduction in respect of medical insurance premiumWhen and to

What extent available [Sec 80D]

Provisions of the section 80D are given below:

To get deduction under section 80D, one should satisfy the following conditions

Condition 1 The tax payer is an individual (may be /non-resident or Indiancitizen/ foreign citizen)or a Hindu un divided family (may beresident or non- resident)

Condition 2 Insurance premium is paid by the taxpayer in accordance with thescheme framed in this behalf by the general insurance, corporationof India and approved by the central government. The scheme isknown as mediclaim insurance policy. The amount deposited ina similar scheme of any other insurer who is approved by theinsurance regulatory and development authority (IRDA)shall alsobe eligible for the deduction

Condition 3 The aforesaid premium is paid by the cheque (may be bearer,crossed or account payee cheque)

Condition 4 It is paid out of income chargeable to tax

Mediclaim policy is taken on the health of the following persons

Taxpayer Insured person

Individual

Hindu undividedfamily

On the health of the taxpayer, on the health of the spouse, dependentparents or dependent children of the taxpayer

On the health of the any member of the family


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Amount of deduction

If all the aforesaid conditions are satisfied, then the insurance premium paid or Rs.10,000 whichever is lower is deductible. The aforesaid limit has been increased to Rs 15,000 wherethe assesse or his wife or her husband, or the dependent parents or any member of the family is a

senior citizen (i.e. one who is resident and at least of 65 years of age at anytime during the previousyear) and the medical insurance premium is paid to effect or keep in force an insurance in relation tohim or her. In order to get a deduction in excess of Rs.10, 000 one has to pay mediclaim insurancepremium to effect or keep in force insurance in relation to a senior citizen.


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Meaning of Research

Research in common parlance refers to a search for knowledge. Once can also define research as ascientific and systematic search for pertinent information on a specific topic.In fact research is an art of scientific investigation. The advance Learners dictionary ofCurrent English lays down the meaning of research as a careful investigation or inquiryEspecially through search for new facts in any branch of knowledge Redman and Morydefine research as a systematic effort to gain new knowledge"

According to Clifford Woody, research comprises defining and redefining problems,Formulating hypothesis or suggested solution; collecting, organizing, and evaluating data;Making deductions and reaching conclusions; and at last carefully testing the conclusionsTo determine whether they fit the formulating hypothesis


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Objectives of Research

The purpose of research is to discover answer to questions through the application ofScientific procedures. The main aim of the research is to find out the truth which is hidden and whichhas not been discovered as yet. Though each research study has its ownSpecific purpose, we may think of research objectives as falling into a number ofFollowing broad groupings;

1) To gain familiarity with a phenomenon or to archive new insights into it (studies with this object inview are termed as exploratory or formulative research studies);

2) To portray accurately the characteristics of a particular individual, situation or a group (studieswith this objective in view are known as descriptive research studies);

3) To determine the frequency with which something occurs or with which it is associated withsomething else (studies with this object in view are knownas diagnostic research studies);

4) To test a hypothesis of a causal relationship between variables (such studies are known ashypothesis testing research studies.


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Significance of Research

All progress is born of inquiry. Doubt is often better than overconfidence, for it leads to inquiryleads to invention is a famous Hudson Maxim in context of which the significance of research canwell be understood. Increased amounts of research make progress possible. Research inculcatesscientific and inductive thinking and it promotes the development of logical habits of thinking andorganization.

The role of research in several fields of applied economics, whether related to business or to theeconomy as a whole, has greatly increased in modern times. The increasingly complex nature ofbusiness and government has focused attention on the use of research in solving operationalproblems.Research, as an aid to economic policy, has gained added importance, both for governmentand business. Research provides the basis for nearly all government policies in our economic system.Research has its special significance in solving various operational and planning problems of

business and industry. Research is equally important for social scientists in studying socialrelationship and in seeking answers to various social problems.

a) To those students who are to write a masters or Ph.D. thesis, research may mean careerism or away to attain a high position in the social structure;

b) To professionals in research methodology, research may mean a source of livelihood;

c) To philosophers and thinkers, research may mean the outlet of new ideas and insights;

d) To literacy men and women, research may mean the development of new styles and creative work;


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TYPES OF RESEARCH

The basic types of research are as follows;

1) Descriptive vs. Analytical:

Descriptive research includes surveys and fact findings enquiries of different kinds. TheMajor purpose of Descriptive research is description of the state of affairs as it exists atPresent. The Analytical research, on the other hand, the researcher has to use facts orInformation already available, and analyze these to make a critical evaluation of theMaterial.

2) Applied vs. Fundamental:

Research can either be applied (or action) research or fundamental (to basic or pure)Research .Applied research aims at findings a solution for an immediate problem facing aSociety or an industrial/ business organization, where as fundamental research is mainlyConcerned with generalizations and with the formulation of theory.

3) Quantitative vs. Qualitative:

Quantitative research is based on the measurement of quantity or amount. It is applicable

To phenomena that can be expressed in terms of quantity. Qualitative research, on theOther hand, is concerned with qualitative phenomena i.e.; phenomena relating to orInvolving quality or kind.

4) Conceptual vs. Empirical:

Conceptual research is that related to some abstract idea(s) or theory. It is generally usedBy philosopher and thinkers to develop new concept or to reinterpret existing ones. OnThe other hand, empirical research relies on experience or observation alone often without dueregards for system and theory. It is data based research, coming up with conclusions which are

capable of being verified by observation or experiment

5) Some other types of research:

All other types of researchare variation of one ormore of the above stated approaches


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Research processStage one

Understanding the projectFirstly I was enriched with the philosophy of Tax saving investment and insurance.Secondly I tried to understand that what made investors comfortable in makingInvestments in different sector and which are the major schemes in which investorsCommonly used to invest for the tax saving.

Stage 2nd

Problem definitionThe objectives were set and sampling, methodology and determined. I along with theExpert guidance of my project guide prepared a well- designed questionnaire.

Stage 3rd

Research designDecision regarding what, where, when, how much to invest for getting maximum taxRebate with minimum risks and by what means? The research design encompasses theFollowing information

Data source:Data collected was primary as it was collected by means of questionnaire consisting from various

investors.

Research instrument.

Structured questionnaire consisting of open-ended questions were used for used forPurpose of research.

Contact method;Personal interview

Research approach;Field survey

Research type;

Conclusive (descriptive) a descriptive approach has been adopted in the


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Study. The data has been generated through extensive survey method.

Scope of research;

City of Kanpur.

Stage 4th:

Data collection.I visited the city of Kanpur. Here data collection was done by the way of questionnaire. IMet various investors, direct and queried regarding the questions in the questionnaire. InThe totality 35 respondents were visited by me.

Sampling design.It encompasses the following information.

Sampling universe: investors of various sectors of society

Sample size: 35

Sample procedure: purposive, judgment, and selective sampling

Sampling type: convenient sampling

Stage 5th

Data analysis:Data until analyzed is of no use. Analysis was done in the order of investors visited andThen a consolidated analysis was done (refer to annexure)

Stage 6th

Data interpretation:

Data was interpreted and inferences were drawn and transformed to meaningful information to helpmanagement


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FINDINGS AND INTERPRETATIONS

1. Income wise classification

2. Classification on the basis of assess to tax

3. Classification on the basis of time period.

4. Classification on the basis of different tax saving tools.

5. Classification on the basis of different features of unit link insurance plan(ULIP )

6. Classification on the basis of insurance awareness.

7. Classification on the basis of purpose of investment.

8. Classification on the basis of amount of tax saving.

9. Classification on the basis of choice of life insurance plan

10. Classification on the basis of investment done by the investor


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Income wise classification

Q) In which income bracket you fall

Income of respondents No of respondents0-1.5 lakh 101.5-3 lakh 15

3-5 lakh 7

5 lakh $ above 3

0-1.5lack

1.5-3lack

3-5lack

5lack

Maximum number of respondents belonged to the income group1.5-3 lack but the incomeGroup above 5 lacks were also covered by the compiler which contributed up to 9%. Apartfrom this, respondents belonging to the income group 0-1.5 lack and 3-5 lack were included as well,which formed the proportion of 29% and 20% respectively. All theseDepict the wide area of respondents covered by the compiler.


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Classification on the basis of assess to tax

Q) Are you assess to tax

No of respondentsYes 25

No 10

Yes

No


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Classification on the basis of time period.

Q) If yes, then what type of investment do you prefer?

Short terminvestment

Long terminvestment

No of respondentsShort term investment 21Long term investment 14


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Classification on the basis of different tax saving tools.

Q) For tax saving which tool you find better?

ools of tax saving No of

respondents

No of

respondent

s

No of

respondent

s

No of

respondent

sPoor Average Good Excellent

quity link savinghemes (ELSS)

2 5 7 8

xed Deposits (FD) 2 5 11 7

onds 5 4 7 10ational savingertificate (NSC)

3 7 4 5

ublic Provident FundPF)

2 6 10 6

nit Link Insurance PlanULIP)

6 4 5 3

ealth Insurance Plan 4 5 12 8ome Loan 7 4 2 2thers


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0

2

4

6

8

10

12

14

Equity

link

savin

gsc

hem

es

Fixe

dDe

posit

s

Bond

s

Nation

alsav

ing

certific

ate

PublicP

rovid

entF

und(

PPF)

Unit

linkIns

uran

cePlan

(ULI

P)

Hea

lthinsu

ranc

epl

an

Hom

eLo

an

Poor

Average

Good

Excellent


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Classification on the basis of different features of unit link insurance

plan (ULIP)

Q) If you invest in Unit Link Insurance Plan, why?

Purpose of investment in ULIP No of respondentsFor life cover 17

For investment solution 5

For Tax exemption 6

Due to high returns 3

Due to flexibility 1

Due to transparency 3

For life cover

For investment solution

For Tax exemption

Due to high returns

Due to flexibility

Due to t ransparency


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Classification on the basis of Bajaj Allianz Life insurance awareness.

Q) Are you aware of Bajaj Allianz Life Insurance?

Yes

No


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Classification on the basis of choice of Life Insurance Plan

Q) The main purpose of your investment is

Term plan

Endowment Plan

Money back plan

Unit Link Insurance Plan(ULIP)


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Classification on the basis of amount of tax saving.

Q) The amount you invest annually to save tax (in thousands)

Amount in thousand

10 to 20

20 to 40

40 to 60

60 $above


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Classification on the basis of investment done by the investor

Q) You do investment for tax saving

By yourself

Consult with friends

By taking help fromrelative

By your financialconsultants/ broker


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CONCLUSION

Through the survey conducted by me, I reached the following conclusions:

Through the survey conducted by me, I reached the following conclusions:

Among all the people visited by me a major proportion of the respondents were short terminvestors

Among all the people visited by me a major proportion of the respondents were invest inULIP due to the life cover and then for getting the tax rebate.

People are not well aware of the Bajaj Allianz Life insurance.

Among all the people visited by me a major proportion of the respondents were invest in theMoney Back Plan.

Among all the people visited by me a major proportion of the respondents were invest indifferent tools by yourself though they have not fully aware of that tool in which they areinvesting.

People are not aware of the fact that all the insures prevailing these day, have a large part oftheir money invested with IRDA kept as a security and they all follow the general rule andguidelines laid down by IRDA, and that too vary strictly.


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ACTIVITIES CONDUCTED

During the training session required under the curriculum of completion of master of businessadministration degree, the management trainees of Bajaj Allianz life insurance carried out someactivities very successfully, under the strong and able guidance of the sales managers Mr. Shiv HareyTiwari. &Mr. Anuj Kumar Tiwari We carried out various canopy programs and presentationprograms in some reputed places of Kanpur like HAL i.e. Hindustan aeronautics limited workersplace as well as in residential quarters. The response obtained from these activities was really great.These activities helped greatly inBoosting our confidence up to a much better level.

Suggestions

Increase the consumer awareness about Bajaj Allianz Life Insurance and its different uses.

Company should make policy for fixed end user price for all customers so that fair gamewill be played & customer would not to compromise on their margin.

Company executive should visit customer on regular basis.


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MY LEARNINGS FROM THE PROJECT

It was great opportunity for me to do my internship from Bajaj Allianz Life Insurance.

I got a project which gave me the opportunity to meet the various people in the corporateworld. I could understand the working culture of corporate as well as government offices.Before this I never visited such big organizations.

Making plan for the next day and finding the concern department and person allowed meto increase my communication ability, written as well as verbal

.

My confidence to meet people has tremendously gone up. Today I have that muchconfidence that I can meet to any big person in any organization.

My Mentor also helped me very much to learn about corporate world.

I also attended the customer demonstration which gave me the knowledge about how thecustomer can be convinced, how there queries are handled.


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AppendixQuestionnaire

Dear sir/ mam,I would request you to kindly respond to the following questionnaire

. This study is meant exclusively for academic purpose. I would like to extend my deed

Sense of gratitude for providing valuable insight that surely help in enriching my

Knowledge about todays investment trend and also customers perception about the

Invasion of private companies in the scenario.

Personal details

Name..

Age

Occupation.

Address..

Phone number.

Q1) in which income bracket you fall

a) 0-1.5 lakh [ ] b) 1.5-3 lakh [ ]c) 3-5 lakh [ ] d) above 5 lakh [ ]

Q2) Are you assess to tax

a) Yes [ ] b) No [ ]

Q3) if yes, then what type of investment do you prefer?

a) Short term investment [ ] b) Long term investment [ ]


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Q4) for tax saving which tool you find better?

Give grade to the following investment tool from 1 to 4

(1 Poor, 2 Average, 3 Good, 4 Excellent)

a) Equity link saving schemes (ELSS) [ ]

b) Fixed Deposits (FD) [ ]

c) Bonds [ ]

d) National saving Certificate (NSC) [ ]

e) Public Provident Fund (PPF [ ]

f) Unit Link Insurance Plan (ULIP) [ ]

g) Health Insurance Plan [ ]

h) Home Loan [ ]

I) Any Other (Please Specify)

Q5) if you invest in Unit Link Insurance Plan, why?

a) For life cover [ ]

b) For investment solution [ ]

c) For Tax exemption [ ]

d) Due to high returns [ ]

e) Due to flexibility [ ]

f) Due to transparency [ ]


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g) All of the above [ ]

h) Any other please specify

Q6) If not, where you invest and why?

Q7) Are you aware of Bajaj Allianz Life Insurance

a) Yes [ ] b) No [ ]

Q8) which type of plans under life insurance do you prefer?

a) Term plan [ ]

b) Endowment Plan [ ]

c) Money back plan [ ]

d) Unit Link Insurance Plan (ULIP) [ ]

Q9) the main purpose of your investment isa) Life Insurance [ ]

b) Getting good returns [ ]

c) Tax Saving [ ]

d) To protect your future [ ]

e) Any other (Please Specify)

Q10) how many members in your family are insured?

a) 1-2 [ ] b) 2-3 [ ] c) above3 [ ]

Q11) the amount you invest annually to save tax (in thousands)

a) 10-20 [ ] b) 20-40 [ ] c) 40-60 [ ] d) 60 & above [ ]


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Q12) you do investment for tax saving

a) By yourself [ ]

b) Consult with friends [ ]

c) By taking help from relative [ ]

d) By your financial consultants/ broker [ ]

Q13) from your point of view mention at least four points why to invest in Unit Link Insurance

Plan (ULIP)

Q14) Give your suggestions what more function can be added to Unit Link Insurance Plan

(ULIP).

Q15) Name any four Unit Link Insurance Plans (ULIP) you prefer.

THANK YOU!!!!


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deepesh gupta