INTRODUCTION

INVESTMENT

Investment is parting with one’s fund to be used by another party, user of fund, productive

activity. It can mean giving an advance or loan or contributing to the equity (ownership capital) or

debt capital of a corporate or non-corporate business unit.

General, investment means conversion of cash or money into a monetary asset or a claim on

future money for a return. This return is for saving, parting with saving or liquidity (to be rewarded

for waiting for future consumption) and lastly for taking a risk involving the uncertainty about the

actual return ,time of waiting and cost of getting back funds, safety of funds, and risk of the

variability of the return

INVESTMENT ACTIVITY

Investment activity involves the use of funds or savings for the creation of assets or acquisition of

existing assets. Investment is explained by in terms of financial and physical assets.

INVESTMENT PROPERTIES

A property that you buy with the purpose of generating financial returns is called an investment

property. This property could be land, a single apartment or house, a block of flats, a commercial or

industrial building.

Generate profits through rental income, capital growth or both. Investment properties are

generally not used for residential purposes. You can also generate rental income from your

residential home by renting out spare rooms, but this is finding compatible and reliable tenants can

be tough. So, buying a separate investment property and using this to generate rental income is

usually a better option.

Ways To Finance For Investment Property

Once you decide to buy an investment property, decide how to finance the property. Home loans or

mortgages are normally offered by banks, credit unions or building societies. These institutions offer

you a loan for a percentage of the purchase price, with the property secured as collateral for the

loan. Loans or mortgages are normally secured with either fixed interest rates or variable/ floating

interest rates based on the interest rates fixed by that country’s central bank or finance ministry

INSURANCE

“Insurance is an instrument which can ensure the financial security at the time of losses. It is

a social security tool. Insurance is a contract between two parties whereby one party called insurer

undertakes in exchange for a fixed sum called premiums to pay the other party called insured a fixed

amount of money on the happening of a certain event”.

Insurance is a protection against financial loss arising on the happening of an unexpected

event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the

premiums collected from the insuring public and the insurance companies act as trustees to the

amount collected.

For example, in a life policy by paying a premium to the insurer, the family of the insured

person receives a fixed compensation on the death of the insured.

Similarly in car insurance in the event to the car meeting with an accident, the insured

receives the compensation to the extent of damage.

It is a system by which the losses suffered by a few are spread over many exposed to similar

risks.

UNIT LINKED INSURANCE PLAN:

A policy, which provides for life insurance where the policy value at any time varies

according to the underlying assets at the time.

Unit linked insurance plan (ULIP) is life insurance solution that provides client with the

benefits of protection and flexibility in investment.

The investment is denoted as units and is represented by the value that is has attained called

as Net Asset Value (NAV).

In today’s times – ULIP provides solutions for all the needs of a client like insurance

planning, financial needs, financial planning for children’s future and retirement planning.

ULIP’s advantages

Cash Averaging Capital Guarantee Flexibility of Funds, Flexibility of Investment, Switching

Charges, Capital Gains Tax, Life Cover, Transparency.

NEED FOR THE STUDY

Insurance is desired to safeguard one self and one’s family against possible losses on account of risks

and perils. It provides financial compensation for the losses suffered due to the happening of any

unforeseen events. By taking life insurance a person can have peace of mind and not worry about the

financial consequences in case of any untimely death. In spite of all these the insurance companies are

now a days offering the schemes, which are market linked, which are otherwise popular as Unit Linked

Insurance plans my study concentrated on Birla sun life insurance gajuwaka.

SCOPE OF THE STUDY

The study was taken up to “Evaluate the performance of unit linked insurance plans.” in life

insurance business which are now a days popular. The scope of the study is restricted to the unit

linked insurance plans. performances along with the funds performance in Birla Sun Life Insurance.

OBJECTIVES OF THE STUDY

To study the concept of Unit Linked Insurance Plans of Birla Sun Life

Insurance Co Ltd.

To portray the life of Insurance Industry and of Birla Sun Life Insurance Co Ltd,.Gajuwaka

To know the theoretical concept of performanceevaluation with special reference to of Birla

Sun Life Insurance Co Ltd,.

To analysis & interpret the Risk & Return with special reference to of Birla Sun Life

Insurance Co Ltd,.

To summary &suggest the better performance of Unit Linked Insurance Policies.

METHODOLOGY OF THE STUDY

Sources of data

The data is collected through two source namely

1. Primary data

2. Secondary data

Primary Data:

The primary data has been collected by interaction with the senior official’s of Birla sun life

insurance, Gajuwaka, Visakhapatnam and from the customers the method is simple and the data

collected is very accurate & by oral communication.

Secondary Data:

Secondary data has been collected from Birla sun life insurance Company brouchers web

sites and newspapers, and from the Internet. The data collected is very accurate and easy to collect

& through website.

LIMITATIONS OF THE STUDY

In spite of honest and sincere efforts there are some limitations as stated below.

There is no depth information given in the investment options by the branch.

The company has not disclosed the total statistical information with regard to the fund

performance.

The study is done for the partial fulfillment of M.B.A

There is time limitation of 8 weeks to study & complete the project

The information collected is of the previous five year’s data i.e.2005-2010.

INDUSRTY PROFILE

INDIAN INSURANCE INDUSTRY

Earlier prior to insurance industry evolution. People were not aware of securing life & the

importance of insurance. In olden days people use to earn there living by traveling from one place to

the other. Men use to travel in boats & ships from one place to the other & he is the bread earner of

the family. If any accident is met & the ship drowned the whole family use to suffer as the bread

earner is no more. so to sage guard the family from the loss of bread earner. The co - travellers have

come out with a solution that there should be contribution from each and every person who is

traveling in the ship, so that if there is any loss of life. They can extend the financial help to the

family with which the concept of insurance has been a started with marine insurance, later life

insurance has started its operation’s & introduced various insurance plans & provided unit linked

insurance plan’s.

Add the history of Life Insurance Corporation & then give the details of new entrants.

Insurance industry, as on 1.4.2000, comprised of mainly two players:

General Insurance Corporation of India (GIC)

Life Insurance Corporation of India (LIC).

(With effect from Dec ‘2000, a national re-insurer).

Definition of General insurance:

A contract whereby, upon periodic of a sum of money called premium, the insurer undertakes to

compensate the insured in the event of any specified loss or damage suffered by the latter, is known

as ‘general insurance’. A typical characteristic of general insurance is that it serves only as a

protection contract, and not as an investment contract.

The various types of general insurance are fire insurance, marine insurance, personal

accident insurance, etc.

Fire insurance:

Under fire insurance, the insurance company undertakes to indemnify the loss sustained by

the insured party on account of fire accidents. In order that fire claims are admitted by the insurance

company, there must be an actual fire that is accidental, and not intentional. the cause of the fire is

immaterial for the fire claim to be admitted. However, in the event of a fire claim to be admitted.

Some of the popular fire insurance policies are as follows:

1. Valued policy:

it is a policy where in the value of the property is agreed upon, and the insurance company

undertakes to pay the agreed value in the event of destruction of the property.

2. Average policy:

A policy wherein, fire claims are paid to the insured in proportion to the actual value of the property

are the time of time of loss, is called ‘Average policy’.

Amount of claims = Amount of insurance policy *Loss assessed

Actual market value of subject matter

3. Specific policy:

This is a policy wherein risk on account of fire is insured for a specific sum. The maximum the

maximum coverage under this policy shall be upto the amount of the insurance policy.

4. Floating policy:

When an insurance policy covers risk pertaining to one or several kinds of goods in different places

for a single sum and for a single premium, it’s called a floating policy.

5. Blanket policy:

where the risk pertaining to all types of assets, fixed as well as current, is covered under one

single insurance policy, it is a case of’ blanket policy’.

Marine Insurance:

An insurance contract which covers the risks of loss arising from and incidental to marine

adventure is known as ‘Marine Insurance’.

Some of the important policies of marine insurance are as follows:

a) Time policy: A marine policy which covers a specified time period only

b) Voyage policy: A marine policy that covers a specified voyage only

c) Mixed policy: A marine policy that covers both specified time period and voyage

d) Blanket policy: A marine policy that covers all type of risks

e) Fleet policy : A marine policy that covers the entire fleet of liners and streamers.

Other insurances:

In addition to fire and marine insurance, other popular types of general insurance includes

motor insurance, burglary, theft and robbery insurance.

Liability insurances:

A type of insurance contract that provides insurance protection to a person in the event of

damage caused to someone’s health or property, if found to e at fault is called ‘liability

insurance’.

GIC had four subsidiary companies, namely (with effect from Dec ‘2000, these subsidiaries

have been de – liked from parent company and made as an independent insurance companies.

1. Oriental Insurance Company Limited with H.Q at New Delhi.

2. New India Assurance Company Limited with H.Q at Mumbai.

3. National Insurance Company Limited with H.Q at Kolkata.

4. United India Insurance Company Limited with H.Q at Chennai.

General insurers:

Registration Number

Dateof Registration

Name of the Company

102 20.10.2000 Royal Sundaram Alliance Insurance Co.Ltd.

103 23.10.2000 Reliance General Insurance Co.Ltd.

106 04.12.2000 IFFCO Tokio General Insurance Co.Ltd.

108 22.01.2001 TATA AIG General Insurance Co.Ltd.

113 02.05.20001 Bajaj Alliance General Insurance Co.Ltd.

115 03.08.2001ICICI Lombard General Insurance Co.Ltd.

123 15.07.2002 Cholamandalam General Insurance Co. Ltd.

124 27.08.2002 Export Credit Guarantee Corporation Co. Ltd.

123 15.07.2002 Cholamandalam General Insurance Co. Ltd.

124 27.08.2002 Export Credit Guarantee Corporation Co. Ltd.

139 27.06.2008 Bharti AXA General Insurance Co. Ltd.

WHAT IS INSURANCE

The business of insurance is related to the protection of the economic value of assets.Every asset has

a value. The asset would have been created through the efforts of the owner. The asset is valuable to

the owner, because he expects to get some benefits from it. The benefit may be an income or some

thing else. It is a benefit because it meets some of his needs. In the case of a factory or a cow, the

product generated by is sold and income generated. In the case of a motor car, it profices comfort

and convenience in transportation. There is no direct income.

Introduction

The business of insurance started with marine business Traders, who used to gather in the Lloyd’s

coffee house in London agreed to share the losses to their goods while being carried by ships. The

losses used to occur because of pirates who robbed on the high seas or because of bad weather

spoiling the goods or sinking the ship. the first insurance policy was issued in 1583 in England .In

India insurance began n 1870 with life insurance being transacted by an English company, the

European and the Albert. The first Indian insurance company was the Bombay mutual Assurance

Society Ltd, formed in 1870.This was followed ye the oriental life Assurance Co. in 1874, the

Bharat in 1896 and the Empire of India in 1897.

Later, the Hindustan cooperative was formed in Calcutta, the united India in Madras, the Bombay

Life in Bombay, the National in Calcutta, the New India in Bombay, and the Jupiter in Bombay and

the Lakshmi in New Delhi. These were all Indian companies, started as result of the swadeshi

movement in the early1900s.By the year 1956, when the life insurance business was nationalized

and the Life Insurance Corporation of India (LIC) was formed on 1 st September 1956, there were

170 and 75 provident fund societies transacting life insurance business in India. After the

amendments to be relevant laws in 1999, the L.I.C. did not have the exclusive privilege of doing

life insurance business in India. By 31.3.2002, eleven new insurers had been registered and had

begun to transact life insurance business in India.

Definition of Life Insuranse:

A contract in which the insurer undertakes to pay a certain sum of money to insured, either on the

expiry of a specified period, or on the death of the insured, in consideration of payment of

’premium’ for a certain period of time, is known as ‘life insurance’.

Some of the popular types of life assurance policies are as follows:

Whole life policy:

An ordinary policy: which runs throughout the life of the assured is known as ‘whole life policy’.

The sum assured under this policy is payable only after the death of the assured. The premium

payable is low, and is meant to protect the family. This policy offers the advantage of an investment

for a life term

Endowment policy: The policy runs for a period as specified in the policy document. The sum

assured, along with the bonuses, are payable either on the date of maturity of policy, or on the death

of the assure, whichever occurs earlier. This policy offers the advantage of both protection and

investment.

Annuity policy: Under this policy, the amount of the policy is paid in the form of annuities for a

specified number of years, or till the death of the assured.

Joint life policy: when the insurance policy covers the lives of two or more persons, it is called

‘joint life policy’.

Group insurance: policy when and\ insurance policy is taken out on the lives of the members of a

family, or the employees of a business concern, it is called ‘group insurance policy’.

Insurance services:

Definition:

A contract where by one party, called the ‘the insurer or the insurance company’, undertakes

to compensate the other party called the ‘insured’, for any loss or damage suffered by the latter, in

consideration of payment of ‘premium’ for a certain period of time, is known as ‘insurance’.

Basic principles of insurance:

Good faith:

A contract of insurance is founded on the principle of ‘utmost good faith’. Accordingly, both parties

to the contract are required to disclose all material facts. The rule of ‘caveat emptor’ is not

applicable in the case of insurance.

Insurable interest:

The insured party is required to have an insurable interest on the object on which the insurance

policy is taken. Insurable interest is required to be present both at the time of the contract, as well as

at the time of loss. Insurance interest refers to the pecuniary or financial interest possessed by the

beneficiary, which is the insured party, on the object being insured for. This implies that loss or

damage caused to such an object would cause financial loss to the insured party.

Compensation:

An insurance contract undertakes to indemnify the insured for any loss or damage sustained due to

the risk against which it is insured. This is applicable only to the general insurance business ,where

it is possible to calculate the loss or the damage in terms of money.

Subrogation:

The term ‘subrogation’ refers to stepping into the shoes of others. Accordingly, an insure can step

into the shoes of an insured, and become entitled to all the rights and privileges of the insured in

relation to the insured object, after making payment to the insured, Under this doctrine, the property

in the object will pass on to the insurance company after the payment of insurance claims.

Contribution:

According to this principle, the amount of compensation forthcoming from an insurance company

would depend proportionately on the amount for which the insurance policy has undertaken to

compensate for the loss. This is applicable in the case of ‘double insurance’, where by the insured

insures the object with more than one insurance company.

Year 2000 – 2001 (From 2 nd April 2000 to 31 st December 2001)

Until the year 1999 LIC enjoyed monopoly in India. But in the year 1999 passing the IRDA

act liberalized the insurance industry in India. According to this act insurance business was

privatized. That is the act allowed foreign participation in insurance business as a joint venture with

an Indian company with 26:74 share holding respectively.

Insurance Industry in the year 2000 – 2001 had 16 new entrants, namely:

Life Insurers:

Registration Number

Date of Registration

Name of the Company

101 23.10.2002 HDFC Standard life Insurance Co. Ltd.

104 15.11.2000 Birla Sun Life Life Insurance Co.Ltd.

105 24.11.2000 ICICI Prudential Life Insurance Co.Ltd.

107 10.01.2001 Om Kotak Mahindra Life Insurance Co.Ltd.

109 31.01.2001 Birla Sun Life Insurance Co.Ltd.

110 12.02.2001 Tata AIG Life Insurance Co.Ltd.

111 30.02.2000 SBI Life Insurance Co.Ltd.

114 02.08.2001 ING Vysya Life Insurance Co.Ltd.

116 03.08.2001 Bajaj Alliance Life Insurance Co.Ltd.

117 06.08.2001 MetLife India Insurance Co. Pvt. Ltd.

121 03.01.2002 Reliance Life Insurance Co.Ltd.

122 14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd

127 06.02.2004 Sahara India Insurance Co. Ltd.

128 17.11.2005 Shriram Life Insurance Co. Ltd.

130 14.07.2006 Bharti AXA Life Insurance Co. Ltd.

133 04.09.2007 Future General India Life Insurance Co. Ltd

135 19.12.2007 IDBI Fortis Life Insurance Co. Ltd.

136 08.05.2008Canara HSBC Oriental Bank of Commerce Life

Insurance Co. Ltd.

138 27.06.2008 Aegon Religare Life Insurance Co. Ltd.

140 27.06.2008 DLF Pramerica Life Insurance Co. Ltd.

142

143

08.6.2009

05.11.2009

Star union Dai-ichi life insurance Co Ltd.

Reheja QBE General Co Ltd.

144

145

17.01.2010

20.09.2010

Century Insurance Co,ltd

Church Mutual Insurance Co.Ltd.

141 15.12.2008 India first life insurance company Ltd.

REASONS FOR TAKING INSURANCE:

Insurance is desired to safeguard oneself and one’s family against possible losses on account

of risks and perils. It provides financial compensation for the losses suffered due to the happening of

any unforeseen events.

Insurance is considered as a good savings instrument. It contains all the features of good

saving plan like –

Safety / Security

Return

Liquidation

Tax benefits

Fulfillment of future financial needs

By taking life insurance a person can have peace of mind and need not worry about the

financial consequences in case of any untimely death.

Certain insurance contracts are also made compulsory by legislation. For example, motor

vehicles Act 1998 stipulates that a person driving a vehicle in a public place should hold a valid

insurance policy covering “Act” risks. Another example of compulsory insurance pertains to the

environmental protection act, where in a person using or carrying hazardous substances (as defined

in the act) must hold a valid public liability (Act) policy.

It is said that –

“Living long is as much a burden as dying too early”

“Terms of life are hard but the terms of life insurance are soft”.

ADVANTAGES OF LIFE INSURANCE:

Protection against premature death: Life insurance provides protection to the dependents

of the assured incase of his untimely death. The dependents get a large sum in case of the

death of their breadwinner.

Provision for old age: Through life insurance, a person can make provisions for his old

age. After is substantially reduced. He cannot maintain his standard of living without

substantial livings.

Promotion of Thrift: Life insurance encourages people to save money compulsorily. Once

a life policy is taken, the assured has to pay premiums regularly to keep the policy in force

and he cannot get back the premium.

Funds foe Investment: It mobilizes the public savings and chanceless them in productive

investment for the economic development of the country. It is an important institution for

the mobilization and investment of small savings.

Commercial Value: Life insurance policy can be used as a collateral security to raise loans.

It improves the continuity and credit worthiness of business.

Social Utility: Life Insurance has significance for the society also industrial workers and

other poor people can save through life insurance. It enables a person to provide for

education and marriage of children and for construction of house.

Superior to an Ordinary Savings Plan: Unlike other savings, it affords full protection

against risk of death. In case of death the full sum assured is made available under a life

assurance policy.

Ready Marketability: After an initials period, if the policy holder finds himself unable to

continue payment of premiums he can surrender the policy for cash sum. Alternatively, he

can tide over a temporary difficulty by taking a loan on the sole security.

Tax Relief: Income Tax Act allows deduction from tax payable, a certain percentage of

portions of the taxable income, which is diverted to payment of premiums.

Life Insurance Business:

It is the business of effecting contracts of insurance upon human life, including any contract

where by the payment of money is ensured on death only or the happening of any contingency

dependant on human life and any contract which is subject to the payment or premiums of a term

dependent on human life and shall be the deemed to include.

The granting of disability and double or triple indemnity accident benefits, of so provided in

the contract of insurance.

The granting of annuities on human life.

The granting of superannuation. Allowance and annuities payable out of any fund applicable

solely to the relief and maintenance of persons engaged or who have been engaged in any

particular profession, trade or employment or the dependants of such persons.

EVOLUTION OF INSURANCE MARKET

Let’s have a brief look into the evolution of the insurance market, which has come a long

way starting 1818.

The business of life insurance in India in its existing form started in India in the year 1818

with the establishment of the Oriental Life Insurance Company in Kolkata. Some of the important

milestones in the life insurance business in India are:

1912: The Indian Life Assurance Company Act enacted as the first statute to regulate the life

insurance business.

1928: The Indian Insurance Company Act enabled the government to collect statistical information

about both life and non – life insurance business.

1938: Earlier legislation was consolidated and amended by the Insurance Act with the objective of

protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the Central

Government were nationalized. LIC formed by an Act of parliament, viz., LIC Act, 1956,

with a capital contribution of Rs. 5 Cr, from the Government of India. (Source:

www.ciionline.org).

Prior to 1956, a large number of organizations were managing life insurance and general

insurance business. But then in 1956, the life insurance business was nationalized & Monopoly

vested with Life Insurance Corporation (LIC). Similarly in 1972, the general insurance business was

nationalized & started to be managed by General Insurance Corporation (GIC) and its four

subsidiaries namely National Insurance Company Limited, New India Assurance Company Limited,

Oriental Fire & General Insurance Company Limited & United India Company Limited.

The first sign of government concern about the state of the insurance industry was revealed

in the early nineties, when an expert committee was set up under the chairmanship of late R.N.

Malhotra Committee, the most important was recommending that the insurance industry be opened

up to private firms, subject to the conditions that a private insurer should have a minimum paid up

capital of Rs. 100 Crs, and that the promoter’s stake in the otherwise widely held company should

not be less than 26 percent and not more than 40 percent.

Subsequent to the submission of its report by the Malhotra Committee, there were several

abortive attempts to introduce the Insurance Regulatory Authority (IRA) Bill in the parliament.

In November 1998, the central cabinet approved the Bill, which envisaged a ceiling of 40

percent for non – Indian stakeholders: 26 percent for foreign collaborators of Indian promoters, and

14 percent for non resident Indians (NRI’s). Overseas corporate bodies (OCB’s) and foreign

institutional investors (FII’s). However, in view of the widespread resentment about the 40 percent

ceiling among political parties, the bill was referred to the standing committee on finance. The

committee has since recommended that each private company be allowed to enter only one of the

three areas of business – life insurance, general or non – life insurance, and reinsurance that the

overall ceiling for foreign stakeholders in these companies be reduced to 26 percent from the

proposed 40 percent.

The committee has also recommended that the minimum paid up share capital of the new

insurance companies he raised to Rs. 200 Crs, double the amount proposed by the Malhotra

Committee. Today, due to these developments, the Indian insurance market stands wide open and

has attracted a host of global players.

EVOLUTION OF IRDA

The Malhotra committee felt that need to provide greater autonomy to insurance companies

in order to improve their performance and enable them to act as independent companies with

economic motives. For this purpose, it had proposed setting up an independent regulatory body. The

insurance Regulatory and Development authority Reforms in the insurance sector were inititated

with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its

incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing

regulations and registering the private sector insurance companies. The other decision taken

simultaneously to provide the supporting systems to the insurance sector and in particular the life

insurance companies was the launch of the IRDA’s online service for issue and renewal of licenses

to agents.

The approval of institutions for imparting training to agents has also ensured that the

insurance companies would have a trained workforce of insurance agents in place of sell their

products, which are expected to be introduced by early next year. Since being set up as an

independent statutory body the IRDA has put in a framework of globally compatible regulations. In

the private sector 12 life insurance and 6 general insurance companies have been registered.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

IRDA:

Its statutory Autonomous board created to perform the role of an effective watchdog and

regulator for the insurance sector in India. It is vested with the power of make regulations consistent

with the act to carry out the purpose of the act.

IRDA is constituted with one chairperson, 5 whole time members and 4 part – time

members, all with tenure of 5 years.

There will be an advisory committee consisting of 25 members to advise IRDA in its day to

day activities representing commerce, industry, agriculture, consumers, employee’s etc.

Objectives of IRDA:

To provide for the establishment of an authority to protect the interests of holders of

insurance policies, to regulate, promote and ensure orderly Creator of the insurance industry.

Important changes brought through IRDA act:

1) Insurance business is opened up to private sector thus ending the monopoly of LIC/GIC.

2) Participation of foreign companies in collaboration with Indian insurance companies is

allowed: subject to the condition that the foreign Company’s share capital shall not exceed

26% of the paid up capital of the Indian insured.

3) Controllers of insurance ceases of exist and all functions are vested with IRDA.

4) Appointment of chief agents and special agents is revived.

5) The concept of insurance broker’s is introduced.

Duties, Powers and Functions of IRDA:

i). Issue certificate of registration, renew, modify, withdraw suspend or cancel such

registration.

ii). Protect the interest of policy holders in all matters concerning the terms and conditions of

contracts of insurance including settlement of insurance claims, surrender value of policy

etc.

iii). Specify requisite qualification, code of conduct and practical training for insurance

intermediaries and agents.

iv). Promote efficiency in the conduct of insurance business.

v). Promoting and regulating professional organizations connected with insurance and

reinsurance business and specify percentage of premium income to be spent by insured

for this purpose.

vi). Undertaking inspections and conducting audit of insured, insurance intermediaries and

other organizations connected with insurance business.

vii). Specify the form and manner in which books of accounts shall be maintained and

statement of accounts be rendered by insured.

viii). Regulate investment of funds by insured’s.

ix). Adjudicate dispute between insured and intermediaries or insurance intermediaries

advisory committee.

x). Supervise the functioning of the Tariff advisory committee.

SEBI VS IRDA BATTLE – ENSUES OVER ULIP’S

The Unit Linked Insurance Plans controversy that started with the stock the Unit Linked

Insurance Plans controversy that started with the stock market regulator SEBI banning 14 insurance

companies from issuing fresh Unit Linked Insurance Plans has drawn from fresh blood. Within 24

hours of this ban, insurance regulatory development authority or the irda has responses to the SEBI

notice by stating that insurers can continue issuing policies as usual.

Why there is a fight?

SEBI manages all stock market related activities. They have power to manage mutual funds and

Unit Linked Insurance Plans are similar to mutual funds (investment in stock market) and some part

of insurance added to it. as Unit Linked Insurance Plan are doing investment in share market, SEBI

should have a control over it and thats why SEBI is saying that insurers should seek its approval for

irda is regulatory authority for insurance companies in india. as Unit Linked Insurance Plan has

more to do with stock market investment and less with insurance part. ideally SEBI should also have

say in regulation of Unit Linked Insurance Plans. the same was requested to irda by SEBI, but they

refused to give them control, so SEBI has asked them to stop selling Unit Linked Insurance Plans,

but irda has asked companies to continue selling the Unit Linked Insurance Plans.

SEBI has removed all entry loads on mutual fund investment, but insurance agents are making lot of

money in first 3-5 years of Unit Linked Insurance Plan charging high entry load on Unit Linked

Insurance Plan investment. most of the Unit Linked Insurance Plans are misspelled in India, saying

that investment have to be done only for 3-5 years, which is incorrect as if policy holder does not

continue this after that, he stands to loose.

These are major concerns that should ideally be addressed by irda, which has acted very little in

consumer interest. Insurance still ranks to be the no. 1 product that is miss-sold making false claims

and giving wrong product knowledge. In these circumstances, it is obvious for the market regulator

SEBI to take a note. SEBI has made a great impact in the highly rigged mutual funds and stock

markets, making it far more transparent over the years.

it is expected that with SEBI intervention, things would get better for the common man for whom

insurance is indispensable. It is high time that insurance is being sold as insurance and investment is

being sold as investment and that too without leakage.

The government may be compelled to step in to resolve the issues as some insurers are planning to

approach the court.

COMPANY PROFILE

Established in 2000, birla sun life insurance company limited (Birla Sun Life Insurance ) is a

joint venture between the aditya birla group, a well known and trusted name globally amongst

indian conglomerates and sun life financial inc, leading international financial services organization

from canada. The local knowledge of the aditya birla group combined with the domain expertise of

sun life financial inc., offers a formidable protection for its customers’ future.

With an experience of over 9 years, Birla Sun Life Insurance has contributed significantly to

the creator and development of the life insurance industry in india and currently ranks amongst the

top 5 private life insurance companies in the country. Known for its innovation and creating

industry benchmarks, Birla Sun Life Insurance has several firsts to its credit.

Birla Sun Life Insurance was the first Indian insurance company to introduce “free look

period” and the same was made mandatory by irda for all other life insurance companies.

Additionally, Birla Sun Life Insurance pioneered the launch of unit linked life insurance plans

amongst the private players in India. To establish credibility and further transparency, Birla Sun

Life Insurance also enjoys the prestige to be the originator of practice to disclose portfolio on

monthly basis. These category development initiatives have helped Birla Sun Life Insurance be

closer to its policy holders’ expectations, which gets further accentuated by the complete bouquet of

insurance products that the company offers. Add to this, the extensive reach through its network of

600 branches and 1,75,000 empanelled advisors.

This impressive combination of domain expertise, product range, reach and ears on ground,

helped Birla Sun Life Insurance cover more than 2 million lives since it commenced operations and

establish a customer base spread across more than 1500 towns and cities in india. To ensure that our

customers have an impeccable experience, Birla Sun Life Insurance has ensured that it has lowest

outstanding claims ratio of 0.00% for fy 2008-09. Additionally, Birla Sun Life Insurance has the

best turn around time according to loma on all claims parameters. Such services are well supported

by sound financials that the company has. The aum of Birla Sun Life Insurance stood at rs. 8165 crs

as on february 28, 2009, while as on march 31, 2009, the company has a robust capital base of rs.

2000 crs.

Vision

To be a leader and role model in a broad based and integrated financial services business

Mission

To help people mitigate risks of life, accident, health, and money at all stages and under

all circumstances

Enhance the financial future of our customers including enterprises

Values

Integrity

Commitment

Passion

Seamlessness

Speed

a us $28 billion corporation, the aditya birla group is in the league of fortune 500 worldwide.

it is anchored by an extraordinary force of 100,000 employees, belonging to 25 different

nationalities. the group operates in 25 countries across six continents – truly india's first

multinational corporation.

aditya birla group through aditya birla financial services group (abfsg), has a strong presence

across various financial services verticals that include life insurance, fund management, distribution

& wealth management, security based lending, insurance broking, private equity and retail broking.

the seven companies representing abfsg are birla sun life insurance company, birla sun life asset

management company, aditya birla money, aditya birla finance, birla insurance advisory & broking

services, aditya birla capital advisors and apollo sindhoori capital investment. in fy 2008-09, the

consolidated revenues of abfsg from these businesses crossed rs. 4763 crores, registering a creator

rate of 36%.

The below following companies which are under ADITYA BIRLA GROUP

sun life financial is a leading international financial services organisation providing a diverse

range of protection and wealth accumulation products and services to individuals and corporate

customers. chartered in 1865, sun life financial and its partners today have operations in key markets

worldwide, including canada, the united states, the united kingdom, ireland, hong kong, the

philippines, japan, indonesia, india, china and bermuda. as of december 31, 2008, the sun life

financial group of companies had total assets under management of $381 billion

ACHIEVEMENTS AND AWARDS

birla sun life insurance achieves the milestone of processing 100% claims received

Birla Sun Life Insurance ends fy09 with 0 outstanding claims - a new high in the insurance

industry

Mumbai, maharashtra, may 14, 2009 /India prwire/ -- birla sun life insurance, one of india’s

leading life insurance companies, has set a new benchmark amongst insurance players, by

achieving the milestone of processing 100 % of its claims.

The company’s claims outstanding ratio has been continuously reducing year-on-year and

has been one of the best in the industry. a reduction from 0.32% in 2007-08 to 0.00% in

2008-09, is a living example of the strong system & processes the company has set in and

demonstrates birla sun life insurance’s customer outcome oriented approach.

A recent survey (2008) conducted by 'life office management association' (loma) of life

insurance companies across asia (wherein birla sun life insurance too had participated) reveal

that birla sun life insurance have had the best turn around times (tat's) on all claims

parameters amongst all the participants.

Mr. verma further added “claims is one of the most important yardsticks by which a

company's performance is measured with the above achievements, we believe that we

continue to build the faith amongst the public & the insured population, of being the

preferred insurance provider and reinforce our 'customer first' approach - even when it comes

to critical issue of 'claims processing.”

Birla sun life insurance, which has till date sold over 2 million policies, has positioned itself

on the quality platform. The company has over 1, 68,090 advisors, who are widely

considered among the best in the business.

Birla Sun Life Insurance declined a profit of rs.89cr in first quarter financial year

2011,against the loss of rs.111cr last year. This is the first ever profit declined by Birla Sun

Life Insurance since inception.

in 2010 the first year premium of rs.473cr reflected a growth of 7%.renual premiums growth

at 27%over the previous year.

AWARDS:

ICAI Awards for Excellence in Financial Reporting, Awarded a Silver Shield in the

Insurance category by the Institute of Chartered Accountants of India (ICAI) for the financial year

ended 31st March, 2009

Recruiting and Staffing Best in Class Awards.

Outlook Money Awards 2004 BIRLA SUN LIFE INSURANCE - Best Life Insurer (Runner Up)

2004 TROPHY

Outlook Money Awards 2004 BIRLA SUN LIFE INSURANCE - Best Life Insurer (Runner

Up) 2004 CERTIFICATE.

The 8th Asia Insurance Industry Awards 2004 - Birla Sun Life Insurance was among the top

five nominees in the category.

The Indo-Canadian Business Chamber- BIRLA SUN LIFE INSURANCE awarded for its

'Successful Performance' for 4 years April 2005

Birla Sun Life Insurance was presented 'The Hewitt Best Employers In India Awards 2004'

Trophy.

MANAGEMENT TEAM:

Mr. Kumar Mangalam Birla

Mr. Birla is a chartered accountant and has also earned an MBA from the london business

school, london.  He is the chairman of the aditya birla group, which is among india's largest business

houses. Among its major companies in india are grasim, hindalco, ultratech cement, aditya birla

nuvo and idea cellular and globally — novelis, minacs, aditya birla minerals, aditya birla chemicals.

Its jv operations include birla sun life asset management company, birla sun life distribution co. Ltd

and birla sun life insurance .

Mr.jayantdua

Mr.jayantdua dua is the managing director at birla sun life insurance. He is a chemical

engineer from iit delhi and an mba from imi, delhi. He also holds an advanced management program

(amp) from harvard business school, usa. He has joined birla sun life insurance in july 2010

Mr. Mayank bathwal

Mayank bathwal is the chief financial officer for birla sun life insurance . In his current role

he provides effective leadership to the finance function towards growing the business of the

company and partners the ceo and the leadership team in managing the affairs of the company.

Mr. Amitabh verma

Chief operating officer

Amitabh verma is the chief operating officer for birla sun life insurance . He is responsible

for determining the organizational strategies for operations and it and reports to the president and

ceo of the company. He is with birla sun life insurance since february1, 2008

Mr. Fabien Jeudy

Chief Actuarial Officer & Appointed Actuary

Fabien Jeudy is the Chief Actuarial Officer & Appointed Actuary for BIRLA SUN LIFE

INSURANCE and is responsible for all actuarial functions within the company.

Mr. Vikram kotak

Vikram kotak is the chief investment officer (cio) for birla sun life insurance and is with the

company since december 2005. He was a member of the working group committee on investments

formed by irda and is now a member of capital market committee – indian merchant chambers.   He

has also served as a member for debt market committee of bombay stock exchange for the period

2002-03 & 2003-04.

Mr. Rahul sinha

Chief marketing officer

Rahul is the chief marketing officer (cmo) for birla sun life insurance . In his role as cmo,

rahul is responsible for determining organizational strategies for the marketing initiatives of the

company and its offerings, with the objective of being the target customer's preferred brand and

choice among life insurance companies

Mr. Donald stewart

Mr. Donald a. Stewart graduated from the university of glasgow in 1968 with first class

honours in natural philosophy. He joined sun life financial in 1969 in london, england, and qualified

as a fellow of the institute of actuaries in 1972. In 1974, he left the company to pursue a career in

benefits consulting, ultimately joining william m.mercerintoronto

Mr. Bishwanath puranmalka

Mr. Puranmalka is a commerce and law graduate and also a fellow member of the institute of

chartered accountants of india and institute of company secretaries of india.  He is the director of

aditya birla group's financial services and has a total working experience of more than 45 years.

Mr. Gian gupta

Mr. Gupta holds a masters in commerce from university of delhi. He is a director on the

board of the company and is the independent director on the board of aditya birla nuvo limited

(holding company of birla sun life insurance ).  He is also a member of the audit committee, finance

committee and share allotment committee of the company.

Mr. Suresh talwar

Mr. Talwar is a commerce graduate and has done his l.l.b.  He practices as a solicitor. He is a

partner of m/s talwar, thakore & associates, a law firm he has founded in partnership with shobhan

thakore. He was also

Associated with m/s. Crawford bayley & company prior to his forming his firm of advocates.

He also acts as a legal counsel to numerous indian companies, multinational corporations, indian &

foreign banks.

BUSINESS CONTINUITY PLAN

Birla Sun Life Insurance is one of the few Indian companies to have a fully operational

Business Continuity Plan (BCP) to ensure minimal impact to the organisation, its people, and most

importantly, its customers. Our Business Continuity Planning (BCP) Program is a response plan

which would ensure that in the event of a disaster we would be able to restore and recover

operations for critical processes within a predetermined time after the disaster.

Business Continuity Management System Objectives (BCMS):

To have a planned response in the event of any contingency ensuring recovery of critical

activities at agreed levels within agreed timeframe thereby complying with various regulatory

requirements and minimizing the potential business impact to BIRLA SUN LIFE INSURANCE .

Additionally to create a system that fosters continuous improvement of business continuity

management

Ensuring a Proactive response to any contingency

Ensuring recovery of identified critical activities within agreed timeframe.

Ensuring that we adhere to our clients, contractual, legal & regulatory requirements.

Programme Overview

As part of our Business Continuity Plan, we have a documented crisis response and recovery

procedure for quick response and stabilisation of the situation, and a business continuity procedure

to ensure recovery.

Highlights of our Plan Document

Crisis Management & incident response

Data back-up, data and system recovery

Recovery of all mission-critical business functions and supporting systems

Alternate recovery sites if primary location is unavailable

Communication with customers, employees and other stakeholders

Assurance to customers that they will continue to receive optimum customer services at all

times

Our Commitment

Risk Assessment & Business Impact Analysis (BIA) annually.

Business Continuity Plan for HO & its Critical branches

Crisis Management Plan & Pandemic Response Plan at a corporate Level.

Business Continuity Plan Testing ensuring viability of all its plans.

The activities set forth above may evolve as business and regulatory needs require

PRODUCTS OF BIRLA SUN LIFE INSURANCE

INSURANCE SOLUTIONS OF INDIVIDUALS:

Birla Sun Life Insurance offers a range of innovatives, Customer-centric products that meet

the needs of customers at every Life stage, It now has 35 products covering both life and health

insurance and 8 riders that can be customized to over 800 combinations enabling customers to

choose the policy that best fit their need. Besides this, the company offers 6 products and 4 riders in

group insurance business.

SAVINGS SOLUTIONS:

BIRLA SUN LIFE INSURANCE -Bachat Endowment Plan

This plan in always there to provide you financial support. It is a perfect money-saver

solution. On its maturity at the end of 20 years, this policy not only gives you a guaranteed sum but

also any bonus it accumulates. In maturity or in case e of unfortunate death, the nominee shall

receive all monthly Base premiums paid (or)sum assured (if higher in case of death) +bachat

additions earned + the loyalty additions.

BIRLA SUN LIFE INSURANCE -Dream Endowment Plan

As a res ponsible provider to your family you have always wanted a solution that can give

you the guarantee of reaching your financial objectives while retaining the freedom to adapt to any

changes in life you the confidence to live your life with freedom.

Policy term is 30 years. And pay tem is single pay or short pay 5,10,15,20 yrs. At maturity

you will receive the Basic Fund Value .In case of death we will pay to the nominee the higher of

Basic Fund Value or Basic Sum Assured.

CHILD PLANS SOLUTIONS:

BIRLA SUN LIFE INSURANCE -Dream Children Plan

In life there are some dreams like giving your child the possible education, planning for their

career or wedding or helping them start their life on an assured footing. And you would ideally like

to guarantee this against any eventually. Birla Sun Life Insurance brings its Dream Plan that can

meet these need and give you the confidence to live tour life with freedom.

Its payable once your policy mature at the end of the policy term. And you will receive the

basic fund value at maturity. in the unfortunate death, we will pay to the beneficiary the basic sum

assured.

BIRLA SUN LIFE INSURANCE -Saral Children Plan

Providing a guarantee for your Childs future is always been apriority for you. However you

may have found the process of buying the right plan to be a cumbersome and lengthy one. With

BIRLA SUN LIFE INSURANCE saral solutions, choosing and applying for the right child solution

simple and easy.

In this policy minimum premium of Rs.10, 000 or more annually. And maturity benefit is

payable only at the end of the policy term and only if the policy is still in effect at that time you will

receive fund value plus guaranteed addition at maturity in case of death we will pay the sum assured

to the nominee immediately. And pay future premium on your behalf and continue untill maturity

RETIREMENT SOLUTIONS:

BIRLA SUN LIFE INSURANCE -Dream Retirement Plan

Through your working life you give your family the best and save for your retirement

years .You wish to live your Golden Years in the same comfort and life style and continue to be the

provider for your loved ones .BIRLA SUN LIFE INSURANCE brings its Dream Plans that can

meet these needs and give you the confidence to live your life with freedom.In the form of

additional units will be added to your plicy on the 10 th policy anniversary and on every 5th policy

anniversary thereafter while your policy is in effect. Each guaranteed addition is 2% of the average

basic fund value the last 60months.

Freedom 58 Retirement Plan

BIRLA SUN LIFE INSURANCE Freedom 58 is designed so that you always remain in

control of your destiny .Free from worries today, tomorrow and even when you retire . Every

individual has aspiration and we at Birla Sun Life Insurance under stand that these aspirations

change over an individual’s lifetime .With BIRLA SUN LIFE INSURANCE Freedom 58 ,we help

you in making your aspirations come true.

Here eligibility age is 18 to 75 years .policy pay term regular and minimum annual premium

is10,000.

BIRLA SUN LIFE INSURANCE -Secure 58 plan

The BIRLA SUN LIFE INSURANCE secure 58 gives you the freedom to retire any time,

and also offers flexibility to access your money .you enjoy a guaranteed corpus of funds at the

threshold of retirement plus the accumulated survival benefit that you collect over the years. Here

growth in savings and freedom to choose your annuity. this freedom to access your money when

you nee it.Here entry age is 18 to 80 years. Vesting age is 10 to 40 years from entry age maximum

vesting age is 90 years. Here more protection to your family.

Wealth SOLUTIONS:

Platinum premier plan

It is a savvy investor you have always appreciated the potential of the equity markets to

generate wealth over the long term. Presenting the BIRLA SUN LIFE INSURANCE platinum

premier plan, a plan that allows you to invest your first three annual premiums in the platinum

premium fund. in this plan any one want to take this plan should having 8 to 70 years of age and

policy term is 10 years. Premium paying term 10 years and minimum Rs.25, 000 p.a. if paid

annually. Sum assured is minimum 5*annual policy premium

Titanium plus plan

You have always looked for financial solutions that offer you both the width and variety of

choice so that your wealth enjoys the upsides of the capital markets but is safeguarded from the risks

due to volatility. We at Birla sun life insurance understand this need to enjoy complete freedom to

manage ones assets and believe that with BIRLA SUN LIFE INSURANCE titanium plus plan, we

have ideal solution to meet your needs

In this plan age limit is 8 to 70 years of age and term 10 years, premium paying term 10

years. annual policy premium minimum Rs.25,000 p.a. if paid annually and minimum Rs.30,000p.a.

if paid monthly, quarterly or semi-annually and sum assured is minimum 5*annual policy premium.

Health and wellness solutions

Universal health plan

Over the years health care costs have been steadily increasing in India providing for the best

medical care and hospitalization is proving to be increasingly expensive, especially when you have

to dip into your long-term savings to pay the hospital bills.

In this plan policy tenure 3years premiums are depends on age and gender. All over the India

5,300 plus network hospitals that provide cashless facility. here guaranteed coverage till age 80

years

Protection plan solution:

High net worth term plan

BIRLA SUN LIFE INSURANCE presents the BIRLA SUN LIFE INSURANCE high net

worth plan that gives your family total financial security while allowing you to customize the plan

and also rewards you for leading a healthy lifestyle.

BIRLA SUN LIFE INSURANCE high net worth plan offers the following key advantages

Comprehensive financial security at an affordable cost

Rewards you for your healthy life style and good habits

Customize the plan as per your needs

Accidental death and dismemberment benefit rider

Critical illness plus rider

Critical illness women rider

MARKETING FUNDS OF BIRLA SUN LIFE INSURANCE

CREATOR FUND

To achieve optimum balance between growth and stability to provide long-term capital

appreciation with Enhancer level of risk by investing in fixed income securities and high quality

equity security.

ENHANCER FUND

To grow your capital through enhanced returns over a medium to long term period through

investments in equity and debt instruments, thereby providing a good balance between risk and

return

PROTECTOR FUND

To generate persistent return through active management of fixed income portfolio and focus

on creating long-term equity portfolio, which will enhance yield of composite portfolio with

minimum risk appetite.

INCOME ADVANTAGE FUND

To provide capital preservation and regular income, at a high level of safety over a

medium term horizon by investing in high quality debt instruments

TAXATION AND INSURANCE

Sections that deal with insurance are:

1. SECTION 10(10D):

Final payments made by the insurer are fully exempted from income Tax.

2. SECTION 80(CCC):

Up to Rs.10000 per annum paid towards premium under pension plan is fully exempted.

3. SECTION 80(DD):

Up to Rs.40000 per annum paid towards premiums for the benefits of physically

handicapped dependant children is fully exempted.

4. SECTION 80(C):

For approved savings by government of India there is exemption from tax. For life insurance

up to Rs.70000 per annum is exempted from tax.

THEORETICAL FRAMEWORK

PERFORMANCE EVALUATION

Performance evaluation is a necessary and beneficial process, which provides annual

feedback to staff members about job effectiveness and career guidance. The performance review is

intended to be a fair and balanced assessment of an employee's performance. To assist supervisors

and department heads in conducting performance reviews, the HR-Knoxville Office has introduced

new Performance Review forms and procedures for use in Knoxville.

BASICS OF UNIT LINKED INSURANCE PLAN

WHAT IS A UNIT INSURANCE PLAN?

Unit Linked Insurance Plan

A policy, which provides for life insurance where the policy value at any time varies

according to the underlying assets at the time.

Unit Linked Insurance Plan (ULIP) is life insurance solution that provides the client with the

benefits of protection and flexibility in investment.

The investment is denoted as units and is represented by the value that it has attained called

as NetAsset Value (NAV).

Unit Linked

Insurance Policies

Units In Funds

Underlying Investment

ULIP came into play in the 1960’s and became very popular in Western Europe and

Americas. The reason that is attributed to the wide spread popularity of ULIP is because of the

transparency and flexibility which it offers to the clients.

As times progressed the plans were also successfully mapped along with life insurance need

to retirement planning.

In today’s times – ULIP provides solutions for all the needs of a client like – insurance

planning, financial needs, financial planning for children’s future and retirement planning.

An ULIP structure like as follows:

Contribution

Less Charges

Investment Represented as Units

Life Cover

Features of a Unit Linked Plan:

ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The

plan is a one – shop solution providing.

1. Life Protection

2. Investment and savings

3. Flexibility

a. Adjustable Life Cover

b. Investment options

2. Transparency

3. Options to take additional cover against

a. Death due to accident

b. Disability

c. Critical illness

d. Surgeries

4. Liquidity

5. Tax Planning

In today’s fast paced world, the clients need change equally fast. Taking the above benefits

lets see how each gets morphed with situation changing for the client.

Life Protection:

Can any of us deny that we do not need life protection? Honestly none can – especially when

we see the fatal events that occur so frequently around us.

However the need may vary and ULIP provides the benefit of adjusting according to the

varying need of the client.

The life insurance needs keep changing throughout the life stage of on individual.

When we start working

When we start a family

When our children start a career

When we retire

There fore as our responsibilities grow the need for life protection grows and when these

responsibilities are successfully executed the need reduces.

ULIP allows a client to change the varying life protection needs that makes it

Easier for the client to manage

Hassle free

Economically effective

The death benefit is usually a multiple of the contribution being paid which ensures that the

contribution adequate enough to provide life protection and is also able to maintain a semblance

between protection and is also able to maintain a semblance between protection and savings.

In a ULIP the client usually pays yearly mortality charges, which makes it more cost

effective for the client.

The charges is deducted each year as per the age of the client there fore at the age of 30 yrs.

Mortality for the age of 30 is charged and at the age of 31 mortality for the age of 31 is charged.

Investment and Savings:

Undoubtedly all of us look for saving the money that we have and to ensure that the

investment that we make should create value for us – and more the better.

Many life insurance plans present in the market do not provide justice to this important need

of the client. ULIP on the other hand has all the composition of satisfying investment and savings

needs of the clients.

ULIP provides the client with the option of investing as per personal risk profile and get

returns accordingly. There are options of funds where in the client can put money in

Equity Markets

Debt Markets

Enhancer funds with a mix on the above two

Short – Term Debt Market

This also helps the client in saving in accordance to the age as a younger person can afford to

take some risk however a senior citizen might not be in a position to make investment in

comparatively high risk instruments.

With the option of four funds to invest in the client always has the option to change shift as

the risk and return orientation changes. Subsequent contributions and contribution can also be

allocates in different funds. Such features ensure that the client is able to use quality fund

management for optimum benefit.

Net Asset Value:

In traditional plans the policy holders are not aware of the value the policy is accruing.

In a Unit Linked Plan – the investments, which is denoted through a NAV, is the real time

indicator of the value of the fund. Therefore a policy holder can easily find out that what is the value

that the policy has accrued as of now?

Transparency:

Every client has the right to know about the manner in which the contribution being given by

him is being allocated. The biggest concern that is raised is about the charges.

ULIP are completely transparent and the client knows as how every paisa being is allocated.

There are various kinds of expenses that are involved in any insurance plan, these expenses

may be related to the sales and distribution cost, or the operational costs, the costs related to the life

insurance cover or the costs related to the management of expenses. Since all unit – linked plans

have a transparent structure, they have to exhibit all the charges, it may be worthwhile to know

about the various king of expenses related to a unit – linked plan.

The various kings of expenses are detailed below:

1) Contribution Related Charges:

These are charges that are represented as a percentage of the regular or single contribution

paid. In case of a regular contribution cost. This charge pays for the assurance and for distribution

commissions.

This is a charge to cover the running expenses of the policy. For single contribution plans

this is levied once at the start of the policy. For regular contribution plans this will be charged on a

regular uniform basis depending upon the frequency of payments.

Normally these charges are shown as percentage of the contribution. Allocation is another

terminology used by the company in actually representing costs.

Allocations are mathematically reverse of the charges. Thus mathematically.

Allocation = 1 –Charges. Thus for example is a product has a 70% allocation in the first year,

it means 1-0.7=0.3 or 30% charge.

2) Administrative Charges:

These are charges that are levied for that administration of the policy and the related costs of

administration of the insurance company, itself. These costs are different from the assurance and

distribution related costs of the product. They are more related to the costs like the IT, Operational

etc cost of continuing the policy.

There are few prominent ways in which these costs are levied.

1. They can be levied as the percentage of the value of the investments (funds) in the account of

the policy holder. So for example, as Bajaj Allianz levy a charge of 1.25% of the fund for the

administration of the policy, every year. These kinds of charges get adjusted in the unit value

(NAV), as the NAV is declared after adjusting these costs.

2. They can be levied as a flat charge with an option of increasing it by a certain percentage

over years. For example, Birla Levies a flat charges of Rs.28 per month on its policy. HDFC

SL unit linked plan levies Rs.180 annually as the administration charges.

3) Fund Management Fee:

All unit linked plans have underlying funds, which the policy holders choose for their

investments. These funds constitute of various financial instruments such as equity, bonds, money

market instruments.

The fund management fees is levied to pay of the charges of managing the investments,

which basically involve the cost of buying and selling the various financial instruments for the

various funds.

These charges are expressed as a percentage of the asset under management of the insurance

company. So for example, Birla in its creator fund charges 1.25% annually of the AUM, HDFC

charges 0.80% its equity fund.

Interesting thing to know here is the factor on which the charges depend the main factor

begin the fund composition.

For example, the cost of managing a bond is lesser than the cost of managing equity. Thus

normally, the fund option, which has a higher percentage of equity, would have higher charges

comparatively to other funds.

So for example, where as Birla charges 1.25% of the AUM as the charge for their creator

fund which has 50% equity (Max) and 50% debt, Aviva’s Equity Fund with 100% option charges

2.00% similarly, the debt fund of Birla, which has 90% debt, charges 1.00% of the AUM as the

annual charge.

4) Mortality Charges:

This covers the cost of providing life protection for the insured and may be paid once at the

start of the policy or a recurrent manner. For example, this charge is levied to provide the insurance

cover under the plan. Normally these charges are 1 yr charges and keep changing as per the age of

the policy holder.

These are normally expressed as per thousand of the sum Assured and depend on the age of

the policy holder.

So, for example one would have the mortality charge as Rs.1.50 per thousand of SA for a 30

year old and Rs.1.55 for the age of 35 years. This means that the cost of insurance of Rs.1,000 at the

age of 30 is 1.50, where the same insurance cover costs Rs.1.55 at the age of 35 years.

All unit linked products have a mortality charge table that is used to calculate the life

insurance cover charge on a yearly basis.

5) Rider Charges:

Rider charges are similar in nature to the mortality charges as they are levied to pay for the

other protection benefits that the policy holder has chosen for like the critical illness benefit or the

accident benefit, etc.

6) Surrender Charges:

When the policy holder decides to surrender the policy or partially withdraw some of the unit

for cash, a surrender charge may be apply. Usually the surrender Charges only apply in the first few

years after the units are invested and are usually on a decreasing scale. Surrender charges are used to

cover initial expenses that have been incurred by the company but not yet recovered form the policy

holder yet.

These charges can either be expressed as a percentage of the value of investments or as a

fixed flat charge, depending on the structure of the product.

So, the policy holder may have charge of 2% of the unit value as the surrender charge or

Rs.1,000 as the surrender penalty.

Surrender charges usually apply to policies with high allocation, especially in the first few

years.

7) Bid Offer Charges:

In ULIP specifically certain insurers might create a difference in the price at which they sell

the unit and the price at which they buy the units.

Investor’s contributions are used to buy units in the investment found at the offer price and

are sold when benefits are required at the bid price. The difference between the offer and bid prices

is known as the “bid – offer spread”. This is used cover expenses when setting up the policy Bid –

offer spread is expressed as a percentage of the NAV’s and hence also becomes a percentage of the

value of units.

So for example a company has bid – offer spread of 5% and has an offer price of Rs.10 per

unit. This means that the bid price would be 5% less and hence 95% of the offer price, i.e.95% *10

= Rs.9.50.

Hence, a policy holder having 100 units in his investment would get Rs.9.5*100 = Rs950 as

his value and if he has to but another 100 units he will have to pay Rs 10 *100 = Rs. 1,000. This Rs

50 difference is the bid offer spread.

Any fund, which has a bid – offer spread would have 2 NAV fund – same for buying and

selling.

8) Transactional Specific Charges:

These charges are levied when the client does some specifics transaction like changing funds,

topping up the investment component or withdrawals.

9) Extra Protection:

Rider’s facility makes the ULIP a very practical insurance in current times. Most life

insurance plans do not provide the policy holder the facility of withdrawing money incase the need

arises.

Unit linked plans provide you easy access to your money as and when you may require. One

can redeem the units after a particular period of time as defined by the plan, as per the need. ULIP

allows either partial & complete withdrawal, without penalizing the policy holder.

For example in the 6th year of your plan, you require 15,000% for certain medical expenses

that came up.

Your investment has been making in the Enhancer fund. If the current NAV of the Enhancer

fund is 15%, then all you need to do is the sell 1000 units, which will give you 15,000%. The rest of

the fund and the policy will continue normally as this is partial withdrawal.

If need be, the policy holder can withdraw all the money in the funds by redeeming all the

units.

Liquidity thus provided to the policy holders is immense value in servicing the ever changing

need for the client.

10) Planning:

Regulation in India allows tax benefits in the contribution paid under section 88.

Contribution paid for health riders (critical illness and major surgical) is allowed tax benefit under

section 88 D, as per the prevailing tax laws.

Maturity benefits are tax free under section 10 (10) D, provided the life cover is at least 5

times of the annual contribution paid.

Death benefit is tax free under section 10 (10) D.

With so many tax benefits available in one instrument – ULIP tends to be an intelligent tax –

planning tool.

WORKING OF A UNIT LINKED PLAN

For example:

A client puts in regular contribution of 20,000/-, from this amount percentage is deducted as

a contribution.

Therefore if the contribution related expenses is 20% Rs. 4000/- will be deducted as a

contribution charges.

The amount that is not available is 20,000 – 4,000 = 16,000/-

Now, if the client who is aged 30 years were to take a life cover of 5,00,000/- then mortality

(1.50/- per thousand at the age of 30)charges of 750 will be deducted.

This amount will provide life cover to the policy holder. The remaining amount of – 15,250/-

will be invested in any of the underlying funds i.e. Debt equity or Mix of both the two. The client

can invest in any one of them or all of them.

The investment is showed in terms of units. Thus if the client invests in debt fund and the

NAV of the debt fund is 16/- (market price) then the number of units that the client will get is

15,250/- 16 = 953.125. For this investment – fund management fee will be charged and for

maintaining the policy an administrative charge is levied.

MEASURES OF PERFORMANCE EVALUATION

SHARPE’S PERFORMANCE INDEX

Sharpe’s performance index gives a single value to be used for the performance ranking of

various funds or portfolios. Sharpe index measures the risk premium of the portfolio relative to the

total amount of risk in the portfolio. This risk premium is the difference between the portfolio’s

average rate of return and the risk less rate of return. The standard deviation of the portfolio

indicates the risk. The index assigns the highest values to assets that have best risk adjusted average

rate of return.

TREYNOR’S PERFORMANCE INDEX

To understand the Treynor index, an investor should know the concept of characteristic line.

The relationship between a given market return and the fund’s return is given by the characteristic

line. The fund’s performance is measured in relation to the market performance. The ideal fund’s

return rises at a faster rate than the general market performance when the market is moving upwards

and its rate of return declines slowly than the market return, in the decline. The ideal fund may place

its fund in the treasury bills or short sell the stock during the decline and earn positive return.

Treynor’s risk premium of the portfolio is the difference between the average return and the

risk less rate of return. The risk premium depends on the systematic risk assumed in a portfolio.

RETURNS:

Investors always expect a good rate of return from their investments. Rate of return could be

defined as the total income the investors receives during the holding period stated as a percentage of

the purchasing price at the beginning of the holding period.

RETURN = (End period value – beginning period value / beginning period value )* 100

RISK:

Risk of holding securities is related with the probability of actual return becoming less than

the expected return. Investments risk is just as important as measuring its expected rate to return

because minimizing risk and maximizing the rate of return are interrelated objectives in the

investment management. Every investor likes to reduce the risk of his investment by proper

combination of different securities.

BETA:

Beta is a slope of the characteristic regression line. Beta describes the relationship between

the stocks return and the index returns.

ANALYSIS & INTERPRETATION

Unit price of a fund will be determined by dividing the net asset value of the fund by the

outstanding number of units on the fund valuation date. The value of a fund will be determined and

based on the market value/ fair value at which assets referenced to such fund can be respectively

purchased or sold, plus the respective cost of purchasing or minus the cost of selling the assets, plus

the value of current assets, plus any accrued income net of fund management charges, less the value

of current liabilities, less provisions, if any. The value of funds may increase, decrease or remain

unchanged accordingly.

Various Fast Moving Plans in Birla Sun Life Insurance Gajuwaka

Dream plan

Child Dream Plan

Platinum Premier Plan

The table representing various fast moving plans

NAME OF THE PLAN SALE % OF PLANS

Dream plan35

Child Dream Plan35

Platinum Premier

Plan 25

Other Plans 5

FINANCIAL DETAILS FOR THE YEAR 2007-2008

Total no of policies done by Birla Sun Life Insurance as yearly wise ,as follows:

:

Interpretation:

During the years 2007 to 2010 no of Unit Linked Insurance Plans sold by the Birla Sunlife

Insurance were increased because awareness increased insurance in public.

YEAR TOTAL ULIPS PLANS SOLD

2007-08412

2008-09 508

2009-10 1024

2010-Upto 20/Sep/2010500

Total annual premium amount (APA) as yearly wise as follows.

YEARS

ANNUAL PREMIUM

AMOUNT

( Rs .in crores)

2007-2008 0.45

2008-2009 0.65

2009-2010 1.1

2010-Aug/2010 0.10

Interpretation:

During the years 2007 to 2010 no of Unit Linked Insurance Plans sold by the Birla Sunlife

Insurance were increased because of that reason APA also increased.

AVERAGE COLLECTED PREMIUM

Average premium=Total collected premium

No of policies

YEARSAVG PREMIUM AMOUNT(

in Rs.)

2007-2008 11000

2008-2009 12800

2009-2010 10742

2010-TillAug/2010 13000

Comparison of Total Premium Collected By Birla Sun Life Insurance Gajuwaka for

the Financial Year 2008&2009

year 2008 2009

Collected Premium(Rs.incrores ) 0.45 0.65

Written Valume (Rs.incrores ) 7 12

The graph represent Total collection of premiums

Analysis :

In the year 2008 the premium colletion is Rs.45 laks .Where as in the year 2009 it reches Rs.65 laks

Interpretation:

During the year 2008 the written volume of the business done is estimated to be Rs7 crores from the

paid in premium value of Rs.45 Lakhs.Where as in the year 2009 the written in volume is estimated to

be Rs.12crores as the paid in premium value is Rs65 lakhs So there is incresed in business in 2009

compared to 2008.

Comparison of Total Premium Collected By Birla Sun Life Insurance Gajuwaka for

the Financial Year 2009&2010

year 2009 2010

Collected Premium(Rs.in crores ) 0.65 1.1

Written Valume (Rs.incrores ) 12 20

The graph represent Total collection of premiums

Analysis :

In the year 2008 the premium colletion is Rs.65 laks .Where as in the year 2009 it reches Rs.1.10crores

Interpretation:

During the year 2009 the written volume of the business done is estimated to be Rs12 crores from the

paid in premium value of Rs.65 Lakhs.Where as in the year 2010 the written in volume is estimated to

be Rs.20crores as the paid in premium value is Rs1.10Crores So there is incresed in business in 2010

compared to 2009.

INVESTMENT OPTIONS:

They have the flexibility to direct our investments in any one or more of the following four

unit linked investment funds of the company:

INCOME ADVANTAGE, PROTECTOR, ENHANCER AND CREATOR.

These funds invest in Fixed Income and Equity assets as follows

INVESTMENT TYPE

FUNDS

CREATOR ENHANCER PROTECTORINCOME

ADVANTAGE

Equities 20 – 70% 20 – 40% 0 – 15% NIL

Corporate Bonds 0 – 30% 20 – 40% 0 – 50% 0 – 50%

Money Market

Instruments / Cash

0 – 20% 0 – 20% 0 – 20% 0 – 20%

Government Securities 0 – 30% 20 – 50% 50 – 80% 50 – 100%

ANALYSIS AND INTERPRETATION

ANALYSIS OF THE CREATOR FUND

Fund Objective:

To achieve optimum balance between growth and stability to provide long-term capital

appreciation with Enhancer level of risk by investing in fixed income securities and high quality

equity security.

Inception Date : 23 – Feb – 2004

Bench Mark : BSE 100&CRISIL composite Bond Index

ASSET ALLOCATION

Table

showing

return on

fund and

return on

Market

YEAR RETURN ON FUND % RETURN ON MARKET %

April – 06 -1.63 -6.54

ALLOCATION TOTAL

Equities 52.50%

Corporate Bonds 30.50%

Cash and Cash Equivalents 14.40%

Government Securities 2.50%

Preferences Shares 0.10%

Grand Total 100.0%

Aug – 06 3.57 4.25

Dec – 06 2.5 4.99

April – 07 1 1.34

Aug – 07 5.12 9.7

Dec – 07 0.74 -0.71

April – 08 7.57 12.3

Aug – 08 2.54 2.27

Dec – 08 3.36 7.74

April - 09 5.36 10.6

Aug -09 4.97 5.2

Dec-09 6.82 6.5

Apr-10 7.11 10.63

Aug-10 5.46 7.26

Average return on fund Rp : 3.01%

Average return on fund Rm : 4.59%

Standard deviation on fund : 2.49%

Covariance : 82.72%

Beta β : 2.11

Risk free rate of return Rf : 8%

Sharpe index : St : -2.00

Treynor Index Tn : -2.36

ANALYSIS AND INTERPRETATION:

The analysis of the returns for the Creator Fund from April – 2006 to April – 2010 reveals

that the return on fund is fluctuating along with the return on market. In the year Apr – 06 Creator

Fund showed a negative return which has turned into positive figure at the end of the year – 2006.

In the year – 2007the return has increased to the maximum of 5% and even touched

minimum of 0% at the end of the year - 2006. During the year – 2008 the maximum return is

noticed at the beginning of the year i.e. 7.57% and the lowest return in the year is 2.54%.Iin the year

– 2009 the return on fund in the first quarter is 5.36%.and the maximum return in that year is

6.82%,the lowest return is 4.97%.in year 2010 the return on fund in first qrarter 7.11%, in second

quarter 5.46% As a whole the graph reveals that the return on fund in comparatively less volatile

than the return on market.

As maximum of the fund is invested in equities i.e. around 52%. The equity market has a

lead of equity indices. That is the reason volatility in return is inevitable.

CREATOR FUND

-10

-5

0

5

10

15

April –

06

Aug –

06

Dec – 0

6

April –

07

Aug –

07

Dec – 0

7

April –

08

Aug –

08

Dec – 0

89-

Apr

9-Aug

9-Dec

10-A

pr

10-A

ug

YEAR

RE

TU

RN

RETURNON FUND%

RETURNONMARKET%

ANALYSIS OF THE ENHANCER FUND

Fund Objective:

To grow your capital through enhanced returns over a medium to long term period through

investments in equity and debt instruments, thereby providing a good balance between risk and

return

Inception Date: 22 – March – 2001

Bench Mark: BSE 100&CRISIL Composite Bond index

ASSET ALLOCATION

ALLOCATION TOTAL

Corporate Bonds 39.40%

Equities 29.30%

Government Securities 22.50%

Cash and Cash Equivalents 8.80%

Preference Shares 0.00%

Grand Total 100.00%

Asset Allocation

39.40%

29.30%

22.50%

8.80% 0.00%

Corporate Bonds

Equities

Government Securities

Cash and Cash Equivalents

Preference Shares

Table showing return on fund and return on Market

YEAR RETURN ON FUND % RETURN ON MARKET %

Apr – 06 -1.1 -6.54

Aug – 06 2.06 4.25

Dec – 06 1.36 4.99

Apr – 07 1.01 1.34

Aug – 07 3.43 9.7

Dec – 07 0 -0.71

Apr – 08 3.96 12.3

Aug – 08 1.62 2.27

Dec – 08 2.08 7.74

Apr - 09 3.11 10.6

Aug -09 4.26 7.35

Dec-09 3.9 5.67

Apr-10 3.8 6.49

Aug-10 4.1 7.50

Average return on fund Rp : 1.75%

Average return on fund Rm : 4.59%

Standard deviation on fund : 1.47

Covariance : 84%

Beta β : 3.61

Risk free rate of return Rf : 8%

Sharpe Index St : -4.25

Treynor Index Tn : -1.73

ENHANCER

-10

-5

0

5

10

15A

pr –

06

Aug

– 0

6

Dec

– 0

6

Apr

– 0

7

Aug

– 0

7

Dec

– 0

7

Apr

– 0

8

Aug

– 0

8

Dec

– 0

8

9-A

pr

9-A

ug

9-D

ec

10-A

pr

10-A

ugYEAR

RE

TU

RN

RETURN ONFUND%

RETURN ONMARKET %

ANALYSIS AND INTERPRETATION:

The analysis of the returns for the Enhancer Fund from April – 2006 to April – 2010 reveals

that the return on fund is fluctuating in some direction with the return on market. But the deviation

in the return on market is more than the return on fund. In the beginning of April – 2006 Enhancer

Fund showed a negative return which has turned into positive figure at the end of the year – 2006. In

the year – 2007 the return has increased to the maximum of 3% and even touched minimum of 0%

at the end of the year – 2007.During the year – 2008 the maximum return is noticed at the beginning

of the year i.e. 3.96% and lowest return in the year is 1.62%.In the year – 2009 the return on fund in

the first quarter is 3.11%.The maximum return in that year 4.26%.in year 2010 In first quarter return

on fund is 3.8%.the second quarter return on fund is 4.1%.

As maximum of the fund is invested in corporate bonds i.e. around 39.40% and 29.30% in

equity market. The bond market and equity market fluctuations can be seen in the fund. That is the

reason volatility in return is inevitable.

ANALYSIS OF THE PROTECTOR FUND

Fund Objective:

To generate persistent return through active management of fixed income portfolio and focus

on creating long-term equity portfolio, which will enhance yield of composite portfolio with

minimum risk appetite.

Inception Date: 22 – March – 2001

Bench Mark: BSE 100&CRISIL Composite Bond index

ASSET ALLOCATION

ALLOCATION TOTAL

Government Securities 55.10%

Corporate Bonds 30.50%

Cash and Cash Equivalents 4.30%

Equities 10.10%

Grand Total 100.0%

Asset Allocation

55.10%30.50%

4.30%10.10%

Government Securities

Corporate Bonds

Cash and Cash Equivalents

Equities

Table showing Return on Fund and Return on Market

YEAR RETURN ON FUND % RETURN ON MARKET %

Apr – 06 -0.28 -0.13

Aug – 06 1.09 -0.35

Dec – 06 0.7 -0.10

Apr – 07 0.83 -0.89

Aug – 07 1.76 0.26

Dec – 07 0.39 -0.13

Apr – 08 1.97 -0.82

Aug – 08 0.66 -0.56

Dec – 08 1.24 0

Apr - 09 1.25 -0.24

Aug -09 1.55 -.090

Dec-09 .95 -0.15

Apr-10 1.37 -0.70

Aug-10 1.18 0.20

Average return on fund Rp : 0.96%

Average return on fund Rm : -0.29%

Standard deviation on fund : 0.61

Covariance : 63.5%

Beta β : -0.06

Risk free rate of return Rf : 8%

Sharpe Index St : -11.5

Treynor Index Tn : 117.33

PROTECTOR FUND

-1

-0.5

0

0.5

1

1.5

2

2.5

Apr

– 0

6

Aug

– 0

6

Dec

– 0

6

Apr

– 0

7

Aug

– 0

7

Dec

– 0

7

Apr

– 0

8

Aug

– 0

8

Dec

– 0

8

9-A

pr

9-A

ug

9-D

ec

10-A

pr

10-A

ug

YEARS

RE

TU

RN

RETURN ONMARKET %

RETURN ONFUND %

ANALYSIS AND INTERPRETATION:

The Protector fund of Birla Sun Life Live is showing a positive average return 0.96% when

compared to market return (-0.29%) which is negative.

From the above graph the fund is showing the negative return during the time period April –

2006 which is correlating with the market return but later the fund return has turned into positive

figure showing 1.09% during August – 2006, in December – 2006 return has slightly decreased to

0.7% after which it is in increasing trend till Aug – 2007 showing 1.76% return on fund (Rp).in the

year 2009 the maximum return is 1.55% and the minimum return is 0.95%.in the year 2010 first

quarter return is 1.37% and second quarter return is 1.18%

Analysis reveals that the coefficient of variation is 63.5% on the returns of the fund

indicating a good fluctuation which is not a good sign. Even though 55% of the fund is in

Government securities and 31% in corporate bonds. The fund return on fund is not that stable and

good.

ANALYSIS OF THE INCOME ADVANTAGE FUND

Fund Objective:

To provide capital preservation and regular income, at a high level of safety over a medium

term horizon by investing in high quality debt instruments

Inception Date: 22 – March – 200

Bench Mark: BSE 100&CRISIL Composite Bond index

ASSET ALLOCATION

Asset Allocation

57.70%

48.80%

1.50%

Government Securities

Corporate Bonds

Cash and Cash Equivalents

ALLOCATION TOTAL

Government Securities 57.70%

Corporate Bonds 48.80%

Cash and Cash Equivalents

1.50%

Grand Total 100.00%

Table showing Return on Fund and Return on Market

YEAR RETURN ON FUND % RETURN ON FUND %

Apr – 06 0.19 -0.94

Aug – 06 0.28 0.44

Dec – 06 0 1.80

Apr – 07 0.93 -0.23

Aug – 07 0.55 2.84

Dec – 07 0 -0.69

Apr – 08 0.53 0.44

Aug – 08 0.17 2.29

Dec – 08 0.58 1.14

Apr - 09 0.74 0

Aug -09 0.73 2.3

Dec-09 0..52 0

Apr-10 0.66 0.49

Aug-10 0.29 1.52

Average return on fund Rp : 0.39%

Average return on fund Rm : 0.71%

Standard Deviation on fund : 0.43

Covariance : 110.25%

Beta β : -0.28

Risk Free rate of return Rf : 8%

Sharpe Index St : -17.69

Treynor Index Tn : 27.17

INCOME ADVANTAGE FUND

-1

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

4

Ap

r –

06

Au

g –

06

De

c –

06

Ap

r –

07

Au

g –

07

De

c –

07

Ap

r –

08

Au

g –

08

De

c –

08

9-A

pr

9-A

ug

9-D

ec

10

-Ap

r

10

-Au

g

YEAR

RE

TU

RN

RETURNONFUND %

RETURNONFUND %

ANALYSIS AND INTERPRETATION:

The Income Advantage Fund of Birla Sun Life Live is showing a positive average return

0.39% when compared to market return (0.71%) which is negative. From the above graph the fund

is showing thee positive return during the time period April – 2006 which is correlating with market

return. Later the fund return has increased showing 0.28% during Aug – 2006. in December – 2006

return has fully decreased to 0%. After which it is in increasing trend till April – 2007 showing

0.93% on fund (Rp).During December – 2007 the fund return value decreased to 0% .In the year

2009 the first and second quarter returns are same & in last quarter return on fund decreased

to .52%.In the year 2010 the first quarter return is 0.60& second quarter is decreased to0.29%

Analysis reveals that the coefficient of variation is 110.25% on the returns of the fund

indicating high fluctuation. Even though 57.70% of the fund is in Government Securities and

48.80% in Corporate Bonds.

Table showing return, standard deviation beta, Sharpe index and treynor index on all the

market funds of birla sun life life insurance.

Performance Evaluation of Birla Sun Life Life Insurance Market Funds based on Sharpe

Performance Index

SHARPE’S PERFORMANCE INDEX:

Sharpe’s performance index gives a single value to be used for the performance ranking of

various founds or portfolios. Sharpe index measures the risk premium of the portfolio relative to the

total amount of risk in the portfolio. This risk premium is the difference between the portfolio’s

average rate of return and the risk less rate of return. The standard deviation of the portfolio

indicates the risk. The index assigns the highest values to assets that have best risk – adjusted

average rate of return.

Fund Rp% S.D Beta St Tn

Creator 3.01 2.49 2.11 -2.00 -2.36

Enhancer 1.75 1.47 3.61 -4.25 -1.73

Protector 0.96 0.61 -0.06 -11.54 117.33

Income

Advantage0.39 0.43 -0.28 -17.69 27.17

Fund Return on

Fund %

Risk free rate

of return %

Standard

deviation of

fund

Sharpe Index Rank

Creator 3.01 8 2.49 -2.00 I

Enhancer 1.75 8 1.47 -4.25 II

PROTECTOR 0.96 8 0.61 -11.54 III

Income

Advantage

0.39 8 0.43 -17.69 IV

INTERPRETATION:

The larger the Sharpe Index better the fund has performed. But Sharpe’s index for all the

funds are negative which directly shows that the return on fund is less than risk free rate. When we

compare the so called negative index of the all the funds in Birla Sun Life Life Insurance Creator

ranked as better fund because the Sharpe index is more than other funds. That is -2.00. The second

best fund is Enhancer with an index of -4.25.

The fund protector and the Income Advantage ranked as third and fourth respectively with a

moderate return and moderate risk. These funds protector and Income Advantage with less return &

less risk ranked as third and fourth respectively.

Performance Evaluation of Birla Sun Life Life Insurance funds based on Treynors

Performance

TREYNOR’S PERFORMANCE INDEX:

To understand the Treynor index, an investor should know the concept of characteristic line.

The relationship between a given market return and the fund’s return is given by the market

performance is measured in relation to the market performance. The ideal fund’s return rises at a

faster rate than the general market performance when the market is moving upwards and its rate of

return declines slowly than the market return, in the decline. The ideal fund may place its fund in the

treasury bills or short sell the stock during the decline and earn positive return.

Treynor’s risk premium of the portfolio is the difference between the average return and the

risk less rate of return. The risk premium depends on the systematic risk assumed in a portfolio.

FundReturn on Fund %

Risk free rate of fund %

BetaTreynor index

Rank

CREATOR 3.01 8 2.11 -2.36 IV

ENHANCER 1.75 8 3.61 -1.73 III

PROTECTOR 0.96 8 -0.06 117.73 I

INCOME

ADVANTAGE

0.39 8 -0.28 27.17 II

INTERPRETATION:

From the above table it seen that the Treynor Index is negative for Enhancer Creator funds.

But PROTECTOR and Income Advantage fund is positive; the reason because the Beta for both the

funds is negative starting that there is negative variation in market returns of both the funds.

According to Treynor Index the fund PROTECTOR is more desirable than other funds. This

was in first rank with 117.33. The second best fund is Income Advantage with an index of 27.17.

The funds Enhancer and Creator ranked as third & fourth respectively with less return and higher

market risk.

SUMMARY

The focus of the study was performance evaluation of ULIP funds in Birla Sun Life

Insurance with an objective to study and understanding how the funds has performed in market with

respect to Birla Sun Life Insurance Company Limited set up in 15/Nov/2000 which is regulated by

IRDA act.

In the study four selected funds were taken into consideration that is Creator, Enhancer,

protector and Income Advantage.

The main aim is to find the risk and return of each fund and compare their performance with

Sharpe Index and Treynor Index. The past four years quarterly market prices data of each selected

fund have been collected. The calculation of risk has done based on the tools of Standard Deviation

and Beta.

Depending on the computation of return, Standard deviation, Beta, Sharpe Index, Treynor

Index can make the investor easier to decide whether to invest in ULIPS and if they invest, which

fund to opt for.

This study makes the investors to understand clearly the performance of each fund in Birla

Sun Life Insurance, it makes easier for them to take the right decision.

FINDINGS

1. Life Insurance Corporation of India is the first public sector organizations under investment

institutions because of untapped Life insurance market in India there is part of scope for

private insurance companies to enter into Indian market, which play a prominent role in

selling insurance plans.

2. The Insurance Companies are now a days selling the policies whose performance is based on

market conditions which once otherwise popular as Unit Linked Insurance Plans.

3. From among the entire Unit Linked Insurance Plans life invest is a powerful insurance plan

that empowers investors to manage their investments through their insurance policy. In this

unit linked plan, investors can direct their investments in organization’s customized unit

linked funds, which offer investments of different types: Fixed Income (e.g. Govt. Securities,

Company Debentures) and Equities(i.e. Shares).

4. A unit linked plan provides an opportunity for the discerning investor to benefit form the

returns available in the capital market without going for direct investment in the capital

market.

5. In the entire unit linked insurance policies the investment risk in investment portfolio borned

by the policy holders.

6. These plans are grouped under different funds and these funds are invested in the capital

market to yield high returns.

7. The different fund options which are available in Birla Sun Life Life Insurance are Creator,

Enhancer, Protector and Income Advantage.

8. According to the Sharpe Index the funds Creator and Enhancer has ranked first and second

respectively.

9. The fund protector and Income Advantage ranked third and fourth respectively with moderate

return and moderate risk. The reason because Sharpe Index for all the funds are negative which

directly shows that the return on fund is less than risk free rate. When we compare the so called

negative Index all the funds.

10. According to Treynor Index the funds Protector and Income Advantage has ranked first and

second respectively. The funds Enhancer and Creator has ranked third and fourth respectively

with less return and higher market risk. The reason because the Beta for the both the funds are

negative starting that there is negative variation in market return of both the funds.

11. During the year 2008 the written volume of the business done is estimated to be Rs7 crores from

the paid in premium value of Rs.45 Lakhs.Where as in the year 2009 the written in volume is

estimated to be Rs.12crores as the paid in premium value is Rs65 lakhs So there is incresed in

business in 2009 compared to 2008.

12. During the year 2009 the written volume of the business done is estimated to be Rs12 crores

from the paid in premium value of Rs.65 Lakhs.Where as in the year 2010 the written in volume

is estimated to be Rs.20crores as the paid in premium value is Rs1.10Crores So there is incresed

in business in 2010 compared to 2009.

SUGGESTIONS

The unit linked insurance plans give the return, which are market based and are risky. So the

companies should regulate the funds, which give almost benefit to the investors.

Since people are getting aware of capital markets and are showing interest in different financial

instruments other than traditional products Birla Sun Life should take utmost care to inform the

investor in detail about their ULIPS and all the fund options available for each plan.

Among all the funds in Birla Sun Life the funds Protector and Income Advantage as ranked first

and second respectively which can be opted by the pessimistic investors and the company should

notice that the funds yields constant returns.

The funds Enhancer and Creator can be opted by most likely and optimistic investors, which

yield moderate return and with moderate risk and company should manage these funds in spite

of high fluctuations in the market.

New regulations by the IRDA mainly concentrates on Investor’s security as well as strengthen

the corporate advisor and Investor relationship

CONCLUSIONS

The first chapter deals with theory behind the insurance and various relating factors of

performance evaluation and objective of the study and need for the study and limitations of

the study. Its tells us about the importance of studying of performance evaluation

the second chapter deals with industry profile. This consists of insurance in India. Types of

insurance reasons for taking insurance and IRDA evaluation to insurance industry. And the

company profile gives us the history and establishment of the company and various products

and the financial position of the company.

The third chapter deals with theoretical frame work of the performance evaluation.

The fourth chapter deals with the Analysis of the performance evaluation and its

interpretations.

The fifth chapter deals with the various findings of the study and relative suggestions.

BIBLIOGRAPHY

BOOKS:

1. Security Analysis and Portfolio Management – Punithavathy Pandian

2. Investment Management - V.K. Bhalla

(Security Analysis and Portfolio Management)

3. Security Analysis and Portfolio Management - V.A. Avadhani

BUSINESS MAGAZINES:

1. Business World

2. Business Today

WEBSITES:

1. www.Irdaonline.org

2. www.birlasunlife.com

NEWSPAPERS:

1. Business line

2. Economic times

3. Times of India