Literature Review

1. THE BACKGROUND:

Insurance, in law and economics, is a form of risk

management primarily used to hedge against the risk of
a contingent, uncertain loss. Insurance is defined as
the equitable transfer of the risk of a loss, from one
entity to another, in exchange for payment. An insurer
is the company selling insurance
an insured or policyholder is the person or entity
buying the insurance policy. The insurance rate is a
factor used to determine the amount to be charged for a
certain amount of insurance coverage, called
the premium.
In some sense we can say that insurance appears
simultaneously with the appearance of human society.
We can see insurance in the form of people helping each
other. For example, if a house burns down, the members
of the community help build a new one. Should the same
thing happen to one's neighbor, the other neighbors
must help. Otherwise, neighbors will not receive help
in the future. This type of insurance has survived to
the present day in some countries where modern money
economy with its financial instruments is not
widespread.
Achaemenian monarchs of Ancient Persia were the first
to insure their people and made it official by
registering the insuring process in governmental notary
offices. When a gift was worth more than 10,000 Derrik
(Achaemenian gold coin) the issue was registered in a
special office.  The purpose of registering was that
whenever the person who presented the gift registered
by the court was in trouble, the monarch and the court
would help him. The Greeks and Romans introduced the

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 Literature Review

origins of health and life insurance c. 600 AD when

they organized guilds called "benevolent societies"
which cared for the families and paid funeral expenses
of members upon death.
Separate insurance contracts (i.e., insurance policies
not bundled with loans or other kinds of contracts)
were invented in Genoa in the 14th century, as were
insurance pools backed by pledges of landed estates.
These new insurance contracts allowed insurance to be
separated from investment, a separation of roles that
first proved useful in marine insurance. Insurance
became far more sophisticated in post-
Renaissance Europe, and specialized varieties
developed.
Some forms of insurance had developed in London by the
early decades of the seventeenth century. Insurance as
we know it today can be traced to the Great Fire of
London, which in 1666 devoured more than 13,000 houses.
The devastating effects of the fire converted the
development of insurance "from a matter of convenience
into one of urgency, a change of opinion reflected in
Sir Christopher Wren's inclusion of a site for 'the
Insurance Office' in his new plan for London in 1667."
A number of attempted fire insurance schemes came to
nothing, but in 1681 Nicholas Barbon, and eleven
associates, established England's first fire insurance
company, the 'Insurance Office for Houses', at the back
of the Royal Exchange. Initially, 5,000 homes were
insured by Barbon's Insurance Office.
The first insurance company in the United
States underwrote fire insurance and was formed in
Charles Town (modern-day Charleston), South Carolina,
in 1732. Benjamin Franklin helped to popularize and
make standard the practice of insurance, particularly

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 Literature Review

against fire in the form of perpetual insurance. In

1752, he founded the Philadelphia Contribution ship for
the Insurance of Houses from Loss by Fire. Franklin's
company was the first to make contributions toward fire
prevention. Not only did his company warn against
certain fire hazards, it refused to insure certain
buildings where the risk of fire was too great, such as
all wooden houses.
ICICI Prudential Life Insurance Company came in
existence in December 2000 after receiving approval
from Insurance Regulatory Development Authority (IRDA).
It’s a joint venture of ICICI Bank and Prudential plc.
Since the liberalization of Indian Insurance sector,
ICICI Prudential Life Insurance has been one of the
earliest private players. Since the time, ICICI Pru
Life has been the leader in terms of market share as
indicated by the IRDA (Insurance Regulatory and
Development Authority, the regulator for Indian
Insurance Industry) at its website. Arguably the most
innovative Indian Life insurer in terms of customer
services and products, ICICI Prudential has one of the
largest distribution and servicing network with over
2,000 proprietary offices & customer touch points
across India.

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2. THE PROMOTERS:

2.1 ICICI BANK:

ICICI Bank Limited (NYSE:IBN) is India’s largest

private sector bank and the second largest bank in the
country with consolidated total assets of over US$ 100
billion as of March 31, 2010. ICICI Bank’s
subsidiaries include India’s leading private sector
insurance companies and among its largest securities
brokerage firms, mutual funds and private equity firms.
ICICI Bank’s presence currently spans 19 countries.

Stake Hold by the two Company

26%

ICICI BANK
PRUDENTIAL PLC

74%

Fig 2.1 Stake hold by the two companies

2.2 PRUDENTIAL PLC:

Prudential plc established in London in 1848,

Prudential plc is an international retail financial
services group with significant operations in Asia, the
US and UK serving around 25 million customers, policy
holder and unit holders worldwide. The company has
£290 billion of assets under management and it is one
of the best capitalized insurers in the word with an
Insurance Groups Directive (IGD) capital surplus

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 Literature Review

estimated at £3.5 billion (at 31 December 2009).

Prudential is a leading life insurer in Asia with a
presence in 12 markets and have the top three position
in seven key locations of Hong Kong, India, Indonesia,
Malaysia, Singapore, Philippines and Vietnam.

2.3 BOARD OF DIRECTORS:

The ICICI Prudential Life Insurance Company Limited

Board comprises reputed people from the finance
industry both from India and abroad. 
Ms. Chanda D. Kochhar, Chairperson.
Mr. N. S. Kannan, Director.
Mr. K. Ramkumar, Director.
Mr. Barry Stowe, Director.
Mr. Adrian O’Connor, Director.
Mr. Keki Dadiseth, Independent Director.
Prof. Marti G. Subrahmanyam, Independent Director.
Ms. Rama Bijapurkar, Independent Director.
Mr. Vinod Kumar Dhall, Independent Direct.
Mr. V. Vaidyanathan, Managing Director & CEO.

2.4 MANAGEMENT TEAM:

The ICICI Prudential Life Insurance Company Limited

Management team comprises reputed people from the
finance industry both from India and abroad.
Mr. [Link], Managing Director & CEO.
Dr. Avijit Chatterjee, Appointed Actuary.
Mr. Puneet Nanda, Executive Vice Preside.

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3. THE COMPANY AND ITS PRODUCTS:

3.1 THE COMPANY:

3.1.1 BACKGROUND:

ICICI Prudential Life Insurance Company is a joint

venture between ICICI Bank, one of India’s foremost
financial services companies and Prudential plc, a
leading international financial services group head
quartered in United Kingdom. Total capital infusion
stands at Rs. 47.80 billion, with ICICI Bank holding a
stake of 74% and Prudential plc holding 26%.
ICICI Prudential Life Insurance Company began their
operation in December 2000 after receiving approval
from Insurance Regulatory Development Authority (IRDA).
Today, company’s nationwide reach includes over 1900
branches, inclusive of 1074 micro offices, over 210000
advisor; and 7 bank assurance partners.
For three year in a row, ICICI Prudential has been
voted as India’s Most Trusted Private Life Insurer, by
the Economic Times – AC Nielsen ORG Marg survey of
‘Most Trusted Brands’. As company grow their
distribution, product range and customer base, company
continues to tirelessly uphold their commitment to
deliver world class financial solutions to customers
all over India.

3.1.2 VISION:

The vision of the company is to be dominant Life,

Health and Pension player built on trust by world-class
people and services.
This they hope to achieve by:

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 Understanding the need of customers and offering

them superior products and services.
 Leveraging technology to service customers quickly
and efficiently.
 Developing and implementing superior risk management
and investment management strategies to offer
sustainable and stable return.
 Building transparency in all their dealings.
The company believes that they are in the threshold of
an exciting new opportunity where they can play a
significant role in redefining and reshaping the
sector. Given the quality of their parentage and the
commitment of their team, there is no limit to their
growth.

3.1.3 VALUES:

Every member of the ICICI prudential team is committed

to 5core values: Integrity, Customer First, Boundary
less, Ownership and Passion. These values shine forth
in all they do, and have become the keystones of their
success.

3.2 THE PRODUCTS:

ICICI Prudential Life Insurance Company understands the

need of their customers may have. It changes at
various stages in customer’s life, from their child’s
education to saving up for their comfortable life post
retirement. It is company’s constant endeavor to
innovate products that best suits any requirements they
may have.
Following are the different product range according to
the need of the customer.

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 Literature Review

3.2.1 EDUCATION INSURANCE PLANS:

One of the most important responsibilities as a parent

is to ensure that child gets the best possible
education that can be provided.
ICICI Prudential offers a wide portfolio of education
insurance plans that are designed to provide peace of
mind to customer, as a parent, that their child's
education will be secure. These plans ensure that money
is made available at the crucial junctures in a child's
education - Class X, Class XII, graduation and post-
graduation - to fund crucial commitments for the
child's future.
Importantly, education insurance plans ensure that in
the unfortunate event of the death of a parent, the
child's education continues unhampered.
Under the education insurance plans platform, ICICI
Prudential brings the following products.
1. ICICI Pru Smartkid Assure
2. ICICI Pru Smartkid Maxima
3. ICICI Pru Smartkid Regular Premium

3.2.2 PENSION PLANS:

The primary objective of a pension plan is to help

customer provide for their financial needs in their
post retirement years. They will find a Pension
Planning Calculator on the site, meant to make their
pension plan review as simple as possible. The
calculator is the first step in their Pension Plan
scheme.
1. ICICI Pru LifeTime Pension Maxima
2. ICICI Pru LifeStage Pension Advantage
3. ICICI Pru Elite Pension II

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4. ICICI Pru Assure Pension

5. ICICI Pru ForeverLife
6. ICICI Pru Immediate Annuity

3.2.3 WEALTH CREATION PLANS:

Wealth Creation Plans give the customer the dual

benefit of protection along with the potentially higher
returns of market-linked instruments. The most
important benefit of ULIPs is the flexibility they give
the customer in choosing the premium amount and also
choosing the underlying fund in which this money is to
be invested. Wealth creation plans also offer the
customer more liquidity options as compared
to traditional plans. As such, ULIPs are ideal for
customers who want the protection of a life cover to be
allied to the returns of market linked instrument –
giving them an unmatched combination of benefits.
Under the wealth creation platform, ICICI Prudential
brings the following products to you. 
1. ICICI Pru LifeStage Wealth
2.  ICICI Pru ACE
3.  ICICI Pru Premier Wealth
4.  ICICI Pru Assure Wealth
5.  ICICI Pru LifeTime Maxima

3.2.4 GROUP SOLUTION PLANS:

ICICI Prudential offers a suite of Group Insurance

plans that provide both you and your employees with a
host of benefits: 
1. Group Super Annuation
2. Group Gratuity Plan
3. Annuity Solutions

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4. Group Term Insurance Plan

5. Group Term Insurance in lieu of EDLI

3.2.5 HEALTH INSURANCE PLANS:

ICICI Prudential not only assists their customers to

generate money but also help them when they are in
major health problems by offering a range of health
plans. Health plans covers customer against
hospitalization expenses and creates a health fund to
cover any other health expenses. There are plans to
hassle free stay and treatment in hospitals. There are
comprehensive health care policy that covers 35
critical illness, death and disability.
ICICI Prudential offers health insurance plans under
the following major need categories.
1. Comprehensive health coverage:
1.1 Health Saver 
2. Hospitalization coverage:
2.1 MediAssure
3. Critical illness coverage:
3.1 Crisis Cover 

4. FEATURES OF THE PRODUCTS:

The company has a wide number of products keeping the

different need of the customer in mind. But as a
trainee we were given certain limited number of product
that are commonly purchased by the customer. Those
products are as follows:
4.1 Education plan
4.1.1 ICICI Pru SmartKid assure
4.1.2 ICICI Pru SmartKid Maxima
4.2 Pension plan

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 Literature Review

4.2.1 ICICI Pru Life Time Pension Maxima

4.3 Wealth creation plan
4.3.1 ICICI Pru Assure Wealth

4.1 EDUCATION PLANS

ICICI Prudential offers a wide portfolio of education

insurance plans that are designed to provide peace of
mind to customer, as a parent.

4.1.1 ICICI PRU SMARTKID ASSURE

BACK GROUND:

As a loving and caring parent, customer would like to

ensure that their children get the best of
opportunities to realize their dream. However,
providing these opportunities to their children comes
at a cost and they have to save wisely so that theses
cost are met, even in their absence.
Presenting ICICI Pru Smartkid assure, an ideal
insurance cum saving product which allocate customer’s
assets based on their chosen portfolio strategy and
whose benefit they are not around to take care of their
child.

KEY BENIFITS:

 Complete protection: Lump sum payment of sum

assured plus payment of future premiums by the
company in the unfortunate event of death of parent.

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 Guaranteed addition: 120% to 170% of one annual

premium allocated their fund value at the end of the
15th.
 Life cycle based portfolio strategy: A unique and
personalized strategy to create an ideal balance
between equity and debt.
 Additional allocation of unit: More than 100%
allocation to funds on premium payment from the 6th
policy year.
 Partial withdrawals: Facility to provide money at
key educational milestone for the children.
 Tax benefit: As per the prevailing tax law customer
will get the reduction on the amount of tax paid.
 Top ups: A customer can decide to increase the
premium value during the term of the contact. The
minimum amount of top up is Rs.2000.
 Increase and decrease in sum assured: A customer
will get option to increase or decrease the amount
of sum assured.
 Cover continue option: this option ensures that
customer’s policy and all its benefits continue in
case he is unable to pay the premiums, any time
after payment of first 5 years premium.

HOW DOES THE POLICY WORKS:

Education tension! Don’t worry ICICI PRU is just a call

ahead it’s too simple to apply for the Smartkid Assure.
 A customer need to choose the premium amount, Sum
assured, Policy term and policy strategy.
 A guaranteed addition varying from 120% to 170% of
one annual premium would be added to the fund value
at the end of the 15th policy year.

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 Literature Review

 Fund value would be payable at the time of maturity.

Alternatively settlement option can be chosen.
 In the unfortunate event of death during the term of
the policy, customer’s nominee would receive the sum
assured. Future premium of the policy would be paid
by the company till the maturity under company’s
payer waiver benefit.

ASSET ALLOCATION DETAILS:

Table 2.1 Asset allocation details

ILLUSTRATION:

Amount of premium: Rs. 20,000

Age of entry 30 years
Mode of premium: Yearly
Portfolio Strategy: Fixed
Sum assured: Rs. 1,00,000
Term = 15 years Term = 25 years
Fund Return @ Return @ Return @ Return @
value at 6% p.a. 10% p.a. 10% p.a. 10% p.a.
maturity Rs. Rs. Rs. Rs.
4,19,495 5,60,503 8,89,217 15.51,310

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Table 2.2 Illustration

CHARGES UNDER THE POLICY:

 Premium allocation charge: The first premium paid

by the policy holder. For the top up premium 1% will
be deducted.
 Fund management charge: for Opportunity Fund, Multi
cap Growth Fund, Blue chip Fund, Dynamic P/E Fund,
Multi cap Balanced Fund, Income Fund the charge is
1.35% p.a. and for Money Market Fund the charge is .
75% p.a.
 Mortality charges: the charger to sum assured is
deducted on a monthly basis as follows:

Age(yrs.) 20 30 40 50 60
Male(Rs.) 1.33 1.46 2.48 5.91 14.21
Female(Rs.) 1.26 1.46 2.12 4.85 11.86

Table 2.3 Mortality charge

 Payer Waiver benefits charge: It would be charged

on a monthly basis which would depend upon age,
gender and outstanding term of the policy.
 Switching charge: four free switches are allowed
every year. Subsequent switches would be charge at
the rate of Rs.100 per switch.
 Miscellaneous charges: If there is any 4 policy
alteration during the policy term they will subject
to a miscellaneous charge of Rs.250 per alteration.

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ICICI PRU SMARTKID ASSURE AT A GLANCE

.
Table 2.4 SmartKid Assure at a Glance

4.1.2 ICICI PRU SMARTKID MAXIMA:

BACK GROUND:

As parents, a customer wants to provide the best that

they can offer for their children and this includes
planning for the best possible education. With the
rising cost of education, a customer needs a savings
plan that is designed to provide adequate money at key
educational milestones and take care of your loved ones
even if when they are not around. With this objective
in mind, ICICI Prudential Life Insurance presents ICICI
Pru SmartKid Maxima. With this product, customer can

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 Literature Review

safeguard their child's education and ensure that their

loved ones stay financially secure in their absence.
Additionally this product also offers the valuable
customer a unique strategy that allows them to protect
gains made through their funds invested in the equity
market from any future equity market volatility.

KEY BENIFITS:

 Complete protection: Lump sum payment of Sum

Assured plus payment of future premiums by the
Company in the unfortunate event of death of the
parent (Life Assured).
 Trigger Portfolio Strategy: A unique portfolio
strategy to protect gains made in equity markets
from any future equity market volatility.
 Guaranteed Additions: Additions of 60% of annual
premium accrue to your Fund Value every five years,
starting from the end of 10th Policy year, on payment
of all due premiums.
 To ups: There is a chance to increase the premium,
minimum top up value is Rs.2000. There will be an
increase of Sum Assured when you make a top up and
you will get an option of choosing an increase of
either 125% or 500% of the top up premium amount.
 Partial withdrawals: Facility to provide money at
key educational milestones of your child.
 Tax Benefits: On premiums paid and benefits
received, as per prevailing tax laws under 80C and
10(10D).

HOW DOES THE POLICY WORKS:

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 Literature Review

Education tension! Don’t worry ICICI PRU is just a call

ahead it’s too simple to apply for the Smartkid Maxima.
 Customer needs to choose the premium, Policy term,
Sum Assured and portfolio strategy for your Policy.
 After deducting the premium allocation charges, the
balance amount would be invested as per the
portfolio strategy of customer’s choice .
 Fund Value would be payable at maturity.
Alternatively, settlement options can be chosen.
 In the unfortunate event of death during the term of
the Policy, Customer’s nominee would receive the Sum
Assured. Future premiums of his Policy would be
paid by the Company till maturity under company’s
Payer Wavier benefit.

ILLUSTRATION:

Amount of premium: Rs. 20,000

Age of entry 30 years
Mode of premium: Yearly
Portfolio Strategy: Fixed
Sum assured: Rs. 1,00,000
Term = 10 years Term = 15 years
Return @ Return @ Return @ Return @
6% p.a. 10% p.a. 10% p.a. 10% p.a.
Fund Rs. Rs. Rs. Rs.
value at 2,37,244 2,91,654 4,11,701 5,65,365
maturity

.
Table 2.5 Illustration

CHARGES UNDER THE POLICY:

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 Literature Review

 Premium allocation charge: The charges will be

deducted from the premium amount at the time of
payment and units will be allocated thereafter. All
top up premiums are subject to a premium allocation
charge of 1%.

Year 1 Year 2 Year 3 Year 4-5 Year 6

onwards
15% 10% 8% 6% 4%

Table 2.6 Premium allocation charge

 Fund management charge: The following fund

management charges will be adjusted from the NAV on
a daily basis.

Fund Opportunities Return Money market

fund, Multi cap guarantee fund
growth fund, fund
Bluechip fund,
Balanced fund,
Income fund
FMC 1.35% p.a. 1.25% p.a. 0.75% p.a.

.
Table 2.7 Fund management charge

 Mortality charges: The charger to sum assured is

deducted on a monthly basis as follows:

Age(yrs.) 20 30 40 50 60
Male(Rs.) 1.33 1.46 2.48 5.91 14.21
Female(Rs.) 1.26 1.46 2.12 4.85 11.86

.
Table 2.8 Mortality charge

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 Literature Review

 Payer Waiver benefits charge: It would be charged

on a monthly basis which would depend upon age,
gender and outstanding term of the policy.
 Switching charge: four free switches are allowed
every year. Subsequent switches would be charge at
the rate of Rs.100 per switch.
 Miscellaneous charges: If there is any policy
alteration during the policy term they will subject
to a miscellaneous charge of Rs.250 per alteration.
 Policy administration charges: There would be a
fixed policy administration charge of Rs.80 per
month, charged from the first to the fifth policy
year, thereafter no charges will be deducted.

ICICI PRU SMARTKID MAXIMA AT A GLANCE:

.
Table 2.9 ICICI Pru Smartkid Maxima

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4.2 WEALTH CREATION PLANS:

4.2.1 ICICI PRU ASSURE WEALTH

BACK GROUND:

A customer wants his investments to work as hard as he

does in order to help him achieve his goals. He also
wants to be rewarded with lifelong benefits so that he
has the peace of mind he always desired. To give the
benefits as the customer wants ICICI Prudential brought
the ICICI Pru Assure Wealth Super and ICICI Pru Assure
Wealth Plus, a whole life insurance and saving product,
that rewards him with a guaranteed addition and also
provides him an insurance cover so that his loved ones
are taken care of in his absence.

KEY BENIFITS:

 Top up premium: This is the option where the

customer can increase his premium by top up. The
minimum top up value is Rs.2000.
 Guaranteed Addition (GA): A Guaranteed addition
varying from 120% to 180% of one annual premium is
added to your Fund Value at the end of the 15th
Policy year.
 Whole Life: Enjoy the benefits of staying invested
throughout your life.
 LifeCycle based Portfolio Strategy: A unique and
personalized strategy to create an ideal balance
between equity and debt, based on your age.

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 Choice of variants: You can choose between two

product variants- Assure Wealth Super and Assure
Wealth Plus.
 Partial withdrawals: Facility to withdraw money for
your liquidity needs.
 Tax Benefits: On premiums paid and benefits
received, as per prevailing tax laws.
 Additional allocation unit: This will lead to more
than 100% allocation to the policy.
 Death benefit: In the unfortunate event of death of
the life assured the company shall pay the sum
assured or the fund value whichever is higher.
 Age based portfolio management: At policy inception
the investment will be distributed in two funds
Multi Cap Growth Fund and Income Fund based on the
age. As the age increases the %age of allocation
will be varied.
 Quarterly rebalancing: The fund allocation might
get altered because of market movements. Company
will review customer’s allocation every quarter and
may reset it.
 Safety as customer reaches at the age of 75: As the
customer is near the age of 75 years, he need to
ensure that short-term market volatility does not
affect his hard earned savings. In order to achieve
this, his investments in Multi Cap Growth Fund will
be systematically transferred to Income Fund in ten
installments in the last ten quarters prior to his
completing 75 years of age.
 Cover continue option: This option ensures that
customer’s policy and all the benefits continues in
case a customer is unable to pay the premium any

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 Literature Review

time after payment of: i) first 5 premium for Super

ii) first 8 premium for Plus.

HOW DOES THE POLICY WORKS:

 You need to choose the product variant, premium

amount, Sum Assured and portfolio strategy for your
Policy.
 You can enjoy a life cover and stay invested for the
whole of your life.
 Enjoy the flexibility to access your funds through
partial withdrawals.
 In the unfortunate event of death, your nominee
would receive the Sum Assured (reduced by partial
withdrawals) or the Fund Value, whichever is higher.
 A Guaranteed Addition as a percentage of one annual
premium would accrue to your Fund Value at the end
of the 15th Policy year. It is based on the number
of premiums paid towards the Policy and the variant
chosen.

ICICI No of 5 6 7 8 9 10 11 12 13 14 15
Pru annual
Assur premiu
e m paid
Wealt
h
Super GA at
15th
120 125 130 135 140 145 150 155 160 165 170%
policy
% % % % % % % % % %
year

Plus 15th
policy
- - 140 145 150 155 160 165 170 175 180%
year
% % % % % % % %

Table 2.10 Guaranteed additions

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ASSET ALLOCATION DETAILS:

Table 2.11 Asset allocation details

`ILLUSTRATION:

Amount of premium: Rs. 20,000 Age of entry 30

years
Mode of premium: Yearly
Portfolio Strategy: Fixed
Sum assured: Rs. 1, 00,000
Term of illustration: 20 years

Assure Wealth Super Assure Wealth Plus

Return Return Return Return
@6%p.a. @10%p.a. @6%p.a. @10%p.a.
Fund Rs. Rs. Rs. Rs.
value 6,34,380 9,61,590 6,32,053 9,56,342

Table 2.12 Illustration

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CHARGES UNDER THE POLICY:

 Premium allocation charge: This charge will be

deducted at time of payment of premium and fund will
be allocated later. Charge for the top up premium
is 1%. The charges are as follows:

ICICI Pru Yr 1 Yr Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr
Assure 2 8+
Wealth
Super 100% 4% 4% 4% 4% 0% 0% 0%
Plus 100% 4% 4% 4% 4% 4% 4% 0%

Table 2.13 Premium allocation charge

 Fund management charge: the following fund

management charge will be deducted in daily basis.

Fund Opportunities Money market

fund, Multi cap fund
growth fund,
Bluechip fund,
Balanced fund,
Income fund
FMC 1.35% p.a. 0.75% p.a.

Table 2.14 Fund management charge

 Policy administration charges: There will be a

fixed charge of Rs.50 from 2nd to 10th policy year.
 Mortality charges: The charger to sum assured is
deducted on a monthly basis as follows:

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Age(yrs.) 20 30 40 50 60
Male(Rs.) 1.33 1.46 2.48 5.91 14.21
Female(Rs.) 1.26 1.46 2.12 4.85 11.86

Table 2.15 Mortality charge

 Switching charge: four free switches are allowed

every year. Subsequent switches would be charge at
the rate of Rs.100 per switch.
 Miscellaneous charges: If there is any policy
alteration during the policy term they will subject
to a miscellaneous charge of Rs.250 per alteration.

ICICI PRU ASSURE WEALTH AT A GLANCE:

.
Table 2.16 ICICI Pru assure wealth at a

4.3 PENSION PLANS:

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4.3.1 ICICI PRU LIFETIME PENSION MAXIMA:

BACK GROUND:

In the prime of one’s life and at the peak of his

career, one enjoys all the comforts of life. A happy
family, own home and car, frequent dining out, holidays
in India and abroad... these are pleasures one is used
to do today. Wouldn't he wish to continue enjoying them
even after he stop working? He can, if he plans for it
now. All he needs is a good retirement plan. At ICICI
Prudential Life Insurance, company understands his
needs and helps him plan for a better future. ICICI
Pru brings to you ICICI Pru LifeTime Pension Maxima, a
regular premium, and unit-linked pension product. This
product offers customers the flexibility to invest in
unit-linked funds that generate potentially higher
returns over the long term. This product also offers
him a unique strategy that allows him to protect gains
made through his funds invested in the equity markets
from any future equity market volatility.

KEY BENIFITS:

 Trigger Portfolio Strategy: A unique portfolio

strategy to protect gains made in equity markets
from any future equity market volatility while
maintaining a pre-defined asset allocation.

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 Additional allocation of units: More than 100%

allocation to funds on premium payment from the
sixth policy year onwards.
 Loyalty Addition: At the end of every five policy
years, starting from the 10th policy year, paid
irrespective of the premium payment status.
 Tax benefits: Avail tax benefits on premiums paid
and receive tax free commutation up to one-third of
the accumulated value on vesting (retirement) date,
as per the prevailing Income Tax laws.
 Death benefit: In the unfortunate event of death of
the Life Assured during the term of the policy, the
nominee shall receive Sum Assured (reduced by
partial withdrawals) or Fund Value, whichever is
higher. Where the spouse is the nominee, this may be
taken as a lump sum or may be used to purchase an
annuity from the Company.
 Cover Continue option: This option ensures that
your policy and all its benefits continue in case
you are unable to pay your premiums. This option is
available only after payment of the first three
years' premium.
 Switching: A customer can avail four free switches
in a policy year.
 Change in portfolio strategy: A customer can change
his chosen portfolio strategy once during every
policy year, which includes the period after
postponement of vesting. This facility is provided
free of cost.
 Top up: A customer can decide to increase his
investment by investing surplus money over and above
his premiums, at his convenience. The minimum
amount of top up is Rs. 2,000

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 Increase or decrease sum assured: A customer can

chose to increase or decrease the sum assured.
 Chose from 5 different options: A customer can
choose from a) Life Annuity, b) Life Annuity with
Return of Purchase Price, c) Life Annuity Guaranteed
for 5/10/15 years & life thereafter, d) Joint Life,
Last Survivor without Return of Purchase Price, e)
Joint Life, Last Survivor with Return of Purchase
Price.
 Choose your pension provider: At the time of
vesting, this option enables you to buy a pension
from any other life insurer of your choice. You have
the freedom to take the best offer available in the
market.
 Commutation or pension fund: You have the option to
receive a lump sum amount up to 1/3rd of the Fund
Value, tax-free, on the vesting date.

HOW DOES THE POLICY WORKS:

 A customer needs to choose the premium amount, Sum

Assured, term and portfolio strategy for your
policy.
 After deducting the premium allocation charges, the
balance amount will be invested as per the portfolio
strategy of his choice.
 At vesting of your policy on his chosen retirement
date, customer can choose from the available pension
options to receive your pension.
 In the unfortunate event of death during the term of
the policy (before vesting), customer’s nominee will
receive Sum Assured (reduced by partial withdrawals)
or Fund Value, whichever is higher.

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ILLUSTRATION:

Amount of premium: Rs. 50,000

Age of entry 30 years
Mode of premium: Yearly
Portfolio Strategy: Fixed
Sum assured: Rs.0
Term of illustration: 20 years
Annuity option: Life time

Return @ 6% p.a. Return @ 10% p.a.

Accumulated Expected Accumulated Expected
Savings Yearly Savings Yearly
Annuity Annuity
Rs. Rs. 1,14,773 Rs. Rs. 1,84,902
16,30,148 25,65,130

Table 2.17 Illustration

.

CHARGES UNDER THE POLICY:

 Premium allocation charge: This will be deducted

from the premium amount at the time of premium
payment and units will be allocated thereafter.

Premium Rs. Yr1 Yr 2-3 Yr4+

<15,000 20% 6% NILL
15,000-24999 18% 6% NILL
25,000-49,999 16% 6% NILL
>=50,000 14% 6% NILL

Table 2.18 Premium allocation charge

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 Policy Administration Charge: This charge is a

percentage of the annual premium and will be charged
regardless of the premium payment status. This
charge will be levied only for the first five policy
years, post which no policy administration charge
would be levied. The policy administration charges
are set out below:

Policy Annual premium Charge %age of

year Rs annual premium
<15,000 0.75%
1 to 5 15,000-24999 0.5%
25,000-49,999 0.4%
>=50,000 0.3%

Table 2.19 Policy administration charge

 Fund management charge: the following fund

management charge will be deducted in daily basis.

Opportunities fund, Multi

Fund cap growth fund, Bluechip Money
fund, Balanced fund, Income market fund
fund
FMC 1.35% p.a. 0.75% p.a.

Table 2.20 Fund management charge

.
 Switching charge: four free switches are allowed
every year. Subsequent switches would be charge at
the rate of Rs.100 per switch.

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 Miscellaneous charges: If there is any policy

alteration during the policy term they will subject
to a miscellaneous charge of Rs.250 per alteration.

ICICI PRU LIFETIME PENSION MAXIMA AT A GLANCE:

Table 2.21 ICICI Pru lifetime pension at a

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 Literature Review

5. MARKETING STRATEGIES:

ICICI Prudential Life Insurance Company began their

operation in December 2000 after receiving approval
from Insurance Regulatory Development Authority (IRDA).
ICICI Prudential now enjoys a brand recall of 92 per
cent next to LIC's 97 per cent, according to AC
Nielsen's Brandtrack 7 study out last year. The
strategies behind this success are well known.
Insurance agents demanded that the companies support
them by advertising. People they are selling to should
at the very least know that the brand they are selling
really exists. Initially, all advertising by ICICI Pru
ended up reinforcing the LIC brand image as the PSU was
still synonymous with life insurance. Historically,
print was the traditional choice for the medium of
advertising. The break with tradition came when ICICI
Prudential arguably became the first private insurance
company to recognize and harness the power of TV
advertising, with its ‘Sindoor’ campaign in 2001. Then
it brought its retirement solutions campaign with the
tagline “Retire from work, not life”.
The second campaign saw ICICI Prudential getting into
product-specific advertising. With the Assure Wealth
Plan they came with the new jingle “Jeete Raho”. The
Jeete Raho jingle and the Sindoor Campaign help ICICI
Pru to reach to its top.
Now, most private players of the insurance industry
have 50-70 per cent of their ad spend skewed in favor
of television. Marketing budgets have been soaring for
the past three years. Reportedly, on a budget of Rs
5.8 crore for February 2005 alone, ICICI Prudential’s
‘Retirement solutions campaign’ was the highest
spending brand, piping several HLL brands to the post.

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The fact that insurance selling activity reaches a peak

around March also needs to be taken into account.
 

Fig 2.2 Advertisement of IPRU

Not only the advertising through the television, ICICI

Pru does different type of other activities also. This
includes Tele Marketing, Street Campaign, advertising
over News Paper etc. ICICI Pru also organizes Talent
Hunt Program to recruit the Advisors. They are the
base of the company. According to the fulfillment
target they got promotion and help IPRU to grow
farther.
ICICI Prudential Life has one of the largest
distribution networks amongst private life insurers in
India. It has a strong presence across India with over
1,900 branches (including 1,074 micro-offices) and an
advisor base of over 210,000 (as on March 31, 2010).
ICICI Prudential Life has one of the largest
distribution networks amongst private life insurers in

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 Literature Review

India. To reach to the heart of the people and make

their good image they are having a strong presence
across India with over 1,900 branches. Out of that
1,074 micro-offices and an advisor base of over
2,10,000 (as on March 31, 2010), and & bank assurance.

Fig 2.3 Advertisement of IPRU through SMS

6. THE COMPETITORS:

The first and foremost competitor of the insurance

field for ICICI Prudential is Life Insurance
Corporation of India. The largest life insurance
company in India, Life Insurance Corporation is fully
owned by the government of India. It provides
individual life insurance, group insurance and pension
plans. Its subsidiaries include Life Insurance
Corporation of India International, LIC Nepal, LIC
Lanka, LIC Housing Finance and LICHFL Care Homes. The
company having their net worth of over Rs. 1,800 crore
and employs over 7,500 employees in its various
businesses. With a presence in 82cities in India and
it services a customer base of over 20,00,000. It has
over 12 million policy holders and over 9 lakh agents.
It has underwritten more than 120 million policies.

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ICICI Prudential is the second highest insurer in terms

of worth just after LICI.
The other competitors are some new and old private
insurer. Who has entered in the business after getting
certification from the IRDA after 2000. The other
private players in the same field are as follows
 Bajaj Allianz Life Insurance Company Limited
 Birla Sun Life Insurance Co. Ltd
 HDFC Standard life Insurance Co. Ltd
 ING Vysya Life Insurance Company Ltd.
 Max New York Life Insurance Co. Ltd
 Met Life India Insurance Company Ltd.
 Kotak Mahindra Old Mutual Life Insurance Limited
 SBI Life Insurance Co. Ltd
 Tata AIG Life Insurance Company Limited
 Reliance Life Insurance Company Limited.
 Aviva Life Insurance Co. India Pvt. Ltd.
 Religare Life Insurance
 ICICI Lombard General Insurance
 Tata AIG General Insurance

Fig 2.4 Share Market position of the

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 Literature Review

7. GOVERNMENT POLICIES:

At the dawn of the twentieth century, insurance

companies started mushrooming up. In the year 1912, the
Life Insurance Companies Act, and the Provident Fund
Act were passed to regulate the insurance business.
The Life Insurance Companies Act, 1912 made it
necessary that the premium rate tables and periodical
valuations of companies should be certified by an
actuary. However, disparage still existed as
discrimination between Indian and foreign companies.
The oldest existing insurance company in India is
National Insurance Company Ltd, which was founded in
1906 and is doing business even today. Insurance
industry earlier comprised of only two state insurers
Life Insurers i.e. Life Insurance Corporation of India
(LIC) and General Insurers i.e. General Insurance
Corporation of India (GIC).
Everything changed with time so did the insurance
industry, the insurance scenario changed from
The Insurance Act, 1938: The Insurance Act, 1938 was
the first legislation governing all forms of insurance
to provide strict state control over insurance
business.
Life Insurance Corporation Act, 1956: Even though the
first legislation was enacted in 1938, it was only in
19 January 1956, that life insurance in India was
completely nationalized, through a Government
ordinance; the Life Insurance Corporation Act, 1956
effective from 1.9.1956 was enacted in the same year
to, inter-alia, form LIFE INSURANCE CORPORATION after
nationalization of the 245 companies into one entity.

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There were 245 insurance companies of both Indian and

foreign origin in 1956. Nationalization was
accomplished by the govt. acquisition of the management
of the companies. The Life Insurance Corporation of
India was created on 1st September, 1956, as a result
and has grown to be the largest insurance company in
India as of 2006.
Insurance Regulatory and Development Authority (IRDA)
Act, 1999: Till 1999, there were not any private
insurance companies in Indian insurance sector. The
Govt. of India then introduced the Insurance Regulatory
and Development Authority Act in 1999, thereby de-
regulating the insurance sector and allowing private
companies into the insurance. Further, foreign
investment was also allowed and capped at 26% holding
in the Indian insurance companies. In recent years
many private players entered in the Insurance sector of
India. Companies with equal strength are competing in
the Indian insurance market.

8. TAXATION ASPECTS:

Section 88(c) this section of the income tax act

provides rebate on the total tax liability of the
individuals. According to this section, investments in
PPF, PF, NSC, post office, saving mutual funds premium
paid for the life insurance products, UTI-ULIP provides
an individual tax rebate.
Investment can be made in any one of the instruments of
a mix of the instruments subject maximum limit of
Rs.100000.
Section 80 D allows contribution up to Rs. 10000 by way
of premium for insurance on the health of the
individual, his spouse of any other member. Deduction

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 Literature Review

is allowed up to Rs. 15000 if the insured is a senior

citizen. Premium has to be paid by cheque.
Section 10( 10 d) of the income tax act, 1961 deals
with income not to be included to total income with
respect to the taxability of such receipts from life
insurance policies. Section 10 (10 d) provides any sum
received under a life insurance policy including the
sum allocated by way of bonus on such a policy other
than:
a) Any sum received under a Keyman insurance policy:
or
b) Any sum received under an insurance policy issued on
or after the 1st day of April, 2003 in respect of which
the premium payable for any of the year during the term
of the policy exceeds 20% of the actual capital sum
assured.

9. MAJOR PROBLEMS:

Before 2000 AD there was a monopoly in the insurance

field. After 2000, IRDA constructed and permitted the
private player to come and make business.
Potential Entrants (threat of new entrants): The most
attractive segment is one in which the entry barrier is
high but the exit barrier is low. But in the insurance
field the entry and the exit barrier both are low so
any private firm can enter and starts their business,
and increase the competition.
Industry competitor (threat of intense segment
rivalry): The Indian insurance sector is full of
competitors so this segment is unattractive for the
company. Though IPRU is the leading insurer in the
private field then also there is a threat from the LIC,

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 Literature Review

old private insurer as well as the new private sector

insurer.

Potential
entrants
(Threat of
mobility)

Suppliers Industry Buyers

(Supplier’s competitor (Buyer’s
power) (Segment power)
rivalry)

Substitute
(Threat of
substitute)

Fig 2.5 The five forces model

Suppliers (threat of supplier’s growing bargaining

power): As IPRU is a service firm so they are not
having any suppliers, thus they do not have this type
of problems.
Buyers (threat of buyer’s growing bargaining power):
Here the buyers are the life assured. Day by day they
want more benefit and new features. It is really
difficult to bring new product every day. Further more
buyer s are getting small amount

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 Literature Review

Substitute (threat of substitute product): There are

so many companies in the same field with almost same
product so it is really difficult to sustain.

OTHER PROBLEMS

ICICI Prudential is a private company and thus don’t

get as much benefits as other public insurer like LIC.
The major problems for the company are
 People’s perception about LIC.
 Lack of promotional activities.
 Less awareness about the company.
 There are many other company with same or sometimes
better benefit.
People use to think many times before investing to
ICICI Prudential, because
 High risk to get a high return.
 High premium.
 Low assured money.
 At unfortunate death people get sum assured/fund
value.
 The fund value at maturity is not tax free.
 There are many other players with almost same
benefits to choose.
The major problems can clearly be defined by Porter’s
five forces model.

10. ACHIEVEMENTS:

10.1 AWARDS:

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 ICICI Prudential Life Insurance Company, the most

trusted private insurer has got so many awards from
inception. They are:
 India's Most Customer Responsive Insurance Company.
AGC Networks - Economic Times, Customer
Responsiveness Awards, 2010.

Fig 2.6 IPRU on

 ICICI Prudential Life Insurance has won the first

runner up award for the Best Defect Elimination in
Service & Transaction category at Asian Six Sigma
Excellence Summit 2009.
 ICICI Pru Life ranked as the Most Trusted Pvt. Life
Insurance brand in the Brand Equity "Most Trusted
Brands 2009" survey
 ICICI Prudential Life Insurance was awarded with the
coveted 'ICAI Award for Excellence in Financial
Reporting' by the Institute of Chartered Accountants
of India (ICAI) for the financial year ended March
31, 2008.

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 ICICI Prudential Life was awarded the Life Insurance

Company of the Year at the12th Asia Insurance
Industry Awards 2008.
 ICICI Prudential Life won the Award for Brand
Excellence in the Banking and Financial services
category at the Asia Brand Congress 2008
 ICICI Prudential Life won the UK Trade & Investment
India Business Awards 2008 in the Business
Partnership Award-Large Company category
 ICICI Prudential Life won the ICICI Group Marketing
Excellence Award 2008 in three key categories for
its marketing initiatives
 ICICI Prudential Life was awarded the INDY’s Award
for Excellence in Mass Communication in the category
of Most Creative Advertisement-Television
 India's Most Customer Responsive Insurance Company.
Avaya Global Connect - Economic Times. Customer
Responsiveness Awards, 2007
And many more……..

10.2 RECOGNITIONS:

 ICICI Prudential Life was recognized by the most

trusted brand amongst private life insurers by The
Economic Times ‘Most Trusted Brand Survey 2008’.
 IMM Award for Excellence by Institute of Marketing
Management.
 Organization with Innovative HR Practices by Indira
Group of Institutes.
 Organization with Innovative HR Practices by Asia
Pacific HR Congress Awards for HR Excellence.
And many more………

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10.3 PICTURES:

ICAI Award, 2008

Most Trusted Brand Survey, 2009

Best Life Insurer 2003 INDY’s Award

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The Life Insurance Company of the Year, 2008 And more …………

Fig 2.7 Awards

11. SHARE MARKET POSITION:

ICICI Prudential Life Insurance has sustained its

leadership position in the private life insurance
industry for over eight years.
The company garnered a total premium (new business plus
renewal) of Rs 9,918 crore for the nine-month period
ended December 31, 2008 (9MFY2009) as against Rs 7,758
crore during the corresponding period last year,
registering a growth of 28%. The company’s renewal
premium showed a strong growth of 75%, and stood at Rs
5,427 crore for 9MFY2009.
ICICI Prudential Life’s market share stood at 11.8%,
for 10-month ended January 31, 2009, making it the
leading private life insurance player. As on January
31, 2009, the company’s assets under management (AUM)
stood at Rs 28,515 crore. Since inception, ICICI
Prudential Life has sold over 90 lakh policies.
Punjab continues to remain one of the major
contributors for ICICI Prudential Life’s growth.
Currently the state contributes almost 8% to ICICI
Prudential Life’s overall business, garnering over Rs
378 crore for the period April 1, 2008, to February 28,
2009. Since inception, the company has sold over
6,92,000 policies in the state.

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The company also has a strong presence in Punjab with

an extensive distribution network of 178 branches
(including 118 small offices in rural India), and
20,201 advisors, in addition to local tie-ups, to
enhance consumer convenience in the state.

12. NATIONAL AND INTERNATIONAL IMAGE: 

ICICI Prudential was the first life insurer in India to

receive a National Insurer Financial Strength rating of
AAA (Ind) from Fitch ratings. As ICICI grow its
distribution, product range and customer base, continue
to tirelessly uphold its commitment to deliver world-
class financial solutions to customers all over India
The ICICI Prudential edge comes from its commitment to
customers, in all that company do - be it product
development, distribution, the sales process or
servicing.
For the past eight years, ICICI Prudential has retained
its position as the No. 1 private life insurer in the
country, with a wide range of flexible products that
meet the needs of the Indian customer at every step in
life.
Prudential is a leading life insurer in Asia with a
presence in 12 markets and have the top three position
in seven key locations of Hong Kong, India, Indonesia,
Malaysia, Singapore, the Philippines and Vietnam.

13. FUTURE PROSPECTS:

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 Literature Review

ICICI Pru Life ranked as the Most Trusted Pvt. Life

Insurance brand in the Brand Equity. Not only but also
it owned India's Most Customer Responsive Insurance
Company award. From these it is noted that IPRU has the
better image of people’s mind rather than other private
insurer. But the main hurdle of being number one is
LIC.
In the current fiscal year, up to February 28, 2010,
the LIC has increased its market share in terms of
first year premium to 65.06 per cent and in terms of
policies to 70.79 per cent.
But LIC had been losing its market share since the life
insurance market was opened up to the private sector in
2000-01. As on date, there are 22 private insurance
companies against one public sector life insurer LIC.

In a growing market, where new private players are

entering, the market share of the leading player i.e.
LIC is bound to reduce.
During the same period, the total premium of private
life insurers has risen to Rs 64,503 crore from Rs 273
crore with an accretion of Rs 64,230 crore. This was
against the total premium of LIC that grew to Rs
1,57,288 crore from Rs 49,822 crore with a total
accretion of Rs 1,07,466 crore.
So it’s clear that IPRU is competing with only LIC
where LIC is fighting with other 22 player in the same
field. Now a day’s people are changing their views and
keen to earn high return by taking some risk. As IPRU
is leading brand against other 21 private insurers so
their prospect to be the no. 1 over all is very high.

14. CONCLUSION:

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 Literature Review

The innovative products should be offered as a right

mix of flexibility, risk & return, which will suit the
requirement of the customers and should target specific
niches, which are poorly served or not served at all.
Number of formalities should reduce, as customer feels
irritated with lots of formalities.
ICICI Prudential Life Insurance Company should lay more
stress on advertisements, both in print as well as in
other media.
Opening up the sector will certainly mean new products,
better packaging and improved customer service. Both
new and existing players will have to explore new
distribution and marketing channels. Potential buyers
for most of this insurance lie in the middle class. New
insurers must segment the market carefully to arrive at
appropriate products and pricing. Recognizing the
potential, in the past three years, the nationalized
insurers have already begun to target niches like
pensions, women or children.



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