EXECUTIVE SUMMARY

Life insurance in its modern form came to India from England in 1818 with the

formation of Oriental Life Insurance Company. The Government of India nationalized

the life insurance industry in January 1956 by merging about 245 life insurance

companies and forming Life Insurance Corporation of India (LIC), which started

functioning from 01.09.1956. For years thereafter, insurance remained a monopoly of

the public sector. It was only after seven years of deliberation and debate that R. N.

Malhotra Committee report of 1994 became the first serious document calling for the

re-opening up of the insurance sector to private players. The sector was finally opened

up to private players in 2001.The Insurance Regulatory and Development Authority,

an autonomous insurance regulator set up in 2000, has extensive powers to oversee the

insurance business and regulate in a manner that will safeguard the interests of the

insured. Insurance is a federal subject in India. There are two legislations that govern

the sector- The Insurance Act-1938 and the IRDA Act1999. The insurance sector in

India has come a full circle from being an open competitive market to nationalization

and back to a liberalized market again.

The objectives of the study are to compare cost efficiency and financial performance

of Life Insurance Corporation of India and private sector life insurance companies in

India, to understand the concept and mechanism of insurance and to predict the

volume of new business and total premium of life insurance sector in India. The study

is divided into five chapters. The first chapter is introductory in nature and deals with

history of insurance, meaning and concept of insurance principles of insurance,

functions of insurance, importance of insurance, types of life insurance policies,

features of life insurance contract and duties, power and functions of IRDA. The

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second chapter deals with literature review and research methodology is dealt with in

the third chapter which includes research statement, hypothesis, and objectives of the

study, tools and methods of factor analysis with reliability testing, scree plot. The

fourth chapter deals with data analysis findings, scope, suggestions, limitations and

keywords of the study. The fifth chapter gives the conclusion of the study and gives

recommendations based on findings.

Both Life insurance density and penetration have increased from 2000-01 to 2009-10.

The prediction of new business and total premium for both private and public sector

life insurance companies in India for the year 2015 shows an upward trend. This

signifies that there is a lot of scope for life insurance sector to develop in India. The

financial performance of Life Insurance Corporation of India is better than private life

insurance companies in India. The private life insurance sector has nearly grabbed

30% of the market share in terms of total premium income. LIC’s new business

premium has fallen from 99.23% in 2000-01 to 65.08% in 2009-10. Unless Life

Insurance Corporation of India is alive to the emerging trends, its performance may

decline

further.

Hence, Life Insurance Corporation of India has to work with renewed vigour and

enthusiasm so as to retain its market share. The findings show a significant

heterogeneity in the cost efficiency scores from 2000-01 to 2009-10. It can be seen

that Life Insurance Corporation of India has consistently secured a cost efficiency

score of 1 in all the years from 2000-01 to 2009-10 and scored the highest rank for all

the years under study. Thus, Life Insurance Corporation of India has consistently been

a costefficient organization. While in the case of the private life insurance companies,

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the cost efficiency score has been inconsistent except for SBI Life insurance company

which has secured a cost efficiency score of 1 in seven years out of ten years.

Chapter 1

INTRODUCTION

1.1 Profile of the organization

The term Insurance defines protection from financial loss. In other words, we can

say that it is a form of risk management, which is primarily used to hedge against

the risk of a primarily uncertain loss.

This entity provides insurance as an insurer, insurance company, insurance carrier

or underwriter. A person who buys insurance is called as an insured or as a

policyholder. These insurance transactions involving that the insured as guaranteed

and it is a relatively small loss in the form of payment to the insurer in the form of

exchange for the insurer's promise to compensate the insured in the area of a

covered loss. The loss could be financial, but it must be diminished into financial

terms, and it generally involves something in which the insured has an insurable

interest which is established by ownership, possession, or pre-existing relationship.

The insured accept a contract, known as the insurance policy, which details the

state and situations under which the insurer will reimburse the insured. The value

money charged by the insurer from the insured for the coverage set forth in the

insurance policy is known as premium. In such case, if the insured faces a loss

which is probably covered by the insurance policy, the insured consent a claim to

the insurer for processing by a claims adjustor. The insurer could be hedging its

own risk by taking reinsurance, whereby another insurance company agrees to bear

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 some of the risks, mainly if the primary insurer considers the risk too large for it to

bear.

1.1.1 Nature of Life Insurance sector

In India, the insurance industry exists 57 insurance companies in which 24 are life

insurance and 33 are non-life insurers. Among these life insurers, Life Insurance

Corporation (LIC) is the only public sector company. Other than that, among the

nonlife insurers there are almost six public sector insurers, In addition to these, there is

sole national re-insurer, namely, General Insurance Corporation of India (GIC Re). In

Indian, the other stakeholders’ Insurance market encompass agents (individual and

corporate), brokers, surveyors, and third-party administrators maintains health

insurance claims.

Life insurance provides payment of a death benefit at the death of the insured(s).

However, life insurance carries many unique characteristics that it may make a

suitable solution for a difference of uses in addition to the death benefit protection.

Some of these characteristics include:

i. Policy cash values accumulate on a tax-deferred basis. ii. Policy death

benefits are received income tax-free. iii. Some of the Policy cash values

may be gain on a tax-advantaged basis.

1.1.2 Types of Life Insurance

i. Term Life Insurance –

Provides death benefit coverage for a specified time period. Premiums may

increase yearly (annual renewable term) or remain level for a period of time

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 (e.g. 10 years) before increasing. Generally, it provides the lowest initial cost

and the highest long-term cost for coverage. Policies may be adaptable to a

perpetual insurance policy for a limited period of time from as little as 2 years

to possibly as late as age 65. Term insurance different from perpetual insurance

in that term, insurance does not assemble cash value while permanent coverage

has a cash value component.

ii. Whole Life Insurance –

In this insurance, the Permanent death benefit coverage characterized by strong

guarantees and premium payments until the death of the insured. The purchaser of the

whole life generally sacrifices premium flexibility for the guarantees found in the

contract. The death benefit is guaranteed when the premium is paid as scheduled, the

death benefit is guaranteed. Fluctuation in the premium schedule normally results in

loss of the death benefit guarantee. The whole life premiums are normally the most

expensive as compared to other policy types. iii. Universal Life Insurance –

Permanent death benefit coverage recognized for its premium flexibility and

cash value accumulation. The amount and timing of premium payments are

flexible as long as policy cash values are sufficient to pay for the cost of

insurance coverage. Typical death benefits options available include a level of

the death benefit or an increasing death benefit. Increasing in the death benefit

is usually a level amount plus either an amount equal to the cash value of the

policy or an amount equal to the cumulative premium payments. Universal life

insurance did not offer guarantees as compared to whole life contracts.

However, in recent years many policies have begun to offer competitive death

benefit guarantees with the satisfied minimum premium amount. Of course,

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 these death benefit guarantees are dependent on the claims-paying ability of the

insurance company.

iv. Endowment Plans Life Insurance -

Endowment plan is another type of life insurance plan, which is a combination

of insurance and saving. A certain amount is kept for life cover – insurance,

while the rest is invested by the life insurance company. In an endowment plan,

if the life assured outlives the policy term, the insurance company offers him

the maturity benefit. Moreover, Endowment Plans may offer bonuses

periodically, which are paid either on maturity or to the nominee under death

claim. On death, the death benefit is payable to the nominee. Endowment plans

are also commonly known as traditional life insurance, although, there is an

investment component, but the risk is lower than the other investment products

and so are the returns.

v. Money Back Life Insurance -

Money back plan is a unique type of life insurance policy, wherein a

percentage of the sum assured is paid back to the insured on periodic intervals

as survival benefit. Money back plans are also eligible to receive the bonuses

declared by the company from time to time. This way, policyholder can meet

short-term financial goals.

vi. Child Plan Life Insurance -

Child plan helps to build corpus for child’s future growth. Child plans help to

build funds for child’s education and marriage. Most of the Child Plan provides

annual instalments or one-time pay-out after the age of 18 years. In case of an

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 unfortunate event, the insured parent passes away during the policy term -

immediate payment is payable by the insurance company. Some child plans

waive off the future premiums on death of the life insured and the policy

continues till maturity.

vii. Retirement Plan Life Insurance -

Retirement plan helps to build corpus for your retirement. Helping you to live

independently financially and without worries. Most of the child plans provide annual

instalments or one-time pay-out after the age of 60 years. In case of an unfortunate

event, life assured passes away during the policy term - immediate payment is payable

to the nominee by the insurance company. Death benefit will be higher of coverage or

fund value or 105% of premiums paid. Vesting Benefit will be payable if the life

assured survives the maturity age. In which case, pay-out will be fund value which has

to be utilized for buying an annuity. viii. Unit Linked Plans (ULIPs) Life Insurance

A unit linked plan is a comprehensive combination of insurance and

investment. The premium paid towards ULIP is partly used as a risk cover

(insurance) and partly is invested in funds. One can invest in different funds

offered by the insurance company depending on his risk appetite. The

insurance company then invests the accumulated amount in the capital market

i.e. in bonds, equities, debts, market funds, or a hybrid funds.

1.1.3 Key trends of the industry

• Key Trends and Opportunities to 2019' report provides detailed analysis of the market trends,

drivers, and challenges in the Indian life insurance segment. It provides key performance

indicators such as written premium, incurred loss, loss ratio, commissions and expenses,

combined ratio, frauds and crimes, total assets, total investment income and retentions during
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 the review period (2010– 2014) and forecast period (2014–2019). The report also analyses

distribution channels operating in the segment, gives a comprehensive overview of Indian

economy and demographics and provides detailed information on the competitive landscape in

the country. The report brings modelling and analysis expertise, giving insurers access to

information on segment dynamics and competitive advantages, and profiles of insurers

operating in the country. The report also includes details of insurance regulations, and recent

changes in regulatory structure. Life Insurance in India, Key Trends and Opportunities to

2019' report provides in-depth market analysis, information and insights into the Indian life

insurance segment, including: The Indian life insurance segment's growth prospects by life

insurance category. Key trends, drivers and challenges for the life insurance segment. A

comprehensive overview of India's economy and demographics. The various distribution

channels in the Indian life insurance segment. Details of the competitive landscape in the life

insurance segment in India. Details of regulatory policy applicable to the Indian insurance

industry.

• Scope

This report provides a comprehensive analysis of the life insurance segment in

India: It provides historical values for the Indian life insurance segment for the

report's 2010–2014 review period, and projected figures for the 2014–2019

forecast period. It offers a detailed analysis of the key categories in the Indian

life insurance segment, and market forecasts to 2019. It analyses the various

distribution channels for life insurance products in India. It profiles the top life

insurance companies in India, and outlines the key regulations affecting them.

• Reasons To Buy

Make strategic business decisions using in-depth historic and forecast market data

related to the Indian life insurance segment and each category within it.

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Understand the demand-side dynamics, key market trends and growth opportunities in the
Indian life insurance segment. Assess the competitive dynamics in the life insurance
segment. Identify the growth opportunities and market dynamics in key product
categories. Gain insights into key regulations governing the Indian insurance industry, and
their impact on companies and the industry's future.

• Key Highlights

The Indian life insurance segment accounted for 79.5% of the industry's gross

written premium in India in 2014, following growth at a review-period (2010–

2014) CAGR of 4.4%. On March 12, 2015, the government passed the

Insurance Laws (Amendment) Bill 2015 and increased the FDI limit in the

Indian insurance industry from 26% to 49%. The FDI increase is expected to

encourage global insurers to invest in the segment, intensifying competition

over the forecast period (2014–2019). The Indian life segment is highly

concentrated, with the five leading life insurers accounting for 88.9% of the

segment's gross written premium in 2014. The Indian life insurance segment

has been an attractive destination for foreign insurers: of the top 10 life insurers

in 2014, nine are domestic operators operating through joint ventures with

foreign companies. Direct marketing remained the dominant distribution

channel in the Indian life segment during the review period, accounting for

50.3% of the new business direct written premium, in 2014 due to its cost-

effective nature. Constant product redevelopments have added complexity and

difficulties for banking staff, especially in terms of product marketing.

Training bank staff to sell insurance is a significant challenge for insurers, and

is usually very expensive.

1.1.4 Mission & Vision

Mission

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 The mission of Life Insurance Sector is to "Ensure and enhance” and the

quality of life of people through financial security by providing several

products and services of aspired attributes with ruthless returns, and for

economic development, they rendering other resources.

Vision

The vision of the Life Insurance Sector is "A trans-nationally competitive financial

conglomerate of significance to societies and Pride of India."

1.1.5 Market size

The Government's policy of ensuring the uninsured has gradually

pushed insurance penetration in the India and expansion of insurance schemes.

Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in

FY18, with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51

trillion (US$ 23.38 billion) from non-life insurance. Overall the insurance

penetration (premiums as % of GDP) in India reached 3.69 percent in 2017

from 2.71 percent in 2001. In FY19 (up to October 2018), premium from new

life insurance business increased 3.66 percent year-on-year to Rs 1.09 trillion

(US$ 15.46 billion). In FY19 (up to October 2018), gross direct premiums of

non-life insurers reached Rs 962.05 billion (US$ 13.71 billion), showing a

year-on-year growth rate of 12.40 percent.

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 Figure No-1.1: Market share of life insurance industry

As we can see in this figure, where there are different kinds of insurance companies

having the highest market share in India. LIC of India is having the highest market

share of 69.40%, and others are having the lowest market share as compared to LIC.

The Present of Insurance Sector In India

As we all know that this industry is going so far, LIC, New India, National Insurance,

United insurance and Oriental these are the only government entity which is ruling and

stands high in the market share and their contribution to the Insurance sector in India.

There are other two major specialized insurers which are classified into credit

insurance and crop insurance, where Export Credit Guarantee of India catering to

Credit Insurance and Agriculture Insurance Company Ltd catering to Crop Insurance.

Whereas, some other private insurers (both life and general) who have done a joint

venture with foreign insurance companies to start their insurance businesses in India.

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Private Sector Companies

• Aegon Life Insurance Co. Ltd.

• Aviva Life Insurance Co. India Ltd.

• Bajaj Allianz Life Insurance Co. Ltd.

• Bharti AXA Life Insurance Co. Ltd.

• Birla Sun Life Insurance Co. Ltd.

• Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

• DHFL Pramerica Life Insurance Co. Ltd.

• Edelweiss Tokyo Life Insurance Co. Ltd

• Exide Life Insurance Co. Ltd.

• Future Generali India Life Insurance Co. Ltd.

• HDFC Standard Life Insurance Co. Ltd.

• ICICI Prudential Life Insurance Co. Ltd.

• IDBI Federal Life Insurance Co. Ltd.

• India First Life Insurance Co. Ltd

• Kotak Mahindra Old Mutual Life Insurance Ltd.

• Max Life Insurance Co. Ltd.

• PNB MetLife India Insurance Co. Ltd.

• Reliance Life Insurance Co. Ltd.

• Sahara India Life Insurance Co. Ltd.

• SBI Life Insurance Co. Ltd.

• Shriram Life Insurance Co. Ltd.

• Star Union Dai-Ichi Life Insurance Co. Ltd.

• Tata AIA Life Insurance Co. Ltd.

1.1.6 Size of the organization

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 Figure No-1.2: Market size of the Industry

In the table of Life Insurance Companies, it shows the market share of all the

companies. This market share is based on the New Business premium which is

collected throughout the year. The Renewal premiums have not been calculated

in these calculations of market share.

Table No-1.1: Market share of the industry

Company 2011-12 2012-13 2013-14 2014-15 2015-16 2017-18

LIC 71.8% 71.4% 75.5% 69.3% 70.5% 69.40%

SBI Life 5.7% 4.8% 4.2% 4.9% 5.1% 5.66%

ICICI Prudential 3.9% 4.5% 3.1% 4.7% 4.9% 4.70%

HDFC Life 3.4% 4.1% 3.4% 4.8% 4.7% 5.85%

Max Life 1.7% 1.8% 1.9% 2.3% 2.1% 2.24%

Others 7.7% 7.8% 8.2% 8.3% 9.5% 12.15%

Investments and Recent Developments

The following are some of the major investments and developments in the Indian insurance

sector.

• As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo Munich Health

Insurance at a valuation of around Rs 2,600 crore (US$ 370.05 million).

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• In October 2018, Indian e-commerce major Flipkart entered the insurance space in partnership

with Bajaj Allianz to offer mobile insurance.

• In August 2018, a consortium of West Bridge Capital, billionaire investor Mr Rakesh

Jhunjunwala announced that it would acquire India’s largest health insurer Star Health and

Allied Insurance in a deal estimated at around US$ 1 billion.

• In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber-insurance policy

for individuals.

• Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7 billion) through

public issues in 2017.

• In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals worth US$ 903

million.

• India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture with Ebix

Inc. to build a robust insurance distribution network in the country through a new distribution

exchange platform.

Government Initiatives

Figure No.-1.3: Government Initiatives

The Government of India has taken a number of initiatives to boost the insurance industry.

Some of them are as follows:

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 • In September 2018, National Health Protection Scheme was launched under Ayushman

Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million

vulnerable families. The scheme is expected to increase penetration of health insurance in

India from 34 per cent to 50 per cent.

• Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY)

in 2017-18.

• The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue

redesigned initial public offering (IPO) guidelines for insurance companies in India, which are

to looking to divest equity through the IPO route.

• IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that

are issued by banks to augment their tier 1 capital, in order to expand the pool of eligible

investors for the banks.

Currently biggest LIFE INSURANCE INDUSTRY in INDIA:

Currently a leading private general insurer in India, ICICI Lombard was started in

2001 as a joint venture between ICICI Bank and Fairfax Financial Holdings. Over the years, it has
grown rapidly along with India’s insurance industry. In FY18, it became the fourth largest non-life
insurance company in the country and issued 23.5 million new.

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SBI Life Insurance was established in 2000 as a joint venture between the State Bank

of India (SBI) and BNP Paribas Cardiff and has become one of the leading life

insurers in the country. The company has a range of life insurance and pension

products which include individual and group products to cater to the insurance needs

of diverse customer.

HDFC Standard Life Insurance Company was established in 2000 as a joint venture

between Housing Development Finance Corporation Limited (HDFC Ltd) and

Standard Life Aberdeen. It was the first private company to get a license from the

Insurance Regulatory and Development Authority in 2001. Today, it is the leading private

life insurer in India

1.1.7 Organisational structure

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 Figure No-1.4: Organization structure

1.1.8 Top Insurance Policies product range

These are the following featured insurance policies of various insurers in India:

Table No-1.2: Product range in the industry

Company Product

LIC Jeevan Vaibhav

ICICI Prudential ICICI Pru iCare

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 SBI Life Saral Maha Anand, Smart Wealth Assure, eWealth
Insurance

HDFC Life SHAURYA Plans, Rural & Social Plans, Women's

Plans, Retirement Plans

Max Life Basic Life Cover, Shiksha Plus Super

Strengths and weakness

Strengths are defined as what each business does best in its scope of operations which can

give it an upper hand over its competitors. The following are the strengths of LIC are:

• India’s largest Insurance service provider: LIC currently has pan India

operations with 2048 fully computerized branch offices, 8 zonal offices, around

113 divisional offices, 2,048 branches, and 1381 satellite offices and corporate

offices. The whole country is classified under 54 customer zones and 25

metroarea service hubs which are based across different cities and towns of

India. Currently, LIC has 1,337,064 individual agents, 242 Corporate Agents, 89

Referral Agents, 98 Brokers and 42 Banks for selling life insurance to the

general public.

• Brand Image: LIC has strong branding in India. Its tagline Yogakshemam

Mahamyaham which means welfare for all is well recognized.

The Economic Time Brand Equity Survey of the year 2015 voted LIC as the most

trusted Insurance provider in India.

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 • Fund Base: LIC has a huge found base of around 150 billion USD and is also

India’s biggest investor making it immensely powerful in the domain of finance in

India.

• A network of Agents: LIC has around 1,337,064 individual agents, 242

Corporate Agents, 89 Referral Agents, 98 Brokers and 42 Banks across India

who cover each nook and corner of the country.

Weaknesses always refer to those areas where the business or the brand needs improvement. Some

of the weaknesses of LIC are:

• Culture: LIC has been strongly related to the government and it follows a very

loose and slow work culture. In modern-day where the insurance players

adopting the new strategies, so this works as a weakness when it compared to

modern-day.

• Poor advertisement strategy: LIC does not spend too much on an

advertisement, In comparison to its private counterparts and this reflects in the quality

of ads that they release. So it is considered a weakness.

• Too many restrictions: The Company always face challenges like red tape

challenge for being a government entity and has a lot of restriction imposed on

it. So, the decision makings are low at LIC.

• Labor overheads: LIC faces major challenges while paying salaries and

managing the themes often and LIC also having huge employee’s strength and

they work from their own setups.

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1.2 OBJECTIVES OF THE STUDY

i. To know the factors affecting the perception of investors investing in the life insurance

sector.

1.3 SCOPE OF THE STUDY

i. The result of this research would help the company to have a better

understanding of the investor’s perception towards life insurance.

ii. The study helps the company by creating awareness about the investors of different

ages and income levels.

iii. The study also enables the company to focus the investor’s preferences and

expectations on the product/policy which they offer.

iv. The sample size of the data is 100 collected from primary and secondary data.

1.4 RESEARCH METHODOLOGY

The Methodology is a systematic way to solve the problem, it includes the research

methods for solving the problem. This process used to collect information and data for

the purpose of making business decisions. This methodology may include publication

research, interviews, and other research techniques, and could include both present and

historical information.

a) Type of research – Descriptive research

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 Descriptive research is defined as a research method that describes the

characteristics of the phenomenon that is being studied. In this research, the

study is to know about their perception of investor’s towards Life Insurance.

b) Data source – primary data and secondary

The study is based on the collection of primary as well as secondary data. In primary

data, quantitative research methods are used to investigate and observe the collected

data with the help of statistical, mathematical and computational techniques. A

structured questionnaire is designed in such a manner so that it caters all the areas of

study. While secondary data includes research findings of earlier studies and research

did so far.

c) Data collection method – Convenient Random Sampling

Convenience sampling is a type of nonprobability sampling in which people

are the only convenient sources of data for researchers so that sample should be

done in a simple manner. In probability sampling, each element in the

population has a known nonzero chance of being selected through the use of a

random selection procedure.

d) Data collection tool – Structured Questionnaire

Structured Questionnaire Method is a method for research. This method falls

under the category of quantitative research. This method is also known as a

closed questionnaire, this method is a positivist research method. In such

questionnaires, this exists a low level of involvement of the person who is

conducting the questionnaire and a high level of involvement of the person

who is answering the questionnaire.

e) Sample size – 151

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Techniques –

a) Descriptive Statistics

Descriptive statistics is a technique which is used to describe the basic features

of the data in a study. It provides summaries about the sample in a simple

manner and the measures. With simple graphics analysis together, it forms the

basis of every quantitative analysis of data virtually.

b) Simple percentage analysis

Percentage analysis is a technique which represents raw streams of data in a

percentage form (a part in 100 - percent) of collected data for a better

understanding. Percentage Analysis is used to create a contingency table from

the frequency distribution and shows the collected data for clear understanding.

c) Ranking method

Ranking method is a technique which used to evaluate the job evaluation with

this ranking method and perhaps it is the simplest method so far. According to

this method, the jobs are evaluated from highest to lowest, in order of their

value or merit performance to the organization. These Jobs can also be

evaluated according to the relative difficulty in performing them.

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 Chapter 2

LITERATURE REVIEW

This chapter presents the review of the literature to identify and understand the

implications of different issues related to investor’s perception towards public and

private life insurances companies in India. The literature on the life insurance industry

in India includes books, compendia, theses, dissertations, study reports and articles

published by academicians and researchers in different periodicals. The review of this

literature helps to have an idea for concentrating on the unexplored area for making

the present study more different from the other studies. The literature available is

presented below:

Baal N. and Sandhog H. S. (August 2011), explains about this study on Life

Insurance Corporation of India (LIC), that the business demanding capital and supplies

the most important financial instruments to customers manage at safety as well as long

term savings. Examines present study defines the parts affecting the agent’s perception

towards Life Insurance Corporation of India. Moreover, the arrangement of one-way

analysis has also been performed to test the important results to show that no

23
important differences exist among miscellaneous groups of respondent regarding their

concern towards Life Insurance Corporation of India.

Singh H. and Loll M (December 2011), explains about this study that life insurance

corporation of India emerging markets in India and is one of the fastest growing.

Insurance spreading in the rural area – the insurance industry has an acceptation grant

in socio-economic development. The objective of the present study is to evaluate the

opportunities for insurers in the rural market and the rural areas are highly

underinsured so what would be a new action for solving this problem in rural areas.

Sharma M. and Vijay T. S. et al (January 2012), explains this study analysis of the

impact of demographic factors on the level of satisfaction of investor’s contra

insurance policies. The study traps the impact of demographic factors on the

sufficiency of investors towards insurance policies. This study analysis also evaluates

a strong relationship between the overall satisfaction of the customers towards the

insurance policies and demographic factors towards the insurance policies.

Gautam V and Kumar M (March 2012), says that analysis of this study is to

modify the attitudes of customers of India towards the insurance services. In this

particular study analysis, it has been made by gathering the feedback of customers

through a structured questionnaire on the five-point Likert scale. The present study

24
orders that it may act as an important feature for the insurance companies in the Indian

market to stalk marketing strategies entrenched on socio-demographic and economic

factors.

Srivastava A. and Tripathi S. et al (April 2012), explain that it is a study on

insurance industry entrust to the financial sector of an economy and also renders the

uppermost social agreement in developing countries. Hence, the study on the Indian

life insurance industry and their changing trends concluded that though the sector is

rapidly growing, the industry has not yet insured even 50% of the insurable population

of India. To achieve this objective, more improvement is required by this sector in the

insurance solidity and insurance penetration.

Borah S. (November 2012), explains that this study is done in Jorhat branch on the

associated view of marketing emphasize on the indulgence of customers. Marketing

commences and ends with the customers. This study on customer satisfaction on

products of private sector insurance company with reference to Kotak Mahindra life

insurance company ltd revealed that most of the customers are the delight and are

satisfied with the same.

L Sreenivas. D. and B Anand M. (December 2012), explains that the insurance

protocol among the general public during the independence decade was exceptional

25
but yet was a phenomenal advancement in the Indian insurance industry soon after the

economic reforms a trick due to healthy race from many national as well as

international private insurance players. The study capture by was a way to try to

determine the investors understanding towards public and private life insurance

companies in India.

Babu P. R. (February 2013) in this study by, on the private sector life insurance

companies have been making a fast cluster in terms of increasing their enlargement

and market share since the year 2000. The Indian life insurance system is having a

powerful base on the mixed economic system wherein the public sector occupied a

monopolistic position in the life insurance business. Private players play a vast aspect

in life insurance business more energetic and customer friendly.

Padhi B. (August 2013), explains this study on the Indian insurance market was

nationalized in 1956 and LIC of India was set up. LIC of India cherishes monopoly on

Indian Insurance market for more than 4 decades. In this study will reveal the

performance of particular private insurance companies in the division like a number of

policies floated number of money collected through premium and the annual growth in

the specific areas from 2001 to 2012.

Gaikwad A. S. and Vibhute S.G. (August 2013), this study is about the Indian

insurance industry is in an undecided situation. This study by, will simply the

26
insurance companies to know the attitude of customers concerning the insurance

industry and particularly attitude towards traditional and ULIP plan. Along with this,

the company and advisors would togetherness the valid demand of samples, the limit

of customer satisfaction. Factors customer acknowledge while choosing the policy and

attitude on advisors approval by which company and advisors can draft their sales

program, sales speech, local strategies and the like.

Mahajan K. (November 2013), this study explains about India after liberalization, has

been proceeding the culture of investment in financial works; which has exposed huge

change for insurance firms to catch these opportunities the insurance firms have come

up with attentive marketing plans, so that, it helps them to achieve their objectives at

one end and serve the Indian customer to travel from unknown to known product zone.

Damtew K. and Pagidimarri V. (December 2013), this study explains that the

different policyholders by are primary for insurers for their life and wealth in today’s

opposite business environment. Customers can purchase various and more policies

from the same source and replace their agreements before end date if they have belief

in their applicable sources. This fantasy aims to analyze the role of trust in building

customer faithfulness in the insurance sector. In order to earn this aim,

nonexperimental fantasy was made for this fantasy and to excite policy holder’s

perception, systematic questionnaires were designed and then research is made and

outcomes are discussed.

27
Thirupathi T. (January 2014), this study explains the Life Insurance Corporation of

India (LIC) is the largest insurance group and investment company in India. They

choose private insurance sectors because they provide them the banking facility and a

lot of value-added services so it will be favorable both to common public and the LIC

if it offers banking facility to the policyholders and the common public. This study

discloses the policyholders have bought out the expectations of the policyholders and

their preferences. It has also offered suggestions that can be executed for the benefit of

the common public and the government.

Bhowal A. and Pankaj B. (April 2014), this study explain the Life insurance industry

is in a growing moment and daily new developments are going on in regards to

products and services. Given the verifiable research methods and especially construct

scaling technique, the study resulted that the difference between the degree of

customer cost ordinary from the insurance and the degree of the customer cost

experienced is statistically not convincing.

Barik B. and Patra R. (June 2014), in this study explains that the Indian life

insurance sector is increasing at an accelerated rate. The study discloses the life

insurance business in India needs special care as compared to other business, both

theory and practice to be discriminatory to provide the best services to the

policyholders. Hence, this study has been done with a purpose to help with suggestion

and recommendation that will help both academician and industry personnel to re-

engineer their thought in the insurance sector.

28
 CHAPTER 3

DATA PRESENTATION AND ANALYSIS

In this chapter, it majorly covers the statistical analysis of data collected using the

research instruments, such as a questionnaire. Analysis of the data was carried out

using both Ms excel and SPSS (statistical package for social sciences) to understand

the factors affecting the perception of investors investing in LIFE INSURANCE

SECTOR.

3.1 FACTOR ANALYSIS

Factor analysis is a technique that is used to reduce a large number of variables into

many numbers of factors. This technique removes maximum common variance from

all variables and puts them into a common score. As an index of all variables, we can

use this score for further analysis. Factor analysis is part of the general linear model

(GLM) and this method also assumes several assumptions: there is a linear

relationship, it includes relevant variables into the analysis, and there is a true

correlation between variables and factors.

3.2 Data Presentation

3.2.1 Demographics

a) Gender of respondents

Table No-3.1: Gender of respondents

Female 60 39.6%

Male 91 60.4%

29
 Total 151 100%

Figure no-3.1: Gender of respondents

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

male and female respondents were found to be 39.6% and 60.4% respectively.

Thus, the total respondents 151 out of which the males were (91) and the females

were (60).

b) Age of respondents

Table No-3.2: Age of respondents

18-24 27 17.9%

25-30 20 13.2%

30-35 41 27.4%

35 and above 63 41.5%

Total 151 100%

30
 Figure No-3.2: Age of respondents

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the age

of respondents were found to be 17.9%, 13.2%, 27.4% and 41.5% respectively.

Thus, the total respondent’s 151 out of which the age of respondents were (27)

are up to 18-25, (20) are up to 25-30, (41) are up to 30-

35, (63) are up to above 35.

c) Marital status of respondents

Table No-3.3: Marital Status

Unmarried 56 36.8%

Married 95 63.2%

Total 151 100%

31
 Figure no-3.3: Marital status

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

marital status of respondents were found to be 63.2% and 36.8% respectively. Thus,

the total respondents 151 out of which the married were (95) and the unmarried

were (56).

d) Income Level

Table No-3.4: Income level of respondents

Below 1 lakh 13 8.5%

1-5 lakh 64 42.5%

5-10 lakh 65 43.4%

Above 10 lakh 9 5.7%

Total 151 100%

32
 Figure no-3.4: Income level of respondents

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

income level of respondents were found to be 43.4%, 42.5%, 8.5%, and 5.7%

respectively. Thus, the total respondents 151 out of which the income level were

(13) are below 1 lakh, (64) are 1-5 lakh, (65) are 5-10 lakh and (9) are above 10

lakh.

e) Mode of payment

Table No-3.5: Mode of payment of respondents

Monthly 48 32.1%

Quarterly 3 1.9%

Half-yearly 20 13.2%

Yearly 80 52.8%

Total 151 100%

33
 Figure no-3.5: Mode of payment of respondents

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

mode of payment of respondents were found to be 52.8%, 32.1%, 13.2% and 1.9%

respectively. Thus, the total respondents 151 out of which the mode of payment

were (48) are paid on monthly basis, (3) are paid on quarterly basis,

(20) are paid on half-yearly basis and (80) are paid on yearly basis.

f) Education Qualification

Table No-3.6: Education qualification of respondents

Under graduate 45 29.2%

Graduate 58 39.6%

Post graduate 36 23.6%

Doctorate 12 7.5%

Total 151 100%

34
 Figure no-3.6: Education qualification of respondent

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

education qualification of respondents were found 29.2%, 39.6%, 23.6%, and

7.5% respectively. Thus, the total respondents 151 out of which the education

qualification were found (45) are graduate, (58) are under graduate, (36) are post

graduate basis and (12) are doctorate.

g) Occupation

Table No-3.7: Occupation of respondents

Service 19 12.3%

Employee 80 53.8%

Business 26 17%

Other 26 17%

Total 151 100%

35
 Figure no-3.7: Occupation of respondents

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the occupation

of respondents were found 12.3%, 58.3%, 17% and 17%

respectively. Thus, the total respondents 151 out of which the (19) are in service,

(80) are employee, (26) are business man/women and (26) are others.

h) Savings per month

Table No-3.8: Saving per month

Up to 10% 58 38.7%

10%-20% 74 49.1%

20%-30% 13 8.5%

Above 30% 6 3.8%

Total 151 100%

36
 Figure no-3.8: Saving per month

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

savings per month of respondents were found 38.7%, 49.1%, 8.5% and 3.8%

respectively. Thus, the total respondents 151 out of which the (58) saves up to

10%, (74) saves 10%-20%, (13) saves 20%-30% and (6) saves above 30%.

i) Number of policies taken

Table No-3.9: Number of policies taken

One 63 41.5%

Two 56 36.8%

Three 14 9.4%

More than three 18 12.3%

Total 151 100%

37
 Figure no-3.9: No. of policies taken

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

respondents were found 41.5%, 36.8%, 9.4%, and 12.3% respectively. Thus,

the total respondents 106 out of which the (63) takes only one policy, (56) takes

only two policies, (14) takes only three policies and (18) takes more than three

policies.

j) Type of investment preferred

Table No-3.10: Investment preference of respondents

Short term 19 12.3%

Long term 67 44.3%

Both 65 43.4%

Total 151 100%

38
 Figure no-3.10: Investment preference of respondents

Interpretation

Out of the total 151 respondents which is collected through questionnaire, the

investment preference of respondents were 12.3%, 44.3%, and 43.4%

respectively. Thus, the total respondents 151 out of which the (19) have short

term investment, (67) have long term investment, and (65) have both

investment.

3.3 Data Analysis

3.3.1 KMO and Bartlett's Test

a) Definition of Kaiser-Meyer-Olkin (KMO) test

Kaiser-Meyer-Olkin (KMO) Test is a measure of how suited your data is for

Factor Analysis. The test measures sampling adequacy for each variable in the

model and for the complete model. The statistic is a measure of the proportion

of variance among variables that might be common variance. The result of this

test performed on the data is follows-

39
 KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .719
Bartlett's Test of Sphericity Approx. Chi-Square 725.980
df 190
Sig. .000

Interpretation

The Kaiser-Meyer Olkin (KMO) and Bartlett's Test measure of sampling adequacy

was used to examine the appropriateness of Factor Analysis. The approximate of Chi-

square is 725.980 with 190 degrees of freedom, which is significant at 0.000 Level of

significance. The KMO statistic of 0.719 is also large (greater than 0.50). Hence

Factor

Analysis is considered as an appropriate technique for further analysis of the data. Communalities

found in the data is given as follows-

40
S17_Settled_claims 1.000 .570
S18_Premium_gifts 1.000 .677
S19_Security_business 1.000 .680
S20_Non_policyholders 1.000 .682
Extraction Method: Principal Component Analysis.

3.3.2 Eigen values- Total Variance Explained

The initial components are the numbers of the variables used in the Factor Analysis.

However, not all the 20 variables will be retained. In the present research only the 7

factors will be extracted by combining the relevant variables. The Eigen values are the

variances of the factors. The total column contains the Eigenvalue. The first factor will

always account for the most variance and hence have the highest Eigen values. The

next factor will account for as much of the left-over variance as it can and the same

will continue till the last factor. The percentage of variance represents the percent of

total variance accounted by each factor and the cumulative percentage gives the

cumulative percentage of variance account by the present and the preceding factors. In

41
the present research the first 7 factors explain 63.19 % of variance. The rotation sums

of the squared loading represent the distribution of the variance after the varimax

rotation with Kaiser

Normalisation. The varimax rotation tries to maximize the variance of each of the

Total Variance Explained

Co Extraction Sums of Squared Rotation Sums of Squared mp Initial Eigenvalues Loadings Loadings
on % of Cumulativ % of Cumulativ % of Cumulative ent Total Variance e % Total Variance e % Total
Variance %

1 4.450 22.248 22.248 4.450 22.248 22.248 2.961 14.805 14.805

2 1.761 8.804 31.052 1.761 8.804 31.052 2.311 11.555 26.361
3 1.554 7.770 38.822 1.554 7.770 38.822 1.578 7.892 34.253
4 1.416 7.080 45.902 1.416 7.080 45.902 1.557 7.784 42.037
5 1.289 6.443 52.345 1.289 6.443 52.345 1.547 7.733 49.769
6 1.135 5.677 58.022 1.135 5.677 58.022 1.344 6.719 56.488
7 1.034 5.170 63.192 1.034 5.170 63.192 1.341 6.704 63.192
8 .894 4.470 67.662
9 .833 4.163 71.824
10 .815 4.075 75.899
11 .764 3.818 79.717
12 .695 3.475 83.192
13 .580 2.902 86.094
14 .542 2.712 88.806
15 .484 2.418 91.223
16 .458 2.291 93.515
17 .376 1.879 95.394
18 .362 1.811 97.204
19 .315 1.573 98.778
20 .244 1.222 100.000
Extraction Method: Principal Component Analysis.
factor.

SPSS output-

42
Based on Varimax Rotation with Kaiser Normalisation, 7 factors have been extracted.

Each factor is constituted of all those variables that have factor loadings greater than

0.5. 20 variables were clubbed into 7 factors. 7 factors were extracted from the 20

variables used in the study. These 7 extracted factors explained 63.19 % of the

variability the performance of Open-Ended Equity Schemes of Mutual Funds. This

explains over three-fourth of the variability.

3.3.3 Scree Plot

A scree plot shows the eigenvalues on the y-axis and the number of factors on the

xaxis. It always displays a downward curve. The point where the slope of the curve is

clearly levelling off (the “elbow) indicates the number of factors that should be

generated by the analysis. The scree plot of the data is shown as follows-

Interpretation

The scree plot graphs the Eigen value against each factor. We can see from the

graph that after factor 7 there is a sharp change in the curvature of the scree

43
 plot. This shows that after factor 7 the total variance accounts for smaller and

smaller amounts.

3.3.4 Identification of the Core Factors

The Rotated Factor Matrix represents the rotated factor loadings, which are the

correlations between the variables and the factors. The factor column represents the

rotated factors that have been extracted out of the total factor. These are the core

factors, which have been used as the final factor after data reduction. According to the

grouping of the factors, each group of factors is named which will represent the

grouped factor and represent the factors.

Rotated Component Matrixa

44
 Rotation Method: Varimax with Kaiser Normalization. a.
Rotation converged in 13 iterations.

Interpretation

The above matrix gives the correlation of the variables with each of the extracted

factors. Usually, each of the variables is highly loaded in one factor and less loaded

towards the other factors. To identify the variables, included in each factor, the

variable with the value maximum in each row is selected to be part of the respective

45
factor. The values have been highlighted in each of the rows to group the 20 variables

into 7 core factors.

Thus, after rotation, Factor 1 accounts for 14.80 % of the variance; Factor 2 accounts

for 11.55 % of the variance; Factor 3 accounts for 7.89 % of the variance; Factor 4

accounts for 7.78 % of the variance, Factor 5 accounts for 7.73 % of the variance,

Factor 6 accounts for 6.71 % of the variance, Factor 7 accounts for 6.70 % of the

variance. All the 7 factors together explain for 63.19% of the variance in performance

of Open-Ended Equity Scheme.

3.4 Factors

COMPONENT 1- INFLUENCE FROM OTHERS

Table No-3.11: Component table-1

STATEMENT COMPONENT-1 FACTOR

S LOADING

S-13 Easy to avail policy loan from the .661

company
S-14 Difficulty in Availing of housing loan in .537
the corporation

S-17 The claims are settle of the Policyholders .549

punctually by the LIC

S-18 The gifts of initial premiums given to the .730

people by the LIC agents, are to influence
people to take up Life Insurance Policies
S-19 The agents of LIC provides services to .602
policyholders even after security business
S-20 non-policyholders opts Life Insurance .786
policies if a existing policyholder suggests
them to buy

46
 Case Processing Summary

N %
Cases Valid 151 100.0
a
Excluded 0 .0
Total 151 100.0
a. Listwise deletion based on all variables in the
procedure.

COMPONENT 2- CLAIM SETTLEMENT

Table No-3.12: Component table-2

STATEMEN COMPONENT-1 FACTOR

TS LOADING

S-6 Low amount of loan sanctioned by Life .734

Insurance Policy.
S-7 Settlement of premium easily done in the .658
corporation branches.
S-15 Improvement of expired policy is made .506
easy in the LIC.
S-16 The claims are settle of the Policyholders .583
punctually by the LIC

Case Processing Summary

N %
Cases Valid 151 100.0
Excludeda 0 .0
Total 151 100.0
a. Listwise deletion based on all
variables in the
procedure.

47
COMPONENT 3- MEDICAL PROVISIONS OF LIC POLICY

Table No-3.13: Component table-3

STATEMENTS COMPONENT-1 FACTOR

LOADING

S-4 The companies have strict rules for .547

examining the medical conditions while
providing a policy
S-9 LIC has provisions for all insurance needs .783
of every class of Indian citizens

Case Processing Summary

N %
Cases Valid 151 100.0
a
Excluded 0 .0
Total 151 100.0
a. Listwise deletion based on
all variables in the
procedure.

COMPONENT 4- BONUS RATES OF POLICIES

Table No-3.14: Component table-4

STATEMENTS COMPONENT-1 FACTOR

LOADING

S-1 Policies have low rates of bonus .707

S-2 Claims of policyholders are settled .662
punctually by the LIC
S-15 Improvement of expired policy is made easy .534
in the LIC.

48
 Case Processing Summary

N %
Cases Valid 151 100.0
a
Excluded 0 .0
Total 151 100.0
a. Listwise deletion based on all variables in the
procedure.

COMPONENT 5- ADVERTISEMENTS

Table No-3.15: Component table-5

STATEMENTS COMPONENT-1 FACTOR

LOADING

S-8 Low rates of bonus. .847

S-12 Advertisements of the LIC are not much .534
influencing for taking up policies.

Case Processing Summary

N %
Cases Valid 151 100.0
a
Excluded 0 .0
Total 151 100.0
a. Listwise deletion based on all variables in the
procedure.

COMPONENT 6- REINVESTMENTS

49
Table No-3.16: Component table-6

STATEMENTS COMPONENT-1 FACTOR

LOADING

S-10 The corporation does provide service .712

towards the welfare of society
S-11 Reinvestment promotes Investment in the .632
corporation.

Case Processing Summary

N %
Cases Valid 151 100.0
a
Excluded 0 .0
Total 151 100.0
a. Listwise deletion
based on all variables in the
procedure.

COMPONENT 7- COUNSELLING OF POLICY

Table No-3.17: Component table-7

STATEMENTS COMPONENT-1 FACTOR

LOADING

S-3 Ease of transfer of policy from one branch .736

to another
S-5 Counselling of policy is done by the LIC .536
agents in an enlightened manner.

50
 Case Processing Summary

N %
Cases Valid 151 100.0
a
Excluded 0 .0
Total 151 100.0
a. Listwise deletion based on all variables in the
procedure.

RELIABILITY

Reliability Statistics
Cronbach's
Alpha N of Items
.744 20

CHAPTER 4

SUMMARY AND CONCLUSIONS

4.1.1 FINDINGS

The findings include:-

• This questionnaire shows that the young generation has more interest in LIC

policies as compared to the old investors, but this questionnaire is filled more

by those investors whose age is above 35 because it helps the study to create

the relevant data.

• This questionnaire shows that the income level of investors is also the major

point of investing in LIC policies and the most of the investors are having their

salary between 5 to 10 lakh and they are paying the amount on yearly basis.
51
• In the current scenario, the investor’s education is higher than before but in this

questionnaire, it shows that a maximum number of investors are the only

graduate whom all are having at least one policy or more than one. Also, most

of the investors are doing a private job.

• Through this questionnaire we can easily finds the data that how much savings

investor or a buyer may save from their total annual salary for the instalments

of the LIC policy which is brought by the buyer and successfully the data

shows that up to 20% an investor may save from his or her salary for their LIC

policy.

• This questionnaire also consists that how many policies a single investor may

take, so through this we get to know that the maximum number of investors are

preferring only one policy for themselves rather taking more than one, but there

are others who also prefer to take more than 3 policies.

• Lastly, this questionnaire consists that how many investors are planning to take

LIC for the long term and with the help of this questionnaire we can see that

most of the investors are interested to take long term policies rather short term,

and there are some others whom all are having their interest to take the policy

as both terms such as short term and long term.

So, these are the findings of my study which is collected from the investors through the

questionnaire.

52
4.2 CONCLUSION

Life insurance is an important form of insurance and necessary for every individual.

Life insurance intelligence in India is very low as compared to the developed nation

where almost all the lives are covered and the stage of saturated has been reached. The

customers are the real support of the success of life insurance business and thus it’s

important for insurers to keep their policyholders satisfied and keep as long as possible

and also get new business out of it by offering need-based unfamiliar products. In Life

Insurance there are so many factors which affect customer’s investment decision and it

has been concluded by the study that demographic factors of the people play a major

and critical role in deciding the purchase of life insurance policies.

The customer will be the single most important factor to manage change in the life

insurance business. The key to success would be in providing insurance solutions, not

insurance products. In terms of diversification of channels, the past years have seen the

emergence of corporate agents, brokers and direct sales force in addition to the

individual financial consultant; websites emerge which will provide this assessment

service comparing the products of different insurers. Arriving at the ideal mix of

distribution channels quickly would be critical to the long run success. Technology

will play a crucial role in the delivery of the service of the highest standard to both the

end customer as well as the negotiator. It helps to reduce costs significantly and hence

get reflected in the pricing of products.

4.3 SUGGESTIONS

a) In the present competitive world, investor’s satisfaction has become an

important aspect to retain the customers, not only to grow but also to survive.

53
 Investor’s service is the critical success factor and private insurers through their

best services would be able to reposition and differentiate itself from LIC.

b) Private insurers should emphasis more on advertising and building brand

awareness through different modes of communication. This will help in

escalate insurance awareness among the common man.

c) To achieve greater insurance intelligence, the healthier competition has to be

raised by both the sectors and they should come up with new unfamiliar

products to offer a greater variety of choice to the customers and also make

improvement in the quality of services and sell products through the suitable

distribution channel to win-win situation for both the parties.

d) Insurance companies should devise policies which provide effective risk

coverage rather than focusing on the tax benefits and also encourages them for

long term investment in insurance.

e) Life insurance companies should come up with innovative tailor-made products

with high-risk cover, more return and a low insurance premium to attract the

number of customers.

4.4 LIMITATIONS

The above study has been conducted on the basis of primary data which has been collected

through questionnaire. It is subject to certain limitations that are as follows:

a) The ability and unwillingness of the respondent to answer the questions.

b) The sample size has been restricted to 151

c) The time of research was limited due to which certain facts has not been touched.

54
 d) The respondent might have given a biased opinion.

e) The area and respondents undertaken for research are very small thus results may differ with

the change in sample size.

4.5 KEYWORDS:

KEYWORD MEANING

Reinvestment It is using dividends, interest and any other form of

distribution earned in an investment to purchase additional
shares or units, rather than receiving the distributions in
cash

Maturity Maturity is the ability to respond to the environment in an

appropriate manner. Maturity also encompasses being
aware of the correct time and location to behave and
knowing when to act.

Risk Risk is the possibility of losing something of value. Values

can be gained or lost when taking risk resulting from a
given action or inaction, foreseen or unforeseen. Risk can
also be defined as the intentional interaction with
uncertainty.

Freight Freight refers to goods or produce being conveyed –

generally for commercial gain – by water, air or land.
Cargo was originally a shipload. Cargo now covers all
types of freight, including that carried by train, van, truck,
or intermodal container.

Retained Continue to have something.

55
Sanction Sanctions, are penalties or other means of enforcement
used to provide incentives for obedience with the law, or
with rules and regulations. Criminal sanctions can take the
form of serious punishment, such as corporal or capital
punishment, incarceration, or severe fines.

Detain Keep someone from proceeding by holding them back or

making claims on their attention.

Counselling Counselling psychology is a psychological specialty that

encompasses research and applied work in several broad
domains: counselling process and outcome supervision and
training career development and counselling and
prevention and health

Promotions Promotion refers to any type of marketing communication

used to inform or persuade target audiences of the relative
merits of a product, service, brand or issue. The aim of
promotion is to increase awareness, create interest,
generate sales or create brand loyalty.

Penetration Penetration rate indicates the level of development of

insurance sector in a country. Penetration rate is

measured as the ratio of premium underwritten in a

particular year to the GDP.

Instalments A sum of money due as one of several equal payments for

something, spread over an agreed period of time.

56
Long Term Policy Long-term care insurance plans have the same trigger.
Most policies have an elimination period or waiting period
similar to a deductible. This is the period of time that you
pay for care before your benefits are paid.

Short Term Policy Short-term insurance is insurance that provides financial

coverage for a specific asset for a limited duration of time,
usually less than one year.

Persuade Induce someone to do something through reasoning or

argument.

Enforcement Enforcement is the process of ensuring compliance with

laws, regulations, rules, standards, or social norms. By
enforcing laws and regulations, governments attempt to
effectuate successful implementation of policies

Dividends A dividend is the distribution of reward from a portion of

company's earnings and is paid to a class of its
shareholders. Dividends are decided and managed by the
company's board of directors, though they must be
approved by the shareholders through their voting rights.

57
 CHAPTER 5

RECOMMENDATIONS

• Life insurance awareness campaigns are to be organized by the LIC as the

market leader, along with the regulator of the industry (IRDA) so that the

public can have a better idea on the importance of having life policies and

thereby increased life insurance density and penetration.

• The information technology has immense potential in marketing services and

servicing policyholders. The dependence of customers on agents for payment

of premium and other services shows the underutilization of information

technology. As such, the premium payment and other services are to be

simplified by enabling the customers to access and utilize the services with

ease through online by providing a demo.

• Life insurance agents face multiple problems in marketing life insurance

products and services from the perspectives of customers, office authorities and

among themselves, as to the upkeep of ethics and standards in marketing. Upto-

date training and skill development programmes are to be arranged, which help

to know the customer well and match their needs with products of the LIC. The

severe problem faced by agents relates to poor customer financial status,

followed by an undue delay in payment of premium and demand for lower

premium in rural areas. Customer education in different aspects of life

insurance, especially premium, return, and purpose of having policies in life,

should be initiated to change the mind-set towards investment in life insurance.

Proper measures are to be taken to address and discourage unhealthy market

practices among agents in urban areas.

58
• The role of personal selling in marketing life insurance is to be optimally used

by the LIC as the large agents’ workforce can be effectively used in creating

customer awareness, changing the attitude of customers towards the LIC,

promoting products and services and enhancing their utility.

• The promotional initiatives in rural areas are to be reoriented such that radio

and newspaper get a prominent place among the promotional media, along with

word-of-mouth, social camps, and customer contact programmes. The

distribution of calendars and diaries at a low price will also be an added

advantage in this direction. Like the internet, website and email use are not so

much popular among rural customers, installation of the trans-slides electric

display at prominent places and provision of information kiosks at office

premises will be helpful in enhancing the effectiveness of the promotional

efforts of the LIC.

• The regional language should be given importance in implementing

promotional efforts through opted media and the media selected should be

suitable to customer segments, and its theme and contents should be oriented in

such a way that it adds to awareness and creates knowledge on products and

services among the prospective customers.

• Payment of premium and demand for lower premium in rural areas. Customer

education in different aspects of life insurance, especially premium, return, and

purpose of having policies in life, should be initiated to change the mind-set

towards investment in life insurance. Proper measures are to be taken to

address and discourage unhealthy market practices among agents in urban

areas. 4) The role of personal selling in marketing life insurance is to be

optimally used by the LIC as the large agents’ workforce can be effectively

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used in creating customer awareness, changing the attitude of customers

towards the LIC, promoting products and services and enhancing their utility.

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 BIBLIOGRAPHY

Books-

• Glaser Kevin. (2010). Inside the Insurance Industry: Right Side Creations

• Kunreuther Howard. (2012). Insurance and Behavioural Economics: Improving Decisions in

the Most Misunderstood Industry: Cambridge University Press

• Stevens James. (2016) ( Insurance: Best Practical Guide for Risk Management,

Property, Liability, Life and Health with Concepts and Coverage: Createspace Independent

Pub

Websites-

• pdfshodhganga.inflibnet.ac.in/bitstream/10603/46473/15/15_chapter6

• http://www.iosrjournals.org/iosr-jbm/papers/Vol20-issue3/Version-

1/H2003014853.pdf

• https://www.scribd.com/doc/21250315/Cosumers-Perception-Towards-

Insurance-Project-Report

• http://indianresearchjournals.com/pdf/ijmfsmr/2012/july/9.pdf

• https://www.slideshare.net/hemanthcrpatna/a-project-report-on-customerperception-towards-

insurance

• https://www.academia.edu/6669255/CONSUMER_PERCEPTION_ON_LIFE

_INSURANCE_COMPANY

61
 • http://www.ijim.in/wp-content/uploads/2016/07/Vol-I-Issue-IV-30-40-paper4-Sandeep-

Choudhary-CONSUMER-PERCEPTION-REGARDING-LIFE-

INSURANCE-POLICIES-A-FACTOR-ANALYTICAL-APPROACH.pdf
QUESTIONNAIRE

Topic- Factors Affecting Perception of Investors Investing In Life Insurance

Dear respondent,

This questionnaire is only focusing of your understanding and perception about Life
Insurance Sector in India. Your response will be distributing with strict confidentiality
and it will be used only for academic purpose. Thank you for paying attention towards
this questionnaire and sharing your perception.
Personal Details:

Q1. Gender-

Male Female
Q2. Age-

18-24 30- 35 25-30 40 and above

Q3 Occupation-

Student Service Business Homemaker

Q4 Income Level-

1 - 5 lakhs 5 - 10 lakhs 10 lakhs and above

S.NO. STATEMENTS STRONGLY AGREE NA/ND STRONGLY DISAGREE

AGREE DISAGREE
1 Do you think that the
rates of premium are
low?
2 Did the companies
detain the freight of
policy bond?
3 Do you think that
it’s easy to transfer
policy from one
branch to another?
4 Do you think that
the companies have
62
 strict rules for
examining the
medical conditions
while providing a
policy?
5 Do the counselling of
policy by LIC Agents
is done in an
enlightened manner?
6 Do you think that
Life Insurance
companies’ sanctions
loan at a low
amount?
7 Do you think that
settlement of
premium takes time
in the corporate
branches?
8 Do you think that
policies have low
rates of bonus?
9 Do you think that
LIC has provisions
for all insurance
needs of every class
of Indian citizens?
10 Do you think that
corporation does
provide service
towards the welfare
of society?
11 Do you think that
reinvestment
promotes investment
in the corporation?
12 Do you think that
advertisements of the
LIC are not much
effective for taking
up policies?
13 Do you think that it’s
easy to avail policy
loan from the

63
 company?
14 Do you think that it’s
difficult to avail
housing loan from
the company?
15 Do you feel that
updating expired
polices in LIC is
quite easier now?
16 Do you think that the
technique of sales
promotion by the
LIC agents is not
much effective in
influencing the
people for taking up
Life Insurance
Policies?
17 Do you think that
claims of
policyholders are
settled punctually by
the LIC?
18 Do you think that the
gifts of initial
premiums given to
the people by the
LIC agents, are to
influence people to
take up Life
Insurance Policies?
19 Do you think that the
agents of LIC
provides services to
policyholders even
after security
business?
20 Do you think that
non-policyholders
opts Life Insurance
policies if a existing
policyholder suggests
them to buy?

64