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INTRODUCTOIN
1
1.1
INTRODUCTION TO THE STUDY
Everyone is exposed to various risks. Future is very uncertain, but there is way
to protect ones family and make ones childrens future safe. Life Insurance compani
es help us to ensure that our familys future is not just secure but also prospero
us. Life Insurance is particularly important if you are the sole breadwinner for
your family. The loss of you and your income could devastate your family. Life
insurance will ensure that if anything happens to you, your loved ones will be a
ble to manage financially. This study titled Study of Consumers Perception about
Life Insurance Policies enables the Life Insurance Companies to understand how co
nsumers perception differs from person to person. How a consumer selects, organiz
es and interprets the service quality and the product quality of different Life
Insurance Policies, offered by various Life Insurance Companies.
Insurance is a tool by which fatalities of a small number are compensated out of
funds (premium payment) collected from plenteous. Insurance companies pay back
for financial losses arising out of occurrence of insured events e.g. in persona
l accident policy death due to accident, in fire policy the insured events are f
ire and other allied perils like riot and strike, explosion etc. hence insurance
safeguard against uncertainties. It provides financial recompense for losses su
ffered due to incident of unanticipated events, insured with in policy of insura
nce. Moreover, through a number of acts of parliament, specific types of insuran
ce are legally enforced in our country e.g. third party insurance under motor ve
hicles Act, public liability insurance for handlers of hazardous substances unde
r environment protection Act. Etc.
2
WHAT IS INSURANCE
It is a commonly acknowledged phenomenon that there are countless risks in every
sphere of life .for property, there are fire risk; for shipment of goods. There
are perils of sea; for human life there are risk of death or disability; and so
on .the chances of occurrences of the events causing losses are quite uncertain
because these may or may not take place. Therefore, with this view in mind, peo
ple facing common risks come together and make their small contribution to the c
ommon fund. While it may not be possible to tell in advance, which person will s
uffer the losses, it is possible to work out how many persons on an average out
of the group, may suffer losses. When risk occurs, the loss is made good out of
the common fund .in this way each and every one shares the risk .in fact they sh
are the loss by payment of premium, which is calculated on the likelihood of los
s .in olden time, the contribution make the above-stated notion of insurance DEF
INITION OF INSURANCE Insurance has been defined to be that in, which a sum of mo
ney as a premium is paid by the insured in consideration of the insurers bearings
the risk of paying a large sum upon a given contingency. The insurance thus is
a contract whereby:
a. Certain sum, termed as premium, is charged in consideration, b. Against the s
aid consideration, a large amount is guaranteed to be paid by the insurer who re
ceived the premium, c. The compensation will be made in certain definite sum, i.
e., the loss or the policy amount which ever may be, and d. The payment is made
only upon a contingency
More specifically, insurance may be defined as a contact between two parties, wh
erein one party (the insurer) agrees to pay to the other party (the insured) or
the beneficiary, a certain sum upon a given contingency (the risk) against which
insurance is required.
3
TYPES OF INSURANCE Insurance occupies an important place in the modern world bec
ause of the risk, which can be insured, in number and extent owing to the growin
g complexity of present day economic system. The different type of insurance hav
e come about by practice within insurance companies, and by the influence of leg
islation controlling the transacting of insurance business, broadly, insurance m
ay be classified into the following categories: 1. Classification from business
point of view a) Life insurance, and b) General insurance 2. Classification on t
he basis of nature of insurance a) b) c) d) e) Life insurance Fire insurance Mar
ine insurance Social insurance, and Miscellaneous insurance
3. Classification from risk point of view a) b) c) d) Personal insurance Propert
y insurance Liability insurance Fidelity general insurance
4
THE INSURANCE INDUSTRY TODAY Since the 1970s, the insurance business has grown d
ramatically and undergone tremendous changes. As a result of the deregulation of
financial services businesses including insurance, banking, and securities tradi
ngthe roles, products, and services of these formerly distinct businesses have be
come blurred. For instance, citizens in the U.S. state of California voted in 19
88 to allow banks to sell insurance in that state. In Canada, banks may also soo
n be allowed to sell insurance. Advances in communications technology have also
allowed traditionally distinct financial businesses to keep instantaneous track
of developments in other businesses and compete for some of the same customers.
Some insurance companies now offer deposit accounts and mortgages. In the United
States, life insurance companies now sell more pension plans and other asset ma
nagement services than they do conventional life insurance. Developments in comp
uter technology that have given insurance providers the ability to quickly acces
s and process information have allowed them to custom-design policies to fit the
needs of individual customers. But the increasing complexity of policies has al
so made some aspects of buying and selling insurance more difficult. In addition
, improvements in geological and meteorological technology have the potential to
change the way property insurers calculate risks of damage. For example, as sci
entists improve their abilities to predict severe weather patterns, such as hurr
icanes, and geological disturbances, such as earthquakes, insurers may change ho
w they provide protection against losses from such events
6
EVOLUTION OF INSURANCE IN INDIA The marine insurance is the oldest form of insur
ance. If we trace Indian history there are evidence that marine insurance was pr
acticed here about three thousand years ago. The code of Manu indicates that the
re was the practice of marine insurance carried out by the traders in India with
those of Srilanka, Egypt and Greece .it is wonderful to see that Indians had ev
en anticipated the doctrine of average and contribution. Fright was fixed accord
ing to season and was then very much at the mercy of the wind and other elements
. Travelers by sea and land were very much exposed to the risk of losing their v
essels and merchandise because of piracy on open seas and highway robbery of car
avans was very common. The practice of insurance was very common during the rule
of Akbar to Aurangzeb, but the nature and coverage of the insurance in this per
iod is not well known. It was the British insurer who introduced general insuran
ce in India in the modern form. The Britishers opened general insurance in India
around the year 1700 .the first company known as the sun insurance office was s
et up in Calcutta in the year 1710. This was followed by several insurance compa
nies like London assurance and royal exchange assurance (1720), Phoenix Assuranc
e Company (1782). Etc. General insurance business in the country was nationalize
d with effect from 1st January 1973 by the General Insurance Business (Nationali
zation) Act, 1972. More than 100 non-life insurance companies including branches
of foreign companies operating within the country were amalgamated and grouped
into four companies, viz., the National Insurance Company Ltd., the New India As
surance Company Ltd., the Oriental Insurance Company Ltd., and the United India
Insurance Company Ltd. with head offices at Calcutta, Bombay, New Delhi and Madr
as, respectively.
7
Life insurance in the current form came in India from united kingdom with the es
tablishment of a British firm, oriental life assurance company in 1818 followed
by Bombay life assurance company in 1823, the madras equitable life insurance so
ciety in 1829 and oriental life assurance company in 1874.prior to 1871, Indian
lives were treated as sub standard and charged an extra premium of 15% to 20%. B
ombay mutual life assurance society, an Indian insurer that came in to existence
in 1871, was the first to cover Indian lives at normal rates. The Indian insura
nce company Act 1923 was enacted inter alia, to enable the government to collect
statistical information about life and nonlife insurance business transacted in
India by Indian and foreign insurer, including the provident insurance societie
s. The first half of the 20th century marked by two world war, the adverse affec
ts of the World War I and World War II on the economy of India, and in between t
hem the period of world wide economic crises triggered by the Great depression.
The first half of the 20th century was also marked by struggles for Indias indepe
ndence. The aggregate effect of these events led to a high rate of bankruptcies
and liquidation of life insurance companies in India. This had adversely affecte
d the faith of the general public in the utility of obtaining life cover In this
background, the Parliament of India passed the Life Insurance of India Act on 1
9th June 1956, and the Life Insurance Corporation of India was created on 1st Se
ptember, 1956, by consolidating the life insurance business of 245 private life
insurers and other entities offering life insurance services.
8
Since 1972, the insurance sector has been totally under the control of governmen
t of India through LIC and GIC and its subsidiaries. As a result, revenue of bot
h of them increased in the last years .the amount of savings pooled by LIC incre
ased from Rs.2704 crores in 1974 to Rs .57670 in 1994 with an annual growth rate
of 16.53% .similarly premium underwritten by GIC rose from 280 crores in 193 to
7647 crores in 1998 showing an annual growth rate of 25.18%. Despite increase i
n premium collected by both LIC and GIC their were inefficiency and red tapeisum
creeped in to the insurance sector. Apart from that a major policy shift by the
Narasimha Rau government during 1990s.the Indian economy opened for foreign comp
etition .In this background The government of India in 1993 had set-up a high po
wered committee by R.N Malhothra ,former governor reserve bank of India, to exam
ine the structure of Indian insurance sector and recommended changes to make it
more efficient and competitive keeping in view structural changes in other part
of the financial system of the country. Insurance sector has been opened up for
competition from Indian private insurance companies with the enactment of Insura
nce Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provis
ions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) wa
s established on 19th April 2000 to protect the interests of holder of insurance
policy and to regulate, promote and ensure orderly growth of the insurance indu
stry. IRDA Act 1999 paved the way for the entry of private players into the insu
rance market, which was hitherto the exclusive privilege of public sector insura
nce companies/ corporations.
9
EVOLUTION OF INSURANCE ORGANIZATION With a view to serve the society, the insura
nce organizations have been developed in different forms with innovation of insu
rance practice for social welfare and development; some of these forms are outli
ned here.
a) Self-insurance The arrangement in which an individual or concern sets up a pr
ivate fund to meet the future risk. If some losses happened in the future the fi
rm meets the loss out of the fund. While it may be called self insurance it is not
a single matter of fact, insurance at all because there is no hedge, no shiftin
g, or distributing the burden of risk among larger Persons. It is merely a provi
sion to meeting the unforeseen event. Here the insured become the insurer for th
e particular risk. But it can be effectively worked only when there is wide dist
ribution of risks subjected the same hazard.
b) Partnership A partnership firm may also carry on the insurance business for t
he sake of profit. Since it is not an entity distinct from the persons comprisin
g it, the personal liability of partners in respect to the partnership debts is
unlimited. In case of huge loss the partners may have to pay from their own pers
onal funds and it will not be profitable to them to starts insurance business .i
n the early period before the advent of joint stock companies many insurance und
ertakings were partnership firms or unincorporated companies
c) Joint stock companies The joint stock companies are those, which are organize
d by the shareholders who subscribe the necessary capital to start the business.
These are formed for earning profits for the stockholders who are the real owne
rs of the companies. The management of a company is entrusted to a board of dire
ctors who is elected by the shareholders from amongst themselves. The company ca
n operate insurance business and policyholders have nothing to do with the manag
ement of the concern. But in life insurance it is the practice to share certain
portion of profit among the certain policyholders.
10
d) Mutual fund companies The mutual fund companies are co- operative association
formed for the purpose of effecting insurance on the property of its members. T
he policyholders are themselves the shareholders of the companies each member is
insured as well as insured. They have power to participate in management and in
the profit sharing to the full extent. Whenever the income is more than the exp
enses and claims, it is accumulated I the form of saving and is entitled in redu
cing the rate of premium. Since the insured are insurers also, they always try t
o reduce the management expenses and to keep the business at sound level.
e) Co-operative insurance organizations Cooperative insurance organizations are
those concerns, which are incorporated and registered under Indian cooperative s
ocieties Act. The concerns are also called co operative insurance societies these
societies like mutual fund companies are non profit organization .the aim is to
provide insurance protection to its members at the lowest reasonable net cost .t
he Indian insurance Act. 1938, has provided special
provisions for the co-operative insurance societies, but after nationalization t
he societies have ceased to exist.
f) Lloyds Association
Lloyds association is one of the greatest insurance institutions in the world. Ta
king its name from the coffee house Lloyd where underwriters assembled to transa
ct business and pick-up news. The organization traces its origins to the latter
part of the seventeenth century .so it is the oldest insurance organization in e
xisting form in the world. In 1871,Lloyds Act was passed incorporating the membe
rs of the association into a single corporate body with perpetual succession and
a corporate seal .the powers of Lloyds corporation were extended from the busin
ess of marine insurance to the other insurance and guarantee business. The Lloyd
s Association also publishes, Lloyds list and register of shipping for the infor
mation of insuring public and the insurers
11
g) State Insurance
The government of a nation, some times, owns the insurance and runs the business
for the benefit of the public. The sate insurance is defined as that insurance
which is under public sector. In Brazil, Japan and Mexico, the insurance are lar
gely nationalized. Previously, the state undertook only those insurances, which
were regarded as vital for the national interest.
INSURANCE SECTOR REFORMS
Having looked at the insurance sector, the efforts made by the government to mak
e the industry more dynamic and customer friendly. To begin with, the Malhotra c
ommittee was set up with the objective of suggesting changes that would achieve
the much required dynamism. The Malhotra Committee Report In 1993, Malhotra Comm
ittee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was f
ormed to evaluate the Indian insurance industry and recommend its future directi
on. In 1994, the committee submitted the report and gave the following recommend
ations: Structure Government stake in the insurance Companies to be brought down
to 50% Government should take over the holdings of GIC and its subsidiaries so
that these subsidiaries can act as independent corporations All the insurance co
mpanies should be given greater freedom to operate
12
1.2 BACKGROUND OF THE STUDY Life Insurance is a contract for payment of a sum of
money to the person assured on the happening of the event insured against. Usuall
y the insurance contract provides for the payment of an amount on the date of ma
turity or at specified dates at periodic intervals or at unfortunate death if it
occurs earlier. Obviously, there is a price to be paid for this benefit. Among
other things the contracts also provides for the payment of premiums, by the ass
ured. Life Insurance is universally acknowledged as a tool to eliminate risk, su
bstitute certainty for uncertainty and ensure timely aid for the family in the u
nfortunate event of the death of the breadwinner. In other words, it is the civi
lized worlds partial solution to the problems caused by death. Life insurance hel
ps in two ways dealing with premature death, which leaves dependent families to
fend for themselves and old age without visible means of support. The most commo
n types of life insurance are whole life insurance and term life insurance. Whol
e life insurance provides a lifetime of protection as long as you pay the premiu
ms to keep the policy active. They also accrue a cash value and thus offer a sav
ings component. Term life insurance provides protection only during the term of
the policy and the policies are usually renewable at the end of the term
15
There are many Life Insurance Companies like LIFE INSURANCE CORPORATION OF INDIA
BAJAJ ALLIANZ LIFE INSURANCE COMPANY ICICI PRUDENTIAL LIFE INSURANCE COMPANY HD
FC STANDARD LIFE INSURANCE COMPANY BIRLA SUN-LIFE INSURANCE COMPANY ING VYSYA LI
FE INSURANCE COMPANY METLIFE INSURANCE COMPANY TATA AIG LIFE INSURANCE COMPANY M
AX NEW YORK LIFE INSURANCE COMPANY OM KOTAK MAHINDRA LIFE INSURANCE COMPANY
16
CHAPTER 2
RESEARCH DESIGN
17
RESEARCH DESIGN
2.1 STATEMENT OF
perception about
understand, how
vice and product
2.2 SCOPE OF THE STUDY This study is limited to the consumers within the limit o
f Bangalore city. The study will be able to reveal the preferences, needs, perce
ption of the customers regarding the life insurance products, It also help the i
nsurance companies to know whether the existing products are really satisfying t
he customers needs .
2.3 NEED FOR THE STUDY 1) The deeper the understanding of consumers needs and per
ception, the earlier the product is introduced ahead of competitors, the expecte
d contribution margin will be greater .Hence the study is very important. 2) Con
sumer markets and consumer buying behavior can be understood before sound produc
t and marketing plans are developed 3) This study will help companies to customi
ze the service and product, according to the consumers need. 4) This study will a
lso help the companies to understand the experience and expectations of the exis
ting customers. 5) Apart from creating, manufacturing and distribution capabilit
ies for life insurance products, an in depth study of the consumers, their prefe
rences and demand for their product is very necessary for setting up an efficien
t marketing network.
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2.4 OBJECTIVE OF THE STUDY o Ascertain the profile and characteristics of potent
ial buyers.
o To have an insight into the attitudes and behaviors of customers.
o To find out the differences among perceived service and expected service . o T
o produce an executive service report to upgrade service characteristics of life
insurance companies.
o To access the degree of satisfaction of the consumers with their current brand
of Insurance products.
2.5. REVIEW OF LITERATURE: The literature review section critically examine the
recent or historically significant studies, company data or industry reports tha
t acts as a basis for proposed studies to begin with the research discussion of
the related literature and relevant secondary data from a comprehensive prospect
ive, moving to more specific studies, that are associate with research problem.
Basically the literature should be applied to the study, than the researcher pro
poses. The literature may also explain the needs for the proposed work to apprai
se the short comings and informational gaps in secondary data sources. To carry
the research work the researcher has gone through a few reports, books, journals
and websites. The details regarding Life Insurance Industry, history, origin an
d growth of the industry is also taken from some books, magazines etc. The sourc
es of this information are as follows: Catalogues and Broachers from various lif
e insurance companies. Articles from magazines and news paper. Information from
various websites.
19
2.6 RESEARCH DESIGN: A research design is a basic plan, which guides the researc
her in the collection and analysis of data required for practicing the research.
Infect the research design is the conceptual structure where the research is co
nducted. It constitutes the Blue Print for the collection, measurement and analysi
s of the data. The study is carried out to understand the Consumer Perception ab
out life insurance companies in Bangalore city .For this study the researcher us
ed exploratory research design. This research covers 50 consumers in Bangalore c
ity, belonging to various age groups.
2.7 SAMPLE DESIGN: The process of drawing a sample from a large population is ca
lled sampling. Population refers to the total of items about which information i
s defined. Well-selected samples may reflect fairly and accurately the character
istics of the population. Sampling Unit: The sample unit of this survey was the
customers having life insurance policies in Bangalore city. Sample Size: The sam
ple size was 50 customers of different life insurance companies, from the variou
s parts of the Bangalore city. Sampling Technique Adopted: Convenient sampling
2.8 SOURCES OF DATA: After identifying and defining the research problem and det
ermining specific information required to solve the problem the researcher will
look for the type and sources of data which may yield the desired results, while
deciding about the method of data collection to be used for the study, there ar
e two types of data.
20
Secondary Data: Secondary data means data that are already available i.e. they r
efer to the data which have been collected and analyzed by someone and can save
both money and time of the researcher. Secondary data may be available in the fo
rm of company records, trade publications, libraries etc. Secondary data sources
are as follows: Company Reports Daily Newspaper Standard Textbook Various Websi
tes
Primary Data: Primary data are those, which are collected for the first time. Pr
imary data is collected by framing questionnaires. The questionnaire contained q
uestions, which are both openended and closed-ended. Open-ended questions are qu
estions requiring answers in the
responders own words. Closed-ended questions are those wherein the respondent has
to merely check the appropriate answer from a list of options available. Any do
ubts raised by the respondents were clarified to get the perfect answers from th
e distributors. Openended questions yielded more insightful information, whereas
closed-Ended questions were relatively simple to tabulate and analyze.
2.9 FIELD WORK: An interview-schedule and well-structured questionnaire is admin
istered to the target respondents to collect primary data (Copy of questionnaire
is attached in the appendix) Open and close-ended questions are used in the que
stionnaire. The orders of the questions are in such a manner that they begin wit
h simple questions and lead on the questions that needed more involvement from r
espondents.The secondary data are collected from periodicals, magazines, journal
s and Internet.
21
2.10 LIMITATIONS OF THE STUDY Although the study was carried out with extreme en
thusiasm and careful planning there are several limitations, which handicapped t
he research viz.
Time Constraints: The time stipulated for the project to be completed is less an
d thus there are chances that some information might have been left out, however
due care is taken to include all the relevant information needed.
Sample size: Due to time constraints the sample size was relatively small and wo
uld definitely have been more representative if I had collected information from
more respondents . Accuracy: It is difficult to know if all the respondents gav
e accurate information; some respondents tend to give misleading information.
24
CHAPTER 3
PROFILE OF THE INDUSTRY
25
Yet, nearly 80 per cent of Indian population is without life insurance cover whi
le health insurance and non-life insurance continues to be below international s
tandards. And this part of the population is also subject to weak social securit
y and pension systems with hardly any old age income security. This itself is an
indicator that growth potential for the insurance sector is immense.
A well-developed and evolved insurance sector is needed for economic development
as it provides long-term funds for infrastructure development and at the same t
ime strengthens the risk taking ability. It is estimated that over the next ten
years India would require investments of the order of one trillion US dollar. Th
e Insurance sector, to some extent, can enable investments in infrastructure dev
elopment to sustain economic growth of the country.
INSURANCE AND BUSINESS ENVIRONMENT Insurance is considered as one of the importa
nt segment of the economy for its growth and development. This industry provides
long term funds which are essential for the growth and development of the natio
n .so the growth of insurance industry largely depends up on the environment in
which they exists. Here I would like to mention about Indian business environmen
t and their impact on insurance sector. There are two type of environment which
affect the business one is environment which is internal to the organization (in
ternal environment) and the other one which is external to the organization (ext
ernal environment). Internal environment includes management, technology, compet
itors, employees, shareholders, policyholders, marketing intermediary etc. The e
xternal environment of insurance business has been classified in four parts, nam
ely legal, economic, financial, and commercial. let us discus them in detail by
taking one by one.
27
THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) The Malhotra Committee
felt the need to provide greater autonomy to insurance companies in order to im
prove their performance and enable them to act as independent companies with eco
nomic motives. For this purpose, it had proposed setting up an independent regul
atory body- The Insurance Regulatory and Development Authority. Based on the Mal
hotra committee report in April 2000 IRDA was incorporated. Since being set up a
s an independent statutory body the IRDA has put in a framework of globally comp
atible regulations. Section 14 of the IRDA Act 1999, lays the duties, power and
functions of the authority .the authority shall have the duty to regulate, promo
te and ensure orderly growth of the insurance business and reinsurance business.
Reforms and Implications
The liberalizations of the Indian insurance sector has been the subject of much
heated debate for some years. The sector is finally set to open up to private co
mpetition. The Insurance Regulatory and Development Authority bill will clear th
e way for private entry into insurance, as the government is keen to invite priv
ate sector participation into insurance. To address those concerns, the bill req
uires direct insurers to have a minimum paid-up capital of Rest. 1 billion, to i
nvest policyholders funds only in India; and to restrict international companies
to a minority equity holding of 26 percent in any new company. Indian Promoters
will also have to dilute their equity holding to 26 percent over a 10-year perio
d. Over the past three year, around 30 companies have expressed interest in ente
ring the sector and many foreign and Indian companies have arranged alliances. W
hether the insurer is old or new, private or public, expanding the market will p
resent challenges. A number of foreign Insurance Companies have set up represent
ative offices in India and have also tied up with various asset management compa
nies. Some of the Indian companies, which have tied up with International partne
rs, are.
28
Indian Partners Bombay Dyeing Tata Dabur Group ICICI Sundaram Finance Hindustan
Times Ranbaxy HDFC CK Birla Group DCM Shriram Godrej M A Chidambaram Cholamandal
am SK Modi Group 20th Century Finance Alpic Finance Vysya Bank Kotak Mahindra
International Partners General Accident, UK American Int. Group, US Liberty Mutu
al Fund, US Prudential, UK Winterthur Insurance, Switzerland Commercial Union, U
K Cigna, US Standard Life, UK Zurich Insurance, Switzerland Royal Sun Alliance,
UK J Rothschild , UK Met Life Guardian Royal Exchange, UK Legal and General, Aus
tralia Canada Life Allianz Holding, Germany ING Chubb, US
The likely impact of opening up of Indias insurance sector is that private player
s may swamp the market. International insurers often derive a significant part o
f their business from multinational operations. Multinational insurers are indee
d keenly interested as; perhaps there home markets are saturated while emerging
countries have low insurance penetration and high growth rates
29
There are a number of policies for specific insurance needs. Some of these inclu
de:
1. Family income life insurance. This is a decreasing term policy that provides
a stated income for a fixed period of time, if the insured person dies during th
e term of coverage. These payments continue until the end of a time period speci
fied when the policy is purchased.
2. Family insurance. A whole life policy that insures all the members of an imme
diate family -husband, wife and children. Usually the coverage is sold in units
per person, with the primary wage-earner insured for the greatest amount.
3. Senior life insurance. Also known as graded death benefit plans, they provide
for a graded amount to be paid to the beneficiary. For example, in each of the
first three to five years after the insured dies, the death benefit slowly incre
ases. After that period, the entire death benefit is paid to the beneficiary. Th
is might be appropriate if the beneficiary is not able to handle a large amount
of money soon after the death, but would be in a better position to handle it a
few years later.
4. Juvenile insurance. This is life insurance on a child. Coverage is paid for b
y an adult, usually the parents or guardians. Such policies are not considered t
raditional life insurance because the child is not producing an income that need
s to be protected. However, by buying the policy when the child is young, the pa
rents are able to lock in an extremely low premium rate and allow many more year
s of tax-deferred cash value buildup .
31
5. Credit life insurance. This insurance is designed to pay off the balance of a
loan if you die before you have repaid it. Credit life insurance is available f
or many kinds of loans including student loans, auto loans, farm equipment loans
, furniture and other personal loans including credit cards. Credit life insuran
ce can be purchased by an individual. Usually it is sold by financial institutio
ns making loans, like banks, to borrowers at the time they take out the loan. If
a borrower dies, the proceeds of the policy repay the loan directly to the lend
er or creditor.
6. Mortgage insurance
This decreasing term coverage is designed to pay off the unpaid balance of a mor
tgage if you die before the mortgage is paid off. Premiums are generally level t
hroughout the term of the policy. The policy is usually independent of the mortg
age, meaning that the financial institution granting the mortgage is separate fr
om the insurance company issuing the policy. The proceeds of the policy are paid
to the beneficiaries of the policy, not the mortgage company. The beneficiary i
s not required to use the proceeds to pay off the mortgage
7. Annuity An annuity is a form of insurance that enables you to save for your r
etirement. Basically, you give the insurance company money for a certain period
of time, and then after you retire they will pay you a certain amount of money e
very year until you die. There are many different forms of annuities. . Most peo
ple who buy annuities are 55 or older
32
Objectives of LIC
Spread Life Insurance much more widely and in particular to the rural areas and
to the socially and economically backward classes with a view to reaching all in
surable persons in the country and providing them adequate financial cover again
st death at a reasonable cost.
Bear in mind, in the investment of funds, the primary obligation to its policyho
lders, whose money it holds in trust, without losing sight of the interest of th
e community as a whole; the funds to be deployed to the best advantage of the in
vestors as well as the community as a whole, keeping in view national priorities
and obligations of attractive return.
Conduct business with utmost economy and with the full realization that the mone
ys belong to the policyholders.
Act as trustees of the insured public in their individual and collective capacit
ies. Meet the various life insurance needs of the community that would arise in
the changing social and economic environment.
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service w
ith courtesy.
Promote amongst all agents and employees of the Corporation a sense of participa
tion, pride and job satisfaction through discharge of their duties with dedicati
on towards achievement of Corporate Objective
34
2) Endowment Schemes Endowment plan with profit Limited payment Endowment Jeeva
Mitra (Double Cover) Jeevan Mitra (Triple cover) Bhavishya Jeevan Jeevan Anand
New Jana Raksha
3) Term Assurance Plan Anmol Jeevan 2 Year Term Assurance Covertible Term New Bi
ma Kiran
35
4)
Plan for needs of Children Komal Jeevan Jeevan Sukanya Jeevan Kishore Jeevan Ba
ya Jeevan Chaya Marriage/educational annuity Deffered Endowment
5) Periodic Money Back Plan Jeevan Samridhi Jeevan Rekha Plan Money Back Plan Je
evan Surabhi Jeevan bharathi
6) Medical benefits linked insurance Asha Deep II Jeevan Asha II
7) For benefits to Handicapped Jeevan Aadhar Jeevan Vishwas
8) Plans to cover housing loans Mortagage redemption
9) Joint life plan Jeevan sathi
36
Money Back Plans Under this plan specific percentage of sum assured will be back
ed to the life assured after specific period of time. This plan is of special in
terest to person who besides desiring to provide for their own old age and famil
y feels the need for lump sum benefits at periodical intervals. Under these poli
cies part of the sum assured is paid to the life assured in installments at sele
cted intervals. Children Plan Under the children plans the risk on the life of t
he children where covered generally this type of plans are helpful in education
and marriage of the children. Jeevan Balya: This plan is designed to enable a pa
rent to provide for the child by payment of a very low premium an Endowment Assu
rance Policy, the risk under which will commence from the vesting date. In addit
ion, Premium benefit and income benefit are included as additional benefit by pa
yment of appropriate additional premium during the deferment period. This policy
shall be cancelled in case the life assured shall die before the deferred dates
and in such an event provided the policy is then in full force in for a reduced
cash option. Marriage Endowment/ educational annual plan Every father desires t
o see that his children are well settled in life through sound education, leadin
g to good jobs and happy marriage. These needs arise at ages which can be approx
imately anticipated. Say when the children are between 18 to 25 year of age. Thi
s plan provides for a sum assured to keep aside to meet marriage educational exp
enses of children. Under this plan the S A along with the vested bonus shall be
payable at the end of the selected term either is lump sum or in ten half yearly
installment, at the option of the life assured nominee beneficiary. Jeevan Mitr
a This plan provides additional insurance cover equal to the sum assured in the
even of death during the term of policy so that the total insurance cover in the
event of death is twice the basic sum assured. i.e. The basic sum assured is do
ubled and the accrued bonus is also paid.
38
The company has over 25,000 customers at the end of 2002 and has achieved a firs
t premium income of Rs. 17 crores in 2002. ING Vysya Life Insurance is a joint v
enture between ING Insurance International BV a part of ING Group, the world s l
argest life insurance company (Fortune Global 500, 2002), ING Vysya Bank, with 1
.5 million customers and over 400 outlets and GMR Technologies and Industries Li
mited, part of GMR Group also based in Bangalore and involved in the field of po
wer generation, infrastructural development and several other businesses. ING Vy
sya Life has a paid up capital of Rs.140 crores and an authorised capital of Rs.
200 crores. Life insurance products offered by the company are: 1) Protection p
lan Critical illness plan Endowment plan
2) Savings plan Endowment plan Child protection plan Money back plan
3) Investment Plan Whole life plan Limited payment endowment plan Anticipated wh
ole life plan
40
TATA-AIG Life Insurance Tata-AIG Life Insurance Company is a joint venture betwe
en the Tata Group and American International Group Inc (AIG), the leading US-bas
ed international insurance and financial services organization and the largest u
nderwriter of commercial and industrial insurance in America. Its member compani
es write a wide range of commercial, personal and life insurance products throug
h a variety of distribution channels in approximately 130 countries and jurisdic
tions throughout the world. AIGs global businesses also include financial service
s and asset management, including aircraft leasing, financial products, trading
and market making, consumer finance, institutional, retail and direct investment
fund asset management, real estate investment management, and retirement saving
s products. TATA holds 76% shares and AIG holds 24% shares in the total share ca
pital of TATA AIG. Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a
broad array of life insurance products to individuals, associations and busines
ses of all sizes, with a wide variety of additional coverage to ensure our custo
mers can find an insurance product to meet their needs. Tata-AIG Life Insurance
and Tata-AIG General Insurance, both joint ventures between the Tata Group and A
merican International Group (AIG), provide life and general insurance policies a
nd solutions to companies, institutions and organizations across India. It is li
censed to operation on 12th February 2001. TATA-AIG life is spread over28 branch
offices and 39 training offices across the country.
Tata-AIG Life offers a broad array of life insurance products and solutions to c
orporate and other organizations. These products and solutions have various valu
eadded benefits and options that deliver flexibility and choice to the company s
clients. Tata AIG Life has completed its 4th year of operations and registered
a Total Premium of Rs. 497 Crores for the period April 2004 - March 2005.
41
The company has some 20 life insurance products with over 250 product combinatio
ns, including endowment to term, pension to group life and credit life, money ba
ck to whole life plans, etc. Tata-AIG Life uses different distribution channels,
including direct marketing, brokerage and banc assurance, to service client gro
ups in 19 Indian cities. Tata-AIG Life is the first private insurer in India to
offer group retirement schemes. Additionally, the company s group management div
ision focuses on providing employee benefit solutions. PRODUCTS The product rang
e of TATA-AIG Life is wide-spread across different segments. Some of the product
s are mentioned below.
Maha life Invest Assure Health Protector Star Kid Shubh Life Nirvana Nirvana Plu
s Money Saver Plan Health First Assure Golden Life Assure 10, 20, 30 years Secur
ity and Growth Assure Educate at 18, 21 Assure Career Builder Plan at 27 Assure
Golden Years Plan Assure 21 Money Saver Plan Assure 1/5/10/15/20/25 years/ to ag
e lifelines TROP
42
Incorporation of HDFC Standard Life Insurance Company Limited: The company was i
ncorporated on 14th August 2000 under the name of HDFC Standard Life Insurance C
ompany Limited. Companies ambition from as far back as October 1995, was to be t
he first private company to re-enter the life insurance market in India. On the
23rd of October 2000, this ambition was realized when HDFC Standard Life was the
only life company to be granted a certificate of registration. HDFC are the mai
n shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%
. Given Standard Life s existing investment in the HDFC Group, this is the maxim
um investment allowed under current regulations. HDFC and Standard Life have a l
ong and close relationship built upon shared values and trust. The ambition of H
DFC Standard Life is to mirror the success of the parent companies and be the ya
rdstick by which all other insurance company s in India are measured. Products o
ffered by the company are: INDIVIDUAL PLAN With Profit Endowment Assurance With
Profits Money Back Single Premium Whole of Life Term assurance Plan Loan Cover T
erm Assurance Personal Pension Plan Childrens Plan
GROUP PLANS Group Term Insurance Development Insurance Plan
44
3. 4. 5.
Extra Protection Through Riders Retirement Plans Forever Life Life link pension
Life time pension Reassure Investment Plans Assure Invest Life Link Group plans
Group Superannuation Group Gratuity Group Term Assurance
46
Group Plan Kotak Term Group plan Kotak Gratuity Group plan Kotak Credit Term Gro
up plan Riders Exclusions Under Riders
Rural Kotak Gramina Bima Yojana
48
2) Endowment Met Gold par Met Platinum par Met Junior par Met junior Non par
3) Money Back Met Sukh Met Junior MB
4) Term Met Mortagage Protector Met Riders Accidental death
50
CHAPTER 4
ANALYSIS AND INTERPRETATION
55
TABLE 2
DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALE
TYPES OF RESPONDENTS
NUMBER OF RESPONDENTS
PERCENTAGE OF RESPONDENTS
MALE RESPONDENTS
34
68%
FEMALE RESPONDENTS
16
32%
TOTAL
50
100 %
SOURCE: - SURVEY DATA
INFERENCE: This table helps us to understand that there are more number of male
consumers with 68% market share than the female consumers with 32% Market share.
59
TABLE 3
DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION
SL.NO
OCCUPATION
NUMBER OF RESPONDENTS
PERCENTAGE OF RESPONDENTS 4%
1.
STUDENTS
2
2.
GOVERNMENT EMPLOYEES PRIVATE EMPLOYEES HOUSE WIVES
20
40 %
3.
24
48 %
4.
2
4%
5.
RETIRED PERSONS TOTAL
2
4%
50
100 %
SOURCE :- SURVEY DATA
INFERENCE: It could be inferred that majority of consumers of life insurance pol
icies are private employees with 48% and Government employees with 40%, followed
by students, house wives and retired persons with 4 % each.
61
TABLE 4
TABLE SHOWING INCOME GROUP OF RESPONDENTS
SL.NO
INCOME GROUP
NUMBER OF RESPONDENTS
PERCENTAGE OF RESPONDENTS 10 %
1.
LESS THAN 5000 5001 10,000
5
2.
16
32 %
3.
10001 15000
17
34 %
4.
15001 20000
8
16 %
5.
20001 25000
2
4%
6.
GREATER THAN 30000 NIL
1
2%
7.
1
2%
TOTAL
50
100 %
SOURCE: - SURVEY DATA
INFERENCE: The majority of dominant income group having life insurance policies
belong to the income group of 10,001 to 15,000, which is middle class group. Fol
lowed by the income group of 5,001 to 10,000.
63
TABLE 5
DIFFERENCIATION OF RESPONDENTS ACCORDING TO THE ASSETS OWNED
SL.NO
ASSETS
NUMBER OF RESPONDENTS
PERCENTAGE OF RESPONDENTS
1.
HOUSE
19
38 %
2.
TWO WHEELER CAR
25
50 %
3.
6
12 %
TOTAL
50
100 %
SOURCE: - SURVEY DATA
INFERENCE: This table helps us to know that most of consumers with life insuranc
e policies own two wheelers with 50%, 38% of consumers own house and12% of the c
onsumers own car.
65
TABLE 6
MARKET SHARE OF DIFFERENT LIFE INSURANCE COMPANIES
COMPANIES
NUMBER OF RESPONDENTS 39
PERCENTAGE OF RESPONDENTS 78 %
LIC
TATA AIG
1
2%
HDFC
3
6%
ICICI
4
8%
MAX NEWYORK
1
2%
KOTAK MAHINDRA
1
2%
ALLIANCE BAJAJ
1
2%
SOURCE: - SURVEY DATA
INFERENCE: This table helps us to understand the market share of different life
insurance companies. LIC has a major share of 78 %, followed by ICICI Prudential
with 8% market share, followed by HDFC Standard Life with 6% market share.
67
TABLE 7
TABLE SHOWING ATTRIBUTES FROM RESPONDENTS
SL.NO
ATTRIBUTE
RESPONDENTS
RANK
1.
RETURN ON INVESTMENT COMPANY REPUTATION PREMIUM OUTFLOW SERVICE QUALITY PRODUCT
QUALITY
17
1
2.
13
2
3.
10
3
4.
7
4
5.
3
5
SOURCE :- SURVEY DATA
INFERENCE: This table shows the strengths and weaknesses of the company, and wha
t are the important criteria or attributes on which decision making is done. Fro
m this table we can infer that consumers give more importance for Return on inve
stment, secondly they prefer company reputation, and then premium outflow follow
ed by service quality and product quality.
69
R ET U RN O N IN
10 12 14 16 18 0 2 4 6 8
C O M PA TM EN T
17
VE S
NY R EP U TA TI O
13
PR EM IU M N O U TF LO W SE R VI C E Q U AL I TY
GRAPH 7
GRAPH SHOWING ATTRIBUTES FROM RESPONDENTS
70
PR O DU CT Q U AL IT Y
7 3
10
TABLE 8
FACTORS WHICH INFLUENCED TO SELECT LIFE INSURANCE COMPANY
SL.NO
FACTORS
RESPONDENTS
RANK
1.
PERSONAL INTEREST
25
1
2.
FAMILY
11
2
3.
FRIENDS
6
3
4.
AGENTS
5
4
5.
ADVERTISEMENT
2
5
6.
OTHERS
1
6
GRAPH 8
FACTORS WHICH INFLUENCED TO SELECT A LIFE INSURANCE COMPANY
30
25 25
20
15 11 10 6 5 5 2 1 0
IL Y EN TS ES T S T VE RT IS EM EN D M IE N ER O TH S
TE R
FA
FR
NA
L
IN
A
G
SO
PE R
72
A
D
TABLE 9
VALUE OF RESPONDENTS LIFE INSURANCE POLICY
SL.NO
AMOUNT
NUMBER OF RESPONDENTS 0
PERCENTAGE OF RESPONDENTS 0%
1.
< 10000
2.
10000 25000
5
10 %
3.
25000 50000
8
16 %
4.
50000-100000
15
30 %
5.
> 100000
22
44 %
SOURCE :- SURVEY DATA
INFERENCE: It can be inferred that majority of consumers buy the life insurance
policy which costs more than Rs. 1,00,000 followed by Rs. 50,000 to Rs.1,00,000,
followed by Rs. 25,000 to Rs. 50,000.
73
TABLE 10
RESPONDENTS PREFERENCE TO INVEST THEIR MONEY
NUMBER OF RESPONDENTS INSURANCE COMPANY 24
PERCENTAGE OF RESPONDENTS 48 %
BANK
26
52 %
TOTAL
50
100 %
SOURCE :- SURVEY DATA INFERENCE: From the table it is clear that majority of peo
ple (52%) prefer to invest in Bank and others (48%) prefer to invest in Insuranc
e companies.
75
TABLE 11
SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE COMPANY
RESPONSE
NUMBER OF RESPONDENTS 47
PERCENTAGE OF RESPONDENTS 94 %
YES
NO
3
6%
TOTAL
50
100 %
SOURCE :- SURVEY DATA
INFERENCE: From this table it could be inferred that 94% of the consumers are sa
tisfied with the service and quality of products of their life insurance compani
es. Only 6% of consumers are not satisfied.
77
GRAPH 11
SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE COMPANY
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
94%
6%
YES
NO
78
TABLE 12
RATINGS OF THE SERVICES OFFERED BY THE RESPONDENTS LIFE INSURANCE COMPANY
RATINGS
NUMBER OF RESPONDENTS 7
PERCENTAGE OF RESPONDENTS 14 %
EXCELLENT
VERY GOOD
12
24 %
GOOD
20
40 %
AVERAGE
11
22 %
POOR
0
0%
TOTAL
50
100 %
SOURCE: - SURVEY DATA
INFERENCE: From this table it could be inferred that 40% of the consumers have r
ated service offered as good, 24% of them have rated them as very good, 22% of t
hem have rated as average and 14% of them have rated as excellent.
79
GRAPH 12
RATINGS OF THE SERVICES OFFERED BY THE RESPONDENTS LIFE INSURANCE COMPANY
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
O O D
40%
24% 14%
22%
0%
E VE R A G PO O R O O D G
80
EX C EL LE N T
VE R Y
G
A
TABLE 13
CONSUMERS WILLINGNESS TO COMMUNICATE THE SERVICE OFFERED BY THEIR LIFE INSURANCE
COMPANY
RESPONSES
NUMBER OF RESPONDENTS 39
PERCENTAGE OF RESPONDENTS 78 %
YES
NO
11
22 %
TOTAL
50
100 %
SOURCE :- SURVEY DATA
INFERENCE: From this table it can be noted that the majority of consumers (78%)
would like to communicate to others about the service offered by life insurance
companies and 22% of consumers would not like to communicate the service offered
.
81
GRAPH 13
CONSUMERS WILLINGNESS TO COMMUNICATE THE SERVICE OFFERED BY THEIR LIFE INSURANCE
COMPANY
90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
YES NO
78%
22%
82
TABLE 14
NUMBER OF LIFE INSURANCE COMPANY KNOWN BY RESPONDENTS
NUMBER OF LIFE INSURANCE COMPANY KNOWN
NUMBER OF RESPONDENTS
PERCENTAGE OF RESPONDENTS
<5
18
36 %
57
29
58 %
8 10
2
4%
>10
1
2%
TOTAL
50
100 %
SOURCE :- SURVEY DATA
INFERENCE: This table helps us to know the consumer awareness about the life ins
urance companies. 58% of the consumers are aware about 5 to 7 life insurance com
panies, followed by 36% consumers who know less than 5 life insurance companies.
83
GRAPH 14
NUMBER OF LIFE INSURANCE COMPANY KNOWN BY RESPONDENTS
70% 60% 50% 40% 30% 20% 10% 0% <5 5 TO 7 8 to 10 > 10 58%
36%
4%
2%
84
TABLE 15
SCORES OF DIFFERENT LIFE INSURANCE COMPANIES
COMPANIES
SCORES
RANK
LIC
345
1
ICICI PRUDENTIAL
211
2
HDFC
194
3
TATA AIG
123
4
ING VYSYA
121
5
BIRLA SUNLIFE
118
6
MET LIFE
90
7
OTHERS
41
8
SOURCE:- SURVEY DATA
INFERENCE: From the table we can rank the life insurance companies, LIC stands f
irst, followed by ICICI Prudential followed by HDFC Standard life, followed by T
ATA AIG.
85
GRAPH 15
SCORES OF DIFFERENT LIFE INSURANCE COMPANIES
9 8 7 6 5 4 3 2 1 0
L VY SY A LA SU N LI FE M ET LI FE LI C FC IG TI A H D ER O TH A
8 7 6 5 4 3 2 1
EN
TA
D
TA
R U
IP
IN
G
IC IC
B IR
86
S
CHAPTER 5
FINDINGS, CONCLUSION AND SUGGESTIONS
87
5.1
FINDINGS
The majority of respondents belonged to the age group of 19 to 28 years which fo
rmed 48% followed by age group of 29 to 38 years which formed 26%.
The male consumers capture the Market share with 68%, followed by the female con
sumers with 32%.
The majority of the consumers of life insurance companies are private employees
with 48% and Government employees with 40%
The dominant income group having life insurance group belong to the group of 100
01 to 15,000 followed by 5,001 to 10,000.
LIC has a major market share of 78%.
The factors which influenced to select a life insurance company is the personal
factor, followed by family, friends, agents and advertisements.
88
The value of respondents life insurance policy costs more than 1, 00,000 followe
d by 50,000 to 1,00,000.
Majority of the people (52%) prefer to invest in bank others (48%) prefer to inv
est in insurance company.
Majority of consumers are satisfied with the service and quality of products of
their life insurance companies.
Majority of consumers (78%) would like to communicate the service offered by lif
e insurance companies.
Majority of consumers (58%) are aware about 5 to 7 life insurance companies.
LIC stands first followed by ICICI prudential, followed by HDFC Standard Life.
89
BIBLIOGRAPHY
93
BIBLIOGRAPHY
1) 2) Dr. Singh, Avtar, Principles of Insurance Law, S Chand & Sons, Delhi,2003.
Leon G. Schiffman, Lestie Lazar Kanwk, Consumer Behaviour, Himalaya Publishers,
Delhi,2004
3) Kotler Philip, Marketing Management, Pearson Education Inc. 11th Edition. 4)
Stanton William J, Etzel Michael J, Walker Bruce J, Fundamentals of Marketing, M
cGraw-Hill international, Singapore, 2002
5) 6) 7) Ravi Shankar, Services Marketing, Prentice Hall, 2000. Valarie Azithaml
, Marry Jo Bittner, Services of Marketing, Prentice Hall, 2001 Rutchnee .T & K.S
.Arun Kumar,Consumer preference & buying perception of ready made silk garments,
PGDSM,International center for training & research in tropical sericulture, News
papers: Economic Times Business Line
94
ANNEXURE
96
QUESTIONNAIRE
A STUDY CONDUCTED TO UNDERSTAND THE CONSUMERS PERCEPTION ABOUT LIFE INSURANCE POL
ICIES
1. Name : 2. Age:
3. Address:
3 a. Phone number: 4. Occupation: 5. Monthly income: <5000 15,001-20000 Nil 5001
-10,000 20,001-25,000 10,000-15,000 >25,000
6. Do You Own House Two Wheeler Car
7. Do you have a Life Insurance Policy with any Life InsuranceCampany? Yes No
7.a) If yes, name the Company___________________________________
b) Name the policy which you own_____________________________
97
8. What factors do you consider while selecting a life insurance company? Premiu
m Outflow Service Quality Return on Investment Company Reputation Product Qualit
y
9. What factors influenced to select a Life Insurance company? Personal interest
Agents Friends Advertisements Family others
10. What is the value of your life insurance? >10,000 50,000-1,00,000 10,000-25,
000 >1,00,000 25,000-50,000
11. Do you prefer to invest your money in a Insurance company or in a Bank? Insu
rance Company Bank
12. Are you satisfied with your current Life Insurance Company? Yes No
If Yes Why?___________________________________________ If No Why?_______________
____________________________
13. How do you rate the service offered by your Life Insurance Company? Excellen
t Average Very Good Poor Good
98
14. Would you like to communicate the service offered by your Life Insurance Com
pany to others? Yes No
15.
How many Life insurance Compannies do you know? <5 5-7 8-10 >10
16. How do you rate the following Life Insurance Companies? LIC HDFC ING VYSYA M
ET LIFE INDIA INSURANCE BIRLA SUNLIFE ICICI Prudential TATA AIG Others
17. Would You like to continue with the same Life Insurance Company? Yes No
18. Any suggestions for improving the service offered by life insurance companie
s
Thank You.
99