“CONSUMER BUYING BEHAVIOUR OON LIFE INSURANCE PRODUCTS

OF LIFE INSURANCE CORPORATION OF INDIA”

PROJECT REPORT
A PROJECT REPORT SUBMITTED TO THE UNIVERSITY OF CALICUT IN
PARTIAL FULFILLMENT OF REQUIREMRNTS FOR THE AWARD OF THE
DEGREE OF MASTER OF COMMERCE

BY

RESHMA R

REG NO.CHAOMCM011

UNDER THE GUID

GUIDANCE AND SUPERVISION OF

Dr
Dr. LAKSHMANAN M P

HEAD OF THE DEPARTMENT, DEPARTMENT OF COMMERCE

POST GRADUATE DEPARTMENT OF COMMERCE

GOVT. COLLEGE, CHITTUR, PALAKKAD

MAY 2016

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 CHAPTER 1
INTRODUCTION

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Indian economy is in transition over the last ten years owing to the major economic reforms affecting
almost all sectors. Insurance business is the most significant in the financial services sector. Life
insurance Corporation (LIC) of India is a financial intermediary which mobilizes people’s savings and
invests large amounts of premiums. Life insurance meets the contingencies of physical death and
economic loss.
In India the insurance business is going on for more than 150 years .Life Insurance was
brought in for the first time by the British. The business of life insurance in India in its existing form
started in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.
The Indian Life Assurance Companies were the first to regulate the Life Insurance business in 1912.
The Insurance Act of 1938 was passed and the Department of Insurance under the authority of
Superintendent of Insurance was established for the administration of the Act. The study of insurance
companies between 1939-55 reveals the lack of trust which is the corner stone of life business and thus
nationalization of insurance business became necessary.
In 1956 LIC was formed by an Act of Parliament, viz. LIC Act, 1956. The Life Insurance Business in
India was characterized by the presence of only one player ie., the Life Insurance Corporation of India.
The Life Insurance Corporation of India is the largest life insurance company in India and it is fully
owned by the Government of India.
The Life Insurance Industry has become increasingly competitive in recent years.
Consumer behavior and satisfaction from life insurance products depends upon various attributes like
search, experience and credence factors. The pre-purchase and post-purchase services perception and
expectations from the services determines the quality and customer satisfaction from services. There
are other important factors like emotional factors, loyalty, persistency, switching over costs,
complaining behavior and repurchase decisions which are of immense importance in determining the
service quality, customer satisfaction, switching over behavior and repurchase intention.
Poor persistency may be due to ‘churning’, where the sales person persuades the
policyholder to withdraw from an existing contract in order to switch insurers. In such cases,
persistency problems could not necessarily be attributed to the poor sales quality of the original insurer
or due to dissatisfaction. Furthermore policy holders may decide to withdraw and switch between
different insurers in order to secure better terms.
The foundation for true loyalty lies in customer satisfaction. Highly satisfied or even delighted
customers are more likely to become loyal to a firm, consolidate their buying with one firm and spread
positive word of mouth. In contrast, dissatisfaction drives customers away and is a key factor in
switching behavior. The study of expectations and perceptions of consumers towards a professional
service like life insurance in the post liberalization period is considered to be one of the most
challenging problems in the insurance sector. Expectations and perceptions form the basis for the

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determination of customer satisfaction. The main problem of the study is to examine the consumer’s
opinion and attitude towards the characteristic features exhibited the reasons for loyalty, persistency
and withdrawal from existing Life Insurance Company. The entry of private players has made the
entire scenario complicated and satisfying the customers is the major problem faced by insurers in the
light of the severe competition. Hence, this study is undertaken to examine expectations, perceptions
and customer satisfaction, to provide useful information to the industry and the policyholders for their
useful and fruitful relationship.

Objectives of the Study

1. To observe the current scenario of the Life insurance Industry in India.
2. To identify and compare the attributes relating to customer preference and their influence on the
purchase of Life insurance products from LIC
3. To examine the impact of customer satisfaction on loyalty, corporate image, Grievances of
customers.
Need for the Study
In the current scenario with the liberalization of the life insurance industry the Customer
will be the most important factor driving changes in the life insurance business. For insurers,
therefore, the critical success factor would be managing the customer.
In the Indian context, increase in number of insurance companies has led to a wider choice
for Indian consumers. The rising customer awareness and aspiration of quality service and availability
of alternative service providers in the Indian market has made customers more demanding. Thus, an
insurance company’s ability to attract and retain the customers is a function of not only what it offers
but also how it serves its existing customers.
Thus Life insurance companies have to understand the requirements of the customers. For
this purpose lots of surveys and studies have to be conducted periodically to explore and identify their
expectations in the existing environment.
Research methodology
Research methodology refers to the theoretical analysis of the methods appropriate to a
field of study or to the body of methods and principles particular to the branch of knowledge.
Data sources
The study makes use of primay and secondary data. The primary data is collected from the policy
holders through a structured questionnaire. Secondary data collected from various sources like articles,
websites, lecture books etc.

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Period of the study
riod of 21 days from 2nd week of April 2016.
The study is conducted for a period

Research Instrument
A well-structured
structured questionnaire was prepared with a view to collect information from the
customers of LIFE INSURANCE CORPORATION OF INDIA.. The questionnaire consists of three
parts.
1. Demographic profile
2. Investment profile
3. Consumer buying behavior

Population
Population comprises all the customers who were using the Life insurance products of LIC
residing at Palakkad municipality
.
Sample framework

people living
in palakkad
municipality

North south East West

1236 1476 1349 1128

346( No of 428( No of 404( No of 293( No of

policyholders) policyholders) policyholders) policyholders)

29 35 33 24

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Method of sampling
Multistage sampling method is used for selecting the sample unit.

Type of analysis
Bi variable and multi variable analysis was done for establishing relationship among the variables
under study. The statistical package for social scientists (SPSS-XX1) was used to process data.

Tools used for analysis

1. Friedman Test
The Friedman test is a non-parametric statistical test developed by US economist Milton
Friedman. Similar to the parametric repeated measures ANOVA, it is used to detect differences in
treatments across multiple test attempts. The procedure involves ranking each row together then
considering the values of ranks by columns.
In this study it is used for testing the variation of the rank preference of the customers
towards factors influenced to choose LIC in buying a life insurance policy, usefulness of source of
information, Difficulties encountered in decision making when buying a policy, Investment option
after receiving amount from LIC.

2. Kruskal- Wallis Test

The Kruskal-Wallis one way ANOVA by ranks is a non-parametric method for testing
whether samples originate from the same distribution. It is used for comparing two or samples that are
independent and that may have different sample sizes.
Here the test is used to test the mean rank preference of users by occupation wise as to their
motive behind purchase of insurance product.

3. Mann – Whitney Test

The Mann-Whitney test is more popular of the two independent sample tests. It is one of
the most powerful non parametric test for comparing two populations.
Here the test is used to test the mean rank preference of users by gender wise as to their
investment option to make investment

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4. MANOVA
The MANOVA is a type of multivariate analysis used to analyse data that involve more than
one dependent variable at a time. MANOVA allows us to test the hypothesis regarding the effect of
one or more dependent variables.

In this study the MANOVA model is used to test the variation of the mean scores of the
responses of customers on the level of satisfaction on different aspects by age, educational
qualification and gender.

Scope of the Study

The study focuses on the buying behavior of consumers relating to the customer
preference, customer satisfaction, loyalty, repurchase decision and grievances of customers in the
purchase of life insurance products.
In the current scenario the life insurance business has become liberalized and competitive.
It is found that exploring the behavior of the customers will give an insight to life insurance
Corporation of India to maximize their customers.

Limitations of the Study

The study suffers from certain limitations
1. The data for the purpose of the study is collected from respondents in Palakkad municipality only.
2. The study concentrates only on selected factors relating to customer purchasing Behavior. There
may be other influencing factors too, which have not been considered due to time and data constraints.
3. The primary data for the study is collected through questionnaires and the results of the study may
suffer from the inherent drawbacks of such instrument.
4. The study compares the perceptions and expectations of the customers of the Life insurance service.
Perceptions are subjective in nature and are likely to Change with the changing times and market
conditions.

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 CHAPTER 2
REVIEW OF LITERATURE

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 Review of literature provides a critical summary of research already done on the research
topic. It providers reader a quick overview of the problem addressed, stresses the need for the new
study and demonstrates how it will contribute to existing evidence.
This chapter presents a review of available literature relating to buying behavior of life
insurance products, customer satisfaction on the products and services of life insurance companies,
marketing life insurance products and services etc.

Krishnamurthy,( 2009),A remarkable trend in the insurance industry in the last 3 years is
the rapid change in the knowledge level as well as expectations of the customers. A study conducted
last year (2003) by FORTE, a collaborative effort between FICCI and ING Vysa Insurance Company
about consumer behavior in the pre and post liberalization days of the industry revealed stunning
changes in consumer expectations. It looks as though the docile, uninformed, insurance consumer
has suddenly been transformed into an aggressive and highly demanding species. Even while the
fresh air of competition in every sector of the economy brings in major changes in consumer
expectations. The insurance industry has witnessed a few unique aspects, such as regulation-inspired
efforts to educate insurance buyers, and a vast change in the skills and capabilities of the
intermediaries involved in distribution.

Kannan, Manivannan and Sathish kumar (2008) revealed that the market potential for
private companies is greater as the Indians are of the opinion that private companies would be able to
perform well. The insurance company should concentration the areas like loss prevention; assured
returns, long term investment etc.

Sudarshana Reddy (2008)in his study has analyzed the customer perceptions towards
private life insurance companies’ Policies. The population of the study consists of all the private
insurance policyholders in Bangalore city. With the use of convenience sampling method, 400
respondents were selected. The required data was collected from primary and secondary sources.
The conclusions drawn shows that the respondents felt that the policies offered by the private
insurance are up-to the customers’ expectations. As far as alternatives of private insurance
companies ‘policies for public insurance companies’, majority of the respondents felt that very few
policies are better alternatives for public insurance company. The customers expectations from life
insurance policies has tax saving, till now, is now slowly are turning towards value added policies.

In a study undertaken by Nalini Prava Tripathy (2009)with the object of finding out the
perception of customers towards insurance company through marketing variables and also to analyze

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the customers preference and importance assigned to different attributes, an attempt was also made to
examine the satisfaction level of customers and agents regarding customer service offered by the
company. The study also has been conducted to determine the position different insurance companies
have been gained in the minds of the people.

(VOICE, 2009) “Insurance PSU’s losing out on consumer rating”, finds Voice Study.
Thousands of consumers are dissatisfied with the way their claims are serviced despite spending
money on insurance policies and premium. India’s first ever study on customer satisfaction in
insurance sector was conducted by the Voluntary Organization in Interest of Consumer Education
(VOICE), India’s leading consumer organization. The study was conducted covering 3600
consumers in 8 metros. The study included 12 life insurance companies and 11 non-life insurance
companies.

In a study a undertaken by Naliniparva Tripathy(2009) with the object of the finding out
the perception of customers towards insurance companies through marketing variables and also
analyse the customers preference and importance assigned to different attributes, an attempt was also
made to examine the satisfaction level of customers and agents regarding customer service offered by
the company. The study also been conducted to determine the position of different insurance
companies have been gained in the mind of the people.

Desai (1973) in his book “life insurance in India – its history and dimensions of growth”,
explains and elaborates the historical background of the life insurance industry in India and its growth
since nationalization.

Rao B.S.R (1976) conducted a research study,” functioning of the LIC An Appraisal”,
wherein he critically appraises the operation of the LIC in India over a period of decades , taking into
consideration the objectives set forth and expectations aroused at the time the life insurance business
nationalized in the country.

Rajkumar (1985) in his study “the role of insurance advertisement” explains the problem
involved in insurance advertising and comes to suggest certain measures to improve the advertising
effectiveness of LIC. He urges the use of humors in advertising to capture the attention of prospective
customers. He also emphasizes the need for carrying the message of life insurance to the people,
without creating unpleasant feelings.

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 Appi Reddy and Narasimha Murthy, G (1996) have attempted to examine the true
marketing practices followed by the life insurance corporation in rural areas and the problems
involved in providing the services. The organization appoints development officers with
responsibility in a specified territory and special promotional efforts like field publicity vans, film
shows, exhibitions etc are insisted.

Arora R.S (1992), in his thesis, analyses the marketing strategies of life insurance services
of the LIC in Jalandhar Division. The study conducted by him is three dimensional in nature. It
examines the performance of the LIC for the period from 1980-81 to 1989-90. The survey sample
consists of 425 policy holders and 90 agents. The study reveals that most of the agents find LIC as a
good employment opportunity, which also gives them a steady income. Also, most of the agents are
found satisfied with the premium charged by LIC and with the bonus declared by it from time to time.
However, they are dissatisfied with the mode of functioning of the LIC. The study also observes that
although there is a complexity in the range of products and pricing system in the LIC, still it is
preferred because of benefits like risk protection and tax benefits.

A study embarked on seven merit parameters to evaluate the rating of insurance

companies. These includes tangibility, problem solving, reliability, responsiveness, assurance and
empathy. The companies covered under life insurance companies included AVIVA, Bajaj Allianz,
Birla sun life, HDFC standard life, ICICI Prudential, ING Vsya, Kotak Mahindra, LIC, Max
Newyork Life, MetLife, SBI life and TATA AIG.

The study has opened a can of worms for the insurance sector. In life insurance the industry
found that through LIC still holds the lion’s share at 80% of the market. It is now no longer only the
option that customers are considering. Product differentiation is at its peak in the life insurance sector
with private players providing additional sops like allowing maximum grace period for payment of
premium, prompt service and doing away with delays in giving payment receipts.

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 CHAPTER 3

THEORETICAL FRAMEWORK

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THE INDIAN LIFE INSURANCE MARKET AN OVERVIEW

Marketing in India, with its economic and social contrasts, with a population of more than
1 billion differing enormously with 15 different languages, social Customs and living under varying
states of economic development from the vastly affluent to the destitute, necessitates the need to deal
with several markets at the same time. The life insurance market, hitherto dominated by a
governmental monopolistic monolith – LIC, had to make way for a slew of private players who
paired with local financial institutions to revolutionize the insurance market in India. At the time of
entry of the private players, several demographic and psychographic mega trends augured well for the
growth of financial services in general and insurance in particular.
The essence of insurance is to share losses and substitute certainty by uncertainty. Human
life is also an income generating asset, albeit, intangible. This asset can be lost through an
unexpectedly premature death due to some accident or disease or the asset can also become non-
functional through some disability. In case of such unforeseen mishaps, life insurance becomes
essential to help the dependents to maintain their life in a normal and regular manner. In this context,
it becomes essential to mention that living too long can be equally or sometimes more problematic
than dying too young. Hence, very old age can be considered a risk, and insurance takes care of all
such risks which need to be safe guarded against. Insurance can minimize the impact of the risk on
the owner of the asset and those who depend upon the asset, but only in terms of economy or finance,
not in terms of emotions.

INSURANCE AND ECONOMIC DEVELOPMENT

Investments form the base for the economic development of the country. Investments are
the result of mobilization of the savings. An insurance company is a major instrument for the
mobilization of the savings of the people. Most of the money collected from public are invested in
Government through the IRDA Act, which has made it compulsory that a life insurance company has
to invest at least 15% of its controlled fund in the infrastructure and social sector of the country.

INSURANCE AND SOCIAL SECURITY

In India, under Article 41, of our Constitution, the State within the limits of its economic
capacity and development has to make effective provision for securing the right to work, to education
and to provide assistance in case of unemployment, Old-age and illness or disability. During the last
50 years, life insurance has become the main vehicle for carrying social security to the public in
general and the weaker sections in particular. The institution of insurance has thus proved to be a
reliable as well as a viable means of carrying the benefits of social security to the people and it can be
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said in particular that life insurance ultimately provides social security when it meets the needs of the
people.

INSURANCE AND FINANCIAL SECURITY

Life insurance is seen as an instrument for “Risk Coverage” as well as a long term investment. With
the bank interest rates coming down, insurance is more of a financial saving rather than a normal risk
covering instrument. With every passing year, life insurance will become an intelligent investment.
Now days, life insurance companies are offering products with life coverage combined with
investment appreciation. The life insurance companies have realized that such a Unique Selling
Proposition (USP) is a must. Life insurance in India was nationalized by incorporating Life
Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken
over by LIC. In 1993 the Government of Republic of India appointed R N Malhotra Committee to
lay down a road map for privatization of the life insurance sector. While the committee submitted its
report in 1994, it took another six years before the enabling legislation was passed in the year 2000,
the legislation amending the Insurance Act of 1938 and legislating the Insurance Regulatory and
Development Authority Act of 2000. In the same year, the newly appointed insurance regulator
IRDA started issuing licenses to private life insurers.

LIFE INSURANCE CORPORATION OF INDIA

The Life insurance Corporation of India, established by an act of parliament that received
the assent of the president on 18thJune 1956, came into existence on 1st September 1956, with 5 zonal
Offices, 33 Divisional Offices and 212 Branches and 97 sub offices all over India. The life insurance
corporation of India was established as a public sector undertaking endowed with the task of meeting
various social and economic obligations for the development of the country emphasizing its main task
of providing efficient life insurance services to ts customers. Since its inception, the life insurance
corporation has been devising plans to achieve the objective of spreading life insurance business
widely and in a particular to the rural areas and to socially and economically backward classes. In
order to achieve the objective, the LIC has opened several branches as well as divisional and zonal
offices in different parts of the country. Since life insurance contracts are long term contracts and
during the currency of the policy, it requires a variety of services, the need was felt in the later years
to expand the operations and place a branch office at each district headquarter. Re-organization of the
LIC took place and large numbers of new branch offices were opened. As a result, of the
reorganization, servicing functions were transferred to the branches, and branches were made
accounting units.

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Today, the corporation has 8 Zonal offices,113 divisional offices,2048 fully computerized branch
offices, 1275 satellite offices and the corporate office more than 1.16 lakh employees and 11.72 lakh
agents spread all over the country. the LIC’s wide area network covers 09 divisional offices and
connects all the branches through a metro area network. The LIC has tied up with some banks and
service providers to offer online premium collection facility in selected cities. The LIC’s ECS and
ATM premium payment facility adds to customer convenience in addition to its customer utilities as
online Kiosks and IVRS, Info centers. The LIC has launched its SATELLITE SAMPARK offices to
provide easy access to its policyholders. The satellite offices are smaller, learner and closer to the
customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many
other conveniences in the future.
The LIC continues to be the dominant life insurer even in liberalized scenario of Indian insurance and
is moving fast on a new growth trajectory surprising its own past records. The LIC has crossed many
milestones and has set unprecedented performance records in various aspects of life insurance
business.
Objectives, Vision and Mission of LIC

• Spread Life Insurance widely and in particular to the rural areas and to the socially and
economically backward classes with a view to reaching all insurable persons in the country and
providing them adequate financial cover against death at a reasonable cost.
• Maximize mobilization of people's savings by making insurance-linked savings adequately
attractive
• Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose
money it holds in trust, without losing sight of the interest of the community as a whole; the funds to
be deployed to the best advantage of the investors 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 moneys belong to the
policyholders.
• Act as trustees of the insured public in their individual and collective capacities.
• 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 with courtesy.
LIC continues to be the dominant insurer even in the liberalized scenario of
The Indian insurance market and is moving fast on a new growth trajectory surpassing its own past
records.
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DIMENSIONS OF CUSTOMER BUYING BEHAVIOUR
Excellence in customer service is the hallmark of success in service industries and among
manufacturers of products that require reliable service. Customer Expectations are beliefs about
service delivery that functions as standards or reference points against which performance is judged.
Customers compare their perceptions of performance with these reference points when evaluating
service quality.
POLICYHOLDERS EXPECTATIONS
Customer expectations are beliefs about service delivery that function as Standards or reference
points against which performance is judged. Because Customers compare their perceptions of
performance with these reference points when evaluating service quality, thorough knowledge about
customer expectations is crucial to services marketers. Knowing what the customer expects is the first
and possibly most crucial step in delivering quality service.
The level of expectation can vary widely depending on the reference point the customer holds.
Everyone has an intuitive sense of what expectations are. Customers hold different types of
expectations about service. Two types of expectation can be focused on.
The highest can be termed as desired service: the level of service the customer hopes to receive and
the wished for level of performance. Desired service is a blend of what the customer believes “can
be” and “should be” The lower level of customer expectation is the level of acceptable service or
adequate service: the level of service the customer will accept. These two types of expectation
standards, act as the upper and lower boundaries for customer expectations. Customers typically hold
similar desired expectations across categories of service, but these categories are not as broad as
whole industries. The adequate service expectation level, on the other hand, may vary for different
firms within a category or subcategory.
Six major areas of customers’ expectations from the life insurance companies are:
1. Resolution of customer anxiety
In a service industry, one of the factors that motivates a customer to opt for a service
provider is whether the service provider is able to reduce his or her anxieties, articulated or not, in
relation to the same. In case of insurance service, many customers are not fully aware of the benefits
being offered as well as the terms and conditions underlying the same. There is always an
apprehension in the minds of the customers that insurance companies are only interested in collecting
the premium without explaining the conditions for seeking future claims. Because of this fear, the
general tendency is to avoid taking insurance covers.

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2. Simplification of the documents.
Complex documentation acts as a deterrent to seeking services because most customers
are not knowledgeable about the insurance products. When faced with long and complicated
paperwork, an immediate reaction of the customers is to assume that the cover is not in their favour.
3. Enhanced responsiveness.
Though the customers expect superior services all the time, customers do realize that once in a while,
there can be specific problems when service providers, such as the insurance companies, are not able
to honor the predefined service standards in the normal course. However, if a service provider is
responsive to customer needs, and goes out of its way to make up for the failure in services offered,
the customers enjoy the special treatment meted out by the service provider during the post-complaint
stage and this builds loyalty.
4. Improve post-sale service.
In a service industry, a significant amount of customer value is created during the post-
sale phase. For example, in the insurance industry, the past experience of customers in settling claims
influences their future decision on renewals as well as in taking additional policies. Research shows
that unhappy customers tend to share a bad experience with potential customers more than they share
a good one.
5. Courtesy shown.
The customer’s perception of quality of services is also influenced by the courtesy
extended to a customer when he comes face-to-face with the employees of the service provider.
6. Effective cost of service.
This includes not only direct cost e.g., premium, but also the hidden costs such as cost of
follow-up, delay in settlement of claims, long waiting time etc.,
PERCEPTION
Perception can be described as how we see the world around us. Perception is the process
by which an individual selects, organizes and interprets information to create a meaningful picture of
the world. Individuals act and react on the basis of their perceptions and not on the basis of objective
reality.
“Perception is the process by which an individual selects, organizes and
Interprets stimuli into a meaningful and coherent picture of the world.” Leon G. Schiffman (2000).
Philip Kotler is of the view that people can form different perceptions of the same stimulus because
of three perceptional processes – selective exposure, selective distortion and selective retention.

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Customer Preferences
There are four unique elements to services. Intangibility, Inconsistency, Inseparability
and Inventory. These four elements are referred to as the 4 I’s of Services. When customers decide to
purchase a service to meet an unfilled need, they go through what is often a complex purchase
process. This process has three Identifiable stages: the pre-purchase stage, the service encounter
stage, and the post-purchase stage.
The primary objective of service producers and marketers is identical to that of all
marketers: to develop and provide offers that satisfy consumer needs and Expectations, thereby
ensuring their own economic survival. In other words service marketers need to be able to close the
customer gap between expectations and perceptions. To achieve this objective, service providers
need to understand how consumers choose and evaluate their service offerings. Unfortunately, most
of what is known about consumer evaluation processes pertains specifically to goods. The
assumption appears to be that of services, if not identical to goods, are at least similar enough in the
consumer’s mind thereby chosen and evaluated in the same manner.
The assumption has been challenged and it is clearly shown that the unique Characteristics
of services require different consumer evaluation processes from those used in assessing goods.
Recognizing these differences and thoroughly understanding consumer evaluation processes are
critical for the customer focus, on which effective services marketing is based. As the customer is the
heart of effective services marketing, the focus should be on the customer.
Consumers have a more difficult time evaluating and choosing services than Goods,
partly because services are intangible and non-standardized and partly because consumption is so
closely intertwined with production. These characteristics lead to differences in consumer evaluation
processes for goods and services in all the stages of the buying process. Customer behavior is roughly
divided into 5 categories or stages of the buying process: (1) Need recognition, (2) information
search, (3) evaluation of alternatives, (4) purchase and consumption, and (5) post-purchase
evaluation. Lack of understanding of the way customers assess and choose services in these five
fundamental stages leads to a customer gap that must be closed by service marketers.

Consumer Evaluation of Services

For consumer evaluation of services the concept of goods was considered and it is only in
the two decades it was realized that service characteristics have definite implications on the consumer
evaluation process. For service industries, therefore, service providers must understand how
consumers choose and evaluate their offering. Service performances, especially those that contain
few tangible clues, can be difficult for consumers to evaluate, both in advance of purchase and even
afterward.
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 As a result, there is greater risk of making a purchase that proves to be disappointing. A
customer who buys a physical commodity that proves unsatisfactory can usually return or replace it.
These options are not as readily available with services.

BRAND LOYALTY

According to Aaker (2000), brand loyalty is the “attachment that a customer has to a
brand”. It can also be seen as the consumers preference to purchase a particular brand In a product
class and this could be as a result of the consumer awareness about that particular brand.

Although the definition of behavioral brand loyalty deals with consumers sincere loyalty to a
brand as shown in purchase choice, the definition based on attitudinal perspective stresses consumers
understanding of quality will loyal to the brand. It is presumed that consumers understanding of
quality will be associated with their brand loyalty. The more loyal a consumer is to a brand, the more
he/she is presumed to see the brand as superior quality and vice versa. Also, the more favourable
associations consumers have towards a brand, the more their loyalty and vice versa.

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 CHAPTER 4
ANALYSIS AND INTERPRETATION

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The result of the survey conducted as a part of the research study has been presented and analyzed in
this chapter. Analysis of data is the most skilled task in the research process. Analysis of data means
studying the tabulated material in order to determine inherent facts or meanings. In other words the
analysis means the computation of certain indices or measure or coefficients along with searching for
pattern of relationship that exist among data groups.

The analysis presented in three parts:

1. Demographic profile of respondents

2. Investment profile of respondents
3. Consumer buying behavior towards products of LIC

4.1 Demographic profile of respondents

The below tables deals with the demographic profile of the respondents, which are age, gender,
occupation, educational qualification, and average income of the respondents.

Table no 4.1.1

Age of the Respondents

Frequency Percent
Less than/=30 14 13.9
31 to 40 39 38.6
41 to 50 40 39.6
Above 50 8 7.9
Total 101 100.0
Source:Primary Data

Majority of the respondents (92 percent) having the age up to 50 years.

Table no 4.1.2
Gender of the Respondents
Frequency Percent
Male 47 46.5
Female 54 53.5
Total 101 100.0
Source: Primary Data

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 The gender wise classification shows that out of 101 selected respondents, female (53.5 per cent)
constitute higher per cent than male counter parts.

Table no 4.1.3
Educational qualification of the Respondents
Frequency Percent
Upto SSLC 53 52.5
HSC 11 10.9
PG 37 36.6
Total 101 100.0
Source: Primary Data

The table reveals that 63.4percent of respondents are HSC or less Qualified.

Table no 4.1.4
Occupation of the respondents
Frequency Percent
Profession 13 12.9
Government 35 34.7
Others 53 52.5
Total 101 100.0
Source: Primary Data

Majority of respondents (52.5) were having the occupation other than profession, government job, ie
either business or private job.

Table no 4.1.5
Average income of the Respondents
Frequency Percent
Less than 10000 32 31.7
10001-20000 23 22.8

20001-30000 46 45.5
Total 101 100.0
Source: Primary Data

Majority of the respondents (45.5 per cent) belongs to the income group of 20001 to 30000
22
4.2 Investment profile of the respondents

The investment profile of the respondents comprises use of financial products, investment preference,
awareness and planning for financial planning, and details of insurance plans.

Table no 4.2.1
Use of financial products
Investment options Yes No

Bank/post office deposits 97(96 ) 4(4)

Chitty funds 23(22.8) 78(77.2)
Life insurance 101(100) 0 (0)
Mutual fund 14(13.9) 87(89.1)
Pension savings 65(64.4) 36(35.6)
Home loan 31(30.7) 70(69.3)
Vehicle loan 9(8.9) 92(91.1)
Others 14(13.9) 87(86.1)
Source: Primary Data

The figures in parenthesis represent the percent.

From the above table it is clear that, 23 percent of respondents were out of organised sector in selecting
their investment options.14 percent of the respondents were belong to the category of the investment
option “others” which includes gold loan, hundies etc.

4.2.2 The investment options

The tables below represent the median difference in the responses of male and female respondents in
choosing the investment options. The Mann-Whitney test is used test the following hypothesis.

H0: There is no difference between male and female in their median responses for their investment
options.

H1: There is significant difference between male and female in their median responses for their
investment options

The test result are presented in the following tables

23
 Table no 4.2.2.1
Mean ranks obtained for the Investment Options
Mean
Male (47) Female (54)
Fixed deposit 52.81 49.43
Life insurance 43.91 57.17
Mutual fund 39.8 60.75
Pension savings 49.07 52.68
Chitty funds 56.95 45.82
Post office deposit 57.2 45.6
Source: Primary Data

Table 4.2.2.2
Man-Whitney Test

Fixed Life Mutual Pension Post office

deposit insurance fund savings Chitty funds depoisit
Mann-whitney u 1184.00 936.000 742.500 1178.500 989.500 977.500

Wilcoxon W 2669.00 2064.000 1870.500 2306.500 2474.500 2462.50

Z -1.540 -2.432 -4.000 -.655 -2.037 -2.067

Asymp. Sig. (2-tailed) .124 .015* <0.01* .512 .042* .039*

Source: Primary Data
*Significant at 5 percent level

The above table reveals that the investment options among the male and female, the hypothesis as to
mutual fund, life insurance, chitty funds and post office deposits is rejected as its p values are
<0.05(.000,.015,.042,&.039) while that of others is not rejected as their respective p values are 0.124
&0.512.butas per alternative hypothesis, the mutual fund, life insurance chitty funds and post office
deposits are not rejected.

24
 Table no 4.2.3
Awareness and planning for financial planning
Sl no AAS ABP NAS

1 Decided how to invest my savings 83(82.2) 18(17.8) 0(0)

2 Know my life insurance requirement 58(57.4) 43(42.6) 0(0)

3 Calculated my son/daughters future 43(42.6) 44(43.6) 14(13.9)
4 Calculated required savings for my 27(26.7) 64(63.4) 10(9.9)
retired life
Source: Primary Data

In the above table AAS means aware and done their appropriate savings, ABP means awared but not
planned for it, and NAS means not aware of such requirement..the above table reveals that 83 percent
of respondents were aware and done their appropriate savings or investment (AAS). All of them were
awared about the life insurance requirement.14 percent of the respondents were not awared about the
requirements of calculating their son/daughters future(NAS).and 64 percent of them were awared but
not planned for the calculation regarding the savings for their retired life(ABP).

4.2.4 Details of insurance policy

The details of insurance policy include the name of the insurance policy, term of the policy, sum
assured on the policy and annual premium of the policy. the name of the policy includes LIC JEEVAN
ANAND, MONEY BACK PLAN, NEW BIMA BACHATH etc. term of the policy includes 5,10,12
and 15. Sum assured on the policy includes 35000, 50000, 70000, 100000 and 200000.and annual
premium lies in a scale of below 3000 to 10000.

Table no 4.2.4.1
Insurance policy

Frequency Percent
LIC JEEVAN ANAND 52 51.5
MONEY BACK PLAN 43 42.6
NEW BIMA BACHAT 3 3
Others 3 3
Total 101 100
Source: Primary Data

On an average most of the respondents prefer LIC JEEVAN ANAND policy.

25
 Table no 4.2.4.2
TERM

Policy term Frequency Percent

5 58 57.4
10 28 27.7
12 5 5.0
15 10 9.9
Total 101 100.0
Source: Primary Data

From the above table85 percent of the respondents have their policy term up to 10 years.

Table no 4.2.4.3
Sum assured

Frequency Percent
35000 25 24.8
50000 33 32.7
70000 10 9.9
100000 27 26.7
200000 6 5.9
Total 101 100.0
Source: Primary Data

It is clear that57 percent of investors assured a sum up to RS.50000 in their investment policy.

Table no 4.2.4.4
Annual premium

Frequency Percent Cumulative Percent

Below 3000 38 37.6 37.6
3001-5000 51 50.5 88.1
5001-10000 12 11.9 100.0
Total 101 100.0
Source: Primary Data

26
The above table exhibits that 62.4 percent of respondents pay their annual premium above
RS.3000.

4.3 Consumer buying behavior

This section deals reveals the buying behavior of customers towards the products of LIC.it includes
motive behind the purchase of insurance product, customer satisfaction, usefulness of source of
information, difficulties encountered while making decision on buying a insurance policy investment
option after receiving the amount from LIC.

4.3.1 Motive behind purchase of life insurance product

The motives includes life insurance cover, availing for income tax benefit, save for old age, pension,
acquisition of home assets etc.

The tables below reveal the motives behind the purchase of insurance product. Kruskal Wallis test
is used to test the hypothesis.

H0: There is no difference in the median responses of investors regarding the motive behind
purchase of life insurance product among the different categories of occupation.

H1: There is significant difference in the median responses of investors regarding the motive
behind purchase of life insurance product among the different categories of occupation. The test results
are presented in the following table

Table no 4.3.1.1

Mean rank obtained for the motive behind purchase of life insurance product

Mean Rank
Profession Government Others
(13) (35) (53)
Life insurance cover 25.35 57.5 53
Saving for children education, marriage etc. 41.12 69.69 41.08
Availing income tax benefit 63.88 32.8 59.86
Saving for old age, pension 26.04 43.64 61.98
Agents recommendation 52.73 54.26 48.42
Recommendation from friends and relatives 31.04 58.43 50.99
Acquisition of home assets 53.73 63.83 41.86
Wealth creation/additional income and income protection 70.46 50.19 46.76
Payment of debt/loan facilities 78.46 44.04 48.86
Long term savings 57.35 44.31 53.86
Source: Primary Data

27
 Table no 4.3.1.2
Kruskal Wallis test

Chi df Asymp.sig
square
Life insurance cover 12.321 2 .002*
Savings for children’s education marriage etc 23.045 2 <0.01*
Availing income tax benefit 22.199 2 <0.01*
Saving for old age pension 20.444 2 0<.01*
Agents recommendation 1.046 2 .593
Recommendation from friends and relatives 8.590 2 .014*
Acquisition of home assets 12.258 2 .002*
Wealth creation/additional income and income protection 7.302 2 .026*
Payment of debt/loan facilities 13.907 2 .001*
Long term savings 3.112 2 .211
Source: Primary Data
*Significant at 5 percent level of significance

All the hypothesis except that related to agents recommendations and long term savings are not rejected
as their p values are .593 & .211 respectively. It shows that there is a significant difference as to all
variables like life insurance cover, savings for children education marriage etc, availing income tax
benefit, saving for old age pension, etc except agents recommendation and long term savings.

4.3.2 Factors influenced to choose LIC in India in buying a policy.

The factors include life insurance agents, family members/ relatives, friends, lic office staff,
advertisement, own perception and informative brochures.

The below tables illustrates the factors behind choosing LIC in buying a policy.

Friedman test is used to test the hypothesis.

H0: There is no difference in the preference of policy holders as to choosing life insurance Corporation
of India in buying a life insurance policy.

H1: There is significant difference in the preference of policy holders as to choosing life insurance
Corporation of India in buying a life insurance policy.

The test results are presented in the following tables.

28
 Table no 4.3.2.1
Mean ranks obtained for factors influenced to choose LIC

Mean Rank
Life insurance agents 3.75
Family members/relatives/spouse 2.97
Friends/colleagues 3.84
Lic office staff 5.38
Own perception/interest 2.96
Advertisement in visuals/print media 4.35
Informative brochures 4.76
Source: Primary Data

The mean ranks obtained for the seven motives behind the selection of life insurance Corporation of
India in buying life insurance policy are stated above. The lower the ranks, the higher will be the
preference. From the above table, the highest preference is given to own perception or interest (mean
rank 2.96), followed by family members/relatives/spouse (mean rank 2.97).

Table no 4.3.2.2
Friedman test
N 101
Chi-Square 105.629

Df 6
Asymp. Sig. <0.01*
Source: Primary Data

The x2 statistic provides a value of 105.629, which is significant at 5 percent level of significance
(p=.000<.05).it is understood that the factor ‘own perception’ has significant role in choosing LIC as
an investment policy.

29
4.3.3 Customer satisfaction

The customer satisfaction is measured in five perspectives, that is

1. Product related satisfaction

2. Price related satisfaction
3. Process related satisfaction
4. Satisfaction with regards to promotion
5. Satisfaction with regards to organisation

H0: There is no significant variation in the mean scores of the set of variables describing level of
satisfaction of the products and services of LIC between age, gender and educational qualification.

H1: There is significant variation in the mean scores of the set of variables describing level of
satisfaction of the products and services of LIC between age, gender and educational qualification.

MANOVA is used to test the hypothesis. The test results are presented on the following table.

Table no 4.3.3.1
MANOVA-General linear model

Effect Value F Hypothesis df Error df Sig.

Pillai's Trace 1.5 10.621 20 372 0.000*

Wilks' Lambda 0 108.32 20 299.45 0.000*
Age
Hotelling's Trace 653 2887.5 20 354 0.000*
Roy's Largest Root 652 12126.431a 5 93 0.000*

Pillai's Trace 0.3 7.336b 5 90 0.000*

Wilks' Lambda 0.7 7.336b 5 90 0.000*
Gender
b
Hotelling's Trace 0.4 7.336 5 90 0.000*
b
Roy's Largest Root 0.4 7.336 5 90 0.000*
Edu. Pillai's Trace 0.5 5.422 10 182 0.000*
qualifica
Wilks' Lambda 0.6 5.598b 10 180 0.000*
tion
Hoteling’s Trace 0.6 5.771 10 178 0.000*
a
Roy's Largest Root 0.5 9.295 5 91 0.000*
Source: Primary Data

30
 Table no 4.3.3.2
Grand Mean

95% Confidence Interval

Dependent Variable Mean Std. Error Lower Bound Upper Bound
product related satisfaction 3.235 .048 3.138 3.331
price related satisfaction 3.364 .094 3.177 3.550
process related satisfaction 3.341 .077 3.189 3.493
satisfaction with regards to promotion 3.391 .059 3.274 3.508
satisfaction with regards to organization 3.775 .047 3.683 3.868
Source: Primary Data

Table no 4.3.3.3
Test between subject effects
Dependent Type I Sum of Mean
Source df F Sig.
Variable Squares Square
PDTS 1129.927 4 282.48 2861.3 <0.01*

PRS 1191.879 4 297.97 802.38 <0.01*

Age PRCS 1122.815 4 280.7 1135.9 <0.01*

PRMS 1094.392 4 273.6 1871.7 <0.01*

ORGS 1435.693 4 358.92 3942.2 <0.01*

PDTS 2.706 1 2.706 27.414 <0.01*

PRS 0.071 1 0.071 0.19 0.664

Gender PRCS 0.292 1 0.292 1.181 0.28

PRMS 0.079 1 0.079 0.539 0.465

ORGS 0.075 1 0.075 0.827 0.365

PDTS 1.076 2 0.538 5.45 0.006*

PRS 0.551 2 0.275 0.741 0.479
Educational
PRCS 1.679 2 0.84 3.398 0.038*
qualification
PRMS 1.523 2 0.761 5.208 0.007*
ORGS 1.204 2 0.602 6.614 0.002*
Source: Primary Data
*Significant at 5 per cent level

31
In this table PDTS indicates product related satisfaction, PRS indicates price related satisfaction, PRCS
indicates process related satisfaction, PRMS indicates satisfaction with regards to promotion and
ORGS indicates satisfaction with regards to organization.

Table no 4.3.3.4
Estimated marginal mean- Age

95% Confidence Interval

Lower Upper
Dependent Variable Age Mean Std. Error Bound Bound
Product related satisfaction Less 3.059 0.092 2.877 3.241
than/=30
31 to 40 3.196 0.056 3.084 3.308
41 to 50 3.441 0.052 3.337 3.545
Above 50 3.242 0.122 3 3.485
Price related satisfaction Less 3.278 0.178 2.925 3.63
than/=30
31 to 40 3.239 0.109 3.022 3.457
41 to 50 3.539 0.102 3.337 3.741
Above 50 3.4 0.237 2.929 3.871
Process related satisfaction Less 3.063 0.145 2.776 3.351
than/=30
31 to 40 3.264 0.089 3.086 3.441
41 to 50 3.644 0.083 3.48 3.809
Above 50 3.393 0.193 3.008 3.777
Satisfaction with regards to Less 3.223 0.111 3.002 3.444
promotion than/=30
31 to 40 3.179 0.069 3.042 3.315
41 to 50 3.347 0.064 3.22 3.473
Above 50 3.817 0.149 3.522 4.113
Less 3.694 0.088 3.519 3.868
than/=30
Satisfaction with regards to 31 to 40 3.915 0.054 3.807 4.022
organisation
41 to 50 3.827 0.05 3.727 3.927
Above 50 3.666 0.117 3.433 3.899
Source: Primary Data

32
 Table no 4.3.3.5
Estimated marginal mean- Gender
95% Confidence Interval
Std. Lower
Dependent Variable Gender Mean Error Bound Upper Bound
Product related satisfaction Male 3.086 .055 2.977 3.196
Female 3.383 .061 3.262 3.503
Price related satisfaction Male 3.350 .107 3.138 3.563
Female 3.378 .118 3.143 3.612
Process related satisfaction Male 3.264 .087 3.090 3.437
Female 3.418 .096 3.227 3.609
Satisfaction with regards to promotion Male 3.425 .067 3.292 3.559
Female 3.357 .074 3.210 3.505
Satisfaction with regards to organisation Male 3.784 .053 3.679 3.889
Female 3.766 .058 3.650 3.882
Source: Primary Data

Table no 4.3.3.6
Estimated marginal mean- educational qualification

95% Confidence Interval

Dependent Std. Lower
Variable Educational qualification Mean Error Bound Upper Bound
product related Upto SSLC 3.392 .048 3.297 3.486
HSC 3.123 .104 2.916 3.330
satisfaction
PG 3.189 .060 3.069 3.309
price related Upto SSLC 3.467 .093 3.284 3.651
HSC 3.211 .202 2.809 3.613
satisfaction
PG 3.414 .117 3.182 3.646
process related Upto SSLC 3.140 .075 2.990 3.290
HSC 3.515 .165 3.187 3.843
satisfaction
PG 3.368 .095 3.179 3.557
satisfaction with Upto SSLC 3.472 .058 3.357 3.587
HSC 3.494 .127 3.242 3.747
regards to
PG 3.208 .073 3.062 3.353
promotion
satisfaction with Upto SSLC 3.607 .046 3.516 3.698
HSC 3.904 .100 3.705 4.103
regards to
PG 3.815 .058 3.700 3.929
organization
Source: Primary Data

33
The estimated marginal means and MANOVA tables indicate that the mean scores of the five variables
of level of satisfaction vary over three factors such as age, gender, and educational qualification. It is
clear that customers in 41-50 age category take product related, price related and process related factors
related with level of satisfaction.(3.441,3.539,3.644) as the mean scores are high. Except customers
belongs to 31-40 age category take satisfaction with regards to organization as a factor into
consideration, and customers belong to above 50 age category take factor satisfaction with regards to
promotion. The statistical significance of the variation of the means confirms this. Moreover the
MANOVA characterized by powerful Roys largest root test is significant at 5 percent level of
significance (value of f=12126.431 with p=0.000<0.05).

similarly, in the gender wise level of satisfaction female customers take product, price, process related
satisfaction as factors, the mean values are high in this respect(3.383,3.378,3.418).except male
customers take satisfaction with regards to promotion and organization as factors into consideration, the
mean values are high in this respect(3.425,3.784). Moreover the MANOVA characterized by powerful
wilks lambda is significant at 5 percent level of significance (value of f= 7.336 with p=0.000<0.05). in
addition to this, the test of between subjects effects as to the gender shows that mean score of 1(product
related) out of 5 variable have independent stastical significance among gender(p values<0.05). While
that of four other variables (price related, process related, promotion related and organization related)
have no independent statistical significance (as the p values are higher than 0.05)

Similarly with regard to educational qualification customers belongs to HSC category take factors such
as process, promotion, and organization for the level of satisfaction. As the mean values are high
(3.515, 3.494, 3.904). Except people with up to SSLC qualification take product and price related
factors, as the mean values are high (3.392, 3.467). . Moreover the MANOVA characterized by
powerful Roys largest root test is significant at 5 percent level of significance (value of f=9.295 with
p=0.000<0.05). in addition to this the test of between subjects effects as to educational qualification
that mean score of 4 out of 5 are independent statistical significance among educational qualification(p
values<.05). While that of other one variable (price related) have no independent statistical significance
( as the p values are>0.05) .

4.3.4 Usefulness of source of information

The source of information may include LIC agent, relative/ friends, lic mailers, advertisements,
internet, attending seminars.

Friedman test is used to test the hypothesis.

34
H0: There is no differences in the preferences of respondents as to the usefulness of source of
information of LIC.

H1: There is significant difference in the preferences of respondents as to the usefulness of source of
information of LIC

The test results are presented in the following tables

Table no 4.3.4.1
Mean ranks of usefulness of source of information
Mean Rank
LIC agent 3.38
Relatives, friends 3.89
LIC mailers 2.68
Advertisements 3.58
Internet 3.50
Attending seminars 3.97
Source: Primary Data

The mean ranks obtained for the six sources of information of life insurance Corporation of India are
stated above. The higher the ranks, the higher will be the preference. From the above table, the highest
preference is given to attending seminars (mean rank 3.97), followed by relatives, friends (mean rank
3.89).

Table no 4.3.4.2
Friedman test

N 101

Chi-Square 38.385

Df 5

Asymp. Sig. <0.01*

Source: Primary Data

The x2 statistic provides a value of 38.385, which is significant at 5 percent level of significance
(p=.000<.05).

35
4.3.5 Difficulties encountered

There are some difficulties encountered while making decision on buying a policy. They are deciding
on what type of policy, deciding on the sum assured, deciding on the life insurance company, selection
of agent, understanding the policy details and settlement of claim amount.

Friedman test is used to test the hypothesis.

H0: There is no difference in the problems encountered in decision making when buying a policy.

H1: There is significant differences in the problems encountered in decision making when buying a
policy.

The test results are presented in the following tables

Table no 4.3.5.1
Mean ranks obtained for difficulties encountered in decision making when
buying a policy

Mean Rank
Deciding on what type of insurance to buy 2.99
Deciding on the sum assured 4.32
Deciding on the life insurance company 3.78
Selecting the person/institution as agent 3.49
Understanding the policy details, benefits etc. 3.00
Settlement of claim amount 3.43
Source: Primary Data

The mean ranks obtained above are the difficulties encountered in decision making when buying
policy. The lower the ranks, the higher will be the preference. From the above table, the highest
preference is given to deciding on what type of insurance to buy (mean rank 2.99), followed by
understanding the policy details, benefits etc.(mean rank 3.00)

36
 Table no 4.3.5.2
Friedman test

N 101
Chi-Square 43.574
Df 5
Asymp. Sig. <0.01*
Source: Primary Data

The x2 statistic provides a value of 43.574, which is significant at 5 percent level of

significance (p=.000<.05).

4.3.6 Investment option after receiving the amount

This includes reinvesting in other option, spending on financial expenditure, acquiring home assets, and
meeting special needs such as education of child.

H0: There is no significant difference in the investment option after receiving the amount from lic.

H1: There is significant differences in the investment option after receiving the amount from lic.

Friedman test is used to test the hypothesis

The test results are presented in the following tables

Table no 4.3.6.1
Mean ranks obtained for investment options after receiving the amount
Mean Rank
Reinvesting in another option 3.04
Spending on financial expenditure 2.40
Acquiring home assets 2.78
Meeting special needs such as education/marriage of child 2.22
Others 4.55
Source: Primary Data

The mean ranks obtained above are the investment option after receiving the amount from lic. The
lower the ranks, the higher will be the preference. From the above table, the highest preference is given

37
to meeting special needs such as education/ marriage etc.(mean rank 2.22), followed by spending on
financial expenditure.(mean rank 2.40)

Table no 4.3.6.2
Friedman test
N 101

Chi-Square 141.633

Df 4

Asymp. Sig. <0.01*

Source: Primary Data

The x2 statistic provides a value of 141.633, which is significant at 5 percent level of

significance (p=.000<.05)

38
 CHAPTER 5

FINDINGS, SUGGESTIONS AND CONCLUSION

39
 The transition of the insurance industry from a public monopoly to a Competitive environment
now presents very interesting challenges, both to the new players and to the customer. This transition
has given the new players an opportunity to test out their various hypotheses and apply what they have
learnt from overseas markets. From the customer’s point of view they will have greater choice when it
comes to choosing a provider or a solution to their need. Thus the biggest beneficiary of the incoming
competition in insurance will be the Indian customers.
In view of the review of literature on the various elements of customer satisfaction, this study
aims at determining the expectations and perceptions of the consumers and the measure of satisfaction
as the degree of discrepancy between customer’s service perceptions and expectations. This study also
examines loyalty, persistency, and withdrawal of policies, repurchase decision, best practices and
conduct of business and emotional factors leading to purchase of life insurance policies as elements of
customer satisfaction. It also identifies the nature of grievances of the life insurance customers.
Finally, a comparison is made between the consumers of LIC on the above mentioned elements of
customer Satisfaction.
FINDINGS
1. Demographic profile of selected policy holders
The majority of the policy holders having the age up to 40 years. Gender wise classification show that
out of 101 respondents, majority (53.5 percent) are female. As to education qualification 52.5 percent
were studied up to SSLC. As to occupation also 52.5 percent were having occupation other than
profession, government job, business and private job. The average income classification of the
respondents reveals that majority of them falls under the income group of 20001-30000.

2. Use of financial products

23 percent of respondents were out of organized sector in selecting their investment options.14 percent
of the respondents were belong to the category of the investment option “others” which includes gold
loan, hundies etc.
3. Investment options
There is a significant difference in the responses of male and female in selecting the investment
options as mutual funds, life insurance, chitty funds and post office deposits. Since their p values are
.000, .015, .042 & .039 which is less than .05.
4. Awareness and planning for financial planning
83 percent of respondents were awared and done their appropriate savings or investment. All of them
were awared about the life insurance requirement.14 percent of the respondents were not awared about
the requirements of calculating their son/daughters future. And 64 percent of them were awared but
not planned for the calculation regarding the savings for their retired life.
40
5. Details of insurance policy
On and average most of the respondents preferred LIC JEEVAN ANAND policy,85 percent of the
respondents have their policy term up to 10 years, 57 percent of investors assured a sum up to
Rs.50000 in their investment policy And 62.4 percent of respondents pay their annual premium above
Rs.3000
6. Motive behind purchase of life insurance product
Out of different factors that motivate to purchase the Life Insurance product, there is a significant
difference in the responses of respondents among different categories of occupation as all factors
except that related to agents recommendations and long term savings. The life insurance cover, saving
for old age, pension and recommendation from friends and relatives are the motive behind
professionals while purchasing a life insurance product. The employees other than professionals,
government employees, business, and private employees have the motive of saving for children’s
education marriage, acquisition of home assets and wealth creation / additional income and income
protection behind the purchase of life insurance product. Government employees purchase life
insurance product for availing income tax benefit and payment of debt/ loan facilities.
7. Consumer buying behavior
There is a significant difference in age, gender and educational qualification with regard to level of
satisfaction in various respects such as product, price, process, promotion and organization.
8. Factors influenced to choose LIC for buying a policy
From the factors influenced to choose Life Insurance Corporation of India in buying a life insurance
policy the highest preference is given to own perception or interest (mean rank 2.96), which is nearly
followed by family members/relatives/spouse(mean rank 2.97).the lowest preferred factor is
informative brochure(4.76).
9. Usefulness of source of information
The highest preferred source of information is attending seminars which is followed by relatives,
friends etc. mean ranks obtained for these two are 3.97 and 3.89 respectively.
10. Difficulties encountered in decision making when buying a policy
From a table of different difficulties encountered in decision making when buying a policy the highest
preference is given to deciding on what type of insurance to buy(mean rank 2.99), which is followed
by understanding the policy details, benefits etc.(mean rank 3.00).
11. Investment option after receiving the amount
The investment option after receiving the amount from LIC, .Highest preference is given to meeting
special needs such as education/ marriage etc.(mean rank 2.22), which is followed by spending on
financial expenditure.(mean rank 2.40).
41
 SUGGESTIONS

1. The customers feel difficulty in making a final decision about their investment. It is required that Life
Insurance campaigns are to be organized by the LIC as the market leader, to the customers as well
agents to convey the idea of life insurance.
2. The customers directly approach higher authorities for their complaints. With regards to complaints
and redressal forums the regional offices and branch offices should be given more importance, thus the
authority can quickly take remedial measures.
3. Customers feel the agents are not efficient to match their financial needs with LIC. Up to date training
and skill development programmes are to be arranged for the agents which help the customer to match
their needs with products of the LIC.
4. The public feel seminars are very useful for acquiring information. The regional offices should
conduct seminars for the people who do not have life insurance policy to covey the importance of life
policies to the local people. thus the authority can attract new customers.
5. The people living in rural areas are not much awared about their future. It is required that campaigns
are to be conducted in rural areas to convey the importance of financial planning for future. Thus the
customers will be guided for making investments for their future.
6. The Life Insurance Corporation should improve their informative brochures as a source of
information. Thus the public can have easy access on it as a good source.
7. The customers feel difficulty in fulfilling the formalities prescribed by the LIC. the life insurance
corporation should reduce their procedural formalities, thus they can attract more customers towards
them.

42
CONCLUSION

The result of this study indicated that the life insurance industry has great potential among the people.
The LIC continues to be the dominant market leader even in this liberalized scenario. The only reason
behind this is they conveyed the message of protection to light the lamps of security in as many homes
as possible and to help the people in providing security to their families as possible.

Understanding the customers purchasing behavior and level of satisfaction on life insurance products
and services, customer perception on the brand image and brand loyalty are of great utility in this
sense. From the study it is clear that the customers are moreover loyal to Life Insurance Corporation of
India. And they are moreover satisfied with what they have which Is provided by LIC. And they have
also facing difficulties while making decisions regarding buying a policy such as too much of
formalities, lack of sufficient information etc.

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APPENDIX AND BIBILIOGRAPHY

44
 APPENDIX

Dear Sir/Madam,
I am conducting a study on the consumer behavior for purchasing of life insurance
products from LIC as a part of M.Com Degree. Kindly fill this questionnaire.

Section 1: Demographic Profile

1.1 Age (in years) : -----------

1.2 Gender : Male Female
1.3 Educational Qualification : Up to SSLC HSC
UG PG
1.4 Occupation : Profession
Government
Business
Private
Others
1.5 Average Income(p.m.) : Less than 10000
10001 – 20000
20001 – 30000
Above
Section 2: Investment Profile
2.1 Use of financial products
Identify the financial products that you have preferred for investment:

Sl no Investment options Yes No

1 Bank/post office deposits
2 Chitty funds
3 Life insurance
4 Mutual fund
5 Pension savings
6 Home loan
7 Vehicle loan
8 Others, specify

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2.2 Investment preference
Please rank the following investment options where you have invested/intended to
invest in near future.

Sl no Investment options Rank

1 Bank fixed deposit
2 Life insurance
3 Mutual fund
4 Pension savings
5 Chitty funds
6 Post office deposit

2.3 Awareness and planning for financial planning

Sl Aware and Aware but Not aware of such
no done the not planned requirement
appropriate for it
savings or
investment
1 Decided how to invest my
savings
2 Know my life insurance
requirement
3 Calculated my son/daughters
future
4 Calculated required savings
for my retired life

2.4 Details of existing insurance plans-

Sl.no Insurance Term Sum Annual
No. assured Premium

1
2
3
4
5

Section 3: Consumer buying behavior

3.1 Identify the motive behind purchase of Life Insurance product (Rank them in order of
your preference)

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 Purpose Rank
1 Life Insurance cover
2 Saving for children’s education marriage etc
3 Availing Income Tax benefit
4 Saving for old age, pension
5 Agent’s recommendation
6 Recommendation from friends and relatives
7 Acquisition of home assets
8 Wealth creation/ additional income and income protection
9 Payment of debt/loan facilities
10 Long term savings

3.2 Who/which of the following persuaded/ influenced you greatly to choose Life Insurance
Corporation of India in buying a life insurance policy?
Sl.No. Persuading Factor Rank
1 Life Insurance Agents
2 Family members / relatives/spouse
3 Friends / colleagues
4 LIC Office staff
5 Own perception/interest
6 Advertisement in visuals/print media

7 Informative brochures

3.3 The following statements are related to the assessment of level of satisfaction on the
products and services of LIC. Rate the statements as you prefer in 5 point scale (5=
STRONGLY AGREE; 4=AGREE; 3=NEUTRAL; 2=DISAGREE; 1=STRONGLY
DISAGREE).
Sl.No 5 4 3 2 1
Product related satisfaction
1 The quality of most products conforms to my
expectation
2 Highly satisfied with most of the products of LIC
3 Too many products by are defective in some way
4 Once the product all sold companies do not bother as
how the products are performing

5 The life insurance policies give short term financial

47
 gains
6 The rate of interest on loan availed on policies is
reasonable
7 The rate of return on life insurance policies is attractive.

8 Loan can be availed on almost all types of policies.

9 Transfer and assignment of policy is easy

10 The formalities to be satisfied for opening a policy are

very simple
Price related satisfaction
11 I am satisfied with the prices one pay
12 Premium charged on policies is reasonable
13 Service charges on life policies are low
14 The penalties charged on delay in payment of premium
are reasonable
15 LIC offers flexible premium payment schedule(monthly,
quarterly etc.)
16 LIC offers innovative modes for the premium payment

17 LIC policies ensure better rate of return than other

saving instruments
Process related satisfaction
18 The procedure foe purchasing policy is simple and less
time consuming
19 It takes very little time to get the policy documents after
taking the policy
20 The working hour of branch office is convenient

21 Proper communication is effected on various aspects of

policies
22 The process of availing loan on policies is simple and
less time consuming
23 Claim on policies are settled at the earliest

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24 The claim settlement requires only simple procedures

25 Fully computerized branches make the policy servicing

quick and prompt
Satisfaction with regards to promotion
26 The media of advertisement is suitable and relevant

27 Most advertising is provides consumers with essential

information
28 Most advertising is very annoying

29 Most advertising makes false claims

30 I enjoy advertisements
31 Purchases decision of products depends open the
advertisement
32 The theme, & language of advertisement is attractive

33 Personal intimation is provided on launching new

products or services
Satisfaction with regards to organization
34 The corporate image of the insurance company has an
important role in purchasing the policy.
35 Agents act as a guide to the consumers for making
decision regarding insurance products

36 I am loyal to the life insurance

Corporation
37 LIC has distinctive feature compared to other Insurance
companies
38 LIC helps in Financial planning of the customers

39 LIC provides wide verify of products and services

40 I feel confusion while selecting the product or service.

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 41 Most of the people take insurance policy for the purpose
of saving the tax liability

42 I am highly satisfied with the products and services

provided by LIC

3.4 Usefulness of source of information of LIC

(Rate in a scale of 1 to 5)
1=not very useful; 2=not useful; 3=neutral; 4=useful; 5= very useful
Sl no Source Rating scales
1 2 3 4 5
1 LIC agent
2 Relatives, friends
3 LIC mailers
4 Advertisements
5 Internet
6 Attending seminars

3.5 What are the difficulties encountered in decision making when buying a policy
1= very difficult; 2= somewhat difficult; 3= little difficult; 4= not difficult; 5=
hardly difficult.
(Rate each in a scale 1 to 5)
Sl no Problems Rating scales
1 2 3 4 5
1 Deciding on what type of insurance to buy
2 Deciding on the sum assured
3 Deciding on the life insurance company
4 Selecting the person/institution as agent
5 Understanding the policy details, benefits etc.

6 Settlement of claim amount

50
3.6 What do you do with the amount that you receive from the LIC?
(Rank the following based on your preference)
Sl no Investment options Rank
1 Reinvesting in another investment option
2 Spending on financial expenditure
3 Acquiring home assets
4 Meeting special needs such as education/marriage of child
5 Others, specify

51
BIBILIOGRAPHY

Books:

Life insurance Corporation of India (1970). Saga of security: story of

Indian life insurance, Paki, Bombay

Sharma K.C (2013). Life insurance in India, regal publishers, New

Delhi

Thesis:

Ramanathan, K.V (2007) a study on policyholders satisfaction with

reference to Life insurance corporation of India.

Lakshmanan M.P (2014) a study on marketing strategy of Life

insurance corporation in Kerala.

Websites:

www.shodgangainflibnet.com

www.scribd.com

www.investopedia.com

www.lic.com

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