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Transcript of 1111111111 Insurance as Investment
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CHAPTER I
INTRODUCTION
1.1 INTRODUCTION OF THE STUDY
“The Business of Insurance is related to the protection of the economic values of the
assets”.
Every human being has the tendency to save to protect him from risks or
events of future. Insurance is one form of savings where in people try to assure
themselves against risks or uncertainties of future. It is assurance against risks or
events or losses. People can save their earnings either in the form gold, fixed assets
like property or in banking and insurances. All the savings of people of a country
account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it.
Hence insurance sector is still untapped in India.
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OVERVIEW OF INSURANCE INDUSTRY
1. WHAT IS INSURANCE?
Insurance is a tool by which fatalities of a small number are
compensated out of funds (premium payment) collected from plenteous. Insurance is
a safeguard against uncertain events that may occur in the future.
It is an arrangement where the losses experienced by a few are extended over
several who are exposed to similar risks. It is a protection against financial loss
arising on the happening of an unexpected event. Insurance companies collect
premium to provide security for the purpose. Loss is paid out of the premium
collected from people and the insurance companies act as trustees to the amount so
collected. These companies have proposal forms which are filled to give details of
insurance required. Depending upon the answers in the proposal form insurance
companies assess the risk and decide on the premium.
Insurance companies are risk bearers. They underwrite the risk in return for an
insurance premium. the function of insurance is to provide protection, prevent losses,
capital formation etc. hence insurance can be defined as a tool in which a sum of
money as a premium is paid by the insured in consideration of the insurer’s bearing
the risk of paying a large sum .it may also be defined as a contract wherein one party
(insurer) agrees to pay the other party (insured) or his beneficiary, a certain sum upon
a given contingency against which insurance is required.
Insurance industry commands massive funds through sales of insurance
products to large number of clients. Insurers also create liabilities and commit
themselves to compensate for losses occurring to the policyholders on future date. It
also plays an important role in process of capital formation.
2. NATURE OF INSURANCE
a) Risk sharing and risk transfer: Insurance is used to share the financial losses that
might occur to an individual or his family on the happening of specified events. The
loss arising from such events are shared by all the insured in the form of premium.
Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Every
year one house gets burnt, resulting into a total loss of Rs 200000.If all the 250
owners come together and contribute Rs.800 each, the common fund would be
Rs200000.This is enough to pay to the owner whose house gets burnt. Thus the risk of
one owner is spread over 250 house owners of the village.
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b) Risk assessment in advance: Insurance companies are risk bearers. They assess
the risk before insuring to charge the amount of premium.
c) Its not gambling or charity: The uncertainty is changed to certainty by insuring
property and life because the insurer promises to pay a definite sum at damage or
death. Insurance is antithesis of gambling. Failure of insurance amounts to gambling
because the uncertainty of loss is always looming. Moreover insurance is not possible
without premium. So it is different from charity because charity is given without
consideration.
d) Huge number of insured people: It is essential to insure larger number of people
or property to make cost of insurance less consequently premium would also be less.
e) Assists in capital formation: Insurance provides capital to society. Accumulative
funds are invested in productive channels.
3. SEMANTICS
1. Risk: It is defined as an uncertainty of a financial loss. It is the unintentional
decline in or disappearance of value arising from contingency.
2. Policy: It is the document which embodies the insurance contract
3. Whole life policy: It is the policy under which the amount of policy will be
paid only on death of the insured. Premiums may be payable throughout the
life or for a limited period.
4. Endowment policy: Endowment policies entitle the insured to receive the
amount of the policy on his reaching a certain age and premiums also stops. If
death occurs earlier, amount of the policy will be paid at that time and
payment of premium will also stop at that time.
5. Claim: It is the amount which an insurer has to pay against a policy.
6. Reinsurance: It refers to placing a part of the risk by an insurer with another
insurer. The object is to reduce the possible loss to be borne by the original
insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure
must pay commission to the original insurer.
7. Premium: A periodic payment made on an insurance policy.
8. Insurance penetration: It is defined as insurance premium as a share of gross
domestic product.
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9. Insurance density: Insurance density is defined as per capita expenditure on
insurance premium i.e. premium per capita.
10. Actuary: The actuary is a specialist who combines an understanding of risks
and mathematical technique to develop financial products to manage these
risks, price these products. He helps in designing insurance plans and then
evaluates the financial risk of the company which it takes while selling an
insurance policy.
4. TYPES OF INSURANCE
Insurance is broadly divided in two segments, based on the nature of insurance, those
are:
1. Life Insurance &
2. Non-Life Insurance or General Insurance. It can be again subdivided into the
following categories:
a) Fire Insurance.
b) Marine Insurance.
c) Social Insurance &
d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc….)
5. HISTORY OF INSURANCE GLOBAL
For now we know the meaning of insurance, different types of insurance. Now
let us know the history and reasons for and behind different types of insurance.
Insurance has existed for thousands of years. The first ever type of insurance
was Property Insurance. It became popular about 3000 BC in China. It all started
when Chinese merchants, as well as their investors, wanted to ensure that they would
see a profit from their goods that they shipped overseas. In the event that a ship was
lost at sea, an insuring partner would reimburse the owners of the ship and goods. To
pay for the loss the merchant would be sold into slavery to the insurer until the debt
was repaid. This was so because, a merchant could not afford to pay for the lost goods
or even to buy a ship unless someone invested.
Property insurance was also seen in Babylon as well. In Babylon, merchants
and investors entered into a contract, in which the supplier of money for a trade
agreed to cancel the loan if the trader was robbed of his goods. The trader who
borrowed the money paid an extra amount for this protection in addition to the usual
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interest. As for the lender, collecting these premiums from many traders made it
possible for him to absorb the losses of the few. Later this contract was extended to
include provisions for a family's home and even the death of the insured, where life
insurance came into existence. Slowly this concept started to spread across other
places like Greek, Roman.
Since ancient times, communities have pooled some of their resources to help
individuals who suffer loss. Like, about 3500 years ago, Moses instructed the nation
of Israel to contribute a portion of their produce periodically for "the alien resident
and the fatherless boy and the widow."
Later the origin of credit insurance, which was included in the Code of
Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. Credit
insurance means, in ancient times the ship owners obtained loans from investors tofinance their trading expeditions. In case, if a ship was lost, the owners were not
responsible to pay back the loans to the investors. The risk to the lenders was covered
by the interest paid by numerous ship owners, since many ships returned safely.
By the middle of the 14th century, marine insurance was one of the most
popular types of insurance among nations of Europe. Things changed dramatically in
the 17th century in Europe. In 1666, the Great Fire of London bought the need for fire
insurance .The Great Fire of London burned for four days and nights. It destroyed 436
acres, 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom
House, the Royal Exchange and dozens of other public buildings. Only six people
were victims in the flames, but hundreds died from shock and exposure.
By 1688, Edward Lloyd was running a coffeehouse in London. Where,
London merchants and bankers met informally to do business. There financiers who
offered insurance contracts to seafarers wrote their names under the specific amount
of risk that they would accept in exchange for a certain payment, called premium.
These insurers came to be known as underwriters. Finally, in 1769, Lloyd's became a
formal group of underwriters that in time grew as an insurance company.
The concept of insurance developed at a fast pace with the growth of British
commerce in the 17th and 18th century. The first stock companies to engage in
insurance were chartered in England in the year 1720.
In 1735, the first insurance company in the American colonies was founded
at Charleston. Later in the year 1787, fire insurance corporations were formed in New
York. Then later in the year 1759, the life insurance corporation was started in
Philadelphia, America.
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The New York fire which occurred in the year 1835 was the main reason to
draw attention to create reserves to meet unexpected losses. In the year 1837,
Massachusetts was the first state to require companies by law to maintain such
reserves. After 1840, life insurance entered a boom period.
The Workmen's Compensation Act of 1897 in Britain required employers to
insure their employees against industrial accidents. Public liability insurance, fostered
by legislation, made its appearance in the 1880s.It attained major importance with the
advent of the automobile.
Until the 1950s, most insurance companies in the United States were restricted
to provide only one type of insurance, but then legislation was passed to permit fire
and casualty companies to underwrite several classes of insurance. Many firms have
since expanded and also were responsible for many mergers.From this brief accounting of history we can see how insurance came into
existence. Fortunately for us we no longer have to sell ourselves into slavery if our car
is stolen nor we have to be scared of losses due to absence of reserves. However we
can be confident that we will be compensated for our loss. Without people wanting to
secure their investments and great tragedies throughout history we may not have
insurance as we know it today resulting in peace of mind.
6. HISTORY OF INSURANCE INDUSTRY IN INDIA
The insurance industry in India over the past century has gone through big
changes. In India this industry reveals the 360 degree turn. 360 degree turn means that
it started in India from being an open competitive market to nationalization and back
to a liberalized market again.
Insurance industry in India started as a fully private system with no restriction
on foreign participation in the Nineteenth Century. Before independence, a few
British insurance companies dominated the Market. Life insurance was first set up in
India through a British company called the Oriental Life Insurance Company in 1818,
followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life
Insurance Society in 1829.All of these companies operated in India but did not insure
the lives of Indians. They were there insuring the lives of Europeans living in India.
Some of the companies that started later did provide insurance for Indians. But, they
were treated as "substandard" and therefore had to pay an extra premium of 20% or
more. The first company that had policies that could be bought by Indians with "fair
value" was the Bombay Mutual Life Assurance Society starting in 1871.
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The first general insurance company, Triton Insurance Company Ltd., was
established in 1850. It was owned and operated by the British. The first general
insurance company was the Indian Mercantile Insurance Company Limited set up in
Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies
(both life and non-life).
After the independence, the industry went to the other extreme. It became a
state-owned monopoly. The industry started to witness a problem like fraud. Hence
many regulations were put in place to reduce and control the problems in the industry.
After which Insurance was nationalized. In 1956, the then finance minister S. D.
Deshmukh announced nationalization of the life insurance business and then the
general insurance business was nationalized in 1972. Only in 1999 private insurancecompanies have been allowed back into the business of insurance with a maximum of
26% of foreign holding.
7. LIFE INSURANCE
After the entry of new players and increase in the penetration levels, could see
the insurance sector cross the Rs 2,00,000-core mark in business by 2010.The current
size of the sector is estimated to be at Rs 50,000 crore, which has seen a compound
annual growth rate (CAGR) of around 175 percent in the last few years.
The insurance sector, both life and non life, is likely to grow by over 200
percent, and private insurers are expected to achieve a growth rate of 140 percent as a
result of aggressive marketing technique. It added that state owned insurance
companies are likely to be 35-40 percent.
On account of intense marketing strategies adopted by the private insurance
players, the market share of state-owned insurance companies like GIC, LIC and
others has come down to 70 percent in last 4-5 years from over 97 percent. Despite
regulation, the private players are offering 35 percent rate of return to is policy
holders against 20 percent by public-sector insurers.
The industry body also noted that India’s life insurance premium is 1.8
percent as a percentage of GDP whereas it is 5.2 percent in the US, 6.5 percent in the
South Korea.
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The services sector offers immense opportunities for expansion opportunities
for expansion opportunities and the rural market, also, offers tremendous growth
opportunities for insurance companies.
8. GENERAL INSURANCE
General insurance in India has been expecting growth except in some
portfolios like motor insurance, fire and engineering. These portfolios are still under
tariff- this means that premium depends on a fixed predetermined rate structure.
In India, GDS as a proportion of GDP at current prices increased from 26.1%
in 2002-03 to 28.1% in 2003-04.house hold sector continued to be the major
contributor to GDS at 24.3% in 2003-04.this can be attributed to soft interest rates
prevailing in housing sector. General Insurance has low market penetration. It is1.95% and ranks 51st. However in collection of premium it is ranked 23 rd. The ratio of
the premium collected to that of GDP is 0.58. The main reason for the general
insurance industry to perform very poorly was because of the slow settlement of
claims. Moreover the rates of claim in India were highest in the world. It was 70
percent compared to 40 percent internationally. This meant that out of 100 people
who had insured their commodities 70 claimed for a loss or damage. The main reason
for the lack of demand for general insurance is that people consider it as an
unnecessary expenditure. However it must be noted that the general insurance has
been earning consistent profits and has an efficient dividend paying record
accompanied by a steady growth in its financial resources. The industry is recognized
as one of the largest financial Institutions in the country. Some of the private players
in this sector are- ICICI – Lombard, Reliance, Royal-Sundaram, Chholamandalam
etc.
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9. PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR
The different private players in the life insurance sector and their associations
with foreign companies are being given below:
COMPANY INDIAN
PROMOTER/PARTNER
FOREIGN
INSURER
TOTAL
CAPITAL
(RS MN.)
FDI
(%)
FOREIGN
CAPITAL
(RS MN.)
AMP
SANMAR
RELIANCE
GROUP(ADAG)
None 2,170 0 0
Aviva Life Dabur Aviva (UK) 4,590 26 1193.4
Bajaj-
Allianz
Bajaj Auto Allianz
(Germany)
3680 26 960
Birla Sun
Life
Aditya Birla Group SunLife (Canada) 4,000 26 1,040
HDFC
Standard
HDFC StandardLife
(UK)
2,500 18.9 470
ICICI
Prudential
ICICI Bank Prudential (UK) 10,850 26 2,820
ING Vysya Vysya Bank ING Ins.
(Netherlands)
4,400 26 680
Kotak
MahindraOld Mutual
Kotak Mahindra Bank OldMutual (South
Africa)
2,600 26 680
Max
Newyork
Max India NewYorkLife
(US)
5,000 26 1,300
Met Life J&K Bank Met Life (US) 3,550 26 920
Sahara Life
Ins. I
Sahara India None 1,000 0 0
SBI Life SBI Cardiff (France) 3,500 26 910
TATA AIG TATA Group AIG (US) 3,810 26 990Shriram Shriram Sanlam Life Ins.
Bharti AXA Bharti Group AXA(Australia)
Some of the new companies who are waiting to come in to the life insurance sector
are:
a. IDBI-FORTIS.
b. Syndicate Bank
COMPANY PROFILEBirla Sun Life Insurance Company Limited
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Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the
Aditya Birla Group and the Sun Life Financial Services of Canada. It started
operations in March 2001 after receiving its registration licence from IRDA in
January 2001.
BSLI’s core strategy since inception has been to ‘create value’ for all its stakeholders.
This has been driven through innovative and customer focused products and a multi
channel distribution capability in individual and group insurance. The company
started its operations with the launch of innovative unit-linked insurance products,
being the first private life insurance company in India to do so. The company has
geared up through superior value creation and technology in fulfilling its aims to
provide multiple products and benefits, greater investment opportunities and to provide the vast investor populace in India with better liquidity and security.
The transition of the insurance industry in India from a public monopoly to a
competitive environment presents interesting opportunities both to the insurance
players as well as to the customers. BSLI plans to spot emerging trends and capitalise
on these opportunities for the benefit of its customers. BSLI aims at being a leader in
product innovation with new products designed to cater to specific customer needs.
The company has a clear thrust on investment linked insurance products and believes
in maximising investment returns for the policyholders. Its unit-linked products offer
varied investment options for policyholders to choose, based on their risk appetite.
BSLI has been fully complying with its rural and social sector obligations. Social and
rural services network of the group is being tapped for this purpose.
Its clients have already appreciated the company’s superior underwriting processes
and infrastructure. Its direct sales force of more than 60,000 high quality licensed
insurance advisors in major cities and towns in India are the company’s flag bearers.
The company’s insurance advisors have qualified for the prestigious Million Dollar
Round Table (MDRT), COT and TOT, one of the highest international honours in the
life insurance industry, in all the years of its operations.
Products
The current range of products offered by BSLI includes:
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:: Flexi Life Line
:: Flexi Cash Flow
:: Flexi Save Plus
:: Flexi SecureLife
:: Classic Life Premier
:: Birla Sun Life Term & Premium Back Term Plan:: Life Companion
:: Prime Life & Prime Life Premier
:: Gold Plus
:: Simply Life
:: Single Premium Bond
:: Supreme Life
:: Children’s Dream Plan, Dream Plan
:: Birla Sun Life Insurance Gold-Plus Plan
:: Birla Sun Life Bima Kavach Yojana
:: Birla Sun Life Group Protection Solutions
:: Birla Sun Life Social Development Plan
:: Birla Sun Life Group Gratuity Plan
:: Birla Sun Life Group Superannuation Plan
:: Birla Sun Life Group Interest Credit Plan
:: Birla Sun Life Credit Guard Plan
The Aditya Birla Group
The Aditya Birla Group is India's first truly multinational corporation. Global in
vision, rooted in Indian values, the Group is driven by a performance ethic pegged on
value creation for its multiple stakeholders.
Its 66 state-of-the-art manufacturing units and sectoral services span India, Thailand,
Indonesia, Malaysia, Philippines, Egypt, Canada, Australia and China.
A US$ 6.7 billion conglomerate, with a market capitalisation of US$ 7 billion, it is
anchored by an extraordinary force of 72,000 employees belonging to over 20
different nationalities. Over 30 per cent of its revenues flow from its operations across
the world.
A premium conglomerate, the Aditya Birla Group is a dominant player in all of the
sectors in which it operates. Such as viscose staple fibre, non-ferrous metals, cement,
viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, sponge
iron, insulators and financial services.
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The Group has also made successful forays into the IT and BPO sectors.
Sun Life Financial Inc
Sun Life Financial Inc is a leading financial services organization headquartered in
Toronto, Canada, operating in key markets around the world.
The Sun Life Financial group of companies and their joint ventures offer individuals
and corporate customers a diverse range of financial products and services that fall
into two principal business areas: wealth management and protection.
Throughout its international operations, Sun Life Financial has an employee base of
approximately 13,800 people plus an extensive global distribution network of career sales forces, independent agents, investment dealers and financial planners.
Tracing its roots back to 1865, Sun Life Financial Inc. and its partners today have
operations in key markets worldwide, including Canada, the United States, the United
Kingdom, Hong Kong, the Philippines, Indonesia, India and China. As of December
31, 2004, the Sun Life Financial group of companies has total assets under
management of USD 298.6 billion.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and
Philippine (PSE) stock exchanges under ticker symbol "SLF".
Key features of the company
Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance
Solutions in India.
Within 4 years of its launch, BSLI has cemented its position as a leading
player in the Private Life Insurance Industry.
There has been focus on Investment Linked Insurance Products, supported
with protection products to maintain leadership in product innovation.
Multi Distribution Channels- Direct Sales Force, Alternate Channels and
Group offering convenient channels of purchase to customers.
Web-enabled IT systems for superior customer services
First to have issued policies over the Internet.
Corporate governance and a high degree of transparency in all business
practices and procedures.
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First to have an operational Business Continuity Plan.
Strong fundamentals based on the Aditya Birla group's local insight and Sun
Life financials's global expertise.
SCOPE OF THE STUDY
•
The result of this research would help the company to have a better understanding about the consumer’s perception towards life insurance.
• The study helps the company by creating awareness about the consumers of
different ages and income levels.
• The study also enables the company to focus the consumer’s preferences and
expectations on the product which they offer.
OBJECTIVES OF THE STUDIES
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a) To know about the various Investment alternatives that is mostly preferred by
the people.
b) To find out the important criteria that people think about before investing in a
life insurance policy.
c) To find out whether gender bias involved in investing life insurance or not.
d) To find out the awareness of Birla Sunlife Insurance among the people.
RESEARCH METHODOLOGY
Methodology is a systematic way of solving a problem it includes theresearch methods for solving a problem it includes the research methods for
solving the problem.
Type of research - Descriptive research
Data source -Primary and Secondary data
Data collection method -Interview and survey
Data collection tools -Questionnaires
Sampling universe -Erode
Sample size -100
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SAMPLE DESIGN
The target population of the study consists of various respondents of
various places. This survey was done by collecting the data from the respondents.
SAMPLE SIZE
After due consultation with the company supervisor as well as with the college
guide, also keeping in mind the requirements of the company for the research, the
sample size that was found to be appropriate for the study was 100.
SAMPLING TECHNIQUE
The sampling technique that adapted to conduct the survey was ‘Convenient
Random Sampling’ and the area of the research was concentrated in the city of Erodeonly. The survey was conducted by visiting different places like colleges, corporate
offices, respondent’s home etc...
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DATA SOURCE
The task of data collection begins after a research problem has been defined.
In this study data was collected through both primary and secondary data source.
A. PRIMARY DATA
A primary data is a data, which is collected for gathering information first time
and to analyze the problem. In this study the primary data was collected among the
consumers using questionnaire.
B. SECONDARY DATA
Secondary data consist of information that already exits somewhere, having
been collected for some other purpose. In this study secondary data was collectedfrom company websites, magazines and brochures.
STATISTICAL TOOLS
Simple percentage analysis, ranking method and chi square analysis are the
main statistical tool used for the study.
SIMPLE PERCENTAGE ANALYSIS
Percentage refers o a special king of ratio in making comparison between two
or more data and to describe relationships. Percentage can also be used to compare the
relation terms between two or more sources of data.
Percentage of respondents = Number of respondents * 100
Total respondents
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LIMITATIONS OF THE RESEARCH
The following limitations can be pointed out from the research that I have
conducted.
a) The sample size chosen for the questionnaire was only 100 and that
may not represent the true picture of the consumer perception about the
Life Insurance sector.
b) The research got confined to the city of Ambala. The respondent
belonged only to Ambala and not others who were out of Ambala.
c) Nearly 98% of the respondent belonged to the age group of 20-50
years and only 2% were above 50 years. So, the responses and the
opinions of the experienced and aged were not available. So, the
findings may not be correct when we think about the opinion of the
elderly people about the life insurance.
d) The selection of people for the questionnaire was done on the basis of
convenient random sampling, so, there were certain cases in which the people selected did not have any life insurance policy, so they could
not give any positive feedback regarding the important criteria to be
considered before taking an life insurance policy. So, this further
reduced the actual number of respondents to 76 from 100.
e) The product offered by different companies had different options and
names in them, so at the time of comparison it became very difficult.
The parameters for comparison were also different in the selected
companies.
f) One of the important criteria that was selected by the respondents
which they consider before taking an insurance policy was ‘Company
Image’, but there was no parameter available to compare criteria like
this between the companies.
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DATA ANALYSIS AND INETERPRETATION
Table-2.1
GLOBAL SCENARIO OF THE INSURANCE INDUSTRY
If we see the table-2.1 in terms of both the premium value and the total market share
of some of the leading countries operating in the Insurance sector, the following
picture emerges in front of us.
Country Total Life Premium
(in $bn.)
Market
Share inpercentage
US 517.0 26.2
Japan 375.9 19.5
UK 194.0 10.11
France 154.0 7.81
Italy 91.7 4.65
Germany 90.2 4.57
China 39.5 2.1
Taiwan 38.8 1.97
India 20.1 1.08
Others 452.8 22.07
The above table shows that US is still the leader in Life Insurance sector, closely
followed by Japan. India’s share in the global market has doubled since 2000 (0.50%)
to 2006 (1.08%), but the growth of china is the maximum from 0.79% in 2000 to
2.10% in 2006. The total premium received in life insurance sector has increased from
$ 1,521 bn. in 2000 to $ 1,974 bn. in the year 2006.
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Chart-2.1
Shares of different countries in Life Insurance
Source: The Economic Times, dated – 20th July, 2006.
Table-2.2
Market share of LIC and Private Players
Market Players Market share in
percentage
Private players 28.44
LIC 71.56
Total 100
Interpretation:
LIC market share continued to decline in the period up to June 2007, it declined to
71.56% from 78.23% in the same period last year. On the other hand the market share
of the private players is continuously growing up; it increased to 28.44% from
21.77% in terms of insurance premium.
Shares of different countries in Life Insurance
517
375.9
19415491.7
90.2
39.5
38.8
80.1
452.8US
Japan
UK
France
Italy
Germany
ChinaTaiwan
India
Others
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Chart-2.2
Market share of LIC and Private Players
Market share of LIC and Private Players up to
June 2007
28.44%
71.56%
Private Players
LIC
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Table-2.3
Market Share among Private players
Private players Market share in
percentage
Market share
change in
percentage
ICICI Prudential 29 4
Bajaj Allianz 21 1
SBI Life 10 0
HDFC Standard 9 1
Reliance Life 9 0
Birla Sunlife 5 -1
Kotak MahindraOld Mutual
3 0
Met Life 3 1
Aviva 3 0
Tata AIG 3 1
Max New York 2 -4
ING Vysya 2 -1
Bharti Axa Life 1 0
Sahara Life 0 0
Shriram Life 0 -1
Private total 100
Interpretation:
ICICI PRUDENTIAL BECOMES THE MARKET LEADER AMONGPRIVATE PLAYERS:
ICICI Prudential strengthens its position at the top of the heap by increasing its
market share by 4% in the month of Jan 2008, followed by Bajaj Allianze with 21%
market share. These two private players contribute 50% of the total insurance market
among the private players.
Chart-2.3
Market Share among Private players
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Market share among private players
29%
21%
10%
9% 9%
5%
3%
3%
3%
3%2%
2%
1%
0%
0%
5%
ICICI Prudential
Bajaj Allianz
SBI Life
HDFC Standard
Reliance Life
Birla Sunlife
Kotak Mahindra
Met Life
Aviva
Tata AIG
Max New York
ING Vysya
Bharti Axa Life
Sahara Life
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Table-2.4
Sales Growth among Private players
Private players Year to year growth
in sales in
percentage
ICICI Prudential 116
Bajaj Allianz 105
SBI Life 138
HDFC Standard 88
Reliance Life 335
Birla Sunlife 152
Kotak MahindraOld Mutual
121
Met Life 125
Aviva 60
Tata AIG 100
Max New York 40
ING Vysya 74
Bharti Axa Life 362
Sahara Life 238
Shriram Life 91
Private total 119
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Interpretation:
Private sector sales continued to be robust at 119% year to year (YoY), up from 118%
YoY last month. The month also saw LIC make up some lost ground by growing
faster than the system at 133% YoY. Among the larger players, Reliance, SBI Life
and Birla Sun Life continued to be the rising stars with the fastest YoY growth rates.
Chart-2.4
Sales Growth among Private players
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Table-2.5
Various investment alternatives available to consumers
Let us see what are the various investment alternatives that are available to the peopleand among that which are the most preferred one. Now, from the data collected fromthe 100 respondents which were surveyed through the questionnaire, the following
representation can be made:
InvestmentAlternatives
Totalscore
Rank
Bank Deposits 6.75 I
Insurance 6.46 II
Post office 5.57 III
Gold & Silver 5.33 IV
Real Estate 5.07 V
Mutual fund 4.83 VI
Equity/Shares 3.84 VII
Public Provident
Fund(PPF)
3.78 VIII
Bond & Debentures 1.74 IX
Interpretation:
From the above table-2.5 it can be seen that ranks for theses investment
alternatives where analyzed by weighted average method. From this analyze we
found Bank Deposits is the most preferred investment alternative among the
people with the average of 6.75, secondly Insurance with the average of 6.46,
followed by other investment alternatives like Post Office (5.57), Gold and Silver
(5.33), Real Estate (5.07), Mutual Fund (4.83), Equity (3.84), PPF (3.78) and least
preferred alternative is that Bond and Debenture (1.74).we understood from this
analyze that people prefer the safe and secure investment alternatives like bank
deposits, insurance, real estates, than risky investment alternatives like bonds,
equities etc.. The reason that can be attributed for the liking of people towards
bank deposit is that people expect safety for their money they deposit even though
there is less appreciation on their deposit. Secondly insurance, may be because
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that insurance provides both life cover as well as security to the holder of the
policy and also to the family members of the insurance holders. Now a days
insurance is also providing option to invest in the markets through plans like
ULIP, which gives the holder both the life cover as well as an opportunity to earn
income at the market rate. Then recently real estate is the major investment
alternative among the people particularly among Erode, this is mainly due to the
increase in land value and also good long term investment preference. Gold and
silver also good investment alternative among people due to the frequent
appreciation in the values of gold, next is that mutual fund which is also the
preferable investment alternative due to low risk on their investment, and other
alternatives which are not much preferred were equities, bonds etc. mainly due to
the risk involved in it.Chart-2.5
Various investment alternatives available to consumers
6.756.46
5.575.335.07
4.83
3.843.78
1.74
0
1
2
3
4
5
6
7
T o t a l s c o r e s
Investment Alternatives
Investment Alternative Preffered by people Bank Deposits
Insurance
Post office
Gold & Silver
Real Estate
Mutual fund
Equity/Shares
Public Provident
Fund(PPF)Bond &
Debentures
Segmentation of the respondents on the basis of certain important criteria:
Now, let us turn our attention towards the respondent who were covered under this
study. These respondents can be categorized on the basis of certain important criteria
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like age group, annual income, life insurance policy holders and awareness of Birla
Sunlife Insurance in the following way
Table-2.6Age Group
Interpretation:
From this table-2.6 we can see that 50% of the respondent belonged to the age group
of below 30 years, followed by 32% who belonged to the age group between 31-40
years, then 16% of respondents belong to 41-50 years and only 2% from the
respondents belong to 51-60 years but there is no respondent from the age group
above 60.
Age Group No of
Respondent
Percentage
Below 30 Yrs31-40 Yrs41-50 Yrs
51-60Above 60 Yrs
50321620
50321620
Total 100 100
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Chart-2.6
Age Group
50
32
16
2 00510
1520253035404550
R e s p o n d e n t s
Below
30 Yrs
31-40
Yrs
41-50
Yrs
51-60
Yrs
Above
60 Yrs
Age Group
Age Group
Table-2.7
Annual Income Level
Interpretations:
Annual Income Level No of
Respondent
Percentage
Below 1 Lakh1.01-3 Lakh3.01-5 Lakh
Above 5 Lakh
336043
336043
Total 100 100
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From the above table-2.7 we can see that 33% of the respondents belonged to
a group which has an annual income of below 1 lakh, followed by highly 60% who
belonged to the group of annual income between 1-3 lakh, then 4% who have an
annual income between 3-5 lakh and 3% of respondent who have an annual income
above 5 lakh.
Chart-2.7
Annual Income Level
Table-2.8
Hold Life Insurance Policy
Hold life insurance
policy
No of
Respondent
Percentage
Yes
No
76
24
76
24
Total 100 100
Interpretation:
Among the 100 respondents that were taken as a sample size, 76 of them had life
insurance policy that was either taken by him/her self or it was taken by their parents
on their name, while 24 of them did not have any kind of Life insurance policy from
any company.
Table-2.9
Awareness about Joint venture between Birla and Sunlife
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47%
53%
Yes
No
2.10 Important criteria before taking an life insurance
On the basics of insurance policy:
Now, let us see what criteria people consider most important before taking a life
insurance policy (the criteria for the study have been mentioned before). Here, the
highly important criterion as perceived by the people is rated as 5, if people perceived
that is only important it is rated 4, if people perceived that it can be only neutrally
important is rated as 3, then the least important criterion is being rated as 2 and if
perceived that it is not important it is rated as 1(as there are 8 criteria that have been
suggested under the research study). Here the number of respondent is only 76,
because those 26 people who do not have any life insurance policy have been
excluded from the purview of the study.
Table-2.10
Premium
Rating No of
Respondent
Percentage
54321
393133
_
51.440.83.93.9 _
Total Insurance
holdersTotal non users
Total
76
24100
100
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Chart-2.11
Premium
39
31
3 30
0
5
10
15
20
25
30
35
40
R e s p
o n d e n t
5 4 3 2 1
Rating
Premium
Interpretation:
Now if we consider one of the criteria we can see that 51.4% of the respondent has
rated premium as the highly important thing that they consider before taking any
insurance policy from any company, and no body has rated it as the not important
criterion. So, it can be clearly interpreted that premium that the policy holder has to
pay to continue his/her policy plays a very important role before selecting the terms
and conditions of the policy and also the company from which the policy is to be
taken.
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Table-2.12
Charges
Rating No of
Respondent
Percentage
54321
1746121
_
22.460.515.81.3 _
Total Insurance
holders
Total non users
Total
76
24
100
100
Interpretation:
Now if we consider the charges the customer has to pay to the insurance company like
Fund Management charges, administration charges etc. most of the people nearly 61%
respondent consider it as an important criterion which can dictate the terms before
deciding on whether to take the policy or not. But a few people (only 22.4% of the
total respondents), consider it to be the highly important criterion before taking the
decision on life insurance policy.
Chart-2.12
Charges
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17
46
12
1 00
10
20
30
40
50
R e s p o n d e n
5 4 3 2 1
Rating
Charges
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Table-2.13
Policy Term
Rating No of
Respondent
Percentage
54321
2936101
_
38.147.413.21.3 _
Total Insurance
holders
Total non users
Total
76
24
100
100
Interpretation:
The tenure of the policy i.e. the policy term depends on the policy holder but
sometimes the insurer can also influence the policy term by giving some additional
benefits on policies taken for a longer period of time or vice versa. In the study that
was conducted by us, we found out that nearly 48% of the respondents think that
policy term offered by the company is the important thing that one should consider
before taking any life insurance policy while 38.1% of the respondents think that it is
the highly important thing that one should consider before taking any life insurance
policy.
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Chart-2.13
Policy Term
29
36
10
1 00
510
15
20
25
30
35
40
R e s p o n d e n t s
5 4 3 2 1
Rating
Policy Term
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Table-2.14
Rider Benefits
Interpretation:
Rider benefits are the additional benefits that the insurer company provides to its
customers for attracting them. Things like accidental benefit, critical illness benefit,
and permanent disablement benefit are provided as a rider with the original policy
with a payment of some additional premium from the point of view of the customers.
According to the study nearly 42% of the respondents think that it is an important
criterion before selecting an insurance policy. On the other hand 27.8% and 23.7% of
the respondent feel it neutrally and the most important criterion, which indicates that
people are not much interested in additional benefits.
Rating No of
Respondent
Percentage
54321
1832215
_
23.742.127.66.6 _
Total Insurance
holders
Total non users
Total
76
24100
100
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Chart-2.14
Rider Benefits
18
32
21
5
00
510
15
20
25
30
35
R e
s p o n d e n t s
5 4 3 2 1
Rating
Rider Benefits
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Table-2.15
Bonus and Interest Paid
Rating No of
Respondent
Percentage
54321
4024822
52.631.610.62.62.6
Total Insurance
holders
Total non users
Total
76
24100
100
Interpretation:
Bonus and interest are paid by the companies to the policy holder for the policies
which are with profit policy i.e. if a person takes a with profit policy, he/she also
becomes liable to get a certain percentage of the profit that the company makes in a
certain financial year. 53% of the respondents consider it as the highly important
criterion before taking a life insurance policy and only 2.6% of respondents
considered it to not important.
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Table-2.15
Bonus and Interest Paid
40
24
8
2 2
0
5
10
15
20
25
30
35
40
R e
s p o n d e n t
5 4 3 2 1
Rating
Bonus & Intere st
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Table-2.16
Services (Pre and Post Sales)
Rating No of
Respondent
Percentage
54321
26351122
34.346.014.52.62.6
Total Insurance
holders
Total non users
Total
76
24
100
100
Interpretation:
While conducting the study we have met many respondents who think that many of
the companies provide them satisfactory services only till the policy is being taken by
the respondent, but after that if there is any requirement from the point of view of the
customer, the company does not pay the same attention to them as they had paidearlier. So, nearly 34% of the respondents feel that services (both pre and post sales)
provided by the company is highly important to consider before undertaking any kind
of life insurance policy.
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Chart-2.16
Services (Pre and Post Sales)
26
35
11
2 2
0
5
10
15
20
25
30
35
R e s p o n d e n t
5 4 3 2 1
Rating
Services
Table-2.17
Accessibility
Rating No of
Respondent
Percentage
54321
214762
_
27.661.88.02.6 _
Total Insurance
holders
Total non users
Total
76
24100
100
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Interpretation:
The term accessibility here refers to the easy availability of the facilities that the
company provides to its customers. The facilities may be regarding information about
the company and the various products offered by them, it can be made available
through internet and other media. According to the study nearly 62% of the
respondents think it is highly important, while 2.6% of them feel that it is the least
important and no respondent considers that it is not important that one may consider
before taking any life insurance policy.
Chart-2.17
Accessibility
21
47
62
00
5
10
15
20
25
30
35
40
45
50
R e s p o n d e n
t s
5 4 3 2 1
Rating
Accessibility
Table-2.18
Company Image
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Interpretation:Company image also plays an very important role in influencing the decision of a
prospective customer while taking the final decision. From the study it has been found
out that nearly 54% and 32% of the people feel that it is the highly and most
important thing, which has higher influence than any other criterion that influences
one’s decision regarding taking of life insurance policy, while for 1.3% of people it
does not provide any significant importance in their decision making.
Chart-2.18
Company Image
Rating No of
Respondent
Percentage
543
21
412410
1 _
5431.613.1
1.3 _
Total Insurance
holders
Total non users
Total
76
24100
100
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41
24
10
1 00
5
10
15
20
25
3035
40
45
R e s p o n d e n t s
5 4 3 2 1
Rating
Company Image
So, to conclude from the above chart-2.18, it can be said that the company image
that the policy holder has to pay for taking any life insurance policy, plays a
highly important role in influencing their decision, followed by the factors like
premium, bonus and interest paid by the company, policy term and so on. So,
those companies who are having brand image or name as well as providing all
other complementary services, have a better chance of succeeding in the life
insurance sector in comparison to other companies who are in the same field.
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To further analyze the perception of the respondents about what they think as
the important criteria before taking an insurance policy, I have taken two independent
parameters, namely:
a) Age of the People.
b) Annual Income of the People.
After taking these two independent parameters, the analysis is being made to see
which age group people think what criterion is important or what is the difference in
perception among the people who have annual income which are significantly
different from each other. The number of respondents taken here is only 76 as those
people who are not having any life insurance policy have been excluded from the
purview of the study and these 76 respondents were allowed to rate the criteria
according to their importance.
(Rating 5 represents highly important,4 represents only important,3 represents
neutrally important,2 represents least important and 1 represents not important).
2.19 Criteria before taking a life insurance policy
On the basics of Age group:
For conducting the study the ages of respondents are divided into five categories,
those are as follows:
a) Less than 30 years.
b) Between 31- 40 years.
c) Between 41 – 50 years.
d) Between 51 - 60 years.
e) More than 60 years.
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Table-2.20
Age Group – Premium
Age group 5 4 3 2 1 Total
Respondent
Below 30
Yrs
20(58.8%)
11(32.4)
2(5.9)
1(2.9)
_ 34(100%)
31-40 Yrs 14(53.8%)
10(38.6%)
1(3.8%)
1(3.8%)
_ 26(100%)
41-50 Yrs 7(46.7%)
7(46.7%)
_ 1(6.6%)
_ 15(100%)
51-60 Yrs _ 1(100%)
_ _ _ 1(100%)
Above 60
Yrs
_ _ _ _ _ _
Total
Respondent
41(54%)
29(38.2)
3(3.9)
3(3.0)
_ 76(100%)
Interpretation:
Now, from the above table-2.20 we can see that nearly 59% of the people who belong
to the age group of less than 30 consider premium as the highly important criterion incomparison to only 54% of the people who belong to an age group of 30-40. So,
people who have started their professional life consider more about the money that
has to be spent on the insurance policy in comparison to the people who are working
for a relatively longer period of time. Again, if we consider those people 41-50 years
who have come to the important stage of their working life, we can see that these
people also thing that the expense regarding the premium to be paid is the highly
important criteria for them because they likely to spend or save their money on
medical, education etc..
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Chart-2.20
Age Group – Premium
Age group-Premium
20
14
7
0
0
11
10
7
1
0
2
1
0
0
0
1
1
1
0
0
0
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A
g e G r o u p
Respondents
5
4
3
2
1
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Table-2.21
Age Group – Charges
Age group 5 4 3 2 1 Total
Respondent
Below 30
Yrs
5(14.8%)
22(64.7%)
7(20.5%)
_ _ 34(100%)
31-40 Yrs 4(15.4%)
18(69.3%)
3(11.5%)
1(3.8%)
_ 26(100%)
41-50 Yrs 8(53.4%)
5(33.3%)
2(13.3%)
_ _ 15(100%)
51-60 Yrs _ 1(100%)
_ _ _ 1(100%)
Above 60Yrs _ _ _ _ _ _
Total
Respondent
17(22.4%)
46(60.5%)
12(15.8%)
1(1.3%)
_ 76(100%)
Interpretation:
Now, if we consider the different charges (like Fund management charges,
administration charges etc.) that the companies take from their policy holders, we can
see that people who are having age less than 30 years and those who belong to the
group of 30-40 years think in the same way in this matter. Nearly 15% of both the
groups consider these charges are highly important, but not as much as they consider
the cost relating to the premium they have to pay to the company.
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Chart-2.21
Age Group – Charges
.
Age group-Charge
5
4
8
0
0
22
18
5
1
0
7
3
2
0
0
0
1
0
0
0
0
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A g e G r o u p
Respondents
5
4
3
2
1
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Table-2.22
Age Group – Policy Term
Age group 5 4 3 2 1 Total
RespondentBelow 30
Yrs
10(29.4%)
14(41.2%)
9(26.5)
1(2.9%)
_ 34(100%)
31-40 Yrs 10(38.5%)
15(57.7%)
1(3.8)
_ _ 26(100%)
41-50 Yrs 8(53.3%)
7(46.7%)
_ _ _ 15(100%)
51-60 Yrs 1(100%)
_ _ _ _ 1(100%)
Above 60Yrs _ _ _ _ _ _
Total
Respondent
29(38.2%)
36(47.4%)
10(13.1%)
1(1.3%)
_ 1(100%)
Interpretation:
The policy term mainly depends on the wishes of the policy holder, so here we can
see that only 29% and 41% of the people whose age is below 30 years, think this is
highly important criterion, but people who a little bit more experienced know that
insurer companies sometime provide extra benefits for longer policies in comparison
to policies which have a shorter span of life, that’s why nearly 39% and 58% of
people belonging to the age group of 31-40 years think that it is a highly important
criterion which affects the decision regarding insurance.
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Chart-2.22
Age Group – Policy Term
Age group-Policy Term
10
10
8
1
0
14
15
7
0
0
9
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A g e G r o u p
Respondents
5
4
3
2
1
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Table-2.23
Age Group – Rider Benefits
Age group 5 4 3 2 1 Total
Respondent
Below 30
Yrs
6(17.6)
15(44.2%)
8(23.5%)
5(14.7%)
_ 34(100%)
31-40 Yrs 6(23%)
10(38.5%)
10(38.5%)
_ _ 26(100%)
41-50 Yrs 5(33.3%)
7(46.7%)
3(20%)
_ _ 15(100%)
51-60 Yrs 1(100%)
_ _ _ _ 1(100%)
Above 60
Yrs
_ _ _ _ _ _
TotalRespondent 18(23.7%) 32(42.1%) 21(27.6%) 5(6.6%) _ 76(100%)
Interpretation:
Mostly all the respondents of different age group are not interested in rider
benefits, nearly 42% of the age group below 30, 31-40 and 41-50 years think that
it is important ,where as only 23% of all age group think that it is highly
important. So, most of them think that rider benefits are not so important and itdoes not influence their decision in a broad way.
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Chart-2.23
Age Group – Rider Benefits
Age group-Rider Benefits
6
6
5
1
0
15
10
7
0
0
8
10
3
0
0
5
0
0
0
0
0
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A g e G r o u p
Respondents
5
4
3
2
1
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Table-2.24
Age Group – Bonus and Interest Paid
Age group 5 4 3 2 1 Total
RespondentBelow 30
Yrs
17(50%)
8(23.5%)
5(14.7%)
2(5.9%)
2(5.9%)
34(100%)
31-40 Yrs 12(46.2%)
13(50%)
1(3.8%)
_ _ 26(100%)
41-50 Yrs 10(66.7%)
3(20%)
2(13.3%)
_ _ 15(100%)
51-60 Yrs 1(100%)
_ _ _ _ 1(100%)
Above 60
Yrs
_ _ _ _ _ _
Total
Respondent
40(52.6%)
24(31.6%)
8(10.5%)
2(2.6%)
2(2.6%)
76(100%)
Interpretation:
In this scenario we can see that the thinking of the people belonging to different
age group is quite similar, as nearly 53% of the respondents belonging to three
different age groups, namely: <30, 30 – 40 and 40 – 50, think that it is a highly
important criterion which influences the decision regarding life insurance policy
and none of the total respondent think that it is the least important criterion among
all.
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Chart-2.24
Age Group – Bonus and Interest Paid
Age group-Bonus & Interest
17
12
10
0
0
8
13
3
1
0
5
1
2
0
0
2
0
0
0
0
2
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A g
e G r o u p
Respondents
5
4
3
2
1
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Table-2.25
Age Group – Services (both pre and post sales)
Age group 5 4 3 2 1 Total
Respondent
Below 30Yrs 11(32.4%) 15(44.2%) 5(14.7%) 2(5.8%) 1(2.9%) 34(100%)
31-40 Yrs 6(23.1%)
13(50%)
6(23.1%)
_ 1(3.8%)
26(100%)
41-50 Yrs 9(60%)
6(40%)
_ _ _ 15(100%)
51-60 Yrs _ 1(100%)
_ _ _ 1(100%)
Above 60
Yrs
_ _ _ _ _ _
Total
Respondent
26(34.2%)
35(46.1%)
11(14.5%)
2(2.6%)
2(2.6%)
76(100%)
Interpretation:
In this case, we can see that the people who belong to the age group of less than 30
years and may be taking an life insurance policy for the first time, give much
importance on services in comparison to the people belonging to the age group of 30–
40, who put more emphasize on the other benefits than services provided by the
company, the percentage is almost 23 but which is 33% for age below 30 years and
they think that it is highly important criterion.
Chart-2.25
Age Group – Services (both pre and post sales)
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Age group-Services
11
6
9
0
0
15
13
6
1
0
5
6
0
0
0
2
1
0
0
0
1
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A g e G r o u p
Respondents
5
4
3
2
1
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Table-2.26
Age Group – Accessibility
Age group 5 4 3 2 1 Total
RespondentBelow 30
Yrs
5(14.7%)
25(73,5%)
2(5.9%)
2(5.9%)
_ 34(100%)
31-40 Yrs 6(23.1%)
16(61.5%)
4(15.4%)
_ _ 26(100%)
41-50 Yrs 10(66.7%)
5(33.3%)
_ _ _ 15(100%)
51-60 Yrs _ 1(100%)
_ _ _ 1(100%)
Above 60
Yrs
_ _ _ _ _ _
Total
Respondent
21(27.6%)
47(61.8%)
6(7.9%)
2(2.7%)
_ 76(100%)
Interpretation:
Here, we can see that not much importance is given to the accessibility criteria by the
respondents belonging to below 30 and 31-40 years, But only respondent belonging to
41-50 years nearly 67% of them consider that it is highly important, because of their
long period of working age they like to get easy availability of the products offered.
So only the age groups 41-50 years consider accessibility as an criterion for decision
to take an life insurance policy.
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Chart-2.26
Age Group – Accessibility
Age group-Accessibility
5
6
10
0
0
25
16
5
1
0
2
4
0
0
0
2
0
0
0
0
0
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A
g e G r o u p
Respondents
5
4
3
2
1
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Table-2.27
Age Group – Company Image
Age group 5 4 3 2 1 Total
Respondent
Below 30
Yrs
17(50%)
12(35.3%)
5(19.2%)
_ _ 34(100%)
31-40 Yrs 12(46.2%)
9(34.6%)
5(19.2%)
_ _ 26(100%)
41-50 Yrs 12(80%)
2(13.3%)
_ 1(6.7%)
_ 15(100%)
51-60 Yrs _ 1
(100%)
_ _ _ 1
(100%)Above 60
Yrs
_ _ _ _ _ _
Total
Respondent
41(53.9%)
24(31.6%)
10(13.2%)
1(1.3%)
_ 76(100%)
Interpretation:
In the case of company image also, we see most of the respondents nearly 41 with
average percentage of nearly 54% consider company image as a highly important
criterion this is mainly because people feel secure and comfortable of their money
which they spend on the company which has a brand name or image. So, that
company image has greater influence among the people before they take up life
insurance.
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Chart-2.27
Age Group – Company Image
Age group-Company Image
17
12
12
0
0
12
9
2
1
0
5
5
0
0
0
2
0
1
0
0
0
0
0
0
0
0 10 20 30 40
Below 30 Yrs
31-40 Yrs
41-50 Yrs
51-60 Yrs
Above 60 Yrs
A g e G r o u p
Respondents
5
4
3
2
1
So, to conclude it can be said that the thinking of people belonging to
different age group are quite different in most of the aspects whole it comes to decide
the important criterion regarding life insurance, it may be due to the fact that they
have started their career, so they worry about the money they have to spend on
insurance or it may be related to the fact that for many of the newcomers it is the first
time that they are taking a life insurance policy on their own, so they do not have
experience when it comes to life insurance in comparison to others who are having
their own policy or those who are working for a longer span of time and are quite
settled in their respective area of operation.
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2.28 Criteria before taking a life insurance policy
On the basics of Annual Income Level:
For conducting the study the annual income of respondents is divided into four
categories, those are as follows:
a) Less than Rs. 1 lakh.
b) Between Rs 1.01 – 3 lakh.
c) Between Rs. 3.01 – 5 lakh.
d) More than Rs. 5 lakh.
Now, let us see the perception of people who belong to different income groups
about the important criterion before taking a life insurance policy.
Table-2.29
Annual Income – Premium
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
13(44.8%)
13(44.8%)
2(6.9%)
1(3.5)
_ 29(100%)
1.01-3 Lakh 25(59.5%)
16(38.1%)
_ 1 _ 42(100%)
3.01-5 Lakh 1(50%)
1(50%)
_ _ _ 2(100%)
Above 5Lakh
_ 1(33.3%)
1(33.3%)
1(33.4%)
_ 3(100%)
Total 39(51.4%)
31(40.8%)
3(3.9%)
3(3.9%)
_ 76(100%)
Interpretation:
In this scenario mostly the respondents of all the annual income groups think that premium to be paid in a policy is the most important criterion (nearly 54%), eventhough the income increases it is considered to be the highly important. So, people of
all income groups put more emphasize on the money to be spent.
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Chart-2.29
Annual Income – Premium
Income-Premium
13
25
1
0
13
16
1
1
2
0
0
1
1
1
0
1
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l I n c o m e
Respondents
5
4
3
2
1
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Table-2.30
Annual Income – Charges
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
10(34.5%)
11(37.9%)
8(27.6%)
_ _ 29(100%)
1.01-3
Lakh
6(14.3%)
32(76.2%)
4(9.5%)
_ _ 42(100%)
3.01-5
Lakh
_ 2(100%)
_ _ _ 2(100%)
Above 5
Lakh
1(33.3%)
1(33.3%)
1(33.4%)
_ _ 3(100%)
Total 17(22.4%)
46(60.5%)
12(15.8%)
1(1.3%)
_ 76(100%)
Interpretation:
As the charges taken by the companies is very less as compared to the premium they
take, so here we can see that people pay less importance to it. But, here also we can
see that nearly 35% of the people who are having annual income of less than 1 lakh,
think this is highly important criterion, On the other hand people who are having
income between 1.01 – 3 lakh, think that it is just an important criterion (nearly76%),
but don’t think at all that this is the highly important criterion (nearly 14%). So, here
also difference in income generates difference in opinion.
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Chart-2.30
Annual Income – Charges
Income-Charges
10
6
0
1
11
32
2
1
8
4
0
1
0
0
0
0
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l I n c o m e
Respondents
5
4
3
2
1
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Table-2.31
Annual Income – Policy Term
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
9(31%)
15(51.7%)
5(17.3%)
_ _ 29(100%)
1.01-3
Lakh
15(35.7%)
21(50%)
5(11.9%)
1(2.4%)
_ 42(100%)
3.01-5
Lakh
2(100%)
_ _ _ _ 2(100%)
Above 5
Lakh
3(100%)
_ _ _ _ 3(100%)
Total 29
(38.1%)
36
(47.4%)
10
(13.2%)
1
(1.3%)
_ 76
(100%)
Interpretation:
In case of policy term we can see that there is no such difference in opinion among
the people who belong to different income groups. As nearly 54% of the total
respondents think it is highly important criterion and on the other hand 31.6% of the
respondents think it is only important. The reason for the same can be that, people
who are having less income now, may have a feeling that as the time goes on their
income will increase, so they don’t put so much emphasis on policy term as compared
to the other criteria.
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Chart-2.31
Annual Income – Policy Term
Income-Policy Term
9
15
2
3
15
21
0
0
5
5
0
0
0
1
0
0
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n
n u a l I n c o m e
Respondents
5
4
3
2
1
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Table-2.32
Annual Income – Rider Benefits
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
5(17.3%)
13(44.8%)
10(34.5%)
1(3.4%)
_ 29(100%)
1.01-3
Lakh
9(21.4%)
19(45.3%)
10(23.8%)
4(9.5%)
_ 42(100%)
3.01-5
Lakh
1(50%)
_ 1(50%)
_ _ 2(100%)
Above 5
Lakh
3(100%)
_ _ _ _ 3(100%)
Total 18
(23.7%)
32
(42.1%)
21
(27.6%)
5
(6.6%)
_ 76
(100%)
Interpretation:
Here, we can see that all respondents who are having income above 6 lakh think that
rider benefits are highly important criterion in comparison to people who are having
less income. The reason for the same may be as the income of a person increases he/
she will be liable to get more rider benefits in comparison to people who are having
lesser income, so they put less importance on rider benefits. But, one thing is clear
that very few people from all income class think that rider benefits do not carry any
importance.
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Chart-2.32
Annual Income – Rider Benefits
Income-Rider Benefits
5
9
1
3
13
19
0
0
10
10
1
0
1
4
0
0
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l
I n c o m e
Respondents
5
4
3
2
1
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Table-2.33
Annual Income – Bonus and Interest Paid
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
13(44.9%)
8(27.6%)
6(20.7%)
2(6.8%)
_ 29(100%)
1.01-3
Lakh
23(54.8%)
15(35.6%)
2(4.8%)
_ 2(4.8%)
42(100%)
3.01-5
Lakh
1(50%)
1(50%)
_ _ _ 2(100%)
Above 5
Lakh
3(100%)
_ _ _ _ 3(100%)
Total 40
(52.6%)
24
(31.6%)
8
(10.6%)
2
(2.6%)
2
(2.6%)
76
(100%)
Interpretation:
In case of bonus and interest paid by the insurer company, we can see that people who
belong to the income groups of 1.01 – 3 lakh, 3.0 –5 lakh and above 6 lakh put more
emphasis on this in comparison to the people who have income less than 1 lakh. The
reason for the same may be due to the fact, that people who belong to the range of 1-
6 lakh as annual income, have an tendency to earn more than what they are earning
and that’s why they think it as highly important criterion, On the other hand people
who have income less than 1 lakh, do not have such income to invest in the company
( more emphasis is given by them on the safety of the money) and that is why they
don’t put so much importance on bonus and interest paid by the company.
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Chart-2.33
Annual Income – Bonus and Interest Paid
Income-Bonus&Interest
13
23
1
3
8
15
1
0
6
2
0
0
2
0
0
0
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l I n c o m e
Respondents
5
4
3
2
1
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Table-2.34
Annual Income – Services (Both pre and post sales)
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
12(41.4%)
11(37.9%)
4(13.8%)
_ 2(6.9%)
29(100%)
1.01-3
Lakh
12(28.6%)
21(50%)
7(16.6%)
2(4.8%)
_ 42(100%)
3.01-5
Lakh
_ 2(100%)
_ _ _ 2(100%)
Above 5
Lakh
2(66.7%)
1(33.3%)
_ _ _ 3(100%)
Total 26(34.2%) 35(46.1%) 11(14.5%) 2(2.6%) 2(2.6%) 3(100%)
Interpretation:
Now if we consider the services provided by the company we can see that the
people who are having less income put more emphasis on this criterion (41.4%)
because people are more conscious about their money than the people who belong
to 1-3 lakh. So, they expect better services for their money even though It is less
and among all respondents above 6 Lakh who have more job responsibility think
service as a highly important criterion for decision making.
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Chart-2.34
Annual Income – Services (Both pre and post sales):
Income-Services
12
12
2
2
11
21
0
1
4
7
0
0
0
2
0
0
2
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l I n c o m e
Respondents
5
4
3
2
1
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Table-2.35
Annual Income – Accessibility
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
9(31%)
19(65.5%)
_ 1(3.5%)
_ 29(100%)
1.01-3
Lakh
10(23.8%)
25(59.5%)
6(14.3%)
1(2.4%)
_ 42(100%)
3.01-5
Lakh
1(50%)
1(50%)
_ _ _ 2
Above 5
Lakh
1(33.3%)
2(66.7%)
_ _ _ 3(100%)
Total 21(27.6%) 47(61.8%) 6(7.9%) 2(2.7%) _ 76(100%)
Interpretation:
If we consider the accessibility as one of the criterion for taking insurance policy, we
can see that as the income of the person increases, they put less importance on the
accessibility criterion (31.0% of people having income less than 1 lakh, 23.8% for
1.01 – 3 lakh, one respondent for 3.01 – 5 lakh and one respondent for more than 5
lakh). The same trend can be seen when they consider it as the only important criteria
in taking a decision regarding life insurance. So, most of the people think it as a
criterion which is not so important while taking their decision.
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Chart-2.35
Annual Income – Accessibility
Income-Accessibility
9
10
1
1
19
25
1
2
0
6
0
0
1
1
0
0
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l I n c o m e
Respondents
5
4
3
2
1
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Table-2.36
Annual Income – Company Image
Annual
Income(Rs)
5 4 3 2 1 Total
Below 1
Lakh
16(55.2%)
9(31%)
3(10.4%)
1(3.4%)
_ 29(100%)
1.01-3
Lakh
23(54.8%)
13(30.9%)
6(14.3%)
_ _ 42(100%)
3.01-5
Lakh
1(50%)
1(50%)
_ _ _ 2(100%)
Above 5
Lakh
1(33.3%)
2(66.7%)
_ _ _ 3(100%)
Total 41(53.9%) 24(31.6%) 10(13.2%) 1(1.3%) _ 76(100%)
Interpretation:
The above table shows 41 respondents of all the income level with average of 54%consider company image as highly important criterion. When we compare companyimage among different age groups and annual income groups we find similar opinion,considering that it is highly important for decision making. This mainly because
people feel safe and secure with the company they invest.
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Chart-2.36
Annual Income – Company Image
Income-Company Image
16
23
1
1
9
13
1
2
3
6
0
0
1
0
0
0
0
0
0
0
0% 20% 40% 60% 80% 100%
Below 1 Lakh
1.01-3 Lakh
3.01-5 Lakh
Above 5 Lakh
A n n u a l I n c o m e
Respondents
5
4
3
2
1
So, to conclude it can be said that in most of the aspects, the opinion of the
people belonging to different income groups differ from each other. The reason for
the same can be the importance that they give on the sum they invest in taking a life
insurance policy i.e. a person who is having income of less than 1 lakh will put more
emphasis on a sum of Rs, 10000, in comparison to a person who is having an income
of more than 5 lakh. So, the difference in income does show difference in opinion
also.
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2.8 To find whether gender bias influenced for investing in life insurance
Table given below shows the data obtained during study of life insurance
Source: Primary data
Null Hypothesis
(Ho): There is no gender bias for investing in insurance
Alternative Hypothesis
(H1): There is gender bias for investing in insurance.
Chi square test
Factor Level of
significance
Degree of
freedom
Table value Chi square
Gender 5% 1 3.84 1.059
Result:
Chi square is less than the table value.
Hence accept the null hypothesis (Ho)
We can conclude that gender bias doesn’t influence for investing in life insurance.
Having
insurance
Not having
insurance
Total
Male 47(44.84) 12(14.16) 41
Female 29(31.16) 12(9.84) 59
Total 76 24 100
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CHAPTER III
FINDINGS, SUGGESTIONS AND CONCLUSION
3.1 FINDINGS
The findings that can be drawn from the survey conducted by us can be summarized
in the following way:
a) Bank Deposits are the most preferred investment alternative which is available
to people followed by alternatives such as Insurance, Real Estate, Gold and
Silver, Mutual etc.
b) It was found that 61 respondents were willing to take a life insurance under
LIC and 33 respondents under ICICI Prudential Life Insurance.
c) Among the 76 insurance holders 63 have policy of LIC whereas only 11
respondents have policy of ICICI Prudential Life Insurance.
d) Only 47% of the total respondents are aware of the joint venture between
ICICI bank with Prudential of UK to form a company called ICICI Prudential
Life Insurance in the year 2000. 22 respondents are interested to invest in
ICICI because of the company’s growth potential and brand image that ICICI
has.
e) The scheme mostly preferred by insurance holders was life protection schemes
like death benefits followed by money growth plans like wealth creation and
high return plans.
f) It was found that nearly 50% of the respondents usually save less than 15%
and the kind of investment mostly preferred by the respondents were both long
and short term.
g) According to the survey safety is the most important criterion which is
excepted among all the respondents towards their investment alternatives
followed by Return, Brand Name, Tax Benefits, Liquidity and Capital Growth.
h) According to the study company image is to be the highly important criteria
which we consider before taking up a life insurance this is mainly because
people expect safety and security for their money which they invest, followed
by the factor Premium which we pay to the insurer and then Bonus and
Interest paid by the company, services etc.
i) People who belong to different age groups have different perception regardingthe most important criteria before taking the decision on a life insurance
policy.
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j) People who belong to different income groups also have different perception
regarding the important criteria concerned with the life insurance.
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3.2 SUGGESTIONS
1. Consumer should be aware of company’s profile and returns associated with
insurance.
2. The Financial advisor should be right enough to serve the consumers. The
consumer
should also be aware of the advisor or others who is looking after their investments.
3. Company should publish their performance by comparing it with their competitors.
4. Company should adopt strategies to explore that private insurance companies are
safer and securer than public insurance company like LIC.
5. Middle income people suggest that premium can be collected on monthly basis
instead
of twice a year.
6. Company’s reputation is more important because bad impression on image or
brand name is considered while decision making among consumers.
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REFERENCES
TEXT BOOKS
1. PHILIP KOTLER (2001) ‘Marketing Management’, Prentice HallPvt.Ltd., New Delhi, Millennium edition.
2. KOTHARI C.R. (1999) ‘Research Methodology’, Wishwa Prakashan, New Delhi, 2nd edition.
3. LEON G. SCHFFMAN and LESLIE LAZAR KANUK (2007)‘Consumer Behavior’, Prentice Hall Pvt.Ltd., New Delhi, 9 th edition.
WEB SITES
1. www.iciciprulife.com
2. www.irda.org
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APPENDIX
A Study of Consumer’s Perception about Life Insurance with special Reference
to Birla Sunlife
Questionnaire
Dear respondent,This questionnaire is aimed at understanding your perception about life insurance.Your response will be dealt with strict confidentiality and it will be used only for academic purpose. Thank you for spending your valuable time to fill thisquestionnaire.
1. Name: Gender: Male Female
Contact No:
2. Age Group:
3. Educational Qualification:
4. Occupation:
5. Annual Income Level:
6. What percentage of your Salary do you usually save?
7. What kind of investment do you prefer?
8. Rank these various investment alternatives according to your preferences.
41-50
Above 60
Below 30 31-40 51-60
Under Graduate Diploma
Others (Specify)………….
Post Graduate
Student Self-Employed
Others (Specify)………….
Employed
Below 1 Lakh 3.01-5 Lakh
Above 5 Lakh
1.01-3 Lakh
Less Than 15% 20-25%
Greater Than 25%
15-20%
Short Term BothLong Term
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9. State your expectation on investment alternatives by ticking according to its
importance.
SNO Investment Alternatives Rank
1. Bonds & Debentures
2. Equity/Shares
3. Mutual Fund
4. Public Provident Fund(PPF)
5. Post Office
6. Insurance
7. Bank Deposits
8. Real Estate
9. Gold & Silver
10. Other (specify)…………………….
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Money growth plan
10. Do you have life Insurance Policy? ( If ‘NO’ then please go to question no.14)
11. If ‘Yes’ Which Insurance Company Policy do you have?
12. What scheme of Insurance Policy have you taken?
13. What parameters do you look into before you take up a life insurance Policy?And tick the following parameter according to your importance.
Parametersconsidered beforeinsurance policy
Highly
Important ImportantNeutral Least
Important NotImportant
Premium
Charges
Policy Term
Rider Benefits
Expectations oninvestment
Highlyimportant Important Neutral
Leastimportant
Notimportant
Safety
Capital Growth
Liquidity
Return
Tax Benefit
Company Profile &Brand Name
Yes No
LIC Reliance lifeBajaj Allianz
Birla Sunlife Prudential Others (Specify)……..HDFC Standard
Life protection plan Retirement planEducation plan
Health plan Others (Specify)……….
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Bonus & Interest
Services (Pre &Post Sales)
Accessibility
Company Image
14. Are you aware about the joint venture between ICICI bank with PrudentialPlc of UK to form a first private sector insurance company called ICICIPrudential Life Insurance in December 2000?
15. Would you like to invest in ICICI Prudential Life Insurance?
16. If, ‘YES’ what will make you to invest in ICICI Prudential Lifeinsurance?
17. Among the following Life Insurance Companies in which companyyou will be Willing to take a life insurance?
18. Suggestions _______________________________________
________________________________________________
________________________________________________
Thank you
Yes No
Yes No
Brand image Diversity
Transparency
Utmost Good Faith
Growth Potential
Others (Specify)…………….
Bajaj AllianzBirla Sunlife
HDFC Standard Life
SBI Life TATA- AIGICICI Prudential
Reliance Max New York Met Life
Sahara ING Vysya Aviva Dabur
OM- Kotak Mahindra LIC AXA-Bharti
ING Vysya
Max New York Max New York
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