Cosumers Perception Towards Insurance - Project Report

CHAPTER I

INTRODUCTION

Visit a2zmba.blogspot.com for more project reports, notes etc.

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.

1

1.2 INDUSTRY PROFILE

OVERVIEW OF CURRENT 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

2

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.

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.

3

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.

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….)

4

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 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 to

finance 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.

5

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.

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

6

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.

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).

7

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 insurance companies have been

allowed back into the business of insurance with a maximum of 26% of foreign holding.

8

7. INDIAN SCENARIO

8. 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,

INDIAN INSURANCE INDUSTRY

Private Sector (15)

Public Sector (1)

PublicSector (4)

Private Sector (9)

LIFE INSURANCE

NON LIFE INSURANCE

9

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.

The services sector offers immense opportunities for expansion opportunities for

expansion opportunities and the rural market, also, offers tremendous growth

opportunities for insurance companies.

9. 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 is 1.95% and ranks 51st.

However in collection of premium it is ranked 23rd. 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.

10

10. 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

Mahindra

Old 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 Sahara India None 1,000 0 0

11

Ins. I

SBI Life SBI Cardiff (France) 3,500 26 910

TATA AIG TATA Group AIG (US) 3,810 26 990

Shriram 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

12

11. CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY

Some surveys have predicted that India and China will play a very vital role in the

years to come. Indian economy can be termed as an emerging economy as it is doubling

its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its

GDP.

If we look at the GDP of the Indian economy very closely over the years, we can

easily come to know the changing structure of the economy. We can also come to know

the changing contribution of the various sectors like agriculture, manufacturing and the

service sector. In the financial year 1993-94, agricultural sector contributed to 31%,

manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the

total GDP of the country. Thus over the years as India became an emerging economy in

2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8

whereas service sector contributed for 51.4% of the total GDP.

There has been 7.5% growth in the total GDP of the country and is estimated to

grow at 8.0% in 2006-07. The Indian economy has shown signs of strong performance

despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the

country. The overall growth of the Indian economy has been equally supported by all the

three sectors of the economy, i.e. the agriculture, manufacturing and the service sector.

Insurance, together with the banking sector, contributes to about 7.3 % of the total GDP

of India, and the gross premium collected contributes to about 2% of the total GDP of the

country

The insurance sector in India has completed a full circle from being an open

competitive market to nationalization and back to a liberalized market again. Tracing the

developments in the Indian insurance sector reveals the 360 degree turn witnessed over a

period of almost 200 years.

13

12. GOVERNMENT POLICIES REGARDING LIFE INSURANCE

Insurance Regulatory and Development Authority (IRDA) 1999

Reforms in the insurance sector were initiated with the passage of the IRDA bill in

December 1999.it was set up as an independent body and it has been able to frame

globally compatible legislations.

The IRDA was set up to protect the interests of holders of insurance policies ,to

regulate ,promote and insure orderly growth of the insurance industry and for matters

connected therewith or incidental thereto.

This act extends to whole of India. With the establishment of this act, government

amended Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972.

IRDA was formed on the recommendations of Malhotra Committee. In 1999 government

of India has set up Malhotra Committee to examine the structure of insurance industry

and recommend changes, under R.N Malhotra –former governor of RBI.

14

1.3 COMPANY PROFILE

The Industrial Credit and Investment Corporation of India Limited (ICICI) was

formed in 1955 which is incorporated at the initiative of the World Bank, the

Government of India and representatives of Indian industry, with the objective of creating

a development financial institution for providing medium-term and long-term project

financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman

of ICICI Limited. ICICI emerges as the major source of foreign currency loans to Indian

industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI

was also among the first Indian companies to raise funds from international markets.

1. WHAT IS ‘ICICI GROUP’?

We are a part of the renowned ICICI Group, a diversified universal banking

group, with a track record of over 50 years in a variety of financial services.

ICICI was formed in 1955, as a result of the focused efforts of the World Bank, the

Government of India and the representatives of Indian Industry. Today, ICICI Bank has

grown to become India’s second largest bank, with over 24 million customers worldwide.

It is also the first bank from Asia (excluding Japan) to be listed on the NYSE.

ICICI Bank is a truly global bank, with presence at key locations across the globe in

Bahrain,   Bangladesh,   Belgium,  Canada,   China,   Dubai, Hong Kong, Indonesia,

Malaysia, Russia, Singapore, South Africa, Sri Lanka, Thailand, UK, USA and Quatar.

ICICI Group’s expertise spans a vast range of financial services, including banking,

broking, mutual funds, insurance, home loans, venture funds and much more. The

Group is the largest consumer credit provider and the biggest private sector, life and

general insurer in India. Expertise across a vast range of products. All blended to bring

you seamless financial solutions that ensure you have the advantage in every financial

decision. Wherever you may be in the world.

15

2. STRUCTURE OF ‘ICICI GROUP’

3. OBJECTIVES OF ICICI GROUP

TRUST

We view each client relationship as a “partnership for success”. We regard your financial

needs as our own and aim to achieve your investment goals with you. We put our best

resources behind you to ensure that your investment objectives are more than met.

AGILITY

We seek to deliver superior value to you. We respond quickly and efficiently to market

opportunities, and offer the most apt financial solutions so that you can reap the best

possible benefits.

16

INNOVATION

We believe that the cornerstone of success in today’s competitive environment is

Innovation. We seek newer opportunities constantly, to fulfill your emerging needs and

wants.

4. ICICI BANK

ICICI Bank is India's second-largest bank with total assets of Rs. 3,767.00 billion

(US$ 96 billion) at December 31, 2007 and profit after tax of Rs. 30.08 billion for the

nine months ended December 31, 2007. ICICI Bank is second amongst all the companies

listed on the Indian stock exchanges in terms of free float market capitalization*. The

Bank has a network of about 955 branches and 3,687 ATMs in India and presence in 18

countries. ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its

specialised subsidiaries and affiliates in the areas of investment banking, life and non-life

insurance, venture capital and asset management. The Bank currently has subsidiaries in

the United Kingdom, Russia and Canada, branches in Unites States, Singapore, Bahrain,

Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative

offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia

and Indonesia. Our UK subsidiary has established branches in Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its

5. COMPANIES UNDER ‘ICICI BANK’

A) ICICI PRUDENTIAL AMC AND TRUST:

ICICI Prudential Asset Management Company enjoys the strong parentage of

prudential plc, one of UK's largest players in the insurance & fund management sectors

and ICICI Bank, a well-known and trusted name in financial services in India. ICICI

Prudential Asset Management Company, in a span of just over eight years, has forged a

position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset

17

management companies in the country with assets under management of Rs. 37,906.24

crore (as of March 31, 2007). The Company manages a comprehensive range of schemes

to meet the varying investment needs of its investors spread across 68 cities in the

country.

Key Indicator:

During the year march 1998 Asset Under Management was Rs160 cores with only

two funds managed, as on February 29, 2008 now it raised up to Rs 62,008.95 cores with

35 funds.

B) ICICI SECURITIES – INDIA’S LEADING INVESTMENT BANK

A subsidiary of ICICI Bank - the largest and most recognized private bank in

India – ICICI Securities Ltd is premier Indian Investment Bank, with a dominant position

in its core segments of its operations - Corporate Finance including Equity Capital

Markets Advisory Services, Institutional Equities, Retail and Financial Product

Distribution With a full-service portfolio, a roster of blue-chip clients and performance

second to none, we have a formidable reputation within the industry.

The Corporate Finance team regularly ranks highest among the leading capital

markets league tables and recently topped the Prime Database League tables for funds

mobilized through equity instruments in the first half of CY 07.

ICICI Securities Inc., the step down wholly owned US subsidiary of the company

is a member of the National Association of Securities Dealers, Inc. (NASD). As a result

of this membership, ICICI Securities Inc. can engage in permitted activities in the U.S.

securities markets. These activities include Dealing in Securities and Corporate Advisory

Services in the United States and providing research and investment advice to US

investors.

ICICI Securities Inc. is also registered with the Financial Services Authority, UK

(FSA) and the Monetary Authority of Singapore (MAS) to carry out Corporate Advisory

Services and Dealing in Securities.

18

C) ICICI VENTURE

ICICI Venture is one of the largest and most successful private equity firms in

India with funds under management in excess of USD 2 billion.

ICICI Venture, over the years has built an enviable portfolio of companies across sectors

including pharmaceuticals, Information Technology, media, manufacturing, logistics,

textiles, real estate etc thereby building sustainable value.

It has several “firsts” to its credit in the Indian Private Equity industry. Amongst them are

India’s first leveraged buyout (Infomedia), the first real estate investment ( Cyber

Gateway), the first mezzanine financing for a acquisition (Arch Pharmalabs) and the first

‘royalty-based’ structured deal in Pharma Research & Development (Dr Reddy’s).

ICICI Venture is a subsidiary of ICICI Bank, the largest private sector financial services

group in India.

D) ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED

ICICI Lombard General Insurance Company Limited is a 74:26 joint venture

between ICICI Bank Limited and the Canada based $ 26 billion Fairfax Financial

Holdings Limited. ICICI Bank is India's second largest bank, while Fairfax Financial

Holdings is a diversified financial corporate engaged in general insurance, reinsurance,

insurance claims management and investment management.

Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited, is

one of Canada's oldest property and casualty insurers. ICICI Lombard General Insurance

Company received regulatory approvals to commence general insurance business in

August 2001.

19

E) ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,

a premier financial powerhouse, and Prudential plc, a leading international financial

services group headquartered in the United Kingdom. ICICI Prudential was amongst the

first private sector insurance companies to begin operations in December 2000 after

receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,

a premier financial powerhouse, and Prudential plc, a leading international financial

services group headquartered in the United Kingdom. ICICI Prudential was amongst the

first private sector insurance companies to begin operations in December 2000 after

receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential Life's capital stands at Rs. 37.72 billion (as on February, 2008)

with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the

nine months period April 1 to December 31, 2007, the company garnered new business

weighted premium of Rs. 4,586 crore and has underwritten around 18 lakh policies

during the period. The company has assets held over Rs. 28,000 crore.

ICICI Prudential Life is also the only private life insurer in India to receive a

National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA

(Ind) rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to

meet its obligations to customers at the time of maturity or claims.

For the past seven years, ICICI Prudential Life has retained its leadership position

in the life insurance industry with a wide range of flexible products that meet the needs of

the Indian customer at every step in life.

20

a) VISION

To be the dominant Life, Health and Pensions player built on trust by world-class

people and service.

This we hope to achieve by:

Understanding the needs of customers and offering them superior products and

service

Leveraging technology to service customers quickly, efficiently and conveniently

Developing and implementing superior risk management and investment

strategies to offer sustainable and stable returns to our policyholders

Providing an enabling environment to foster growth and learning for our

employees 

And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core

values ,Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the

values describe what the company stands for, the qualities of our people and the way we

work.

b) VALUES 

Every member of the ICICI Prudential team is committed to 5 core values:

Integrity, Customer First, Boundary less, Ownership, and Passion. These values shine

forth in all we do, and have become the keystones of our success.

21

c) DEPARTMENTS AND BRANCHES OF ICICI PRUDENTIAL LIFE

INSURANCE COMPANY LIMITED

Branches:

ICICI Prudential Life has one of the largest distribution networks amongst private

life insurers in India. It has a strong presence across India with over 945 branches in

addition to 550 micro-offices and an advisor base of 270,000.

Distribution Network:

There are four different ways of distributing a Life insurance product namely;

1. Agents (Financial Advisors):- Anybody possessing the minimum qualification

of 10+2 after completing 100 hrs of training from the training institute approved

by IRDA can sell life insurance products of any particular company which has

sponsored him to take the training. This is the most popular distribution channel.

2. Corporate Agents Any corporate may apply for license to sell insurance after

complying with the requirements of IRDA.

3. Bancassurance If the corporate agent is a bank, then it is known as

bancassurance. Banks can sell the policies to their existing as well as prospective

clients. This is becoming quite popular these days and the bank earns huge fund

based income. Bancassurance has 1% share in total premium collection in 2004-

05.

4. Broker They are like corporate agents with only difference that they can sell

the products of more than one insurance company.

Departments:

The various departments that can be seen in an insurance organization and that has

been observed by me are as follows:

a) Marketing Department: This department mainly deals with the marketing and

promotion part of the Insurance Company. They spend most of their time in

22

formulating strategies to make their products known to the common people and to

promote the same in a easy and cost effective way.

b) Sales Department: This department mainly deals with the sales part of the

Insurance Company; the department includes designations like Sales Manager and

Financial Advisor who personally contacts with people for performing the task of

sales of various products.

c) Accounts/ Financial Department: This department has the task of keeping track

of the various expenses incurred by the various other departments of the

organization and also performs the task of allocating various funds to different

departments according to their requirements.

d) Human Resource Department: This department is handled by the Human

Resource manager of the company. The function of this department involves the

well being of the employees of the company, I,e, to see whether there is employee

grievance in the organization or not and if it is there what are the possible causes

for that and also try to find out solutions for the same if possible.

e) Investment Department: This department deals with the task of investing the

money of the policy holders in such way that will ensure both safety of the money

and also a steady return on the same. The task of this department is very difficult

as it deals with the money given by the policy holders, so it requires lot of

thinking on the part of the personnel of this department before deciding where to

invest the money.

f) Actuarial Department: This department is under the supervision of an Actuary

who decides the premiums and charges to be taken from the policy holder on the

basis of certain information’s (like Age, Annual Income etc.) provided by the

prospective customer. The task also involves the calculation of mortality charges

which requires high statistical knowledge from one’s point of view. So, this

department involves in the calculation of various amounts to be charged from the

prospective customers.

23

d) ICICI PRUDENTIAL LIFE INSURANCE PRODUCTS

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric

products that meet the needs of customers at every life stage. Its products can be

enhanced with up to 4 riders, to create a customized solution for each policyholder.

Savings & Wealth Creation Solutions

Save'n'Protect is a traditional endowment savings plan that offers life protection

along with adequate returns.

CashBak is an anticipated endowment policy ideal for meeting milestone

expenses like a child's marriage, expenses for a child's higher education or

purchase of an asset. It is available for terms of 15 and 20 years.

LifeTime Gold & LifeTime Plus are unit-linked plans that offer customers the

flexibility and control to customize the policy to meet the changing needs at

different life stages. Each offer 6 fund options - Preserver, Protector, Balancer,

Maximiser, Flexi Growth and Flexi Balanced.

LifeLink Super is a single premium unit linked insurance plan which combines

life insurance cover with the opportunity to stay invested in the stock market.

Premier Life Gold is a limited premium paying plan specially structured for

long-term wealth creation.

InvestShield Life New is a unit linked plan that provides premium guarantee on

the invested premiums and ensures that the customer receives only the benefits of

fund appreciation without any of the risks of depreciation.

InvestShield Cashbak is a unit linked plan that provides premium guarantee on

the invested premiums along with flexible liquidity options.

LifeStage RP is a unique and powerful wealth creation insurance solution, which

combines the benefits of automatic asset allocation and quarterly rebalancing

along with increased protection.

24

Protection Solutions

LifeGuard is a protection plan, which offers life cover at low cost. It is available

in 3 options - level term assurance, level term assurance with return of premium

& single premium.

HomeAssure is a mortgage reducing term assurance plan designed specifically to

help customers cover their home loans in a simple and cost-effective manner.

 Education insurance plans

Education insurance under the SmartKid brand provides guaranteed educational

benefits to a child along with life insurance cover for the parent who purchases

the policy. The policy is designed to provide money at important milestones in the

child's life. SmartKid plans are also available in unit-linked form - both single

premium and regular premium.

 Retirement Solutions

ForeverLife is a traditional retirement product that offers guaranteed returns for

the first 4 years and then declares bonuses annually.

LifeTime Super Pension is a regular premium unit linked pension plan that helps

one accumulate over the long term and offers 5 annuity options (life annuity, life

annuity with return of purchase price, joint life last survivor annuity with return of

purchase price, life annuity guaranteed for 5, 10 and 15 years & for life thereafter,

joint life, last survivor annuity without return of purchase price) at the time of

retirement.

LifeLink Super Pension is a single premium unit linked pension plan.

Immediate Annuity is a single premium annuity product that guarantees income

for life at the time of retirement. It offers the benefit of 5 payout options.

PremierLife Pension is a unique and convenient retirement solution with a

limited premium paying term of three or five years, to suit professionals and

businessmen, especially those who require more flexibility and customization

while planning their finances.

Health Solutions

25

Health Assure Plus: Health Assure is a regular premium plan which provides

long term cover against 6 critical illnesses by providing policyholder with

financial assistance, irrespective of the actual medical expenses. Health Assure

Plus offers the added advantage of an equivalent life insurance cover.

Cancer Care: is a regular premium plan that pays cash benefit on the diagnosis

as well as at different stages in the treatment of various cancer conditions.

Cancer Care Plus: is a wellness plan that includes all the benefits of Cancer Care

and also provides an additional benefit of free periodical cancer screenings.

Diabetes Care: Diabetes Care is a unique critical illness product specially

developed for individuals with Type 2 diabetes and pre-diabetes. It makes

payments on diagnosis on any of 6 diabetes related critical illnesses, and also

offers a coordinated care approach to managing the condition. Diabetes Care Plus

also offers life cover.

Diabetes Care Plus: is a unique insurance policy that provides an additional

benefit of life cover for Type 2 diabetics and pre-diabetics

Hospital Care: is a fixed benefit plan covering various stages of treatment -

hospitalisation, ICU, procedures & recuperating allowance. It covers a range of

medical conditions (900 surgeries) and has a long term guaranteed coverage upto

20 years.

Crisis Cover : is a 360-degree product that will provide long-term coverage

against 35 critical illnesses, total and permanent disability, and death.

Group Insurance Solutions

ICICI Prudential Life also offers Group Insurance Solutions for companies seeking to

enhance benefits to their employees.

Flexible Rider Options

ICICI Prudential Life offers flexible riders, which can be added to the basic policy at a

marginal cost, depending on the specific needs of the customer.

26

1.4 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.

27

1.5 OBJECTIVES OF THE STUDIES

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 ICICI Prudential Life Insurance among the people.

28

1.6 RESEARCH METHODOLOGY

Methodology is a systematic way of solving a problem it includes the research

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

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 Erode

only. The survey was conducted by visiting different places like colleges, corporate

offices, respondent’s home etc...

29

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 collected from

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

30

RANKING METHOD (WEIGHTED AVERAGE METHOD)

This technique was used to rank out the opinion about the consumers preference

towards different investment alternatives. The order of merit given by the respondents

was converted into ranks by using the following formula.

Weightage Score = Wi * Xj

Where Wi = Weightage value and Xj = Ranking position value

CHI SQUARE TEST

Chi Square is a statistical measure used in the context of sampling analysis for

comparing the variance to a theoretical variance. In order to judge the significance of

association between two attributes, we make use of chi square test by finding the values

of chi square using the chi square distribution.

31

1.7 LIMITATIONS OF THE RESEARCH

The following limitations can be pointed out from the research that I conducted in

relation to the problems that were given to me by ICICI Prudential Life Insurance

Company Limited:

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 Erode. The respondent belonged

only to Erode and not others who were out of Erode.

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.

32

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.

33

CHAPTER-IIDATA 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 in

percentage

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.

34

Chart-2.1

Shares of different countries in Life Insurance

Source: The Economic Times, dated – 20th July, 2006.

35

Shares of different countries in Life Insurance

517

375.9

19415491.7

90.2

39.5

38.8

80.1

452.8USJapanUKFrance ItalyGermanyChinaTaiwanIndiaOthers

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.

36

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

37

Table-2.4.3Market Share among Private players

Private players Market share in percentage

Market share change in

percentageICICI 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 AMONG PRIVATE 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.

38

Chart-2.3

Market Share among Private players

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

Shriram Life

39

Table-2.4Sales Growth among Private players

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.

Private players Year to year growth in sales in

percentageICICI 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

40

Chart-2.4

Sales Growth among Private players

41

Table-2.5Various investment alternatives available to consumers

Let us see what are the various investment alternatives that are available to the people and among that which are the most preferred one. Now, from the data collected from the 100 respondents which were surveyed through the questionnaire, the following representation can be made:

Investment Alternatives

Total score

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,

42

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 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.

43

Chart-2.5Various investment alternatives available to consumers

6.756.46

5.575.335.074.83

3.843.78

1.74

0

1

2

3

4

5

6

7

Tota

l sco

res

Investment Alternatives

Investment Alternative Preffered by people Bank Deposits

Insurance

Post office

Gold & Silver

Real Estate

Mutual fund

Equity/Shares

Public ProvidentFund(PPF)Bond &Debentures

44

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 like age

group, annual income, life insurance policy holders and awareness of ICICI Prudential

Life 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

45

Chart-2.6

Age Group

50

32

16

2 005

101520253035404550

Res

po

nd

ents

Below30 Yrs

31-40Yrs

41-50Yrs

51-60Yrs

Above60 Yrs

Age Group

Age Group

46

Table-2.7Annual Income Level

Interpretations:

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.

Annual Income Level No of Respondent

Percentage

Below 1 Lakh1.01-3 Lakh3.01-5 Lakh

Above 5 Lakh

336043

336043

Total 100 100

47

Chart-2.7

Annual Income Level

33

60

4 30

10

20

30

40

50

60

Res

pond

ents

Below 1Lakh

1.01-3Lakh

3.01-5Lakh

Above 5Lakh

Annual income

Annual Income Level

48

Table-2.8Hold 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.

49

Table-2.8

Hold Life Insurance Policy

Hold Life Insurance Policy

76%

24%

Yes

No

50

Table-2.4.9Awareness about Joint venture between ICICI and Prudential

Interpretation:

Now coming to the point of awareness among the people about ICICI Prudential Life

Insurance, the response was very disappointing from the point of view of the

company. Out of 100 respondents 53 respondents did not have the knowledge about

the joint venture between ICICI bank with Prudential Plc of UK to form a first private

sector insurance company in India called ICICI Prudential Life Insurance in

December 2000, while the rest 47 had knowledge of the joint venture of Prudential by

ICICI.

Awareness about ICICI Prudential

No of Respondent

Percentage

YesNo

4753

4753

Total 100 100

51

Table-2.9 Awareness about Joint venture between ICICI and Prudential

Awarness-ICICI Prudential

47%

53%

Yes

No

52

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-2.11

Premium

Rating No of Respondent

Percentage

54321

393133_

51.440.83.93.9_

Total Insurance holdersTotal non users Total

76

24100

100

53

Chart-2.11

Premium

39

31

3 30

0

5

10

15

20

25

30

35

40

Resp

on

den

ts

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.

54

Table-2.12

Charges

Rating No of Respondent

Percentage

54321

1746121_

22.460.515.81.3_

Total Insurance holdersTotal non users Total

76

24100

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.

55

Chart-2.12

Charges

17

46

12

1 00

10

20

30

40

50

Resp

on

den

ts

5 4 3 2 1

Rating

Charges

56

Table-2.13

Policy Term

Rating No of Respondent

Percentage

54321

2936101_

38.147.413.21.3_

Total Insurance holdersTotal non users Total

76

24100

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.

57

Chart-2.13

Policy Term

29

36

10

1 005

10152025303540

Res

po

nd

ents

5 4 3 2 1

Rating

Policy Term

58

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 holdersTotal non users Total

76

24100

100

59

Chart-2.14

Rider Benefits

18

32

21

5

00

5

10

15

20

25

30

35

Resp

on

den

ts

5 4 3 2 1

Rating

Rider Benefits

60

Table-2.15

Bonus and Interest Paid

Rating No of Respondent

Percentage

54321

4024822

52.631.610.62.62.6

Total Insurance holdersTotal 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.

61

Table-2.15

Bonus and Interest Paid

40

24

8

2 20

5

10

15

20

25

30

35

40

Resp

on

den

ts

5 4 3 2 1

Rating

Bonus & Interest

62

Table-2.16

Services (Pre and Post Sales)

Rating No of Respondent

Percentage

54321

26351122

34.346.014.52.62.6

Total Insurance holdersTotal non users Total

76

24100

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 paid earlier.

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.

63

Chart-2.16

Services (Pre and Post Sales)

26

35

11

2 20

5

10

15

20

25

30

35

Res

po

nd

ents

5 4 3 2 1

Rating

Services

64

Table-2.17

Accessibility

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.

Rating No of Respondent

Percentage

54321

214762_

27.661.88.02.6_

Total Insurance holdersTotal non users Total

76

24100

100

65

Chart-2.17

Accessibility

21

47

62 0

05

101520253035404550

Res

po

nd

ents

5 4 3 2 1

Rating

Accessibility

66

Table-2.18

Company Image

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.

Rating No of Respondent

Percentage

54321

4124101_

5431.613.11.3_

Total Insurance holdersTotal non users Total

76

24100

100

67

Chart-2.18

Company Image

41

24

10

1 00

5

10

1520

25

3035

40

45R

esp

on

den

ts

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.

68

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.

69

Table-2.20

Age Group – Premium

Age group 5 4 3 2 1 TotalRespondent

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

_ _ _ _ _ _

TotalRespondent

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 in

comparison 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..

70

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

Age

Gro

up

Respondents

5

4

3

2

1

71

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 60 Yrs

_ _ _ _ _ _

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.

72

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

Age

Gro

up

Respondents

5

4

3

2

1

73

Table-2.22

Age Group – Policy Term

Age group 5 4 3 2 1 Total Respondent

Below 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 60 Yrs

_ _ _ _ _ _

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.

74

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

Age

Gro

up

Respondents

5

4

3

2

1

75

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

_ _ _ _ _ _

Total Respondent

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 it does not influence

their decision in a broad way.

76

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

Age

Gro

up

Respondents

5

4

3

2

1

77

Table-2.24

Age Group – Bonus and Interest Paid

Age group 5 4 3 2 1 Total Respondent

Below 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.

78

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

Ag

e G

rou

p

Respondents

5

4

3

2

1

79

Table-2.25

Age Group – Services (both pre and post sales)

Age group 5 4 3 2 1 Total Respondent

Below 30 Yrs

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.

80

Chart-2.25

Age Group – Services (both pre and post sales)

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

Ag

e G

rou

p

Respondents

5

4

3

2

1

81

Table-2.26

Age Group – Accessibility

Age group 5 4 3 2 1 Total Respondent

Below 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.

82

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

Ag

e G

rou

p

Respondents

5

4

3

2

1

83

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.

84

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

Age

Gro

up

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.

85

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 5 Lakh

_ 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%), even though 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.

86

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

An

nu

al I

nco

me

Respondents

5

4

3

2

1

87

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.

88

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

An

nu

al I

nco

me

Respondents

5

4

3

2

1

89

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.

90

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

Ann

ual I

ncom

e

Respondents

5

4

3

2

1

91

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.

92

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

Ann

ual I

ncom

e

Respondents

5

4

3

2

1

93

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.

94

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

An

nu

al I

nco

me

Respondents

5

4

3

2

1

95

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.

96

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

Ann

ual I

ncom

e

Respondents

5

4

3

2

1

97

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.

98

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

An

nu

al I

nco

me

Respondents

5

4

3

2

1

99

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 company image 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.

100

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

An

nu

al I

nco

me

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.

101

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

102

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

103

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 regarding the

most important criteria before taking the decision on a life insurance policy.

j) People who belong to different income groups also have different perception

regarding the important criteria concerned with the life insurance.

104

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.

105

3.3 CONCLUSION

Insurance is a tool by which fatalities of a small number are compensated out of

funds collected from plenteous. Insurance is a safeguard against uncertain events that

may occur in the future. Over the last 5 to 6 years, the ICICI Prudential life insurance

company have tripled investors money than the other competent, this progress leads to

increase the company image and makes a way to lead the total insurance market.

Thus the study also comprise company image is the highly important criteria that

consumers consider before taking up a life insurance. This is mainly because people

expect safety and secure 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.

106

REFERENCES

TEXT BOOKS

1. PHILIP KOTLER (2001) ‘Marketing Management’, Prentice Hall Pvt.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, 9th edition.

WEB SITES

1. www.iciciprulife.com

2. www.irda.org

107

APPENDIX

A Study of Consumer’s Perception about Life Insurance with special Reference to ICICI Prudential

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 this questionnaire.

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?

108

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%

7. What kind of investment do you prefer?

8. Rank these various investment alternatives according to your preferences.

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)…………………….

109

Short Term Both Long Term

Money growth plan

9. State your expectation on investment alternatives by ticking according to its importance.

Expectations on investment

Highly important Important Neutral

Least important

Not important

Safety

Capital Growth

Liquidity

Return

Tax BenefitCompany Profile & Brand Name

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?

110

Yes No

LIC Reliance lifeBajaj Allianz

ICICI Prudential Others (Specify)……..HDFC Standard

Life protection plan Retirement planEducation planHealth plan Others (Specify)……….

13. What parameters do you look into before you take up a life insurance Policy? And tick the following parameter according to your importance.

Parameters considered before insurance policy

Highly Important Important

Neutral Least Important

Not Important

Premium

Charges

Policy Term

Rider Benefits

Bonus & Interest

Services (Pre & Post Sales)

Accessibility

Company Image

14. Are you aware about the joint venture between ICICI bank with Prudential Plc of UK to form a first private sector insurance company called ICICI Prudential 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 Life insurance?

111

Yes No

Yes No

Brand image Diversity

Transparency Utmost Good Faith

Growth Potential

Others (Specify)…………….

17. Among the following Life Insurance Companies in which company you will be Willing to take a life insurance?

18. Suggestions _______________________________________ ________________________________________________ ________________________________________________

Thank you

112

Bajaj Allianz Birla SunlifeHDFC Standard Life

SBI Life TATA- AIGICICI PrudentialReliance Max New YorkMet Life

Sahara ING Vysya Aviva Dabur

OM- Kotak Mahindra

LIC AXA-Bharti

ING Vysya

Max New YorkMax New York