A
PROJECT REPORT
ON
INVESTORS DECISION MAKING PATTERN FOR LIFE INSURANCE PRODUCT
SUBMITTED IN
PARTIAL FULFILMENT FOR
THE DEGREE OF
BACHELOR OF BUSINESS ADMINISTRATION
(BBA)
SUBMITTED BY
PATEL DIPTI R. 29
PROJECT GUIDE
AMINA I. NAKHUDA(Asst. Prof.)UDHNA CITIZEN COMMERCE COLLEGE
&
S.P.B. COLLEGE OF BUSINESS ADMINISTRATION
&UDHNA ACADEMY COLLEGE OF COMPUTER APPLICATION &
INFORMATION TECHNOLOGY
SURAT
2013-14 DECLARATION
I, the undersigned, Miss Patel Dipti R. here by, declare that
this dissertation titled Investors Decision Making Pattern for Life
Insurance Product is bonafide work carried out under the guidance
of Asst. Prof. Mrs. Amina I. Nakhuda, S.P.B. College of Business
Administration, Udhna, Surat.
The empirical findings in this report are based on the data
collected and have not been taken from any other reports.
This dissertation does not form any basis for other degree or
diploma.
__________________________
(Signature of the researcher)
Miss Patel Dipti R. Date:BBA Roll No. 29
Place: Surat ACKNOWLEDGEMENT
The satisfaction and euphoria that accompany the successful
completion of any task would be incomplete without the mention of
the Leaders, whose constant guidance and encouragement crown all
the efforts with success.
I am highly obliged to the Veer Narmad South Gujarat University
for arranging the programme of practical training in Bachelor of
Business Administration in such a manner.
It is my privilege to express my deep sense of gratitude to
Asst. Prof. Mrs. Amina L. Nakhuda for her efforts, guidance,
valuable comments and suggestions for making this project report.
She helped me to complete my report on the practical study and gave
contribution to improve and expand my practical knowledge.
Finally, I express my intense gratitude to my parents whose
blessings has helped me translate my efforts into fruitful
achievement.
UDHNA CITIZEN COMMERCE COLLEGE &
S.P.B. COLLEGE OF BUSINESS ADMINISTRATION &
UDHNA ACADEMY COLLEGE OF COMPUTER APPLICATION AND I.T.
(Self Financed College Affiliated To VNSGU, Surat)
(Managed By Udhna Academy Education Trust, Udhna)
214, Ranchhodnagar, Opp. Swaminarayan Temple, Udhna Main Road,
Udhna, Surat 394 210
(B.COM. / B.B.A. / B.C.A. / M.Sc.(C.A.))
Phone : (0261) (B.Com.: 2277739) (B.B.A.: 2270825) (B.C.A. /
M.Sc.(C.A.)): 2273542) (Fax: 2277739)
E-Mail ID :(B.Com.: [email protected]) (B.B.A.:
[email protected])(B.C.A.: [email protected])(M.Sc.(C.A.):
[email protected])
Website : www.udhnacollege.org B.Com.: NAAC Accredited B Grade
(CGPA 2.67) - 2009
Ref No. : /2013-14 Date : 19-02-2014
CERTIFICATE
This is to certify that Mr. Miss.patel Dipti has prepared the
Project Report entitled investor decision making pattern for life
insurance product under my guidance & supervision.
This project embodies the result of her work & is of the
standard expected of a candidate for the successful completion of
Bachelor of Business Administration Degree.
Date:
Place: Surat________________
_______________ _______________
(Faculty Guide)
(Vice Principal)
(Incharge Principal) Mrs. Amina I. Nakhuda Dr. Daisy Sheby
Thekkanal Dr. Mehul P. Desai(Asst. Prof.) INDEX
SR NO.TOPICPAGE NO.
IDECLARATIONI
IIACKNOWLEDGEMENTII
IIICERTIFICATE-II (From College)III
IVINDEX
List of Tables (Titles to be given)
List of Graphs (Titles to be given)IV
1Introduction 1
1.1. Introduction of Project
1.2. Objective of the Project
1.3. Research Methodology
1.4. Scope of the Study
1.5. Importance of the Study
1.6. Hypothesis of the Study
1.7. Organisation of the Study
1.8. Limitation of the Study
2Conceptual Framework
2.1. Industry Profile
2.2. Company Profile
2.3. Core Concepts
3Data Presentation & Analysis
3.1. Introduction
3.2. Presentation of Secondary Data
3.3. Presentation of Primary Data
4Findings & Conclusions
5Suggestions & Recommendations
Bibliography
Annexure
List of table Table no.DetailPage no.
3.1.1Which source respondent like for earning 35
3.1.2Respondents are satisfy with the earning36
3.1.3OpiniontowardsInvestinginlifeinsurance37
3.1.4Respondents like to invest in some other part time
work38
3.1.5In which industry respondent like to involve yourself39
3.1.6Which factors responsible for investment in life Insurance
product40
3.1.7 Which companies Life Insurance respondent chose 41
3.1.8How many year respondent ready to pay premium for his/her
Insurance scheme42
3.1.9How did respondent come to know about his/her present Life
Insurance43
3.1.10Which type of Insurance policy respondent most
prefer44
3.1.11Respondent motive when they Invest in Insurance45
3.1.12Selected Insurance policy fulfills respondent motive46
3.1.13Haw many percentage respondent spend for investment47
3.1.14Which premium policy respondent prefer most48
3.1.15Respondent main objective behind the investing49
3.1.16Respondent preferred mode or time period for paying
premium amount50
3.1.17The objective behind invest in insurance is Tax
saving53
3.1.18The objective behind invest in insurance is Future
security54
3.1.19The objective behind invest in insurance is Pension55
1.1.20The objective behind invest in insurance is
Speculation56
List of graph
Table no.DetailPage no.
3.1.1Which source respondent like for earning 35
3.1.2Respondents are satisfy with the earning36
3.1.3OpiniontowardsInvestinginlifeinsurance37
3.1.4Respondents like to invest in some other part time
work38
3.1.5In which industry respondent like to involve yourself39
3.1.6Which factors responsible for investment in life Insurance
product40
3.1.7Which companies Life Insurance respondent chose 41
3.1.8How many year respondent ready to pay premium for his/her
Insurance scheme42
3.1.9How did respondent come to know about his/her present Life
Insurance43
3.1.10Which type of Insurance policy respondent most
prefer44
3.1.11Respondent motive when they Invest in Insurance45
3.1.12Selected Insurance policy fulfills respondent motive46
3.1.13Haw many percentage respondent spend for investment47
3.1.14Which premium policy respondent prefer most48
3.1.15Respondent main objective behind the investing49
3.1.16Respondent preferred mode or time period for paying
premium amount50
3.1.17The objective behind invest in insurance is Tax
saving53
3.1.18The objective behind invest in insurance is Future
security54
3.1.19The objective behind invest in insurance is Pension55
3.1.20The objective behind invest in insurance is
Speculation56
Ch 1: Introduction1.1) INTRODUCTION OF PROJECTLife is full of
risks. Being a social animal and risk reverse, man always tries to
reduce risk. An age- old method of sharing of risk through economic
cooperation led to the development of the concept of insurance.
Insurance may be described as a social device to reduce or
eliminate risk of loss to life and property. Insurance is
collective bearing of risk. The risks, which can be insured
against, include fire, perils of sea, death, accidents and
burglary.
Insurance can be defined as a legal contract between two parties
where one party called insurer undertakes to pay a fixed amount of
money on the happening of a particular event which may be certain
or uncertain. The other party called insured pays in exchange a
fixed sum known as premium. The insurer and the insured are also
known as Assuror and AssuredIn India insurance is a flourishing
industry, with several national and international players competing
to excel. With several reforms and policy regulations, the Indian
insurance sector has witnessed tremendous growth in the recent
past. Insurance can be defined as a legal contract between two
parties whereby one party called insurer undertakes to pay a fixed
amount of money on the happening of a particular event, which may
be certain or uncertain. The other party called insured pays in
exchange a fixed sum known as premium. Insurance is desired to
safeguard oneself and ones family against possible losses on
account of risks and perils. It provides financial compensation for
the losses suffered due to the happening of any unforeseen
events.
Life insurance provides financial security to the family of a
policyholder in the event of his/her death. This is the most
popular insurance policy, as most people want to ensure that their
family members remain financially secure in the event of their
death. Till date, only 20% of the total insurable population of
India is covered under various life insurance schemes, the
penetration rates of health and other non-life insurances in India
is also well below the international level. These facts indicate
the of immense growth potential of the insurance sector. At present
there are 24 life insurance companies at present offering different
products to suit to the needs of the customers. Life Insurance
contracts not only allows an individual to have a risk cover
against any unfortunate event of the future but also provides for
educational needs, retirement needs, loans, tax planning,
investment option and savings. The customers prefer to invest their
money in a number of alternatives such as post office savings,
fixed deposits, mutual funds, share market, insurance, bonds etc.
Also, the returns they expect and their frequency of investment
varies. The individuals may be equal in all aspects, may even be
living next door, but their financial planning needs are very
different. The investment preference is influenced by various
demographic factors such as family size, age, gender, occupation,
educational qualification, income size etc.Insurance industry
contributes to the financial sector of an economy and also provides
an important social security net in developing countries. The
growth of the insurance sector in India has been phenomenal. The
insurance industry has undergone a massive change over the last few
years and the metamorphosis has been noteworthy.
There are numerous private and government insurance companies in
India that have become synonymous with the term insurance over the
years. Offering a diversified product portfolio and excellent
services the many insurance companies in India have managed to make
their way into almost every Indian household.Given the dynamism in
new offerings it becomes very important to analyze the association
between demographics of individual investors and their investment
behavior and also analyzing the acceptance of insurance by themMy
project was about approaching people in order to make them aware of
the benefits of being a certified financial consultant with life
insurance.I used both primary and secondary data to make a database
of people I had to target in the project I did a survey purely
targeting people for being financial consultants. I used a
semi-structured kind of questionnaire that contained both
close-ended and multiple-choice question in order to have an
insight into the needs, family structure, social contact base and
drives of the people I met. The response was a combination of
affirmative as well as negative due to various reasons.1.2)
OBJECTIVE OF STUDAY1. To know about various life insurance product
and policy.2. Proper understanding and analysis of life insurance
industry.
3. To know the people preference and perception towards
insurance.
4. To Know the potentially of insurance market in finance
market.
5. To gain a through knowledge of insurance sector.6. To know
the factors influencing invertors witch purchasing and decision
regarding life insurance product.7. To know why people choose the
life insurance.8. To understand the future scenario of insurance
and investment sector.1.3) RESEARCH METHODOLOGY(1) Need for
Research :
The study is necessary to know the decision regarding selection
of the insurance product. So it is useful to the investor insurance
is the one type benefited for the investors because of investors
get protection against particular risk or uncertainties.(2)
Research problem statement :
A study on In Investors Decision Making Pattern for Life
Insurance Product.(3) Research design :
3.1) Type of research :
There are 3 types of research design are as follows:
1 Exploratory research design
2 Descriptive research design
3 Causal research design
The type of research undertaken is descriptive research design
because the research is interested in knowing characteristics of
certain groups, object or event in used to the primary dad in the
life research product. 3.2) Source of data :
The data is collected through primary source using
questionnaire.
3.3) Sample size :
This study covers 100 respondents to study decision making
Pattern For Life Insurance Product from udhna area, surat city.3.4)
Sampling method :There are two types
1. Probability Sampling method2. Non probability Sampling
methodHere non probability Sampling method has been used non
probability convenience Sampling.3.5) Tools used for data
collection :Questionnaire is used for primary data collection
conducting close ended question with single choice question and
multiple choice questions. (4) Tools used for data analysisThe data
analysis tools are as follows:
Charts(pie)
Tables 1.4) SCOPE OF THE STUDAY1. The research work was
conducted in diriment areas, conveniently selecting 100 customers.
The study was done with the aim of understanding customers
perception towards fife insurance.
2. The result of the study will help the researcher to identify
the satisfaction level of the customers on various benefits
provided by the life insurance.
3. The result of the study will help the researcher to indentify
the areas where the life insurance company should focus in order to
increases their customer base.
4. The result of the study will help the researcher to bring out
with a new plan which the existing customers prefer.1.5) Important
of study :
1. Researchers come to know from this study about knowledge of
insurance sector.2. Researcher comes to know people thinking
towards insurance.
3. Researcher come to know how much people contribute in
insurance sector after change brought by IRDA.
4. The study will uncover and bring the important role being
played by insurance economic growth and development.5. Its help to
increase the knowledge about insurance sector.1.6) HYPOTHESIS OF
THE STUDY:1) H1: people are satisfy with security of life
insurance.H0: people are not satisfy with security of life
insurance.
2) H1: People are fulfill his/her need to selected insurance
policy.
H0: People are not fulfill his/her need to selected insurance
policy.3) H1: people are gain through knowledge of insurance
sector.
H0: people are not gain through knowledge of insurance sector.4)
H1: factor more responsible for investment in life insurance
product.sH0: factor not more responsible for investment in life
insurance product.1.7) Organization of the study: This Project is a
part of my BBA course. I have done the research on Investor
decision making pattern for life insurance product . The main focus
of this research is to explore the scope for a Insurance Sector in
the chosen location, the method and practices they adopt, and to
analyze the insurance position in present scenario. In my project 5
chapters should be included1st is introduction in witch we study
all information like introduction of the project, research
methodology, objective, scope, important, hypothesis, and
limitation of the study. 2nd chapter is conceptual framework in
witch we study industry profile and core concept.
3rd chapter is data presentation and analysis. In witch we study
the date use graph and charts.
4th findings and conclusions.
5th suggestions and recommendation. And last bibliography and
annexure.
I will collect all information for completion of the project.
For the successful completion of this project I conducted survey in
one area. Area is udhna. I went there with my set of questionnaire
and requested persons fill up my questionnaire form. After
conducting survey I analyzed data and found some fact which I have
mentioned in my project report. In this project report I used
various chart. On the basis of founded chart I have given some
inference also. These inferences have helped me a lot to come to
conclusion.1.5) Limitation of the study:1. The survey was limited
it may be possible that some important data is left out.2. The
results are not applicable to the whole population.3. Due to lack
of experience and knowledge of insurance industry it cant be said
that project has been made totally correct and aureate.4.
Questionnaire Because of the fast life of the respondents, most of
them do not give the time that needed, so that affects the result
as well as analysis.
Ch 2: Conceptual Framework2.1)INDUSTARY PROFILE
History of insurance industry: In some sense we can say that
insurance appeared simultaneously with appearance of society. In
earlier economies, we can see insurance in the form of people
helping each other. For example, if a house is burnt, the members
of the community help build a new one. Should the same thing happen
to ones neighbors must come to help? Otherwise, neighbors will not
receive help in the future.In the modern sense, started as a
methods of transferring or distributing risk Were by Babylonian
traders as long ago as the 3rd and 2nd millennia BC, respectively.
Chinese merchants traveling treacherous river rapids would
redistribute their cargo across many vessels to limit the loss due
to any single vessels capsizing. The Babylonians developed a system
which was recorded in the famous code of Hammurabi, c.1750 BC, and
practiced by early Mediterranean sailing merchants. If a merchant
received a loan to fund his shipment, he would pay the lender an
additional sum in exchange for the lenders guarantee to cancel the
loan should the shipment be stolen.
Greek monarchs were the first to insure their people and made it
official by registering the `insuring process in governmental
notary offices. They invented the concept of the general average
.Merchants whose goods were being shipped together would pay a
proportionally divided premium which would be used to reimburse any
merchant whose goods were jettisoned during storm or sinking of the
vessel in the sea.
The Greeks and Romans introduced the origins of health and life
insurance c.600 AD when they organized guilds called benevolent
societies which cared for the families and paid expenses of members
upon death. Guilds in the middle ages served a similar purpose.
Before insurance was established in the late 17th century, friendly
societies existed in England, in which people donated amounts of
money to a general sum that could be used for emergencies.
Separate insurance contracts (i.e., insurance policies not
bundled with loans or other kinds of contracts) were invested in
Greeks rulers in the 14th centaury, as were insurance pools backed
by pledges of landed estates. These new insurance contact allowed
insurance to be separated from invested from investment, a
separation of roles that first proved useful in insurance, became
for most sophisticated in post-Renaissance Europe, and specialized
varieties developed. Insurance as we know it today can be traced to
the Great Fire of London, witch in 1666 A.D devoured 13,200 houses.
In the aftermath of this disaster, Nicholas Barboa opened an office
to insure buildings. In 1680, he established Englands first fire
insurance company. The Fire Office, to insure brick and frame
homes. The first insurance company in the United States underwrote
fire insurance and was formed in Charles Town (modern-day Carolina,
in 1732.) LITERATURE REVIEW Life Insurance has come a long way from
the earlier days when it was originally conceived as a risk
covering medium for short periods of time, covering temporary risk
situations, such as sea voyages. As life insurance became more
established, it was realized what a useful tool it was for a number
of situations, including.
Temporary Needs / Threats The original purpose of life insurance
remains an important element, namely providing for replacement of
income on death etc. Regular Savings Providing for one's family and
oneself, as a medium to long term exercise (through a series of
regular payment of premiums). This has become more relevant in
recent times as people seek financial independence for their
family. Investment
Put simply, the building up of savings while safeguarding it
from the ravages of inflation. Unlike regular saving products,
investment products are traditionally lump sum investments, where
the individual makes a one off payment.
Retirement Provision for later years becomes increasingly
necessary, especially in a changing cultural and social
environment. One can buy a suitable insurance policy, which will
provide periodical payments in one's old age.
Protection:
Savings through life insurance guarantee full protection against
risk of death of the saver. Also, in case of demise, life insurance
assures payment of the entire amount assured (with bonuses wherever
applicable) whereas in other savings schemes, only the amount saved
(with interest) is payable. Aid to Thrift: Life insurance
encourages 'thrift'. It allows long-term savings since payments can
be made effortlessly because of the 'easy installments' facility
built into the scheme. (Premium payment for insurance is monthly,
quarterly, half yearly or yearly). For example: The Salary Saving
Scheme popularly known as SSS provides a convenient method of
paying premium each month by deduction from one's salary. In this
case the employer directly pays the deducted premium to LIC. The
Salary Saving Scheme is ideal for any institution or establishment
subject to specified terms and conditions. Liquidity:
In case of insurance, it is easy to acquire loans on the sole
security of any policy that has acquired loan value. Besides, a
life insurance policy is also generally accepted as security, even
for a commercial loan. Tax Relief: Life Insurance is the best way
to enjoy tax deductions on income tax and wealth tax. This is
available for amounts paid by way of premium for life insurance
subject to income tax rates in force. Assesses can also avail of
provisions in the law for tax relief. In such cases the assured in
effect pays a lower premium for insurance than otherwise.
Money When You Need It: A policy that has a suitable insurance
plan or a combination of different plans can be effectively used to
meet certain monetary needs that may arise from time-to-time.
Children's education, start-in-life or marriage provision or even
periodical needs for cash over a stretch of time can be less
stressful with the help of these policies. Alternatively, policy
money can be made available at the time of ones. Retirement from
service and used for any specific purpose, such as, purchase of a
house or for other investments. Also, loans are granted to
policyholders for house building or for purchase of flats (subject
to certain conditions).As of today, there are twenty one private
life insurance companies operating in India. Evaluation of life
insurance in India Important MILESTIONES
In India, insurance has a deep-rooted history; it finds mention
in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra)
and kauitlya (Arthasastra). The writings talk in terms in pooling
of resources that could be re-distributed in times of calamities
such as fire, floods, epidemics and famine. This was probably a
pre-cursor to modern day insurance. Ancient Indian history has
preserved the earliest traces of insurance in the form of marine
trade loans and carries contracts.YearEvent
1818The advent of life insurance business in India establishment
of the Oriented Life Insurance Company in Calcutta.
1834Oriental Life Insurance Failure
1850The advent of General Insurance in India with the
establishment of Triton insurance Company Ltd in Calcutta
1870The enactment of the British Insurance Ltd was set up
1907The Indian Mercantile Insurance Ltd was set up
1912The Indian Life Assurance Companies Act, 1912 was the first
statutory measure to regulate life business.
1928The Indian Insurance Companies Act was enacted.
1956Nationalization of Life Insurance Sector and Life Insurance
Corporation. The LIC absorbed 154 Indian, 16 non-Indian insurance
as also 75 provident societies.
1971The General Insurance Corporation of Indian was incorporated
as a company
1973 General insurance business was nationalized with effect
from 1st January 1973.
107 insurers where amalgamated and grouped into four companies
namely:
1) National Insurance Company Ltd.
2) The New Indian Assurance Company Ltd.
3) The Oriental Insurance Company Ltd
4) The United Indian Insurance Company Ltd.
1993The Government set up a committee under the chairmanship of
RM Malhotra former Governor of RBI to propose recommendations for
reforms in the insurance sector
2000 The IRDA was incorporated as a statutory body in April
2000.
Foreign companies where allowed ownership of up to 26%
2000-01Insurance Industry had 16 new entrants, 10 in life and 6
in General Insurance
2001-03Insurance Industry had 5new entrants, 2 in life and 3in
General
2003-04Insurance Industry had 1new entrants, Sahara Indian
Insurance Company Ltd. In Life Insurance category
2004-05Insurance Industry had 1new entrants, Shri Ram Indian
Insurance Company Ltd. In Life Insurance category
2005-06Bharti Axa Life Insurance Company was granted
Certification of Registration in July
2006Bharti Axa Life Insurance Company commenced operation the
newest player in the insurance sector.
Evaluation of life insurance in India:The boycott of British
goods and British institution, which occurred because of the
nationalist movement, encouraged of Indian-owned commercial and
business houses By 1907, the Indian mercantile the first of the
long lasting general insurance companies to be established with
Indian capital, had started functioning five offices, the New
India, Vulcan, Jupiter, British India General and Universal, were
established in 1919 almost simultaneously for transaction general
insurance business.In 1928, prominent insurance men of Bombay met
and formed the Indian insurance companies association to protect
the interest of Indian insurance. Leaders of the insurance industry
began to annual remove of national wealth through invisible exports
and arise public interest in favor of Indian insurance.
In 1972, the General Insurance Business (Nationalization) Act
1972 was passed under the provisions of this act. The general
insurance corporation of India was established for the purpose of
directing; controlling and caring on the general insurance business
and all the 106 insurers were merged and grouped into four
subsidiaries of the general insurance corporation of India
namely:
National Insurance Company Ltd., with its head office at
Calcutta.
The New India Assurance Company Ltd., with its head office at
Bombay.
The Oriental Insurance company Ltd., with its head office at
Delhi.
The United Indian insurance Company Ltd., with its head office
at Madras The history of life insurance in India dates back to 1818
when it was conceived as a means to provide for English Windows.
Interestingly in those days a premium was charged for Indian lives
than the non-Indian lives as Indian lives were considered risky for
coverage. The Bombay Mutual Life Insurance Society started its
business its 1870. It was a first company to charge some premium
for both Indian and non-Indian lives. The Oriental Assurance
Company was established in 1880. The General insurance business in
India, on the other hand, can trace its roots to the Triton (Tital)
Insurance Company Limited, the first general insurance company
established in the year 1850 in Calcutta by the British. Till the
end of nineteenth century insurance business was almost entirely in
the hand of overseas companies.
Insurance regulation formally began in India with the passing of
the Life Insurance Companies Act of 1912 and the provident fund Act
of1912.by 1938 there were 176 Insurance companies. The first
comprehensive legislation was introduced with the Insurance Act of
1938 that provided strict state Control over insurance business.
The insurance businesses grow at a faster pace after independence.
Indian companies strengthened their hold on this business but
despite the growth that was witnessed, insurance remained an urban
phenomenon.
The Government of India in 1956, brought together over 240
private life insurance and provident societies under one
nationalized monopoly corporation and Life Insurance Corporation
(LIC) was born. Nationalization was justified on the grounds that
it would create much needed founds for rapid industrialization.
This was in conformity with the Governments chosen path of State
lead planning and development.
With largest number of life insurance policies in force in the
world, Insurance happens to be a Megs opportunity in India. Its a
business growing at the rate of 15-20 per cent annually and
presently is of the order of Rs 450 billion. Together with banking
services, it adds about 7 per cent to the GDP. Gross premium
collection is nearly 2 per cent of GDP and funds available with LIC
for investment are 8 per cent of GDP.Yet, nearly 80 per cent of
Indian population is without is life insurance cover while health
Insurance and non- life insurance continues to be below
international standards and this part of the population is also
subject to weak social security and pension system with hardly any
old age income security. This it is an indicator that growth
potential for the insurance sector is vast.
A well-developed and evolved Insurance sector is needed for
economic development as it provides long term funds for
infrastructure development and at the some time strengthens the
risk taking ability. It is estimated that over the next ten years
Indian would require investments of the order of one trillion US
dollar. The insurance sector, to some extent, can enable
investments in infrastructure development to sustain economic
growth of the country.
Insurance is a federal subject in Indian. There are two
legislations that govern the sector The Insurance Act -1938 and the
IFDA Act-1999. Reinsurance
A reinsurer in India was defined clearly for the first time in
the Insurance Act of 1938. 260 Indian currency has not been
convertible since independence. Thus, to retain the maximum
possible premium within India and thereby preserve foreign currency
became a priority for the reinsurance business. India did not have
a floating exchange rate until the 1990s. Therefore, hard
currencies (like the U.S. dollar) were considered valuable
resources. Thus, the policy was to pay minimum possible premiums in
hard currencies. To achieve this goal, the insurance companies in
India formed the India Reinsurance Corporation in 1956. This was a
voluntary agreement at the time.In 1961, the government created the
Indian Guarantee and General Insurance Company. By amendment to
Section 101A of the Insurance Act, the government required all
companies to give statutory cession of 10 percent each to the India
Reinsurance Corporation and to the Indian Guarantee and General
Insurance Company. This requirement has been echoed in the Act
passed in 2000. 5 The only reinsurance company allowed to operate
in India is the General Insurance Corporation. Present scenario:The
Government of Indian liberalized the insurance sector in March 2000
with the passage of the Insurance Regulatory and Development
Authority (IRDA) Bill, lifting all entry restrictions for private
players and allowing foreign players to enter the market with some
limits on direct foreign ownership. Under the current guidelines,
there is a 26 percent equity cap for foreign partner in an
insurance company. There is a proposal to increase this limit to 49
percent.
The opening up of the sector is likely to lead to greater spread
and deepening of insurance in India and this may also include
restructuring and revitalizing of the public sector companies. In
the private sector 12 life insurance and 8 general insurance
companies have been registered. A host of private Insurance
companies operating in both life and non-life segments have started
selling their insurance policies since 2001.
In India, some Europeans started the first life insurance
company in Bengal presidency, viz., the Orient Life assurance
Company in 1818. The year 1870 was a year of a land mark in the
history of Indian Insurance separating the early period of
pioneering attempts in life Insurance form the subsequent period of
steady at the establishment of Indian Life Office, viz., Bombay
mutual Life Assurance society in 1871. The next important life
office was Oriental Government Security Life Assurance Co., Ltd.,
which started its operation since 1874. Since then several offices
developed in India. In 1956, the Life insurance business was
nationalized by taking over 245 companies and by forming one single
corporation, named as Insurance Corporation (LIC) of India. Role of
insurance in economic
For economic development, investments are necessary. Investments
are made out of saving. A life insurance company is a major
instrument for the mobilization of savings of people, particularly
from the middle and lower income groups. These savings are
channeled into investments for economic growth.
An on 31.3.2002, the total investment of the LIC exceeded
Rs.245,000 corers, of which more than Rs.130,000 corers were
directly in Government (both State and Centre) related securities,
more than Rs. 12000 corers in the State Electricity Boards, nearly
Rs.20,000 corers in housing loans and Rs.4000 corers in water
supply and sewerage systems. Other investments included road
transport, setting up of industrial estates and directly financing
industry. Investment in the corporate sector (shares, debentures
and term loans) exceeded Rs.30, 000 corers. These directly affect
the lives of the people and their economic well-being.The L.I.C is
not an exception. All good life insurance companies have huge
funds, accumulated through the payments of small amounts of premium
of individuals. These funds are invested in ways that contribute
substantially for the economic development of the countries in
which they do business. The private insurers in India are new and
had not built up funds in 2002. But, in course of time, they also
would be directly and indirectly contributing to the countrys
development.
A life insurance company will have large funds. These amounts
are collected by way of premiums. Every premium represents a risk
that is covered by that premium. In effect, therefore, these vast
amounts represent pooling of risks. The funds are collected and
field in trust for the benefit of the policyholders. The management
of life insurance companies is required to keep this aspect in mind
and make all its decision in ways that benefit the community. This
applies also to its investments. That is why successful insurance
companies would not be found investing in speculative ventures.
Their investments, as in die case of the L.I.C., benefit the
society at large.
Rural Insurance
In his budget speech, Finance Minister Deshmukh had specific
hopes for rural insurance. He announced, It will be possible to
spread the message of insurance as far and as wide as possible,
reaching out beyond the most advanced urban areas and into hitherto
neglected, namely, rural areas.After nationalization, Life
Insurance Corporation has specifically targeted the rural insurance
market. To promote rural insurance, it followed a segmented
approach to the market. First, it targeted the rural wealthy with
regular individual policies. Second, it offered group policies to
people who could not afford individual policies. For the very poor,
it offered government-subsidized policies. In India today more than
half of the population live in rural areas and contribute a quarter
of the gross domestic product (GDP). Thus, the policymakers felt
that it was essential to bring life insurance business to the rural
population. Did the policymakers succeed in bringing insurance in
the rural sector? Exactly to whom in the rural sector did they
manage to bring life insurance? The success of the rural expansion
can be measured in a number of different dimensions. Here we are
not talking about success necessarily in the sense of commercial
success of higher profits. The finance minister was talking about a
social objective of bringing insurance cover for the neglected
rural areas. CHANGING TRENDS IN LIFE INSURANCE POLICY:A long with
the other objectives of insurance like financial security, tax
benefits etc. one of the major objectives is saving and investment.
Traditional life insurance policies like endowment were becoming
unattractive and not meeting the aspirations of the policyholders
as the policyholder found that the sum assured guaranteed on
maturity had really depreciated in real value because of the
depreciation in the value of money. The investor was no longer
content with the so called security of capital provided under a
policy of life insurance and started showing a preference for
higher rate of return on his investments as also for capital
appreciation. It was, therefore found necessary for the insurance
companies to think of a method whereby the expectation of the
policyholders could be satisfied. The objective of providing a
hedge against the inflation through a contract of insurance pushed
insurer to link the insurance policy with market and thus the
industry observed the beginning of Unit linked insurance policy
(ULIP). Life insurance Company in Indian market:Herein mentioned
are some statistics given by IRDA regarding individual single
premium of several life insurance.
1. Bajaj Allianz
2. ING vyasa
3. Reliance life
4. SBI Life
5. Tata AIG
6. HDFC standard
7. ICICI prudential
8. Birla Son life
9. Aviva
10. Max New York
11. Met Life
12. Shriram Life
13. IDBI federal
14. Star Union Dai-ichi
15. LIC Brief history of same Indian life insurance company
1) HDFC Standard Life Insurance Co. LTD.
HDFC Standard life insurance Company LTD is one of Indias
leading private insurance companies, which offers a range of
individual and group insurance solutions. HDFC standard life
insurance Co. LTD. Is a joint venture between HDFC LTD., Indias
largest housing finance institution and standard life Assurance
company, Europes largest mutual life company. It was the first life
insurance company to be granted a certificate of registration by
the IRDA on the 23rd of October, 2000. HDFC holds about 72.43% of
the equity, standard life holds 26% while the rest is held by
others
Standard Life, UK was founded in 1825 and has an experience of
over 185 years. The company is rated as very strong by standard
& poors (AA) and excellent by Moodys (Aa2). Headquartered in
Edinburgh, standard life has around 9,000 employees across the UK,
Canada, Leland, Germany, Austria, India, USA, Hong Kong and
mainland China The standard life group includes savings and
investments businesses, which operate across its UK, Canadian and
European markets; corporate pensions and benefits businesses in the
UK and Canada; standard life investment is a global investment
manager.
HDFC Limited, Indias premier housing finance institution has
assisted more than 3.8 million families to own a home, since its
inception in 1977 across in Dubai, London and Singapore with
service associates in Saudi Arabia, Qatar, Kuwait and Oman to
assist NRIS to own a home back in India. HDFC has set benchmarks
for the Indian housing finance industry. Recognition for the
service to the sector has come form several national and
international entities including the World Bank that has lauded
HDFC as a model housing finance company for the developing
countries. HDFC has undertaken a lot of consultancies abroad
assisting deferent countries including Egypt, Maldives, Mauritius,
and Bangladesh in the companies.
2) Max New York Life Insurance co.LTD.Max New life Insurance
Company Limited is a joint venture between Max Indian Limited, a
multi- business corporate, and New York Life International, a
global expert in life insurance.
New York Life is a Fortune 100 company that has over 160 years
of experience in the life insurance business. Max Indian is a
Limited is a multi- business corporate dealing in Clinical
Research, IT and Telecom Service, and Specialty product
businesses.
Max New Life Insurance started its operations in India on 15th
November, 2000. It is the first life insurance company in the to be
awarded the ISO 9000:2000 certification Max New York offers
customized products tailored to suit individuals needs. With its
various products and Riders, they offer more than 400 product
combination. Today, Max New York Life Insurance has a network of
705 offices spread over 37 cities all over Indian.
Max New York Life has identified individual agents as its
primary channel of distribution. The Company places a lot of
emphasis on its selection process, which comprises four stages
screening, psychometric test, career seminar and final interview.
The agent advisors are trained in- house to ensure optimal control
on equality of training. Max New York Life insurance significantly
in its training programmer and each agent is tainted for 152 hours
as opposed to the mandatory 100 hours stipulated by the IRDA before
beginning to sell in the marketplace. Training is a continuous
process for agents at Max New York Life and ensures development of
skills and knowledge through a structured programmed spread over
500 hours in two years. This focus on continuous quality training
has resulted in the company having amongst the highest agent pass
rate in RIDA examination and agents have the highest productivity
among private life insurance.
Having set a best in class agency distribution model in place,
the company is spearheading a major thrust into additional channels
to further grow its business. The company is using a five-pronged
strategy to pursue alternative channels of distribution. These
included the franchisee model, rural business, direct sales force
involving group insurance and telemarketing opportunities, banc
assurance and corporate alliances.
3) ICICI Prudential Insurance co. LTD.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
was established in 1995 to lend money for industrial development.
Today, it has diversified into retail banking and is the largest
private bank in the country. Prudential plc was established in 1848
and is presently the largest life insurance company. Total capital
infusion stands at Rs. 33.62 billion, with ICICI Bank holding a
stake of 74% and prudential plc holding 26%.
They began their operations in 24th November, 2000 after
receiving approval from Insurance Regulatory Development Authority
(RIDA). TODAY, nation-wide team comprises of over 1,000 offices,
over 263,000 advisors; and 22 banc assurance partners. ICICI
Prudential was the first life insurance in the Indian to receive a
National Insurance Financial Strength rating of AAA from Fitch
ratings. For three years in a row, ICICI Prudential has been voted
as Indias Most Trusted Private Life Insurance, by the Economic
Times AC Nielsen ORG Margi survey of Most Trusted Brands.
4) Kotak Mahindra Old Mutual Life Insurance Co.LTD.
Kotak Mahindra Old Mutual Life Insurance LTD. Is a joint venture
between Kotak Mahindra Bank LTD,(KMBL), and Old Mutual plc, Kotak
Mahindra is one of Indias leading financial institution and offers
a range of financial services such as commercial banking, stock
broking, mutual funds, life insurance, and investment banking,
Kotak Mahindra Old Mutual Life Insurance Ltd. Started its
operations in India on 10th January, 2000.
Old Mutual, a company with 160 years experience in life
insurance was established more than 150 years ago and offers a
diverse range of financial services in South Africa, the United
States and United Kingdom. The company is listed on the London
Stock Exchange with a market capitalization and has its head
quarters in London
Kotak Mahindra Old Mutual Life Insurance is a 74:26 joint
venture between Kotak Mahindra Ltd. And Mutual plc. Kotak Mahindra
Old Mutual.
Life insurance is one of the fastest growing insurance companies
in India has shown remarkable growth since its inception in
2001.
5) Birla Sun Life Insurance Co. Ltd.Established in 2001, Birla
Sun Life Insurance Company Limited (BSLI) is a joint venture
between the Aditya Birla Group, a well know and trusted name
amongst Indian conglomerates and Sun Life Financial of Canada.
Aditya Birla Group is an Indian multinational conglomerate with
presence in India, Thailand, Indonesia, Philippines Australia and
china.Sun Life Insurance, Sun Life financial primary insurance
business, is one of the leading insurance companies of the
world.
Known for its innovation and creating benchmarks, BSLI has
several first to its credit. It was that first Indian insurance
Company to introduce Free Look Period and the same was made
mandatory by IRDA for all other life insurance companies.
Additionally players in India. To establish credibility and further
transparency, BSLI also enjoys the prestige to be the originators
of practice to disclose portfolio on monthly basis. These category
development initiatives have helped BSLI be closer to its policy
holders expectations, which gets further accentuated by the
complete of insurance products (viz. pure term plan, life stage
products, health plan and retirement plan) that the company
offers.
It has an extensive reach through its network of 600 branches
and 1, 47,900 empanelled advisors. This impressive combination of
domain expertise, product range, reach and ears on ground, helped
BSLI cover more than 2.4 million lives it commenced operations and
establish a customer base spread across more than 1500 towns and
cities in India. BSLI has ensured that it has lowest outstanding
claims ratio of 0, 00% for FY 2010- 11. The company has web-enabled
IT system for better customer services and a strong distribution
channel. It has professional knowledge and global of Aditya Birla
Group.
6) TATA AIG LIFE INSURANCE CO.LTD.
Tata AIG Life Insurance Company Limited is a joint venture
between Tata Group and American International Group, Inc. (AIG).
Tata Group is one of the oldest and leading business groups of
India. Tata Group has had a long association with Indias insurance
sector having been the largest insurance company in India prior to
the nationalization of insurance. The Late Sir (Docub) Tata was the
founder Chairman of New India Assurance Co. Ltd, a group company
incorporated way back in 1919.
American International Group, Inc is the leading U.S. based
international insurance and financial services organization and the
largest underwriter of commercial and industrial insurance in the
United Status. AIG has one of the most extensive life insurance
networks in the world.
Tata AIG Life combines the Tata Groups Pre-eminent leadership
position in India and AIGs Global presence as the worlds leading
international insurance and financial services organization. The
Tata Group holds 74 per cent stake in the insurance venture with
AIG holding the balance 26 percent. Tata AIG Life provides
insurance solution to individuals and corporate. Tata AIG Life
Insurance Company was licensed to operate in India on February 12,
2001 and started operations on April 1, 2001.
7) SBI LIFE INSURANCE CO.LTD.SBI Life Insurance is a joint
venture between the State Bank of India and Cardif of France. State
Bank of India is the largest banking franchise in India. Along with
its 7 Associate Banks, SBI Group has a network of over 14,500
branches across the country, the largest in the world.Cardif is a
wholly owned subsidiary of BNP Paribas, which is The Euro Zones
leading Bank. BNP is one of the oldest foreign banks with a
presence in India dating back to 1860. SBI Life Insurance is
registered with an authorized capital of Rs. 1000 Corer and a paid
up capital of Rs. 500 crores. SBI owns 74% of the total capital and
Cardif the remaining 26% Cardif is ranked 2nd worldwide in
creditors insurance offering protection to over 35 million policy
holders and net income in excess of Euro 1 billion. Cardif has also
been a pioneer in the art of selling insurance products through
commercial banks in France and in 35 more countries.
8) MET LIFE INDIA INSURANCE CO.LTD.Met life insurance Co; ltd is
a joint venture between Met life Group and its Indian partners; the
Indian partner include J&k Bank, Dhanalakshmi, Karnataka Bank,
Karvy constructions, Way2Wealth, and Mini Muthoothu.
Met life Group has presence in America and Asia and has an
experience of over 139 years in providing financial services. The
Met life companies are the number one life insurer in the U.S. with
approximately US$2.8 trillion of life insurance in force. Met life
serves 88 of the top one hundred FORTUNE 500 companies. Met life
entered Indian insurance sector in 2001. The met life companies
offer life insurance, annuities, automobile, and home insurance,
retail banking and other financial services to individuals, as well
as group insurance, reinsurance and retirement and savings products
and services to corporation and other institutions, reaching more
than 70 million customers around the world.9) RELIANCE LIFE
INSURANCE CO.LTD.
AMP sanmar life insurance was a joint venture between AMP,
Australia and the sanmar Group. Headquartered in Chennai, AMP
sanmar had over 90 offices across the country, 9000 agents, and
more than 900 employees. Consequent to the acquisition of the
entire equity capital of AMP, Australia and Sanmar Group in AMP
Sanmar life insurance Co. ltd., by Reliance Capital Limited, AMP
Sanmar Life insurance Co. ltd. has changed to reliance life
insurance Co. Ltd. on 17.01.2006.Reliance Life insurance Company
Limited is a part of reliance capital limited of the reliance Anil
Dhirubhai Ambani Group. The company acquired 100 per cent
shareholding in AMP Sanmar Life insurance Company in August 2005.
RLIC has a huge network of around 1145 branches covering a wide
geographical area. It is one of the ISO 9001-2000 certified life
insurance companies of India.
2.2)Core concept: WHAT IS INSURANCE:Insurance in law and
economics is a form of risk management primarily used to hedge
against the risk of a contingent loss. Insurance is defined as the
equitable transfer of the risk of a loss, from one entity to
another, in exchange for a premium. An insurer is a company selling
the premium, to be charged for a certain amount of insurance
coverage.The definitions of life insurance given by the learned
persons are as follows:
Life insurance business is the business of effecting contract
upon human life.
As per section of insurance Act. A life insurance contract may
be defined as one whereby the insurer, in consideration of premium
paid either in a lump sum or in periodical installments, undertaken
to pay an annuity or a certain sum of money either on the death of
the insured as on the expiry of a certain number of years. R.S.
Sharma.The act, system, or business of insuring property, life etc,
against loss or harm arising in specified contingencies, as fire,
accident, death, disablement in consideration of a payment
proportionate to the risk involved is called insurance. Insurance
may be described as a social device to reduce or eliminate risk of
life and property. Under the plan of insurance, a large number of
people associated themselves by sharing risk.
Insurance is actually a contact between 2 parties whereby one
party called insurer undertakes in exchanges for a fixed sum called
premium to pay the other party happening of a certain event,
insurance is a contract whereby, in return for the payment of
premium by the insurers pay the losses suffered by the insured as a
result of the occurrence of unforeseen events.
Types of insurance :
Life insurance:
Life in insurance business was started by Europeans with the
establishment of oriented Life insurance Company in 1818.Later on,
in 1871, Bombay Mutual Life insurance came into Existence. The
Oriental Government Security Life assurance came into being in
1874. The Life insurance business was nationalized in the year
1956.
Marine insurance is the oldest type of insurance and of the
earliest record of a marine Policy relates to a Mediterranean
voyage in 1347.This was followed by Life insurance some 300 years
later. Fire insurance, however, did not begin until after the Great
fire of London in 1666. In India all the three insurance developed
as under:Marine insurance:
There are references that marine insurance was practiced in
India three thousand years ago; there is no evidence that insurance
in its present from was practiced prior to the twelfth century. In
fact, British insurers introduced general insurance, in its modern
form in India, when they opened their branches around 1700. The Sun
Insurance Office ltd (a foreign company) started its operation in
Calcutta in the year 1710. In our country the following four
companies have been authorized to carry to the general insurance
business including marine insurance:
1) National Insurance Company, Calcutta.
2) New India Assurance Company, Bombay.
3) Orieatal Fire and General Company, Bombay.
4) United India Fire and general Insurance Company, Madras, Fire
insurance. In our country the insurance started with the
establishment of Triton insurance Company in Calcutta in 1850. The
North British Mercantile Company come into existence in 1861. There
was slow progress of fire insurance in our country and with the
nationalization of general insurance business. Fire insurance is
now being transacted by the four subsidiary companies of General
insurance Corporation of India. Principles of insurance:Insurance
contracts are based on certain fundamental principles. These
principles are common to all type of insurance life, fire, marine
and miscellaneous insurance contracts, with the exception of the
principle of indemnity which is not applicable in case of life
insurance contract because of a being a contingent contract.These
Principles are:
1) Utmost good faiths2) Insurable interest
3) Indemnity
4) Contribution1) Principles Utmost good faith:
Since insurance shift risk from one party to another, it is
essential that there must be at most good faith and mutual
confidence between the insured and the insurer. In a contract of
insurance the insured knows more about the project matter of the
contract than the insurer. Consequently, he is duty bound to
disclose accurately all material facts and nothing should be a
withheld or concealed. Any fact is material, which goes to the root
of the contract of insurance and has a bearing on the risk
involved. It is only when the insurer knows the whole truth that he
is in a position to judge (a) weather he should accept the risk and
(b) what premium he should charge. If that were so, the insured
might be tempted to bring about the event insured against in order
to get money.2) Principles of Insurable interest:For an insurance
contract to be valid, the insured should have an insurable interest
in the subject matter of insurance. A contract of insurance
affected without insurable interest is void. It means that the
insured must have an actual pecuniary interest and not a mere
anxiety or sentimental interest in the subject matter of the
insurance. The insured must be so situated with regard to the thing
insured that he would have benefit by its existence and loss from
its destruction. The owner of a ship run a risk of losing his ship,
the character of the ship runs a risk of losing his freight and the
owner of the cargo incurs the risk of losing his goods and profit.
So, all these persons have something at stake and all of them have
insurable interest, It is the existence of insurable interest in a
contract Insurance, which distinguishes it from a mere watering
agreement.3) Principle of Indemnity :The term Indemnity means
making up the loss. A contract of insurance contained in a fire,
marine, burglary or any other policy (excepting life assurance and
personal accident and sickness insurance) is a contract of
indemnity. This means that the insured, in case of loss against
which the policy has been issued, shall be paid the actual amount
of loss not exceeding the amount of the policy, i.e. He shall be
fully indemnified. The object of every contract of insurance is to
place the insured in the same financial position, as nearly as
possible, after the loss, as if his loss had not taken place at
all. It would be against public policy to allow an insured to make
a profit out of his loss, as if his loss had not taken place at
all. It would be against public policy to allow an insured to make
a profit out of his loss or damage.4) Principle of Contribution
:Contribution is also a corollary of the principle of indemnity.
This principle applies where there are two or more insurance on one
risk; the principle of contribution comes into play. The aim of
contribution is also distribute the actual amount of loss among the
different insurers who are liable for the same risk under different
policies in the respect of the same subject matter. Any one insurer
may pay to the insured the full amount of the loss covered by the
policy and then become entitled to contribution from his
co-insurers in proportion to the amount which each has undertaken
to pay in case of loss of the same subject-matter.In other words,
the right of contribution arises when (i) there are different
policies which relate to the same subject-matter (ii) the policies
cover the same peril which caused the loss, and (iii) all the
policies are in force at the time of loss, and (iv) one of the
insurers has paid to the insured more than his share of the loss.
Function of insurance
1) Provides protection
The function of insurance is to provide protection against
future risk, accidents, uncertainty. Insurance cannot check the
happening of the risk, but can certainly provide for the losses of
risk. Insurance is actually a protection against economic loss by
sharing the risk with others.
2) Collective bearing of risk
Insurance is a device to share the financial loss of few among
many others. Insurance is a mean by which few losses are shared
among larger number of people. All the insured contribute the
premiums towards a fund and out of which the persons exposed to a
particular risk is paid.
3) Assessment of risk
Insurance determines the probable volume of the risk by
evaluating the various factors that give rise to risk. Risk is the
basis for determining the premium rate also.4) Provide
certainty
Insurance is s device, which help to change from uncertainty to
certainty. Insurance is device whereby the uncertain risks may be
made more certain.
5) Preventions of losses
Insurance cautions individuals and businessmen to adopt suitable
to prevent unfortunate consequences of risk by observing safety
instructions; installation of automatic sparkler or alarm systems,
etc. prevention of losses causes lesser payment to the assured by
the insurer and this will encourage for more savings by way of
premium. Reduced rate of premium stimulate for more business and
better protection to the insured.
6) Means of savings and investment
Insurance server as savings and investment; insurance compulsory
way of savings and it restricts the unnecessary expense by the
insureds for the purpose of saving income-tax exemptions also,
people in insurance.
Advantages of life insurance:1. In the event of death, the
settlement is easy. The heirs can collect the money quicker,
because of nomination and assignment.2. There is a certain amount
of compulsion to go through the plan of savings. In another forms,
if one charges the original plan of savings, there is no loss. In
life insurance, there is a loss.
3. There are tax benefits, both in income tax and in capital
gain.4. Marketability and liquidity are better. A life insurance
policy is property and can be transfer on mortgaged. Loans can be
raised against the policy. Ti is possible to protect a life
insurance policy from being attached by debtors. The beneficial
interest will remain secure. Limitation of life insurance: 1.
Insurance can not protect against all kind of risk. If any risk is
not in harmony with government policy, insurance can not protect.
For example there is no protection against the risk in smuggling
business.
2. The loss which has been evaluated in money that is only
secured by insurance.3. Insurance can not protect in case of risk
existing due to unexpected events. For example economic instability
due to trade cycle, aptitude of public, changes in fashions &
habits, unexpected and unprecedented changes in government policy.
All such can not get insurance protection.
CH: 3 Data presentation and analysis
3.1)Introduction
3.1.1)what is your source of earning?
option No. of respondent
Private40
Business20
Government 40
Total 100
3.1.1) what is your source of earning
Conclusion:
40% respondents earn through priavt company 20% business men
&40% have government job so masy of the people hear do the work
in privat or government jop3.1.2)Are you satisfied with the
earning?
option No. of respondent
yes 66
no 34
total 100
3.1.2) Are you satisfied with the earning
Conclusion
66% respondent should be satisfy get the service of life
insurance &34% respondent not satisfy so we shows that
satisfaction level should be higher get the service life insurance
product.
3.1.3)Are you interested in investing?
option No. of respondent
yes 66
no 34
total 100
3.1.3) Are you interested in investing
conclusion
66% respondent intrested inverting & 34% respondent not
interestd investing so we shows that interest leval higher to
invest the fund.
3.1.4)Would you like to invest in some other part time work?
option No. of respondent
yes 70
no 30
total 100
3.1.4) Would you like to invest in some other part time work
Conclusion
70% respondent like to invest in part time work & 30% only
not interested. So, hear we shows that people like to invest in
part time work and also its ratio was higher.
3.1.5)In which industry would you like to involve yourself?
OptionNo. of respondent
Insurance50
Banking& finance20
Education20
Others 10
3.1.5) In which industry would you like to involve yourself
Conclusion
50% respondent like to invest money in insurance sector,10%
respondent only invest money in others place, 20% invest fund in
education sector,20% like to invest in banking finance. So, we show
that more of the respondents chose insurance industry to invest the
fund.
3.1.6)(if yes, than) which factors responsible for investment in
life Insurance product? (Multiple)
OptionNo. of respondent
Tax benefit10
Risk coverage saving20
Security with high return20
Money back guarantee10
Larger risk covariance 30
Others10
3.1.6)(if yes, than) which factors responsible for investment in
life Insurance product
Conclusion 30% respondent invest in insurance sector because of
tax saving,10% respondent invest in because of money back
insurance,20% respondent invest in because of security with high
return,20% invest in because of risk coverage saving,10% invest in
because of other reson. So we shows that most of respondent chose
it to get benefit of tax saving.
3.1.7)
Which companies Life Insurance do you have?
OptionNo. of respondent
LIC40
Bajaj alliance20
Reliance life insurance20
Kotak life insurance10
Other10
3.1.7)Which companies Life Insurance do you have
Conclusion
40% chose LIC company, 20% chose Bajaj alliance, 20% chose
Reliance life insurance, 10% chose Kotak life insurance &10%
chose others sectors to invest the fund. So we shows that LIC is
more feverable to invest the fund and people also interested in it
as compar to all other palces.
3.1.8)
How many year are you ready to pay premium for your Insurance
scheme?
OptionNo. of respondent
Less than 3 years40
6-9 years10
3-5 years30
More than 10 years30
3.1.8) How many year are you ready to pay premium for your
Insurance scheme
Conclusion
40% respondent pay the pimium less thae three year, 10%
respondent pay the primium 6-9 year, 30% respondent pay the primium
3-5 year,& 30% respondent pay the primium more than 10 years.
So we asum thae people wouled like to pay the pimium tess than 3
years in his /her schem.
3.1.9)
How did you come to know about your present Life Insurance?
[Multiple]
OptionNo. of respondent
Family/ relatives30
Friends20
Agent10
Advertisement30
Others10
3.1.9)How did you come to know about your present Life
Insurance
Conclusion30% respondent know the insuranc sctor to his
family,10% respondent known it through others ways ,30% respondent
known it through adevertisement,10%espondent known it through
agent,20% respondent known it through it friends.
3.1.10)Which type of Insurance policy do you have?
[Multiple]
OptionNo. of respondent
Individual Med shield policy10
Motor vehicle policy10
Disability benefit10
Accident policys30
Trade30
Other specify10
3.1.10)Which type of Insurance policy do you have
Conclusion10% respondent have individual medishield policy,
disability benefit, also moter vihical policy, &other spacify,
30% respondent have trade,& also accident policy.so we assume
that accident policy,and trad more feverable to all others.
3.1.11)
What is your motive when you invest in Insurance?
OptionNo. of respondent
Only investment30
Only insurance30
Investment + Insurance40
3.1.11)What is your motive when you invest in Insurance
Conclusion40% respondent motive to invest in ivest +
insurance,30% respondent motive to invest in only investment &
305 also invest in his/ her motive is only insurance.so more of
them chose ti toinsure + invest the fund.
3.1.12)
Selected Insurance policy fulfills your motive?
OptionNo. of respondent
Yes90
No10
3.1.12)Selected Insurance policy fulfills your motive
Conclusion90% respondents motive should be fulfil by the
insurance only 10% are not fulfil his/her motive, so we shows that
more raspondent senisfy the life insurance.
3.1.13)
Haw many percentages of you spend for investment?
OptionNo of respondent
None10
10%10
20%20
30%20
More than 30%40
3.1.13)Haw many percentages of you spend for investment
Conclusion40% respondent spend more than 30% amount, 20%
respondent spend 30% amount, and 10% respondent spend 10% amount.
Hear we shows that more than respondent spend his money in
insurance sector.
3.1.14)
Which premium policy you prefer most?
OptionNo of respondent
Single premium policy 60
Annuity policy40
3.1.14) Which premium policy you prefer most
Conclusion
60% respondent prefar annuity police and 40% respondent prefar
single primium policy. So more of respondent chose annuity
policy.
3.1.15)
What are your main objective behind the investing?
High priority -4, Average priority -3, less priority-2, least
priority-1
ObjectiveHigh priorityAverage priorityLess priorityLeast
priority
Tax saving593920
Future security3745153
Pension2436355
Speculation4748111
3.1.15)
What are your main objective behind the investing?
High priority -4, Average priority -3, less priority-2, least
priority-1
1.3.16)
Which is your preferred mode or time period for paying premium
amount?OptionNo of respondent
Monthly20
Quarterly20
Half40
Yearly20
1.3.16)
Which is your preferred mode or time period for paying premium
amount
Conclusion40% respondent pays the premium half yearly, 20%
respondent pay the premium quarterly, and also monthly, 20%
respondent pay the premium yearly also. So more of them respondent
pay the premium half yearly.
DATA ANALYSIS BY WAM METHOD
The Main objective behind the investing: Tax saving
Future security
Pension
Speculation
3.1.17) Tax saving :
XiWiXiwi
High priority594236
Average priority393117
Less priority224
Least priority010
Total357
Xiwi n
= 357/100
= 3.57
3.1.17) Tax saving :
Conclusion: tax saving objective is high priority, it a main
objective to chose insurance.
3.1.18) Future security
XiWiXiwi
High priority374148
Average priority453135
Less priority15230
Least priority313
Total316
Xiwi n
= 316/100
= 3.16
3.1.18) Future security
Conclusion : future security is a main objective and also
priority should be high.
3.1.19) Pension
XiWiXiwi
High priority24496
Average priority363108
Less priority35270
Least priority515
Total279
Xiwi n
=279 /100
= 2.79
3.1.19) Pension
Conclusion : Pension is a one objective of to chose insurance,
but its priority was average.3.1.20) Speculation
XiWiXiwi
High priority474188
Average priority413123
Less priority11222
Least priority111
Total334
Xiwi n
= 334/100
=3.34
3.1.20) Speculation
Conclusion: speculation is a better objective of insurance also
its a high priority.
So, we conclude that tax saving is main objective of to chose
the insurance.ObjectiveWAMStatement
Tax saving3.57Less priority
Future security3.16Less priority
Pension2.79Least priority
Speculation3.34Less priority
3.2 Presentation of Secondary DataSecondary data means data that
are already available i.e. they refer to the data which have
already been collected and analyzed by someone else. Secondary data
may either be published data or unpublished data. In this project
secondary data collected from following sources. Usually published
data are available: Secondary data:www.icici.comIrda.com
Insurance.com
Icra.com
Books:
Life Insurance(1c33)-5. Balachandran
Insurance principles and practice P.A.S.mani
Life insurance prof. o. s. Gupta
3.3.Presentation of Primary Data
Those data which are collected for the first time by the
researcher or by some else especially for the purpose of study are
known as primary data.
Primary data are:
Primary data are collected from the public by filled up the
questioner.CH: 4 Finding and conclusion
H1: is accepted
H0: is failed to be accepted because of people are not satisfy
the facility of life insurance policy. H1: is accepted
H0: is failed to be accepted because of more responsible factor
is Larger risk covariance.
H1: is accepted H0: is failed to be accepted because of most of
respondent pay premium mode is monthly and interested in less than
three years.
H1: is accepted H0: is failed to be accepted. 100 of respondent
it is found that most of effective source of awareness for life
insurance policy is family/relatives.
Conclusion
1. The researcher concludes from the study purchase accident
policy is more preferable to other because reason behind choosing
the med claim policy for tax saving & family responsibility
& some other reason are also behind for purchase insurance
policy like retirement, pension, future security, and so on.
2. The researcher conclude that the investor mostly know
insurance policy through friends, family / relation, etc.
3. Researchers know about insurance policy today many people
interested towards trade protector, motor vehicle policy, and
accident policy.
4. The researcher conclude that the investor mostly prefer LIC
life insurance policy.
CH: 5 Suggestion and recommendation Nearly 80 per cent of Indian
population is without life insurance policy cover while health
insurance and non- life insurance continues to be below
international standard and pert of the population is also subject
to weak social security and pension systems with hardly any old age
income security. This is an indicator that growth potential for the
insurance sector in immense. A well- developed and evolved
insurance sector is needed for economic development as it provides
long term fund for infrastructure development and at the same time
strengthens the risk taking ability. It is estimated that over the
next ten years Indian would require investments of the order of one
trillion US dollar. The insurance sector, to some extant, can
enable investments in infrastructure development to sustain
economic growth country. The life insurance sector has been witness
to varied phases witnessing a slew of changes in the past year.
Life insurance has no competition from any other business. Many
people think that life insurance is an investment or a manse of
saving. This is not a correct view. When a person saves, the amount
of funds available at any time is equal to the money set aside in
the past, plus interest. This is so in a fixed deposit in national
savings certificates, in mutual funds and all other savings
instrument. If the money is invested in buying shares and stocks,
there is the risk of the money being lost in the fluctuations of
the stocks market.Recommendation
Indian insurance would be seeing a deregulated open insurance
sector re-regulated by IRDA. Many more places intensely competing
for the market shares with financial products offering similar
benefits in an intensely intra institutional competing market,
different companies could sustain and increase its market share if
it initiates certain strategic action in advance. The suggestion as
per finding and analysis are: Companies should focus more on
advertising and publicity because the awareness level in people is
low.
All the popular plans should be re-introduced with some
additional features and benefits.
Since most of the people buy insurance plan for investing so
companies should try to give fixed return to its customers.
Companies should increase its customer base not only in urban
areas but also in rural
Areas by opening more branches in some cities and towns.
Bibliography
Website:
Indra .com
Insurance.com
Bimaonline.com
Icra.inBooks:
Life insurance (IC33) - 5.Balachandran
Insurance principles & practice - P.A.S Mani
Life insurance - prof. o.s.Gupta
Annexure
I, Dipti Patel from the spb collage of business administration
studying in T.Y.BBA SEM 6th (FINANCE). I am doing research on
investors decision is making Pattern for Life Insurance Product".
The objective of study is to know investors decision making pattern
for life insurance product. This study is only for academic
purpose. And will be kept completely confidential.
Personal Information:-
Name: - ___________________________________________________Mo.
no: - _________________ Age: - ___________Income (Annual income):-
_____________
Gender: - ( ) Male ( ) FemaleTypes of occupation: -
CA_________
Property dealer___________
Financial adviser______________
Others____________
Q.1) What is your source of earning?( ) Private Job( ) Business(
) Government jobQ.2) Are you satisfied with the earning?
( ) Yes ( ) NoQ.3) Are you interested in investing?
( ) Yes ( ) No
Q.4) Would you like to invest in some other part time work?
( ) Yes ( ) No
Q.5) in which industry would you like to involve yourself?
( ) Insurance
( ) Banking & Finance
( ) Education
( ) Others
Q.6) (if yes, than) which factors responsible for investment in
life Insurance product? (Multiple)
( ) Tax benefit
( ) Risk coverage & saving( ) Security with high return
( ) Money back guarantee( ) Larger risk covariance
( ) Others
Q.7) which companies Life Insurance do you have?
( ) LIC
( ) Bajaj Allianz
( ) Reliance Life Insurance
( ) Kotak Life Insurance
( ) Others
Q.8) How many year are you ready to pay premium for your
Insurance scheme?
( ) less than 3 years ( ) 3 - 5 years( ) 6 - 9 years ( ) more
than 10 yearQ.9) How did you come to know about your present Life
Insurance? [Multiple]( ) Family/ Relatives
( ) Friends
( ) Agent
( ) Advertisement
( ) OthersQ.10) which type of Insurance policy do you have?
[Multiple]
( ) Individual Med shield policy
( ) Motor Vehicle policy
( ) Disability benefit
( ) Accident policy
( ) Trade ( ) Others
specify________________________________Q.11) what is your motive
when you Invest in Insurance?
( ) Only investment
( ) Only Insurance
( ) Investment + insurance
Q.12) Selected Insurance policy fulfills your motive?
( ) Yes ( ) NoQ.13) Haw many percentage of you spend for
investment?( ) None
( ) 1O%
( ) 20
( ) 30%
( ) More than 30%Q.14) which premium policy you prefer most?
( ) Single Premium Policy
( ) Annuity policyQ.15) what are your main objective behind the
investing?
High priority -4, Average priority -3, less priority-2, least
priority-1
ObjectiveHigh priorityAverage priorityLess priorityLeast
priority
Tax saving
Future security
Pension
Speculation
Q.16) which is your preferred mode or time period for paying
premium amount?
( ) Monthly
( ) Quarterly
( ) Half
( ) yearly
Non Life insurance
Fire
Marine
Aviation
Accident
Miscellaneous
Insurance
Life insurance
Term life Whole life insurance Endowment type plans children
assurance plans annuity and pension plan