Investment preferences of women towards life insurance

Investment preferences of women towards life insurance

JAIN UNIVERSITY School of Commerce and Management Studies

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CHAPTER 1

INTRODUCTION

The goal of life insurance is to provide a measure of financial security for your family after

you die. So, before purchasing a life insurance policy, you should consider your financial

situation and the standard of living you want to maintain for your dependents or survivors.

Insurance cover serves two major purposes: (1) to substitute for the insured’s income if he or

she dies, and (2) to qualify the insured for favourable tax treatment. The policy holders buy

insurance cover from an insurance company, and pay specific periodic amounts (premiums)

for the term (duration or life) of the policy. If the insured dies before this term is completed, a

guaranteed sum (the face amount of the policy) is paid to one or more named beneficiaries. If

the insured survives the term then, depending on the type of the policy, he or she may receive

the full or a part of the face amount of the policy. For young families, a life insurance policy

creates an ‘instant estate’ before they have enough time to accumulate other assets. And it

provides liquidity to the named beneficiary (or beneficiaries) long before the deceased’s

estate matters (which often call for substantial expense) are settled. In the Indian male-

dominated society, the emphasis given on personal financial planning of women is not much.

Nevertheless, we cannot ignore the fact that women have been the best managers of

household finance. We have witnessed times where the man of the family was vested with

the responsibility of taking investment decisions for all the members of the family. And

today we are getting to witness the major role a woman plays as financial managers too, in

par with the male counterpart. With the constant growth and empowerment of women with

respect to her education and profession, there has been a corresponding growth in her

perception towards financial management. Women earn, save and understand that it is

important for her money to keep growing than lying idle in the fashionable purse.

The matter of concern now is her level of awareness, understanding and perception towards

various investment avenues among which Insurance plays a vital role. It is often observed

that insurance is sold and bought as an investment plan, money growing scheme or a tax

saving scheme, ignoring its innate purpose and the very existent need. The general scenario

irrespective of the gender is that, one seldom realises the very purpose of insurance is to

insure lives, secure dependent families and value life in monetary terms in accordance with



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the contribution made by the person to the family. When this purpose stands forgotten, it is

necessary to analyse how secure and insured is the life of a woman who is the true care-taker

of a family in every aspect. This is the underlying broad intention of this study.

To understand the study it is necessary to look through few key terms: industry profile,

history, growth and current trends in the market, which are discussed below.

1.1 Definition and meaning of key terms

Investment

An asset or item that is purchased with the hope that it will generate income or appreciate in

the future. In an economic sense, an investment is the purchase of goods that are not

consumed today but are used in the future to create wealth. In finance, an investment is a

monetary asset purchased with the idea that the asset will provide income in the future or

appreciate and be sold at a higher price.

Insurance

‘Insurance is the equitable transfer of the risk of a loss, from one entity to another in

exchange for payment. It is a form of risk management primarily used to hedge against the

risk of a contingent, uncertain loss’.

An insurer, or insurance carrier, is a company selling the insurance; the insured, or

policyholder, is the person or entity buying the insurance policy. The amount of money to be

charged for a certain amount of insurance coverage is called the premium.

Insurer is the party to an insurance arrangement who undertakes to indemnify for losses.

Insured is the person who obtains or is otherwise covered by insurance on his or her health,

life or property. The insured in a policy is not limited to the insured named in the policy but

applies to anyone who is insured under the policy.

There is a difference between the insured and the policy owner, although the owner and the

insured are often the same person. For example, if Joe buys a policy on his own life, he is

both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the

owner and he is the insured. The policy owner is the guarantor and he will be the person to



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pay for the policy. The insured is a participant in the contract, but not necessarily a party to

it. Also, most companies allow the payer and owner to be different, e. g. a grandparent

paying premiums for a policy on a child, owned by a grandchild.

Insurance policy is a contract of insurance, describing the term, coverage, premiums and

deductibles. It is also known as insurance contract.

1.2 Objectives of insurance:

Everyday we face uncertainty and risk. Insurance offers individuals and organisations

protection from potential losses as well as peace of mind in exchange for periodic payments

known as premiums. Today, insurance companies offer a variety of insurance products in

areas such as property, casualty and life insurance. To function effectively, insurance must

satisfy a number of objectives including pooling risk, paying out claims, ensuring the

solvency of insurers and incentivizing safe behaviour.

• Pooling Risk

One of the objectives of insurance is to pool the risk of a sufficiently large number of

policyholders. By collecting premiums from many individuals or organisations, insurers can

pay out relatively few claims each year while collecting premiums from the majority of

policyholders who do not file claims over that same period. This conclusion follows the Law

of Large Numbers.

• Loss Recovery

A second key objective of insurance is to compensate policyholders following predetermined

catastrophic events. For example, auto insurance policyholders are reimbursed for part or all

of the damages sustained by their vehicle in a collision. Other examples of assets covered by

property insurance include houses, inventory and personal possessions.

• Insurer Solvency

A third objective of insurance is to satisfy policyholders that insurers are financially stable

and solvent. This is important because if any policyholders were not compensated for eligible

losses it would undermine society’s confidence in the system.



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• Behavioural Influence

Yet another aim of insurance is to promote and reward responsible behaviour. For example,

individuals with safe driving records are more likely to be quoted lower auto insurance

premiums than those with unsafe driving records. Such discriminatory pricing may cause

some individuals and organisations to behave with greater caution, thereby making society

safer for everyone.

1.3 Need for life insurance:

More than providing peace of mind your family and yourself, life insurance can be one of the

best investment decisions you have ever made. With stringent regulatory conditions to

safeguard policyholders, traditional life insurance policies carry minimum investment risk

and provide long-term insurance benefits.

Most life insurance policies include retirement income on maturity. Another advantage of life

insurance is that the coverage amount can be increased over time. So, while presently, you

can afford only a low insurance premium with your current salary, over time with increasing

income through promotions or new income sources, you can increase your insurance cover

by paying slightly higher premiums and provide a better life cover for your family even when

you are not around.

While choosing a life insurance policy, it is generally advisable to look at various products

that different organizations provide. Many insurance companies offer an array of insurance

plans that best suit the needs of the entire family.

It is always better to invest your hard earned savings which will provide you with long-term

benefits than to seek short-term benefits from high-risk investment ventures. Whether you

have just started your career, are recently married or blessed with a family, securing adequate

life insurance can prove to be the best investment decision you ever made.

1.4 Criticism:

Although some aspects of the application process (such as underwriting and insurable interest

provisions) make it difficult, life insurance policies have been used to facilitate exploitation

and fraud. In the case of life insurance, there is a possible motive to purchase a life insurance

policy, particularly if the face value is substantial, and then murder the insured. Usually, the



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larger the claim, and the more serious the incident, the larger and more intense the ensuing

investigation, consisting of police and insurer investigators.

A viatical settlement involves the purchase of a life insurance policy from an elderly or

terminally ill policy holder. The policy holder sells the policy (including the right to name the

beneficiary) to a purchaser for a price discounted from the policy value. The seller has cash

in hand, and the purchaser will realize a profit when the seller dies and the proceeds are

delivered to the purchaser. In the meantime, the purchaser continues to pay the premiums.

Although both parties have reached an agreeable settlement, insurers are troubled by this

trend. Insurers calculate their rates with the assumption that a certain portion of policy

holders will seek to redeem the cash value of their insurance policies before death. They also

expect that a certain portion will stop paying premiums and forfeit their policies. However,

viatical settlements ensure that such policies will with absolute certainty be paid out. Some

purchasers, in order to take advantage of the potentially large profits, have even actively

sought to collude with uninsured elderly and terminally ill patients, and created policies that

would have not otherwise been purchased. These policies are guaranteed losses from the

insurers' perspective.

1.5 Advantages and disadvantages:

Life insurance offers several advantages not available from any other financial instrument;

yet it also has disadvantages.

Advantages of Life Insurance

• Life insurance provides an infusion of cash for dealing with the adverse financial

consequences of the insured's death.

• Life insurance enjoys favorable tax treatment unlike any other financial instrument.

• Death benefits are generally income-tax-free to the beneficiary.

• Death benefits may be estate-tax free if the policy is owned properly.

• Cash values grow tax deferred during the insured's lifetime.

• Cash value withdrawals are treated on a first-in-first-out (FIFO) basis, therefore cash

value withdrawals up to the total premiums paid are generally income-tax free.

• Policy loans are income tax free.



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• A life insurance policy may be exchanged for another life insurance policy (or for an

annuity) without incurring current taxation.

Note: All of the above statements are generally true; however the tax benefits of life

insurance have certain limitations which under the wrong set of circumstances can cause the

tax benefits mentioned to be lost.

• Many life insurance policies are exceptionally flexible in terms of adjusting to the

policyholder’s needs. The death benefit may be decreased at any time and the

premiums may be easily reduced, skipped or increased.

• A cash value life insurance policy may be thought of as a tax-favored repository of

easily accessible funds if the need arises; yet, the assets backing these funds are

generally held in longer-term investments, thereby earning a higher return.

Disadvantages of Life Insurance:

• Policyholders forego some current expenditure to pay policy premiums. Moreover,

life insurance is typically purchased for the benefit of others and usually only

indirectly for the insured person.

• Cash surrender values are usually less than the premiums paid in the first several

policy years and sometimes a policy owner may not recover the premiums paid if the

policy is surrendered.

• The life insurance purchase decision and the positioning of the life insurance can be

complex especially if the insurance is for estate planning, business situations or

complex family situations.

• The life insurance acquisition process can be annoying and perplexing (e.g. Is the life

insurance agent trustworthy? Is this the right product and carrier? How can medical

underwriting be streamlined?).

1.6 Principles of insurance:

• Utmost good faith: A contract of insurance is a contract uberrimea fidei i.e. a

contract of utmost good faith. This is a fundamental principle of insurance law. Both

the parties to the contract are required to observe utmost good faith and should

disclose every material fact known to them. There is no difference between a contract



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of insurance and any other contract except that in a contract of insurance there is a

requirement of utmost good faith. The duty of good faith is of a continuing nature in

as much no material alteration can be made to the terms of the contract without the

mutual consent of the parties.

• Misrepresentation: Representations are statements, made by one party to the other,

either prior to or while entering into an insurance contract, of some matter or

circumstances relating to it and which is not an integral part of the contract. These

statements are said to have fulfilled their obligations when the final acceptance on the

policy is conveyed. A mere recital of representations made at the time of entering into

the contact will not make them warranties. However, if representations are made an

integral part of the contract they become warranties, and, in case of their being

untrue, the policy can be avoided, even if the loss does not arise from the fact

concealed or misrepresented. A policy of life insurance cannot be called in question

on the ground of misrepresentation after a period of two years from the

commencement of the policy.

• Warranty : A warranty may be distinguished from a representation in as much a

representation may be equitably and substantially answered but a warranty must be

strictly complied with. A breach of warranty will avoid the policy, although it may

not relate to a matter material to the risk insured. Warranties may be expressed or

implied, if it is condition implied by law. However, implied warranties are mostly

confined to marine insurance. The statements must be true in fact without any

qualification of judgement, opinion or belief. The warranty should be in the policy or

must be incorporated by reference. If any of the statements or representations made

by the assured in the proposal have been made the “basis” of the contract and they are

found to be untrue, the contract of insurance would be void and unenforceable in law,

irrespective of the question whether the statement, concerned is of a material nature

or not.



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• Indemnity and subrogation: Most kinds of insurance policies other than life and

personal accident insurance are contracts of indemnity whereby the insurer

undertakes to indemnify the insured for the actual loss suffered by him as a result of

the occurring of the event insured against. Even within the maximum limit, the

insured cannot recover more than what he establishes to be his actual loss. Indemnity

is a fundamental principle of insurance law, and the principle of Subrogation is a

corollary of this principle in as much the insured is precluded from obtaining more

than the loss he has sustained. The most common form of subrogation is when an

insurance company pays a claim caused by the negligence of another.

• Proximate cause: The doctrine of proximate cause is expressed in the maxim 'Causa

Proxima non remota spectator', which means that the proximate and not the remote

cause, shall be taken as the cause of loss. The insurer is thus has to make good the

loss of the insured that clearly and proximately results, whether directly or indirectly,

from the event insured against in the policy. The burden of proof that the loss

occurred on account of the proximate cause, lies on the insured.

• Insurable interest: To constitute insurable interest, it must be an interest such that

the risk would by its proximate effect cause damage to the assured, that is to say,

cause him to lose a benefit or incur a liability. The validity of an insurance contract,

in India, is dependent on the existence of an insurable interest in the subject matter.

The person seeking an insurance policy must establish some kind of interest in the life

or property to be insured, in the absence of which, the insurance policy would amount

to a wager and consequently void in nature.

1.7 Types of plans:

• Term Insurance Policies

The basic premise of a term insurance policy is to secure the immediate needs of nominees or

beneficiaries in the event of sudden or unfortunate demise of the policy holder. The policy

holder does not get any monetary benefit at the end of the policy term except for the tax

benefits he or she can choose to avail of throughout the tenure of the policy. In the event of



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death of the policy holder, the sum assured is paid to his or her beneficiaries. Term insurance

policies are also relatively cheap to acquire compared to other insurance products.

• Money back Policies

Money back policies are basically an extension of endowment plans wherein the policy

holder receives a fixed amount at specific intervals throughout the duration of the policy. In

the event of the unfortunate death of the policy holder, the full sum assured is paid to the

beneficiaries. The terms again might slightly vary from one insurance company to another.

• Unit linked Investment Policies (ULIP)

Unit linked insurance policies again belong to the insurance-cum-investment category where

one gets to enjoy the benefits of both insurance and investment. While a part of the monthly

premium pay-out goes towards the insurance cover, the remaining money is invested in

various types of funds that invest in debt and equity instruments. ULIP plans are more or less

similar in comparison to mutual funds except for the difference that ULIPs offer the

additional benefit of insurance.

• Pension Policies

Pension policies let individuals determine a fixed stream of income post retirement. This

basically is a retirement planning investment scheme where the sum assured or the monthly

pay-out after retirement entirely depends on the capital invested, the investment timeframe,

and the age at which one wishes to retire. There are again several types of pension plans that

cater to different investment needs. Now it is recognised as insurance product and being

regulated by IRDA.

• Endowment policy

This is a life insurance contract designed to pay a lump sum after a specific term (on its

‘maturity’) or on death. Typical maturities are ten, fifteen or twenty years up to a certain age

limit. Some policies also pay out in the case of critical illness. Endowments can be cashed in

early (or surrendered) and the holder then receives the surrender value that is determined by

the insurance company depending on how long the policy has been running and how much

has been paid into it.



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• Whole life policy

Whole life policy is a life insurance contract with level premiums that has both an insurance

and an investment component. The insurance component pays a stated amount upon death of

the insured. The investment component accumulates a cash value that the policyholder can

withdraw or borrow against.

1.8 Life insurance industry in India

History

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu

(Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in

terms of pooling of resources that could be redistributed 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 carriers’ contracts. Insurance in India has evolved over time heavily drawing

from other countries, England in particular. A total of 1818 saw the advent of life insurance

business in India with the establishment of the Oriental Life Insurance Company in Calcutta.

By 1950, there were a large number of insurance companies and the level of competition

was high. There were also allegations of unfair trade practices. The Government of India,

therefore, decided to nationalise insurance business. An Ordinance was issued on 19 January

1956, nationalising the Life Insurance sector and Life Insurance Corporation came into

existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75

provident societies –– 245 Indian and foreign insurers in all. The LIC had monopoly till the

late 1990s when the Insurance sector was reopened to the private sector.

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance

Regulatory and Development Authority (IRDA) was constituted as an autonomous body to

regulate and develop the insurance industry. The IRDA was incorporated as a statutory body

in April 2000. The key objectives of the IRDA include promotion of competition so as to

enhance customer satisfaction through increased consumer choice and lower premiums,

while ensuring the financial security of the insurance market.



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The IRDA opened up the market in August 2000 with the invitation for application for

registrations. Foreign companies were allowed ownership of up to 26%, which is now

increased to 49%. The insurance sector is a colossal one and is growing at a speedy rate of

15–20%. Together with banking services, insurance services add about 7% to the country’s

GDP. A well-developed and evolved insurance sector is a boon for economic development as

it provides long-term funds for infrastructure development at the same time strengthening the

risk-taking ability of the country.

Present market

The Life Insurance market in India is an underdeveloped market that was only tapped by the

state owned LIC till the entry of private insurers. The penetration of life insurance products

was 19% of the total 400 million of the insurable population. The state owned LIC sold

insurance as a tax instrument, not as a product giving protection. Most customers were under-

insured with no flexibility or transparency in the products. With the entry of the private

insurers the rules of the game have changed. The growing popularity of the private insurers

shows in other ways. They are coining money in new niches that they have introduced. The

state-owned companies still dominate segments like endowments and money back policies.

But in the annuity or pension products business, the private insurers have already wrested

over 33% of the market. And in the popular unit-linked insurance schemes they have a virtual

monopoly, with over 90% of the customers.

Yet, nearly 80% of Indian population is without 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 systems with hardly any old

age income security. This is an indicator that growth potential for the insurance sector is

immense. In India, insurance is generally considered as a tax-saving device instead of its

other implied long-term financial benefits. Indian people are prone to investing in properties

and gold followed by bank deposits. They selectively invest in shares also but the percentage

is very small. Even to this day, Life Insurance Corporation of India dominates Indian

insurance sector. With the entry of private sector players backed by foreign expertise, Indian

insurance market has become more vibrant.



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Market share of major companies in terms of total life insurance premium collected

LIC is the market leader, with 72.7% share in FY13, followed by ICICI Prudential, with

4.7% share.

Market Size

India’s life insurance sector is the biggest in the world with about 36 crore policies which is

expected to increase at a compound annual growth rate (CAGR) of 12–15% over the next

five years. The insurance industry plans to hike penetration levels to 5% by 2020, and could

top the US$ 1 trillion mark in the next seven years. The total market size of India’s insurance

sector is projected to touch US$ 350–400 billion by 2020 from US$ 66.4 billion in FY13.

List of Life Insurers (as of June 2014)

Apart from Life Insurance Corporation, the public sector life insurer, there are 23 other

private sector life insurers, most of them are joint ventures between Indian groups and global

insurance giants.

Life Insurer in Public Sector

� Life Insurance Corporation of India

Life Insurers in Private Sector

� SBI Life Insurance

� PNB Metlife India Life Insurance

� ICICI Prudential Life Insurance

� Bajaj Allianz Life



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� Max Life Insurance

� Sahara Life Insurance

� Tata AIG Life

� HDFC Life

� Birla Sun Life Insurance

� Kotak Life Insurance

� IndiaFirst Life Insurance

� Aviva Life Insurance

� Reliance Life Insurance Company Limited – Formerly known as AMP Sanmar LIC

� Exide Life Insurance – Formerly known as ING Vysya Life Insurance

� Shriram Life Insurance

� Bharti AXA Life Insurance Co. Ltd.

� Future Generali Life Insurance Co. Ltd

� IDBI Federal Life Insurance

� AEGON Religare Life Insurance

� DHFL Pramerica Life Insurance – Formerly known as DLF Pramerica Life Insurance

� CANARA HSBC Oriental Bank of Commerce

� Star Union Dia-ichi Life Insurance Co. Ltd

� Edelweiss Tokio Life Insurance Company Ltd.

Growth prospects for the industry:

Life insurers monitor and manage performance on an ongoing basis but as life insurance

policies remain in force for many years and sometimes even decades, the ultimate

profitability of the underwritten business is only known in later years when all the policy

obligations are fulfilled. The attractiveness of India has always been the sheer size of the

market and finding the right distribution model to address the different target segments is of

grave importance. As sale of new policies and increasing the penetration of life insurance is

one of the levers of creating profits, the first wave of insurance companies concentrated on

building a distribution model to enable this lever. In that context, the private life insurers

faced a unique challenge. There is enough evidence from developed markets that internet

penetration and usage have a positive correlation with the performance and activities of

insurance companies at various levels – lower customer acquisition costs, improved access to



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information, product innovation that cater to the needs of the customers and enhanced

convenience. India has only 150 million internet users as of February 2013 with a penetration

of 12 percent making it one of the least penetrated of BRIC7 nations. However, there has

been a surge in volume and value of retail transactions in the last decade that reflects the

comfort of the internet users to conduct financial transactions online.

In times where it is important to conserve capital and allocate capital to resources that will

deliver sustainable returns, no insurer can remain rigid in their distribution or operating

model. Changing lifestyles and buying preferences will constantly dictate the future models

of distribution. However, life insurers would also need to decide on the resources that need to

be deployed to build these future models. While the urban market today might be

comfortable buying online insurance products, they might not resist the ’warm smile’ of a

life insurance agent. There are also successful models in other financial and non-financial

services business that can be adapted to distribute life insurance products. It would be useful

to examine some of them from an ‘ideating’ perspective.



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CHAPTER 2

RESEARCH DESIGN

2.1 Title:

Investment preference of women towards life insurance

2.2 Statement of problem:

Having observed lower investment rate among women in life insurance products as

compared to men, the study focuses on analysing the reasons behind the same. The problem

hence lies in the insurers’ understanding of women’s perception towards life insurance, their

investment behaviour and reasons for not making an investment in life insurance products.

2.3 Objectives of the study:

• To understand the purpose with which women make investment

• To analyse if any demographic factor has significant bearing on the investment

decision of women

• To know if level of awareness has an impact on their choice of insurance plan

• To study the relationship between education of women and their awareness level with

respect to life insurance

• To figure out the reason for not investing in life insurance

• To know the satisfaction levels of women towards existing life insurance products

2.4 Scope of the study:

The study was conducted in the month of March 2015 among 100 women residing in

Bengaluru city.

2.5 Limitations of the study:

• Lack of awareness about life insurance among the respondents

• Limited time period available to conduct the study

• The sample size and the geographic area under study are limited



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• Time period and the availability of resources shall bear an impact on the

interpretations

2.6 Research Methodology:

• Type of research: Analytical research establishing hypotheses to study the presence

or absence of relationship between demographic factors and investment behaviour of

women.

• Data: Primary Data has been the major contribution towards this study. Secondary

sources have been used for better understanding of the subject and for further

strengthening the reliability of the study.

• Data collection instrument: Questionnaire was constructed to be the tool of data

collection after being convinced about its adaptability, relevance and reliability.

• Sampling: Stratified random sampling was used as a technique to choose

representative units from the population. Stratums were based on the occupation of

women viz. teachers and lecturers, employees of private firms, government

employees, self employed women and home-makers. A random sample of 100 was

then chosen from these stratums.

• Statistical tools of data analysis: Tools for hypothesis testing used were ANOVA,

chi-square test and correlation. Also, simple percentages have been used for clear

understanding of few aspects.



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Chapter 3

REVIEW OF LITERATURE

3.1 An analysis of investors preference on various life insurance policies by Divya

Joseph aims to know the preference of the consumer about the investment made on

insurance policies. The study reveals the different attitude of consumer towards it. Through

this study the researcher tries to give some recommendation and suggestion for existing

products and services of insurance. A summary of findings suggests that this study reveals

that majority of respondents belong to the age group of 20–40 years. This leads to the

conclusion that policy holders are youngsters. The data collected regarding the employment

of policyholders revealed that various categories of people like agriculturists, business

people, employed personnel, etc. hold various types of policies and their respective

proportion to the total policy holders are not much different. Analysis reveals that 90% of the

policy holders are resident. It signifies that most of the resident Indians like to take life

insurance policies. It also reveals that majority of the policy holders are middle income

people. But it does not mean that the proportion of upper-class people and lower-class

people are insignificant. Life Insurance Companies are offering different types of policies

with different maturity period. It was revealed that medium-term policies are more preferred

by policy holders. Study reveals that above 60% of the insured have sufficient knowledge

about various policies and they have moderate knowledge about the benefits provided by

each type of policies. Study reveals that risk cover is the most important objective followed

by future return. The survey reveals Money back Policy is the most attractive one. Regarding

other benefits received by policyholders from Life Insurance Companies, 43.33% received

other benefits in the form of lump sum.

3.2 A study of the purpose of investment by women in life insurance products and its

relationship with selected demographic factors by Dr. Chitralekha H. Dhadhal attempts

to know the purpose/s of investing in life insurance by working women of Rajkot City and its

relationship with selected demographic factors like age, marital status, occupation,



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educational qualification and monthly income. The study concludes that most of the working

women in Rajkot City, i.e. 34%, purchase life insurance plans for the purpose of savings only

and not to save income tax, companies can reach out to women with tax-saving plans by

doing aggressive marketing of the tax-saving aspect of the insurance products as it seems

from this survey that women of Rajkot city still consider life insurance as an unsought

product for which the marketer needs to create demand by linking the benefit/s of the product

with the natural needs of the customers; followed by the next lot of 22% women who do so

with the aim of protecting their families and only 18% of the women invest in life insurance

for the purpose of children’s education and their marriage. Wealth appreciation is by far the

least preferred reason for investment in life insurance which suggests that financial literacy is

less and capital appreciation of their investments as an objective to invest is still not in their

priority list. There is no significant relationship between the purpose of investment in life

insurance by working women and their age, marital status, occupation, their educational

qualification and their monthly income.

3.3 Attitude of working women towards investing in life insurance with special

reference to private bank employees of Coimbatore city by S. Vinoth studies and

analyses the preference for Life Insurance products, the reason for investing in Life Insurance

and to find the satisfaction of working women on the quality of service of the Insurance

Companies. The findings suggest that financial Literacy index reveals that while 61.4%

women in India are financially literate while in Asia pacific this percentage is 65.7%. There

is a need for women to become financially literate as only financial literate women can take

of her family and her future in much better way than a financially illiterate one. The life

insurance investment of working women provides savings for children’s education, future

medical expenses and retirement life. The Study analyses on the Attitude of Working

Women’s Investments in Life Insurance. The working women are not fully aware about the

Life insurance investments and its benefits, even though they work as a part of the financial

system. On the basis of the observations of the respondents, the life insurance companies

must take steps to educate and to increase the number of working women policy holders.

3.4 Consumer preference in life insurance – a case study in Guwahati by Basabi Deb:

The present study carried out projects on the specific parameters based on the purchasing

decision of the consumers, the customer-orientated accessibility and promptness of services



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including more returns on investment, tax savings as well as life coverage, which tends to

lead a company acquiring the top rank with a huge market share. The present exhaustive

research in the field of Life Insurance throw up some exciting trends that became very much

clear from the analysis. A general idea that was gathered during data compilation was the

enormous awareness and knowledge among people about diverse companies and their

insurance products. People are beginning to look beyond LIC for their insurance needs and

are enthusiastic to believe private players. The buying behaviour of consumers in respect of

Life insurance products in general is initiated by number of factors viz. Psycho graphical,

Economic, Social, Politico, legal and Demographical. The list is not exhaustive but it is

adequate to have the deep understanding of the factors influencing the decision. The

respondents are expecting more benefits than the single benefit being offered by an insurance

product and they are generally satisfied with their insurance companies. Another inspiring

trend was in terms of people viewing insurance as a tax saving and savings instrument as

much as a protective one. A very soaring number of respondents have opted for insurance for

such purposes and it shows how insurance companies have been booming to magnetise

public money in present times.

3.5 Demographic analysis of factors influencing purchase of life insurance products in

India by Dr. Divya Negi and Praveen Singh tries to understand the consumer’s perception

and attitude towards insurance and creating an insurance culture is essential in facilitating the

success of insurance services since a better understanding of consumer’s behaviour through

demographic analysis can play an important role in predicting demand for insurance. It is

evident from the study, ‘Product Quality and Brand Image’ has got the highest mean. The

insurance companies thus should try to maintain the timely and satisfactory service along

with maintaining their reputation and goodwill. The companies should pay more attention in

timely and hassle free settlement of the claims. Further customer relationship management

should be of utmost importance for such companies. ‘Brand Loyalty’ has been rated lowest

among customers while selecting and purchasing insurance product that signifies the healthy

competition among the insurance industry. The study of mean among different gender

categories of respondents reveals male customers are giving more preference to ‘Product

Quality & Brand Image’ and to ‘Commitment’. On the other hand, female respondents are

giving more preference to ‘Customer Friendliness’. Thus, while dealing with customers, the

insurance companies should take care of gender category of the customer. Thus insurance



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companies should have different strategies for male and female customers and also different

categories of customers.

3.6 A study on factors affecting customers investment towards life insurance policies by

Ms Babita Yadav and Dr Anshuja Tiwari is an exploratory- and descriptive-based study

selected with an objective to identify those factors that influence customers policy buying

decision and also analyse the preferences of customers while life policy investment decision-

making. Various insurance-related factors have been discussed in the paper. The study

reveals that the consumer decision to purchase insurance product from different insurance

companies can be affected by several factors like age, gender and income level. From the

analysis, it is inferred that respondents belonging to the age group between 30 to 40 years

(which contribute 52% to the total respondents) found to be more interested in buying a life

insurance policy as compared to other age group and a majority (54.6%) of policyholders

have shown preference towards LIC for safety purpose followed by SBI life insurance with

(14.6%) among the private players for better returns. The features of policy that attracted

policyholders can be ranked as follows: company reputation, money back guarantee, risk

coverage, low premium and easy access to agents as 1st, 2nd, 3rd, 4th and 5th respectively.

Thus it can be inferred that goodwill of the company is the most influencing factor while

policy buying decision.

3.7 Personal Finance Corner – Endowment plans or ULIPs? By Teena Jain, The

Financial Express has brought to light, the following information – When it comes to

insurance as an investment tool ‘Young India’ likes to go in for unit linked insurance plans

(ULIPs) over traditional endowment plans, for riding on the strong markets performance over

the last three years, ULIPs have given better returns over endowment plans. Endowment

plans are preferred by risk-averse investors, as unlike term insurance plans, they cover an

individual’s life in case of an eventuality. If the investor survives the policy, he stands to gain

the maturity amount along with accumulated profits and bonuses. Currently endowment

plans are not so popular in the market. Riding on the strong bullish wave, ULIPs have got an

edge over them in terms of premium collection. But endowment plans have their own

advantages, as an investment tool, for returns-sensitive investors who want protection along

with savings over a long period of time.



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3.8 Insurance Industry in India: Structure, Performance, and Future Challenges, S.

Krishnamurthy, S. V. Mony, Nani Jhaveri, Sandeep Bakhshi, Ramesh Bhat and M. R.

Dixit and Sunil Maheshwari Ramesh Bhat concludes saying that there is a need to change

the perceptions of the Indian consumers towards pure term insurance/alternative products.

The competitive and risk pressures in the industry call for multi-channel distribution

footprint, technological advancement, quality of manpower, customised product offerings

(for financially knowledgeable customers and OTC products for middle class and lower

middle class segment), investment strategy, fund management and acquisition cost in the

initial years. The future of life insurance lies in increasing the pure protection products, a

refreshing look at ULIP with rising protection components, and continuously improving

service levels. The experiences with a traditional agent-based model of insurance product

distribution, which is more focused, dedicated, committed, predictable and relatively easy to

manage. But, it reaches its saturation fast and has a high element of fixed cost. Banks can be

potential partners in distributing insurance products through bancassurance. Bancassurance

offers ready manpower, customer database and relationship banking of the bank to the

customers of banks making insurance a value addition and thus in a way beneficial to both

partners.

3.9 Insurance – risk cover or investment? By Deepanjan Banerjee concludes that a

proper capital needs analysis will have to be carried out before buying a product and extent

of cover need to be analysed also. Term plans are preferred by people who are investment

savvy. Term plans combined with investment products can serve the protection and

investment needs. However, many people are neither disciplined in their investment

behaviour nor they can manage their investments better, to get the desired yields. Therefore,

one cannot ignore the strength of an endowment or a money back plan, which is a

combination of protection and savings, particularly, when the returns are going to be market

related and enjoy complete tax free status.

3.10 Understanding the Advice of Commissions-Motivated Agents: Evidence from the

Indian Life Insurance Market, Harvard business school, Clearly states that, the private

sector will be important in educating new investors and providing suitable products. Recent

events in developed economies suggest that regulation or improved consumer awareness may



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be necessary to ensure that the private sector’s own incentives do not compromise the quality

of financial decisions made by private individuals. This issue is of particular importance in

emerging markets where new investors have little experience with formal financial products.

Despite the large economic losses associated with investing in whole insurance, we find that

life insurance agents overwhelmingly encourage the purchase of whole insurance.

Throughout our three experimental designs, we find that life insurance agents rarely

recommend term insurance. Even in audits where there should be no commitment savings

motivation, we still find that agents predominantly recommend whole insurance. We find that

requiring disclosure of commissions on one particular product led to that product being

recommended less. This result is interesting in that it suggests that hiding information may be

an important part of life insurance agents’ sales strategy, and that disclosure requirements can

change the optimal strategy of agents. In this case it appears that the disclosure requirement

on one product simply had the effect of pushing agents to recommend more opaque products.

These results suggest that the disclosure requirements for financial products need to be

consistent across the menu of substitutable products.


DATA

4.1 Demographic factors

Table 1:

Table showing the age of

Age

20–30

30–50

50 and above

Grand Total

Inference:

Among the 100 respondents,

majority, followed by women

is a good mix to analyse the

women and their preferences

Figure 1: Graph showing

30-

38%


School of Commerce and Management Studies

Chapter 4

ANALYSIS AND INTERPRETATION

factors of respondents:

of respondents:

respondents, 44% women fall under the age bracket of

women aged 30–50years. 18% of women are aged

the preference of women towards life insurance

preferences form a strong base to predict future demand.

showing the spread of respondents over different age

20-30

44%

-50

38%

50 AND ABOVE

18%


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INTERPRETATION

No. of respondents

44

38

18

100

20–30 being the

aged above 50years. This

insurance products. The young

demand.

age groups:


Table 2:

Table showing the number

Occupation

Government employees

Home makers

Lecturers

Employees of private firms

Self employed

Teachers

Grand Total

Inference:

We can infer from the table

respondents are picked from

Private firms employ a good

showing the good number

government sector, 19% are

makers.


0

5

10

15

20

25

30

35

40

45

50

government

employees

home maker



number of respondents under each occupation:

table that women are employed in various occupations

from those major sectors where there is density

good number of female employees followed by

too. 44% of respondents are from the private

are teachers and lecturers, 4% are self employed

showing the percentage of women falling under different

home maker lecturer pvt firm

empoyees

self employed


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No. of respondents

29

4

6

44

4

13

100

occupations and the

of women employees.

government sector

private sector, 29% from

employed and 4% are home

different occupations:

self employed teacher



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Table 3:

Table showing the education levels of respondents:

Education No. of respondents

Schooling and pre-university 9

Graduation 45

Post graduation 39

Others 7

Grand Total 100

Inference:

We can infer from the above table that most of the respondents seem well educated with

graduate and post graduate studies. 45% of the respondents are graduates and 39% of them

are post graduates. 9 of them have completed their basic education and 7 of them have

pursued different courses like diploma.

Figure 3: Graph showing the education levels of respondents:

0 5 10 15 20 25 30 35 40 45 50

SCHOOLING AND PRE-UNIVERSITY

GRADUATION

POST GRADUATION

OTHERS



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Table 4:

Table showing the income levels of respondents:

Income level No. of respondents

2–5 lakh 51

5 lakh and above 19

Below 2 lakh 30

Grand Total 100

Inference:

From the above table we can infer that majority of the respondents earn 2–5 lakh per year.

We can also observe that there are 30% of respondents are earning below 2 lakh and 19% of

the respondents earn 5 lakh and above a year.

Figure 4: Graph showing the income levels of respondents:

51%

19%

30%

2-5 LAKH 5 LAKH AND ABOVE BELOW 2 LAKH



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Table 5:

Table showing the marital status of the respondents:

Marital status No. of respondents

Married 72

Unmarried 28

Grand Total 100

Inference:

From the above table it is clear that 72% of the respondents are married woman and 28% are

unmarried women.

Figure 5: Graph showing the percentage of married and unmarried women among the

respondents:

0

10

20

30

40

50

60

70

80

MARRIED UNMARRIED



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Table 6:

Table showing the level of awareness among respondents about life insurance:

Level of Awareness No. of respondents

I have no knowledge about it 6

I take expert advices 14

I take advice from family and friends 27

I take my own decision after thorough understanding 53

Inference:

From the above table we can infer that respondents have appreciable level of awareness

about life insurance as 53% of them claim to be buying insurance products only after

thorough understanding. 27% take suggestions from family and friends, 6% of the

respondents have no knowledge about insurance and 14% of the respondents take expert

advice.

Figure 6: Graph showing the awareness levels of respondents about life insurance:

6%

14%

27%

53%

I have no knowledge about it

I take expert advices

I take advice from family and

friends

I take my own decision after

thorough understanding



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Table 7:

Table showing preference for safer and riskier policies:

Type of policy No. of respondents

Safer policies 94

Policies with risk 6

Total 100

Inference: from the above table we can observe a clear majority of 96% of the respondents

favoring safer insurance policies.

Figure 7: Graph showing the preference of women towards safer and riskier policies:

94%

6%

safer policies policies involving risk


Table 8:

Tables showing level of satisfaction

Level of satisfaction

Satisfied

Not satisfied

Total

Inference:

From the above table it is

products showing satisfaction

products with customised

women say yes to women

Figure 8: Graphs indicating

75%

25%



satisfaction about existing products and demand

products for women:

No. of respondents Customised products for

women

75 Yes

25 No

100 Total

clear that the respondents are quite satisfied with

satisfaction levels up to 75%. Yet, women would like

features for women, which is clear when we

life insurance plans.

indicating satisfaction level about existing products

women policies:

satisfied

not satisfied

0 20 40

yes

no


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demand for customised

No. of respondents

87

13

100

with the existing

like to have more

observe 87% of the

products and demand for

60 80 100


Table 9:

Table showing preference

Type of plans

Endowment

Money back

Pension

Term

ULIP

Whole life

Women plans

Grand Total

Inference:

From the above table we can

other types. 49% of the respondents

followed by the next favou

type.


10%

6%

3%

11%

endowment money back



preference for different types of policies:

can observe a clear preference for money back

respondents have expressed their preference for

urite being women plans. ULIPS are among the

showing preference for various types of life insurance

9%

49%

12%

money back pension term ulip whole life women plans


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No. of respondents

9

49

10

6

3

11

12

100

back policies over all

for money back policies

the least preferred

insurance products:

women plans


Table 10:

Table showing preference

Particulars

Short term investment with

Long term investment with

Total

Inference: We can infer from the above table that 61 out of 100 women prefer short term

investment with quick returns.

grow.


Short term investment with quick returns

Long term investment with more returns



preference with regards to term of investment and returns

with quick returns

with more returns

We can infer from the above table that 61 out of 100 women prefer short term

investment with quick returns. Only 39% of women are ready to wait for their money to

showing preference for term and returns of the investment

0 10 20 30 40

Short term investment with quick returns

Long term investment with more returns


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returns:

No. of respondents

61

39

100

We can infer from the above table that 61 out of 100 women prefer short term

Only 39% of women are ready to wait for their money to

investment:

50 60 70



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4.2 Chi-square results on various hypotheses tested

Test 1-

H0: There is no significant difference between women having different income levels with respect to their perception towards life insurance.

H1: There is significant difference between women having different income levels with respect to their perception towards life insurance.

Table 11: Chi-square calculation for income level and perception

O e o-e (o-e)2 (o-e)2/e

8 8.4 -0.4 0.16 0.01904762

12 14.28 -2.28 5.1984 0.36403361

8 5.32 2.68 7.1824 1.35007519

11 7.5 3.5 12.25 1.63333333

12 12.75 -0.75 0.5625 0.04411765

2 4.75 -2.75 7.5625 1.59210526

11 13.5 -2.5 6.25 0.46296296

25 22.95 2.05 4.2025 0.18311547

9 8.55 0.45 0.2025 0.02368421

0 0.6 -0.6 0.36 0.6

2 1.02 0.98 0.9604 0.94156863

0 0.38 -0.38 0.1444 0.38

7.59404393

Results:

Particulars Values

p 0.269

α 0.05

χ2c 12.59

df 6

χ2obs 7.594

Inference:

Since p>0.05 and χ2obs< χ2

c , the null hypothesis is accepted. Thus women falling under

different categories of income, more or less have the same perception towards life insurance

with 45% of them perceiving it to be a necessity, among other options viz., highly important,

moderately important and not important. We can infer that the women in the sample have

moderate level of understanding about the role life insurance plays in their personal finance.



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Test 2-

H0: There is no significant difference in the preference for safer investment policies among women having different income levels.

H1: There is significant difference in the preference for safer investment policies among women having different income levels.

Table 12: Chi-square calculation for income level and preference for safety

O E o-e (o-e)2 (o-e)2/e 29 28.2 0.8 0.64 0.02269504 46 47.94 -1.94 3.7636 0.07850647 19 17.86 1.14 1.2996 0.07276596 1 1.8 -0.8 0.64 0.35555556 5 3.06 1.94 3.7636 1.22993464 0 1.14 -1.14 1.2996 1.14

2.89945766

Results:

Particulars Values α 0.05

p 0.2346

d.f. 2

χ2c 5.99

χ2obs 2.8994

Inference:


c, we shall accept the null hypothesis stating that income has no bearing

on preference for safer policies. Irrespective of the level of income, women have expressed a clear

preference of about 94% for safer insurance policies. This also indicates that women are risk averse

and would not like to risk their money in market linked plans.



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Test 3-

H0: There is no significant difference between the percentages of income that people earning different level of incomes would like to invest in life insurance.

H1: There is significant difference between the percentages of income that people earning different level of incomes would like to invest in life insurance.

Table 13: Chi-square calculation for income level and percentage of income invested

O E o-e (o-e)2 (o-e)2/e 12 11.4 0.6 0.36 0.03157895 17 19.38 -2.38 5.6644 0.2922807 9 7.22 1.78 3.1684 0.43883657

17 17.4 -0.4 0.16 0.0091954 32 29.58 2.42 5.8564 0.19798513 9 11.02 -2.02 4.0804 0.37027223 1 1.2 -0.2 0.04 0.03333333 2 2.04 -0.04 0.0016 0.00078431 1 0.76 0.24 0.0576 0.07578947

1.45005609

Results:

particulars values α 0.05

p 0.8354

df 4

χ2c 9.49

χ2obs 1.45

Inference:


c, we shall accept the null hypothesis. Women earning higher income also

prefer to invest less than 10% or 10–20% of their income in life insurance products. There is

negligible number of respondents who invest more than 20% of their income on life insurance alone.

Thus women under different income categories do not differ in this respect.



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Test 4-

H0: There is no significant difference in the perception of women belonging to different age groups towards life insurance.

H1: There is significant difference in the perception of women belonging to different age groups towards life insurance.

Table 14: Chi-square calculation for age and perception

O E o-e (o-e)2 (o-e)2/e 13 12.6 0.4 0.16 0.01269841 12 11.48 0.52 0.2704 0.02355401 3 3.92 -0.92 0.8464 0.21591837

12 11.25 0.75 0.5625 0.05 10 10.25 -0.25 0.0625 0.00609756 3 3.5 -0.5 0.25 0.07142857

19 20.25 -1.25 1.5625 0.07716049 18 18.45 -0.45 0.2025 0.01097561 8 6.3 1.7 2.89 0.45873016 1 0.9 0.1 0.01 0.01111111 1 0.82 0.18 0.0324 0.0395122 0 0.28 -0.28 0.0784 0.28

1.25718649

Results:

particulars values

α 0.05

p 0.9739

df 6

χ2c 12.59

χ2obs 1.2571

Inference:


c, we shall accept the null hypothesis. Women of different ages have a

collective perception that life insurance is a necessity. Age factor has no bearing on their perception.

The difference of opinion is in negligible proportion. While 28% and 25% of women say that life

insurance is highly important and moderately important, only 2% opine that it is totally not required.



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Test 5-

H0: There is no significant difference in the preference for safer investment policies among married and unmarried women.

H1: There is significant difference in the preference for safer investment policies among married and unmarried women.

Table 15: Chi-square calculation for marital status and preference for safety

O E o-e (o-e)2 (o-e)2/e

68 67.68 0.32 0.1024 0.001513

26 26.32 -0.32 0.1024 0.00389058

4 4.32 -0.32 0.1024 0.0237037

2 1.68 0.32 0.1024 0.06095238

0.09005966

Results:

Particulars Values

α 0.05

p 0.7641

df 1

χ2c 3.84

χ2obs 0.0901

Inference:


c, we shall accept the null hypothesis. Both married and unmarried

women prefer safer life insurance policies. Marital status has no bearing on their preference for

safety. 94% of married women and 92% of unmarried women prefer safer policies.



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Test 6-

H0: There is no significant difference in the perception towards life insurance among women with different education levels.

H1: There is significant difference in the perception towards life insurance among women with different education levels.

Table 16: Chi-square calculation for education and perception

O E o-e (o-e)2 (o-e)2/e 2 2.52 -0.52 0.2704 0.10730159

12 12.6 -0.6 0.36 0.02857143 12 10.92 1.08 1.1664 0.10681319

2 1.96 0.04 0.0016 0.00081633 1 2.25 -1.25 1.5625 0.69444444

11 11.25 -0.25 0.0625 0.00555556

12 9.75 2.25 5.0625 0.51923077 1 1.75 -0.75 0.5625 0.32142857

6 4.05 1.95 3.8025 0.93888889 20 20.25 -0.25 0.0625 0.00308642 15 17.55 -2.55 6.5025 0.37051282

4 3.15 0.85 0.7225 0.22936508 0 0.18 -0.18 0.0324 0.18

2 0.9 1.1 1.21 1.34444444 0 0.78 -0.78 0.6084 0.78

0 0.14 -0.14 0.0196 0.14 5.77045952

Results:

Particulars Values

α 0.05

p 0.7626

d.f. 9

χ2c 16.92

χ2obs 5.7704

Inference:


c, we shall accept the null hypothesis. Irrespective of what their education

is, most of the women think life insurance is just a necessity and not a highly or moderately important

as an investment. There is no difference among women with different education levels in this respect.



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4.3 ANOVA results for various hypotheses tested-

Test 1:

H0: With respect to purpose of investment in life insurance, there is no significant difference between married and unmarried women.

H1: With respect to purpose of investment in life insurance, there is significant difference between married and unmarried women.

Table 17: ANOVA calculation for marital status and purpose of investment

SUMMARY

Groups Count Sum Average Variance

Married 72 374 5.194444 14.80673

Unmarried 28 90 3.214286 9.359788

Source of Variation

SS df MS F P-value F crit

Between Groups 79.04794 1 79.04794 5.940755 0.016597 3.938111

Within Groups 1303.992 98 13.30604

Total 1383.04 99

Inference:

Since p<0.05 and F>F crit, we can reject the null hypothesis. Thus, we can conclude that

married and unmarried women invest in life insurance products with different purposes. The

within group variance for married women is 14.80 showing inconsistent responses within the

group as compared to variance within the unmarried group which is 9.35.



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Test 2:

H0: There is no significant difference in the purpose of investment in life insurance between women of different age groups.

H1: There is significant difference in the purpose of investment in life insurance between women of different age groups.

Table 18: ANOVA calculation for age and purpose of investment

SUMMARY


20–30 45 169 3.755556 12.23434

30–50 41 216 5.268293 15.00122

Above 50 14 79 5.642857 13.78571

Source of Variation


Between Groups 65.46582 2 32.73291 2.409802 0.095193 3.090187

Within Groups 1317.574 97 13.58324

Total 1383.04 99

Inference:

Since p>0.05 and F<F crit, we shall accept the null hypothesis. Thus one can conclude that

there is no difference between women of different age groups with respect to their purpose of

investment in life insurance. The within group variance of all the three groups seem quite

large impacting the value of F.



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Test 3:

H0: There is no significant difference in the reasons for not investing in life insurance between married and unmarried women.

H1: There is significant difference in the reasons for not investing in life insurance between married and unmarried women.

Table 19: ANOVA calculation for marital status and reason for not investing

SUMMARY


Married 72 172 2.388889 9.480438

Unmarried 28 70 2.5 6.407407

Source of Variation

SS Df MS F P-value F crit

Between Groups 0.248889 1 0.248889 0.028827 0.865528 3.938111

Within Groups 846.1111 98 8.633787

Total 846.36 99

Inference:

Since p>0.05 and F<F crit, we can accept null hypothesis concluding that married and

unmarried women have more or less, the same reasons for not investing in life insurance

products. We can observe p=0.8 which is a huge probability indicating that both groups have

no difference. Also, F is very much within the region of acceptance.



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Test 4:

H0: There is no significant difference in the reasons for not investing in life insurance between women earning different levels of income.

H1: There is significant difference in the reasons for not investing in life insurance between women earning different levels of income.

Table 20: ANOVA calculation for income level and reason for not investing

SUMMARY


below2 30 51 1.7 6.217241

2to5 51 121 2.372549 10.43843

abv5 19 54 2.842105 8.807018

Inference:

Since p>0.05 and F<F crit, we can accept null hypothesis. It means that women earning

different levels of income have no significant difference in their reasons for not investing in

life insurance. P value 0.3983 is quite high as a probability for F to lie within the critical

region.

Source of Variation

SS Df MS F P-value F crit

Between Groups 16.49212 2 8.246058 0.92927 0.398328 3.090187

Within Groups 860.7479 97 8.87369

Total 877.24 99



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Test 5:

H0: There is no significant difference between the type of plan preferred by women who invest for short term and the women who invest for long term.

H1: There is significant difference between the type of plan preferred by women who invest for short term and women who invest for long term.

Table 21: ANOVA calculation for term of investment and type of plan preferred


Short-term quick returns 61 186 3.04918 3.680874

Long-term more returns 39 135 3.461538 3.307692

Source of Variation


Between Groups 4.045233 1 4.045233 1.143959 0.287445 3.938111

Within Groups 346.5448 98 3.536171

Total 350.59 99

Inference:

Since p>0.05 and F<F crit, we must accept null hypothesis. Though respondents do consider

the term of policy, it is not significantly the deciding factor for their choice of plans. People

who desire quick returns and those who wait for more returns do not have significantly

variant reasons for their choice of insurance plans.



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Test 6:

H0: There is no significant difference in the factors impacting the choice of investment of women with different levels of awareness.

H1: There is significant difference in the factors impacting the choice of investment of women with different levels of awareness.

Table 22: ANOVA calculation for awareness level and factors impacting choice of investment

SUMMARY


No knowledge 6 16 2.666667 0.266667

Family friends 53 237 4.471698 14.48476

Experts 14 102 7.285714 25.75824

Own 27 139 5.148148 20.20798

Source of Variation

SS df MS F p-value F crit

Between Groups 120.8346 3 40.27819 2.394534 0.073079 2.699393

Within Groups 1614.805 96 16.82089

Total 1735.64 99

Inference:

Since p>0.05 and F<F crit, the null hypothesis stays accepted. People with different levels of

awareness are influenced with similar factors while making their choice of investment in life

insurance. While observing p and F values, we can infer that the factors impacting choice of

investment differs but the difference is not statistically very significant.



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4.4 CORRELATION TEST

A correlation test was conducted to analyse the relationship between education and level of

awareness about life insurance among the respondents. Correlation factor (r) obtained was

0.027402.

This indicates positive correlation between the two groups. Thus we can conclude that

education has a direct impact on the level of awareness about life insurance. But we can also

observe that ‘r’ is tending towards a 0, which means the correlation between the groups is not

a perfect positive correlation, indicating that the relationship is weak.

Figure 11: Graph showing the correlation and trend lines of education and awareness

levels.

Level of awareness Level of awareness

Education



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CHAPTER 5

FINDINGS OF THE STUDY AND SUGGESTIONS

5.1 Findings:

The study on ‘investment preference of women towards life insurance’ has broken many

myths, highlighted many facts and has been helpful in understanding the real life situation,

demands and grievances women have towards life insurance products.

1. We can infer from the study that majority of the women included in the sample are

very well aware about life insurance. The awareness levels were measured as follows-

‘1- I have no knowledge about life insurance’; ‘2-I take suggestions from family and

friends’; ‘3-I take expert advice’; ‘4-I take my own decision after thorough

understanding’ (4 being highest and 1 being the least). 53% of them claim that they

make their own decisions after thorough understanding followed by 27% of women

who take suggestions from their peer groups. This indicates a decent, rather good

level of awareness among women about life insurance.

2. Observing the correlation factor between education and level of awareness we infer

that the two factors are positively correlated. But we must also notice that r=0.0274 is

tending towards 0 and might further reduce to negative correlation, which is observed

from the trend lines. Thus, education is one of the factors impacting level of

awareness among women about life insurance but this impact is meek and not so

significant.

3. From the ANOVA results we found out that awareness levels have no significant

impact on factors impacting their choice of investment. Plan benefits and agents are

the most influencing factors on the behaviour of customers. Company image is given

the least importance of all other factors. Money locking period is not a deciding factor

for many.

4. On observing the responses we understand that a very large number of respondents

get to know about life insurance products through family and friends, which is not a

very reliable source of information. Agents are the next source and from the review of

literature, survey and previous records, it is found that agents are providing



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information which is beneficial to them than the customers. Advertisements are the

last source of information that is reaching the selected respondents.

5. ‘Perception’ is a factor that is highly emphasised in this study. For the customers to

make a choice or express preferences, their perception becomes the base. When one

perceives life insurance as unnecessary, the following behaviour or choices shall not

be in the favour of insurers. Thus, it was apt to analyse perception with various

demographic factors like income, age and education of respondents. In all the three

cases it was found that the demographic factors have no significant bearing on the

perception of women towards life insurance. Nevertheless, these factors do have a

minor influence on the perception. 45% of the women in the sample perceive it to be

a necessity whereas 28% of them think life insurance is highly important.

6. Different people have different purposes for making an investment in life insurance.

While few truly understand the actual purpose and buy a policy to cover their lives,

few invest to get better returns. People with comparatively higher income might

invest to save tax payment and few others might be making post retirement

arrangement through life insurance plans. To analyse the basis on which purpose of

investment differs, tests were conducted to understand the impact made by marital

status and age on the purpose of investment. It was found out that marital status does

have a major impact on the purpose of investment and age does not have such major

impact.

62% of married women have life cover as one of the purposes of investing in

life insurance whereas it is 78% among unmarried women. This shows better

understanding among unmarried women about the purpose of life insurance. We have

also noticed that married women desire more returns from life insurance products

compared to unmarried women. Pension is seen as a concern for married women.

While considering age as a factor influencing the purpose, a major difference

can be observed with people above 50 years of age who are seeking pension plans,

while for women in the age group of 20–50, tax and returns are the major concerns.

Respondents under all age groups have given sufficient importance for life cover as a

purpose.

7. It is necessary for the insurance companies to know, what percentages of their income

women would like to invest in life insurance. This may vary due to two major



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demographic factors: income and age. On conducting the chi-square test, we found

out that both these factors do not have a noticeable bearing on the percentage of

income invested. Negligible number of respondents have opted to invest more than

20% of their income in life insurance. Most of them have chosen to invest 10–20% of

their income.

8. We have observed an increasing market for ULIPs. But it is to be noted that a

percentage of investment in ULIPs are invested in the units of secondary market that

bears risk. As per this study, a clear majority of risk averse women is seen. This is a

clear indication that women are not in for risk bearing life insurance policies.

9. It is also found from the study that 61% of the women under study prefer to invest for

a short term and get quick returns. They are not very persistent or patient to wait for

their money to be released after a long term irrespective of the fact that it offers

greater returns.

10. Having studied all these factors, an insurer has to then discover the reasons due to

which women are not investing in life insurance products. On conducting an ANOVA

test it is clear that income is not a key factor for not investing in life insurance.

Looking through the responses we realise that maximum complaints are about less

returns followed with complex formalities and procedures.

11. To implant changes in the existing products and offer improved ones, one has to

understand the type of product preferred by the customers. From the ANOVA test we

have understood that women preferring short- and long-term plans have similar mix

of preference for different types of plans. 49% of the women under study have

expressed a clear favour for money back policies. We can infer from this choice that

liquidity is expected out of the product. Regular money back along with death benefit

is what these women expect. The next best preferred is women plan. Whole life and

pension plans seem to be age specific choices.

12. The last factor to be discussed after awareness, perception, purpose and behaviour is

the satisfaction levels. 75% of the women under study are satisfied with the existing

products and service. This is a good indicator for the life insurance companies who

now have to focus on minute details and improvisations in the existing products and

services. 87% of the respondents have stated that they would like to have more

customised products for women.



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5.2 Suggestions:

� With respect to creating awareness about life insurance, it is better for the public to

learn about insurance from more reliable sources. There must be more clear

advertisements about life insurance products. Companies can also provide

information about different products and its benefits in simple terms in their websites

and through mailing existing customers, which ensures true and simple information

reaching right persons through right source.

� We have observed a positive correlation between education and awareness. Thus,

including financial planning as a subject in the higher education of all streams helps

every individual to form a financial plan of their own. It also helps in better

understanding of the purpose and role of life insurance in personal finance.

� Plan benefits and agents are the major factors impacting the choice of investment.

We shall discuss about plan benefits at the stages required. Agents play key role in

popularising, marketing and even in creating an image about life insurance in the

minds of investors. Therefore every company must pay much more attention towards

training and selection of agents. There must be equal and justified spread of

commission for all the products helping to reduce the biased sales which is in vogue

among agents today.

� Apart from good awareness levels, insurance companies have an icing on the cake

that demographic factors have no significant impact on the perception of women

towards life insurance. This provides a vast scope for the companies to establish a

fair perception in the minds of women by advertising in a way which highlights the

fact that life insurance is highly important to insure the life of the lady and secure the

future of her dependents.

� Having seen that marital status has effect on the purpose of investment, insurance

companies must accordingly classify the plan benefits for these categories. Since

married women invest with a purpose of getting returns and pension, insurance

companies can provide more customised products to married and unmarried women

offering pension and life cover combinations for married women and life cover with



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returns/tax saving combination for the unmarried. The same combination shall serve

women under different age groups in accordance with their purpose of investment.

� The study reveals that, irrespective of the level of income earned and the age of

respondents, majority of them would like to invest nearly 10–20% of their income in

life insurance. It is feasible for the insurers as well as the customers to fix the

premium amounts and payment intervals after surveying the income brackets of the

women in the region. This will help the insurance companies in fixing affordable

premiums and offering plan benefits accordingly.

� Since the women under study are risk averse, the companies may withdraw ULIPs

attached to women plans or the companies must provide convincing evidences that

their asset is managed well by the company.

� One of the major reasons for women not investing in life insurance is less return than

expected. To address this concern, insurance companies must introduce better ways

of managing the customers’ funds so as to offer more returns. Another issue that

every layman faces is the complex procedures and formalities involved in life

insurance contracts. It is suggested to provide policy details in a brief and simpler

way. The companies must provide transparency and disclose every detail about the

way funds are managed, the returns on them, calculation of premiums, benefits

available from the plan, etc.

� Since women under study have chosen money back policy more, the companies can

eliminate term plans and offer more money back plans with customised features and

benefits for women. Having women plans with money back and pension categories

might prove to be beneficial to the company as well as the customers.

� Considering the entire study, it is advised for the insurance companies to pay more

attention towards the women customers, their needs and demands. This market has a

huge scope offering benefits on both the ends. It is necessary for the companies to

focus on the growing trends in the personal financial management of women.



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CHAPTER 6

CONCLUSION

The study on ‘Investment preference of women towards life insurance’ considered analyzing

the impact of demographic factors on the awareness, perception, purpose, behavior and

satisfaction towards life insurance. The study concluded that most of the demographic factors

have no significant bearing on the above mentioned characteristics. The insurance industry is

performing well giving high levels of satisfaction to customers but is a step back in reaching

the women customers through the right mode. This sector has not focused enough on women

as a separate market segment and thus has not offered satisfactory products to the women

customers.

Irrespective of age, income, marital status, education and occupation, women have similar

preferences making it easy for the insurance companies to offer customized products for

them. On conducting a segment survey, companies can design products with short term

investment, income justified premiums, life cover and suitable returns as applicable to the

segment. The existing women plans can be made more attractive and further fresh plans

exclusively for women can be introduced with adequate amount of awareness measures.



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REFERENCES:

Investopedia.com

http://www.businessdictionary.com

www.Wikipedia.com

https://www.kpmg.com/IN/en/IssuesAndInsights

www.people.richland.edu

www.real-statistics.com

www.tiem.utk.edu

www.stat.cmu.edu

www.psychstatmissouristate.edu

www.explorable.com

www.slideshare.net

www.en.wikibooks.org

www.licindia.in

www.irda.gov.in

www.ibef.org

www.theglobaljournals.com

www.youtube.com

Books: Statistics vol-2 by Raj Mohan