Cosumers Perception Towards Insurance - Project Report

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CHAPTER I INTRODUCTION Visit a2zmba.blogspot.com for more project reports, notes etc. 1.1 INTRODUCTION OF THE STUDY “The Business of Insurance is related to the protection of the economic values of the assets”. Every human being has the tendency to save to protect him from risks or events of future. Insurance is one form of savings where in people try to assure themselves against risks or uncertainties of future. It is assurance against risks or events or losses. People can save their earnings either in the form gold, fixed assets like property or in banking and insurances. All the savings of people of a country account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it. Hence insurance sector is still untapped in India.

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1.2 INDUSTRY PROFILE OVERVIEW OF CURRENT INSURANCE INDUSTRY 1. WHAT IS INSURANCE? Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment) collected from plenteous. Insurance is a safeguard against uncertain events that may occur in the future. It is an arrangement where the losses experienced by a few are extended over several who are exposed to similar risks. It is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premium to provide security for the purpose. Loss is paid out of the premium collected from people and the insurance companies act as trustees to the amount so collected. These companies have proposal forms which are filled to give details of insurance required. Depending upon the answers in the proposal form insurance companies assess the risk and decide on the premium. Insurance companies are risk bearers. They underwrite the risk in return for an insurance premium. the function of insurance is to provide protection, prevent losses, capital formation etc. hence insurance can be defined as a tool in which a sum of money as a premium is paid by the insured in consideration of the insurer’s bearing the risk of paying a large sum .it may also be defined as a contract wherein one party (insurer) agrees to pay the other party (insured) or his beneficiary, a certain sum upon a given contingency against which insurance is required. Insurance industry commands massive funds through sales of insurance products to large number of clients. Insurers also create liabilities and commit themselves to compensate for losses occurring to the policyholders on future date. It also plays an important role in process of capital formation. 2. NATURE OF INSURANCE

3 a) Risk sharing and risk transfer: Insurance is used to share the financial losses that might occur to an individual or his family on the happening of specified events. The loss arising from such events are shared by all the insured in the form of premium. Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Every year one house gets burnt, resulting into a total loss of Rs 200000.If all the 250 owners come together and contribute Rs.800 each, the common fund would be Rs200000.This is enough to pay to the owner whose house gets burnt. Thus the risk of one owner is spread over 250 house owners of the village. b) Risk assessment in advance: Insurance companies are risk bearers. They assess the risk before insuring to charge the amount of premium. c) Its not gambling or charity: The uncertainty is changed to certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. Insurance is antithesis of gambling. Failure of insurance amounts to gambling because the uncertainty of loss is always looming. Moreover insurance is not possible without premium. So it is different from charity because charity is given without consideration. d) Huge number of insured people: It is essential to insure larger number of people or property to make cost of insurance less consequently premium would also be less. e) Assists in capital formation: Insurance provides capital to society. Accumulative funds are invested in productive channels. 3. SEMANTICS 1. Risk: It is defined as an uncertainty of a financial loss. It is the unintentional decline in or disappearance of value arising from contingency. 2. Policy: It is the document which embodies the insurance contract 3. Whole life policy: It is the policy under which the amount of policy will be paid only on death of the insured. Premiums may be payable throughout the life or for a limited period.

4 4. Endowment policy: Endowment policies entitle the insured to receive the amount of the policy on his reaching a certain age and premiums also stops. If death occurs earlier, amount of the policy will be paid at that time and payment of premium will also stop at that time. 5. Claim: It is the amount which an insurer has to pay against a policy. 6. Reinsurance: It refers to placing a part of the risk by an insurer with another insurer. The object is to reduce the possible loss to be borne by the original insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure must pay commission to the original insurer. 7. Premium: A periodic payment made on an insurance policy. 8. Insurance penetration: It is defined as insurance premium as a share of gross domestic product. 9. Insurance density: Insurance density is defined as per capita expenditure on insurance premium i.e. premium per capita. 10. Actuary: The actuary is a specialist who combines an understanding of risks and mathematical technique to develop financial products to manage these risks, price these products. He helps in designing insurance plans and then evaluates the financial risk of the company which it takes while selling an insurance policy.

4. TYPES OF INSURANCE Insurance is broadly divided in two segments, based on the nature of insurance, those are: 1. Life Insurance & 2. Non-Life Insurance or General Insurance. It can be again subdivided into the following categories: a) Fire Insurance. b) Marine Insurance. c) Social Insurance & d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc….)

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5. HISTORY OF INSURANCE GLOBAL For now we know the meaning of insurance, different types of insurance. Now let us know the history and reasons for and behind different types of insurance. Insurance has existed for thousands of years. The first ever type of insurance was Property Insurance. It became popular about 3000 BC in China. It all started when Chinese merchants, as well as their investors, wanted to ensure that they would see a profit from their goods that they shipped overseas. In the event that a ship was lost at sea, an insuring partner would reimburse the owners of the ship and goods. To pay for the loss the merchant would be sold into slavery to the insurer until the debt was repaid. This was so because, a merchant could not afford to pay for the lost goods or even to buy a ship unless someone invested. Property insurance was also seen in Babylon as well. In Babylon, merchants and investors entered into a contract, in which the supplier of money for a trade agreed to cancel the loan if the trader was robbed of his goods. The trader who borrowed the money paid an extra amount for this protection in addition to the usual interest. As for the lender, collecting these premiums from many traders made it possible for him to absorb the losses of the few. Later this contract was extended to include provisions for a family's home and even the death of the insured, where life insurance came into existence. Slowly this concept started to spread across other places like Greek, Roman. Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. Like, about 3500 years ago, Moses instructed the nation of Israel to contribute a portion of their produce periodically for "the alien resident and the fatherless boy and the widow." Later the origin of credit insurance, which was included in the Code of Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. Credit insurance means, in ancient times the ship owners obtained loans from investors to finance their trading expeditions. In case, if a ship was lost, the owners were not responsible to pay back the loans to the investors. The risk to the lenders was covered by the interest paid by numerous ship owners, since many ships returned safely.

6 By the middle of the 14th century, marine insurance was one of the most popular types of insurance among nations of Europe. Things changed dramatically in the 17th century in Europe. In 1666, the Great Fire of London bought the need for fire insurance .The Great Fire of London burned for four days and nights. It destroyed 436 acres, 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other public buildings. Only six people were victims in the flames, but hundreds died from shock and exposure. By 1688, Edward Lloyd was running a coffeehouse in London. Where, London merchants and bankers met informally to do business. There financiers who offered insurance contracts to seafarers wrote their names under the specific amount of risk that they would accept in exchange for a certain payment, called premium. These insurers came to be known as underwriters. Finally, in 1769, Lloyd's became a formal group of underwriters that in time grew as an insurance company. The concept of insurance developed at a fast pace with the growth of British commerce in the 17th and 18th century. The first stock companies to engage in insurance were chartered in England in the year 1720. In 1735, the first insurance company in the American colonies was founded at Charleston. Later in the year 1787, fire insurance corporations were formed in New York. Then later in the year 1759, the life insurance corporation was started in Philadelphia, America. The New York fire which occurred in the year 1835 was the main reason to draw attention to create reserves to meet unexpected losses. In the year 1837, Massachusetts was the first state to require companies by law to maintain such reserves. After 1840, life insurance entered a boom period. The Workmen's Compensation Act of 1897 in Britain required employers to insure their employees against industrial accidents. Public liability insurance, fostered by legislation, made its appearance in the 1880s.It attained major importance with the advent of the automobile. Until the 1950s, most insurance companies in the United States were restricted to provide only one type of insurance, but then legislation was passed to permit fire and

7 casualty companies to underwrite several classes of insurance. Many firms have since expanded and also were responsible for many mergers. From this brief accounting of history we can see how insurance came into existence. Fortunately for us we no longer have to sell ourselves into slavery if our car is stolen nor we have to be scared of losses due to absence of reserves. However we can be confident that we will be compensated for our loss. Without people wanting to secure their investments and great tragedies throughout history we may not have insurance as we know it today resulting in peace of mind. 6. HISTORY OF INSURANCE INDUSTRY IN INDIA The insurance industry in India over the past century has gone through big changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from being an open competitive market to nationalization and back to a liberalized market again. Insurance industry in India started as a fully private system with no restriction on foreign participation in the Nineteenth Century. Before independence, a few British insurance companies dominated the Market. Life insurance was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829.All of these companies operated in India but did not insure the lives of Indians. They were there insuring the lives of Europeans living in India. Some of the companies that started later did provide insurance for Indians. But, they were treated as "substandard" and therefore had to pay an extra premium of 20% or more. The first company that had policies that could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871. The first general insurance company, Triton Insurance Company Ltd., was established in 1850. It was owned and operated by the British. The first general insurance company was the Indian Mercantile Insurance Company Limited set up in Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies (both life and non-life).

8 After the independence, the industry went to the other extreme. It became a stateowned monopoly. The industry started to witness a problem like fraud. Hence many regulations were put in place to reduce and control the problems in the industry. After which Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukh announced nationalization of the life insurance business and then the general insurance business was nationalized in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a maximum of 26% of foreign holding.

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7. INDIAN SCENARIO

INDIAN INSURANCE INDUSTRY

LIFE INSURANCE

Public Sector (1)

Private Sector (15)

NON LIFE INSURANCE

Public Sector (4)

Private Sector (9)

8. LIFE INSURANCE After the entry of new players and increase in the penetration levels, could see the insurance sector cross the Rs 2,00,000-core mark in business by 2010.The current size of the sector is estimated to be at Rs 50,000 crore, which has seen a compound annual growth rate (CAGR) of around 175 percent in the last few years. The insurance sector, both life and non life, is likely to grow by over 200 percent, and private insurers are expected to achieve a growth rate of 140 percent as a result of aggressive marketing technique. It added that state owned insurance companies are likely to be 35-40 percent. On account of intense marketing strategies adopted by the private insurance players, the market share of state-owned insurance companies like GIC, LIC and others has come down to 70 percent in last 4-5 years from over 97 percent. Despite regulation,

10 the private players are offering 35 percent rate of return to is policy holders against 20 percent by public-sector insurers. The industry body also noted that India’s life insurance premium is 1.8 percent as a percentage of GDP whereas it is 5.2 percent in the US, 6.5 percent in the South Korea. The services sector offers immense opportunities for expansion opportunities for expansion opportunities and the rural market, also, offers tremendous growth opportunities for insurance companies.

9. GENERAL INSURANCE General insurance in India has been expecting growth except in some portfolios like motor insurance, fire and engineering. These portfolios are still under tariff- this means that premium depends on a fixed predetermined rate structure. In India, GDS as a proportion of GDP at current prices increased from 26.1% in 2002-03 to 28.1% in 2003-04.house hold sector continued to be the major contributor to GDS at 24.3% in 2003-04.this can be attributed to soft interest rates prevailing in housing sector. General Insurance has low market penetration. It is 1.95% and ranks 51st. However in collection of premium it is ranked 23rd. The ratio of the premium collected to that of GDP is 0.58. The main reason for the general insurance industry to perform very poorly was because of the slow settlement of claims. Moreover the rates of claim in India were highest in the world. It was 70 percent compared to 40 percent internationally. This meant that out of 100 people who had insured their commodities 70 claimed for a loss or damage. The main reason for the lack of demand for general insurance is that people consider it as an unnecessary expenditure. However it must be noted that the general insurance has been earning consistent profits and has an efficient dividend paying record accompanied by a steady growth in its financial resources. The industry is recognized as one of the largest financial Institutions in the country. Some of the private players in this sector are- ICICI – Lombard, Reliance, Royal-Sundaram, Chholamandalam etc.

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10. PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR The different private players in the life insurance sector and their associations with foreign companies are being given below:

COMPANY INDIAN

FOREIGN

TOTAL

FDI FOREIGN

PROMOTER/PARTNER INSURER

CAPITAL (%)

CAPITAL

AMP

RELIANCE

None

(RS MN.) 2,170

0

(RS MN.) 0

SANMAR Aviva Life

GROUP(ADAG) Dabur

Aviva (UK)

4,590

26

1193.4

Bajaj-

Bajaj Auto

Allianz

3680

26

960

Allianz Birla Sun Aditya Birla Group

(Germany) SunLife (Canada)

4,000

26

1,040

Life HDFC

HDFC

StandardLife

2,500

18.9 470

Standard ICICI

ICICI Bank

(UK) Prudential (UK)

10,850

26

2,820

Prudential ING Vysya

Vysya Bank

ING

Ins. 4,400

26

680

Kotak

Kotak Mahindra Bank

(Netherlands) OldMutual (South 2,600

26

680

Mahindra

Africa)

Old Mutual Max

Max India

NewYorkLife

5,000

26

1,300

Newyork Met Life

J&K Bank

(US) Met Life (US)

3,550

26

920

Sahara Life

Sahara India

None

1,000

0

0

Ins. I SBI Life

SBI

Cardiff (France)

3,500

26

910

12 TATA AIG

TATA Group

AIG (US)

Shriram

Shriram

Sanlam Life Ins.

Bharti AXA

Bharti Group

AXA(Australia)

3,810

26

990

Some of the new companies who are waiting to come in to the life insurance sector are: a. IDBI-FORTIS. b. Syndicate Bank

13 11. CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY Some surveys have predicted that India and China will play a very vital role in the years to come. Indian economy can be termed as an emerging economy as it is doubling its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its GDP. If we look at the GDP of the Indian economy very closely over the years, we can easily come to know the changing structure of the economy. We can also come to know the changing contribution of the various sectors like agriculture, manufacturing and the service sector. In the financial year 1993-94, agricultural sector contributed to 31%, manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus over the years as India became an emerging economy in 2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8 whereas service sector contributed for 51.4% of the total GDP. There has been 7.5% growth in the total GDP of the country and is estimated to grow at 8.0% in 2006-07. The Indian economy has shown signs of strong performance despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the country. The overall growth of the Indian economy has been equally supported by all the three sectors of the economy, i.e. the agriculture, manufacturing and the service sector. Insurance, together with the banking sector, contributes to about 7.3 % of the total GDP of India, and the gross premium collected contributes to about 2% of the total GDP of the country The insurance sector in India has completed a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost 200 years.

14 12. GOVERNMENT POLICIES REGARDING LIFE INSURANCE Insurance Regulatory and Development Authority (IRDA) 1999 Reforms in the insurance sector were initiated with the passage of the IRDA bill in December 1999.it was set up as an independent body and it has been able to frame globally compatible legislations. The IRDA was set up to protect the interests of holders of insurance policies ,to regulate ,promote and insure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. This act extends to whole of India. With the establishment of this act, government amended Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972. IRDA was formed on the recommendations of Malhotra Committee. In 1999 government of India has set up Malhotra Committee to examine the structure of insurance industry and recommend changes, under R.N Malhotra –former governor of RBI.

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1.3 COMPANY PROFILE The Industrial Credit and Investment Corporation of India Limited (ICICI) was formed in 1955 which is incorporated at the initiative of the World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited. ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI was also among the first Indian companies to raise funds from international markets. 1. WHAT IS ‘ICICI GROUP’? We are a part of the renowned ICICI Group, a diversified universal banking group, with a track record of over 50 years in a variety of financial services. ICICI was formed in 1955, as a result of the focused efforts of the World Bank, the Government of India and the representatives of Indian Industry. Today, ICICI Bank has grown to become India’s second largest bank, with over 24 million customers worldwide. It is also the first bank from Asia (excluding Japan) to be listed on the NYSE. ICICI Bank is a truly global bank, with presence at key locations across the globe in Bahrain, Bangladesh, Belgium, Canada,

China, Dubai, Hong Kong, Indonesia,

Malaysia, Russia, Singapore, South Africa, Sri Lanka, Thailand, UK, USA and Quatar. ICICI Group’s expertise spans a vast range of financial services, including banking, broking, mutual funds, insurance, home loans, venture funds and much more. The Group is the largest consumer credit provider and the biggest private sector, life and general insurer in India. Expertise across a vast range of products. All blended to bring you seamless financial solutions that ensure you have the advantage in every financial decision. Wherever you may be in the world.

16 2. STRUCTURE OF ‘ICICI GROUP’

3. OBJECTIVES OF ICICI GROUP TRUST We view each client relationship as a “partnership for success”. We regard your financial needs as our own and aim to achieve your investment goals with you. We put our best resources behind you to ensure that your investment objectives are more than met. AGILITY We seek to deliver superior value to you. We respond quickly and efficiently to market opportunities, and offer the most apt financial solutions so that you can reap the best possible benefits.

17 INNOVATION We believe that the cornerstone of success in today’s competitive environment is Innovation. We seek newer opportunities constantly, to fulfill your emerging needs and wants. 4. ICICI BANK ICICI Bank is India's second-largest bank with total assets of Rs. 3,767.00 billion (US$ 96 billion) at December 31, 2007 and profit after tax of Rs. 30.08 billion for the nine months ended December 31, 2007. ICICI Bank is second amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalization*. The Bank has a network of about 955 branches and 3,687 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its 5. COMPANIES UNDER ‘ICICI BANK’ A) ICICI PRUDENTIAL AMC AND TRUST: ICICI Prudential Asset Management Company enjoys the strong parentage of prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India. ICICI Prudential Asset Management Company, in a span of just over eight years, has forged a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with assets under management of Rs. 37,906.24

18 crore (as of March 31, 2007). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 68 cities in the country. Key Indicator: During the year march 1998 Asset Under Management was Rs160 cores with only two funds managed, as on February 29, 2008 now it raised up to Rs 62,008.95 cores with 35 funds. B) ICICI SECURITIES – INDIA’S LEADING INVESTMENT BANK A subsidiary of ICICI Bank - the largest and most recognized private bank in India – ICICI Securities Ltd is premier Indian Investment Bank, with a dominant position in its core segments of its operations - Corporate Finance including Equity Capital Markets Advisory Services, Institutional Equities, Retail and Financial Product Distribution With a full-service portfolio, a roster of blue-chip clients and performance second to none, we have a formidable reputation within the industry. The Corporate Finance team regularly ranks highest among the leading capital markets league tables and recently topped the Prime Database League tables for funds mobilized through equity instruments in the first half of CY 07. ICICI Securities Inc., the step down wholly owned US subsidiary of the company is a member of the National Association of Securities Dealers, Inc. (NASD). As a result of this membership, ICICI Securities Inc. can engage in permitted activities in the U.S. securities markets. These activities include Dealing in Securities and Corporate Advisory Services in the United States and providing research and investment advice to US investors. ICICI Securities Inc. is also registered with the Financial Services Authority, UK (FSA) and the Monetary Authority of Singapore (MAS) to carry out Corporate Advisory Services and Dealing in Securities.

19 C) ICICI VENTURE ICICI Venture is one of the largest and most successful private equity firms in India with funds under management in excess of USD 2 billion. ICICI Venture, over the years has built an enviable portfolio of companies across sectors including pharmaceuticals, Information Technology, media, manufacturing, logistics, textiles, real estate etc thereby building sustainable value. It has several “firsts” to its credit in the Indian Private Equity industry. Amongst them are India’s first leveraged buyout (Infomedia), the first real estate investment ( Cyber Gateway), the first mezzanine financing for a acquisition (Arch Pharmalabs) and the first ‘royalty-based’ structured deal in Pharma Research & Development (Dr Reddy’s). ICICI Venture is a subsidiary of ICICI Bank, the largest private sector financial services group in India. D) ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED ICICI Lombard General Insurance Company Limited is a 74:26 joint venture between ICICI Bank Limited and the Canada based $ 26 billion Fairfax Financial Holdings Limited. ICICI Bank is India's second largest bank, while Fairfax Financial Holdings is a diversified financial corporate engaged in general insurance, reinsurance, insurance claims management and investment management. Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited, is one of Canada's oldest property and casualty insurers. ICICI Lombard General Insurance Company received regulatory approvals to commence general insurance business in August 2001.

20 E) ICICI PRUDENTIAL LIFE INSURANCE COMPANY ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life's capital stands at Rs. 37.72 billion (as on February, 2008) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the nine months period April 1 to December 31, 2007, the company garnered new business weighted premium of Rs. 4,586 crore and has underwritten around 18 lakh policies during the period. The company has assets held over Rs. 28,000 crore. ICICI Prudential Life is also the only private life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to meet its obligations to customers at the time of maturity or claims. For the past seven years, ICICI Prudential Life has retained its leadership position in the life insurance industry with a wide range of flexible products that meet the needs of the Indian customer at every step in life.

21 a) VISION To be the dominant Life, Health and Pensions player built on trust by world-class people and service. This we hope to achieve by: •

Understanding the needs of customers and offering them superior products and service

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Leveraging technology to service customers quickly, efficiently and conveniently

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Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders

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Providing an enabling environment to foster growth and learning for our employees

•

And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core values ,Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the values describe what the company stands for, the qualities of our people and the way we work. b) VALUES Every member of the ICICI Prudential team is committed to 5 core values: Integrity, Customer First, Boundary less, Ownership, and Passion. These values shine forth in all we do, and have become the keystones of our success.

22 c) DEPARTMENTS AND BRANCHES OF ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED Branches: ICICI Prudential Life has one of the largest distribution networks amongst private life insurers in India. It has a strong presence across India with over 945 branches in addition to 550 micro-offices and an advisor base of 270,000. Distribution Network: There are four different ways of distributing a Life insurance product namely; 1. Agents (Financial Advisors):- Anybody possessing the minimum qualification of 10+2 after completing 100 hrs of training from the training institute approved by IRDA can sell life insurance products of any particular company which has sponsored him to take the training. This is the most popular distribution channel. 2. Corporate Agents Any corporate may apply for license to sell insurance after complying with the requirements of IRDA. 3. Bancassurance If the corporate agent is a bank, then it is known as bancassurance. Banks can sell the policies to their existing as well as prospective clients. This is becoming quite popular these days and the bank earns huge fund based income. Bancassurance has 1% share in total premium collection in 200405. 4. Broker They are like corporate agents with only difference that they can sell the products of more than one insurance company. Departments: The various departments that can be seen in an insurance organization and that has been observed by me are as follows: a) Marketing Department: This department mainly deals with the marketing and promotion part of the Insurance Company. They spend most of their time in

23 formulating strategies to make their products known to the common people and to promote the same in a easy and cost effective way. b) Sales Department: This department mainly deals with the sales part of the Insurance Company; the department includes designations like Sales Manager and Financial Advisor who personally contacts with people for performing the task of sales of various products. c) Accounts/ Financial Department: This department has the task of keeping track of the various expenses incurred by the various other departments of the organization and also performs the task of allocating various funds to different departments according to their requirements. d) Human Resource Department: This department is handled by the Human Resource manager of the company. The function of this department involves the well being of the employees of the company, I,e, to see whether there is employee grievance in the organization or not and if it is there what are the possible causes for that and also try to find out solutions for the same if possible. e) Investment Department: This department deals with the task of investing the money of the policy holders in such way that will ensure both safety of the money and also a steady return on the same. The task of this department is very difficult as it deals with the money given by the policy holders, so it requires lot of thinking on the part of the personnel of this department before deciding where to invest the money. f) Actuarial Department: This department is under the supervision of an Actuary who decides the premiums and charges to be taken from the policy holder on the basis of certain information’s (like Age, Annual Income etc.) provided by the prospective customer. The task also involves the calculation of mortality charges which requires high statistical knowledge from one’s point of view. So, this department involves in the calculation of various amounts to be charged from the prospective customers.

24 d) ICICI PRUDENTIAL LIFE INSURANCE PRODUCTS Insurance Solutions for Individuals ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to create a customized solution for each policyholder. Savings & Wealth Creation Solutions •

Save'n'Protect is a traditional endowment savings plan that offers life protection along with adequate returns.

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CashBak is an anticipated endowment policy ideal for meeting milestone expenses like a child's marriage, expenses for a child's higher education or purchase of an asset. It is available for terms of 15 and 20 years.

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LifeTime Gold & LifeTime Plus are unit-linked plans that offer customers the flexibility and control to customize the policy to meet the changing needs at different life stages. Each offer 6 fund options - Preserver, Protector, Balancer, Maximiser, Flexi Growth and Flexi Balanced.

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LifeLink Super is a single premium unit linked insurance plan which combines life insurance cover with the opportunity to stay invested in the stock market.

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Premier Life Gold is a limited premium paying plan specially structured for long-term wealth creation.

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InvestShield Life New is a unit linked plan that provides premium guarantee on the invested premiums and ensures that the customer receives only the benefits of fund appreciation without any of the risks of depreciation.

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InvestShield Cashbak is a unit linked plan that provides premium guarantee on the invested premiums along with flexible liquidity options.

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LifeStage RP is a unique and powerful wealth creation insurance solution, which combines the benefits of automatic asset allocation and quarterly rebalancing along with increased protection.

25 Protection Solutions •

LifeGuard is a protection plan, which offers life cover at low cost. It is available in 3 options - level term assurance, level term assurance with return of premium & single premium.

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HomeAssure is a mortgage reducing term assurance plan designed specifically to help customers cover their home loans in a simple and cost-effective manner.

Education insurance plans •

Education insurance under the SmartKid brand provides guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the child's life. SmartKid plans are also available in unit-linked form - both single premium and regular premium.

Retirement Solutions •

ForeverLife is a traditional retirement product that offers guaranteed returns for the first 4 years and then declares bonuses annually.

•

LifeTime Super Pension is a regular premium unit linked pension plan that helps one accumulate over the long term and offers 5 annuity options (life annuity, life annuity with return of purchase price, joint life last survivor annuity with return of purchase price, life annuity guaranteed for 5, 10 and 15 years & for life thereafter, joint life, last survivor annuity without return of purchase price) at the time of retirement.

•

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

•

Immediate Annuity is a single premium annuity product that guarantees income for life at the time of retirement. It offers the benefit of 5 payout options.

•

PremierLife Pension is a unique and convenient retirement solution with a limited premium paying term of three or five years, to suit professionals and businessmen, especially those who require more flexibility and customization while planning their finances.

26 Health Solutions •

Health Assure Plus: Health Assure is a regular premium plan which provides long term cover against 6 critical illnesses by providing policyholder with financial assistance, irrespective of the actual medical expenses. Health Assure Plus offers the added advantage of an equivalent life insurance cover.

•

Cancer Care: is a regular premium plan that pays cash benefit on the diagnosis as well as at different stages in the treatment of various cancer conditions.

•

Cancer Care Plus: is a wellness plan that includes all the benefits of Cancer Care and also provides an additional benefit of free periodical cancer screenings.

•

Diabetes Care: Diabetes Care is a unique critical illness product specially developed for individuals with Type 2 diabetes and pre-diabetes. It makes payments on diagnosis on any of 6 diabetes related critical illnesses, and also offers a coordinated care approach to managing the condition. Diabetes Care Plus also offers life cover.

•

Diabetes Care Plus: is a unique insurance policy that provides an additional benefit of life cover for Type 2 diabetics and pre-diabetics

•

Hospital Care: is a fixed benefit plan covering various stages of treatment hospitalisation, ICU, procedures & recuperating allowance. It covers a range of medical conditions (900 surgeries) and has a long term guaranteed coverage upto 20 years.

•

Crisis Cover : is a 360-degree product that will provide long-term coverage against 35 critical illnesses, total and permanent disability, and death.

Group Insurance Solutions ICICI Prudential Life also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. Flexible Rider Options ICICI Prudential Life offers flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer.

27

1.4 SCOPE OF THE STUDY •

The result of this research would help the company to have a better understanding about the consumer’s perception towards life insurance.

•

The study helps the company by creating awareness about the consumers of different ages and income levels.

•

The study also enables the company to focus the consumer’s preferences and expectations on the product which they offer.

28

1.5 OBJECTIVES OF THE STUDIES a) To know about the various Investment alternatives that is mostly preferred by the people. b) To find out the important criteria that people think about before investing in a life insurance policy. c) To find out whether gender bias involved in investing life insurance or not. d) To find out the awareness of ICICI Prudential Life Insurance among the people.

29

1.6 RESEARCH METHODOLOGY Methodology is a systematic way of solving a problem it includes the research methods for solving a problem it includes the research methods for solving the problem. Type of research

- Descriptive research

Data source

-Primary and Secondary data

Data collection method

-Interview and survey

Data collection tools

-Questionnaires

Sampling universe

-Erode

Sample size

-100

SAMPLE DESIGN The target population of the study consists of various respondents of various places. This survey was done by collecting the data from the respondents. SAMPLE SIZE After due consultation with the company supervisor as well as with the college guide, also keeping in mind the requirements of the company for the research, the sample size that was found to be appropriate for the study was 100. SAMPLING TECHNIQUE The sampling technique that adapted to conduct the survey was ‘Convenient Random Sampling’ and the area of the research was concentrated in the city of Erode only. The survey was conducted by visiting different places like colleges, corporate offices, respondent’s home etc...

30 DATA SOURCE The task of data collection begins after a research problem has been defined. In this study data was collected through both primary and secondary data source. A. PRIMARY DATA A primary data is a data, which is collected for gathering information first time and to analyze the problem. In this study the primary data was collected among the consumers using questionnaire. B. SECONDARY DATA Secondary data consist of information that already exits somewhere, having been collected for some other purpose. In this study secondary data was collected from company websites, magazines and brochures. STATISTICAL TOOLS Simple percentage analysis, ranking method and chi square analysis are the main statistical tool used for the study. SIMPLE PERCENTAGE ANALYSIS Percentage refers o a special king of ratio in making comparison between two or more data and to describe relationships. Percentage can also be used to compare the relation terms between two or more sources of data. Percentage of respondents =

Number of respondents Total respondents

* 100

31 RANKING METHOD (WEIGHTED AVERAGE METHOD) This technique was used to rank out the opinion about the consumers preference towards different investment alternatives. The order of merit given by the respondents was converted into ranks by using the following formula. Weightage Score = Σ Wi * Xj Where Wi = Weightage value and Xj = Ranking position value CHI SQUARE TEST Chi Square is a statistical measure used in the context of sampling analysis for comparing the variance to a theoretical variance. In order to judge the significance of association between two attributes, we make use of chi square test by finding the values of chi square using the chi square distribution.

32

1.7 LIMITATIONS OF THE RESEARCH The following limitations can be pointed out from the research that I conducted in relation to the problems that were given to me by ICICI Prudential Life Insurance Company Limited: a) The sample size chosen for the questionnaire was only 100 and that may not represent the true picture of the consumer perception about the Life Insurance sector. b) The research got confined to the city of Erode. The respondent belonged only to Erode and not others who were out of Erode. c) Nearly 98% of the respondent belonged to the age group of 20-50 years and only 2% were above 50 years. So, the responses and the opinions of the experienced and aged were not available. So, the findings may not be correct when we think about the opinion of the elderly people about the life insurance. d) The selection of people for the questionnaire was done on the basis of convenient random sampling, so, there were certain cases in which the people selected did not have any life insurance policy, so they could not give any positive feedback regarding the important criteria to be considered before taking an life insurance policy. So, this further reduced the actual number of respondents to 76 from 100. e) The product offered by different companies had different options and names in them, so at the time of comparison it became very difficult. The parameters for comparison were also different in the selected companies.

33 f) One of the important criteria that was selected by the respondents which they consider before taking an insurance policy was ‘Company Image’, but there was no parameter available to compare criteria like this between the companies.

34

CHAPTER-II DATA ANALYSIS AND INETERPRETATION Table-2.1 GLOBAL SCENARIO OF THE INSURANCE INDUSTRY If we see the table-2.1 in terms of both the premium value and the total market share of some of the leading countries operating in the Insurance sector, the following picture emerges in front of us.

Country

Total Life Premium

Market

(in $bn.)

Share in

US

517.0

percentage 26.2

Japan

375.9

19.5

UK

194.0

10.11

France

154.0

7.81

Italy

91.7

4.65

Germany

90.2

4.57

China

39.5

2.1

Taiwan

38.8

1.97

India

20.1

1.08

Others

452.8

22.07

The above table shows that US is still the leader in Life Insurance sector, closely followed by Japan. India’s share in the global market has doubled since 2000 (0.50%) to 2006 (1.08%), but the growth of china is the maximum from 0.79% in 2000 to 2.10% in 2006. The total premium received in life insurance sector has increased from $ 1,521 bn. in 2000 to $ 1,974 bn. in the year 2006.

35 Chart-2.1

Shares of different countries in Life Insurance

Shares of different countries in Life Insurance

452.8

517

80.1 38.8 39.5 90.2 91.7 154

375.9 194

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

US Japan UK France Italy Germany China Taiwan India Others

36 Table-2.2

Market share of LIC and Private Players Market Players Private players

Market share in percentage 28.44

LIC

71.56

Total

100

Interpretation: LIC market share continued to decline in the period up to June 2007, it declined to 71.56% from 78.23% in the same period last year. On the other hand the market share of the private players is continuously growing up; it increased to 28.44% from 21.77% in terms of insurance premium.

37 Chart-2.2

Market share of LIC and Private Players

M a rke t sha re of LIC a nd Priva te Pla ye rs up to June 2007

28.44%

Private Play ers LIC

71.56%

38 Table-2.4.3

Market Share among Private players Private players

Market share in percentage

ICICI Prudential

29

Market share change in percentage 4

Bajaj Allianz

21

1

SBI Life

10

0

HDFC Standard

9

1

Reliance Life Birla Sunlife

9 5

0 -1

Kotak Mahindra Old Mutual

3

0

Met Life

3

1

Aviva

3

0

Tata AIG

3

1

Max New York

2

-4

ING Vysya

2

-1

Bharti Axa Life

1

0

Sahara Life

0

0

Shriram Life

0

-1

Private total

100

Interpretation: ICICI PRUDENTIAL BECOMES THE MARKET LEADER AMONG PRIVATE PLAYERS: ICICI Prudential strengthens its position at the top of the heap by increasing its market share by 4% in the month of Jan 2008, followed by Bajaj Allianze with 21% market share. These two private players contribute 50% of the total insurance market among the private players.

39 Chart-2.3

Market Share among Private players ICICI Prudential

Market share among private players

Bajaj Allianz

5% 9%

9%

SBI Life

3%

HDFC Standard

3% 3%

10%

3% 5%

Reliance Life Birla Sunlife

2%

Kotak Mahindra Met Life

2%

Aviva Tata AIG

21% 29%

1%

Max New York

0%

ING Vysya

0%

Bharti Axa Life Sahara Life Shriram Life

40 Table-2.4

Sales Growth among Private players Private players ICICI Prudential

Year to year growth in sales in percentage 116

Bajaj Allianz

105

SBI Life

138

HDFC Standard

88

Reliance Life

335

Birla Sunlife

152

Kotak Mahindra Old Mutual Met Life

121

Aviva

60

Tata AIG

100

Max New York

40

ING Vysya

74

Bharti Axa Life

362

Sahara Life

238

Shriram Life

91

Private total

119

125

Interpretation: Private sector sales continued to be robust at 119% year to year (YoY), up from 118% YoY last month. The month also saw LIC make up some lost ground by growing faster than the system at 133% YoY. Among the larger players, Reliance, SBI Life and Birla Sun Life continued to be the rising stars with the fastest YoY growth rates.

41 Chart-2.4

Sales Growth among Private players

42 Table-2.5

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

Investment Alternatives

Total score

Rank

Bank Deposits

6.75

I

Insurance

6.46

II

Post office

5.57

III

Gold & Silver

5.33

IV

Real Estate

5.07

V

Mutual fund

4.83

VI

Equity/Shares

3.84

VII

Public Provident Fund(PPF)

3.78

VIII

Bond & Debentures

1.74

IX

Interpretation: From the above table-2.5 it can be seen that ranks for theses investment alternatives where analyzed by weighted average method. From this analyze we found Bank Deposits is the most preferred investment alternative among the people with the average of 6.75, secondly Insurance with the average of 6.46, followed by other investment alternatives like Post Office (5.57), Gold and Silver (5.33), Real Estate (5.07), Mutual Fund (4.83), Equity (3.84), PPF (3.78) and least preferred alternative is that Bond and Debenture (1.74).we understood from this analyze that people prefer the safe and secure investment alternatives like bank deposits, insurance, real estates,

43 than risky investment alternatives like bonds, equities etc.. The reason that can be attributed for the liking of people towards bank deposit is that people expect safety for their money they deposit even though there is less appreciation on their deposit. Secondly insurance, may be because that insurance provides both life cover as well as security to the holder of the policy and also to the family members of the insurance holders. Now a days insurance is also providing option to invest in the markets through plans like ULIP, which gives the holder both the life cover as well as an opportunity to earn income at the market rate. Then recently real estate is the major investment alternative among the people particularly among Erode, this is mainly due to the increase in land value and also good long term investment preference. Gold and silver also good investment alternative among people due to the frequent appreciation in the values of gold, next is that mutual fund which is also the preferable investment alternative due to low risk on their investment, and other alternatives which are not much preferred were equities, bonds etc. mainly due to the risk involved in it.

44 Chart-2.5

Various investment alternatives available to consumers

Investment Alternative Preffered by peopleBank Depos its 7

Total scores

6 5 4

Ins urance

6.75 6.46

Pos t office

5.575.33 5.074.83

Gold & Silver

3.843.78

3

Real Es tate Mutual fund

1.74

2 1 0 Investm ent Alternatives

Equity/Shares Public Provident Fund(PPF) Bond & Debentures

45

Segmentation of the respondents on the basis of certain important criteria: Now, let us turn our attention towards the respondent who were covered under this study. These respondents can be categorized on the basis of certain important criteria like age group, annual income, life insurance policy holders and awareness of ICICI Prudential Life Insurance in the following way

Table-2.6 Age Group Age Group

Percentage

Below 30 Yrs 31-40 Yrs 41-50 Yrs 51-60 Above 60 Yrs

No of Respondent 50 32 16 2 0

Total

100

100

50 32 16 2 0

Interpretation: From this table-2.6 we can see that 50% of the respondent belonged to the age group of below 30 years, followed by 32% who belonged to the age group between 31-40 years, then 16% of respondents belong to 41-50 years and only 2% from the respondents belong to 51-60 years but there is no respondent from the age group above 60.

46

Chart-2.6 Age Group

Respondents

Age Group 50 45 40 35 30 25 20 15 10 5 0

50

32

16 2 Below 31-40 30 Y rs Y rs

41-50 Y rs

0

51-60 A bove Y rs 60 Y rs

Age Gr oup

47 Table-2.7

Annual Income Level Annual Income Level

No of Respondent

Percentage

Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh

33 60 4 3

33 60 4 3

Total

100

100

Interpretations: From the above table-2.7 we can see that 33% of the respondents belonged to a group which has an annual income of below 1 lakh, followed by highly 60% who belonged to the group of annual income between 1-3 lakh, then 4% who have an annual income between 3-5 lakh and 3% of respondent who have an annual income above 5 lakh.

48 Chart-2.7

Annual Income Level Annual Income Level 60

60

Respondents

50 40

33

30 20 10

4

3

0 Below 1 1.01-3 Lakh Lakh

3.01-5 Above 5 Lakh Lakh

Annual income

49 Table-2.8

Hold Life Insurance Policy Hold life insurance policy

No of Respondent

Percentage

Yes

76

76

No

24

24

Total

100

100

Interpretation: Among the 100 respondents that were taken as a sample size, 76 of them had life insurance policy that was either taken by him/her self or it was taken by their parents on their name, while 24 of them did not have any kind of Life insurance policy from any company.

50 Table-2.8

Hold Life Insurance Policy

Hold Life Insurance Policy 24%

Yes No

76%

51 Table-2.4.9

Awareness about Joint venture between ICICI and Prudential

Awareness about ICICI Prudential

No of Respondent

Percentage

Yes No

47 53

47 53

Total

100

100

Interpretation: Now coming to the point of awareness among the people about ICICI Prudential Life Insurance, the response was very disappointing from the point of view of the company. Out of 100 respondents 53 respondents did not have the knowledge about the joint venture between ICICI bank with Prudential Plc of UK to form a first private sector insurance company in India called ICICI Prudential Life Insurance in December 2000, while the rest 47 had knowledge of the joint venture of Prudential by ICICI.

52 Table-2.9

Awareness about Joint venture between ICICI and Prudential

Awarness-ICICI Prudential

47% Yes

53%

No

53

2.10 Important criteria before taking an life insurance On the basics of insurance policy: Now, let us see what criteria people consider most important before taking a life insurance policy (the criteria for the study have been mentioned before). Here, the highly important criterion as perceived by the people is rated as 5, if people perceived that is only important it is rated 4, if people perceived that it can be only neutrally important is rated as 3, then the least important criterion is being rated as 2 and if perceived that it is not important it is rated as 1(as there are 8 criteria that have been suggested under the research study). Here the number of respondent is only 76, because those 26 people who do not have any life insurance policy have been excluded from the purview of the study. Table-2.11

Premium Rating

No of Respondent

Percentage

5 4 3 2 1

39 31 3 3 _

51.4 40.8 3.9 3.9 _

Total Insurance holders Total non users Total

76

100

24 100

54

Chart-2.11

Premium Premium

Respondents

40 35

39 31

30 25 20 15 10

3

5

3

0 5

4

3

2

0 1

Rating

Interpretation: Now if we consider one of the criteria we can see that 51.4% of the respondent has rated premium as the highly important thing that they consider before taking any insurance policy from any company, and no body has rated it as the not important criterion. So, it can be clearly interpreted that premium that the policy holder has to pay to continue his/her policy plays a very important role before selecting the terms and conditions of the policy and also the company from which the policy is to be taken.

55 Table-2.12

Charges Rating

No of Respondent

Percentage

5 4 3 2 1

17 46 12 1 _

22.4 60.5 15.8 1.3 _

Total Insurance holders Total non users Total

76

100

24 100

Interpretation: Now if we consider the charges the customer has to pay to the insurance company like Fund Management charges, administration charges etc. most of the people nearly 61% respondent consider it as an important criterion which can dictate the terms before deciding on whether to take the policy or not. But a few people (only 22.4% of the total respondents), consider it to be the highly important criterion before taking the decision on life insurance policy.

56 Chart-2.12

Charges Charges

Respondents

50

46

40 30 20

17

12

10

1

0 5

4

3 Rating

2

0 1

57 Table-2.13

Policy Term Rating 5 4 3 2 1 Total Insurance holders Total non users Total

No of Percentage Respondent 29 36 10 1 _

38.1 47.4 13.2 1.3 _

76

100

24 100

Interpretation: The tenure of the policy i.e. the policy term depends on the policy holder but sometimes the insurer can also influence the policy term by giving some additional benefits on policies taken for a longer period of time or vice versa. In the study that was conducted by us, we found out that nearly 48% of the respondents think that policy term offered by the company is the important thing that one should consider before taking any life insurance policy while 38.1% of the respondents think that it is the highly important thing that one should consider before taking any life insurance policy.

58 Chart-2.13

Policy Term

Respondents

Policy Term 40 35 30 25 20 15 10 5 0

36 29

10 1 5

4

3 Rating

2

0 1

59 Table-2.14

Rider Benefits Rating

No of Respondent

Percentage

5 4 3 2 1

18 32 21 5 _

23.7 42.1 27.6 6.6 _

Total Insurance holders Total non users Total

76

100

24 100

Interpretation: Rider benefits are the additional benefits that the insurer company provides to its customers for attracting them. Things like accidental benefit, critical illness benefit, and permanent disablement benefit are provided as a rider with the original policy with a payment of some additional premium from the point of view of the customers. According to the study nearly 42% of the respondents think that it is an important criterion before selecting an insurance policy. On the other hand 27.8% and 23.7% of the respondent feel it neutrally and the most important criterion, which indicates that people are not much interested in additional benefits.

60 Chart-2.14

Rider Benefits

Rider Benefits 35

32

Respondents

30 25 20

21

18

15 10

5

5

0

0 5

4

3 Rating

2

1

61 Table-2.15

Bonus and Interest Paid Rating

No of Respondent

Percentage

5 4 3 2 1

40 24 8 2 2

52.6 31.6 10.6 2.6 2.6

76

100

Total Insurance holders Total non users Total

24 100

Interpretation: Bonus and interest are paid by the companies to the policy holder for the policies which are with profit policy i.e. if a person takes a with profit policy, he/she also becomes liable to get a certain percentage of the profit that the company makes in a certain financial year. 53% of the respondents consider it as the highly important criterion before taking a life insurance policy and only 2.6% of respondents considered it to not important.

62 Table-2.15

Bonus and Interest Paid

Respondents

Bonus & Interest 40 35 30 25 20 15 10 5 0

40

24

8 2 5

4

3 Rating

2

2 1

63 Table-2.16

Services (Pre and Post Sales) Rating 5 4 3 2 1 Total Insurance holders Total non users Total

No of Respondent 26 35 11 2 2

Percentage

76

100

34.3 46.0 14.5 2.6 2.6

24 100

Interpretation: While conducting the study we have met many respondents who think that many of the companies provide them satisfactory services only till the policy is being taken by the respondent, but after that if there is any requirement from the point of view of the customer, the company does not pay the same attention to them as they had paid earlier. So, nearly 34% of the respondents feel that services (both pre and post sales) provided by the company is highly important to consider before undertaking any kind of life insurance policy.

64 Chart-2.16

Services (Pre and Post Sales)

Services 35

35 Respondents

30 25

26

20 15

11

10 5

2

2

0 5

4

3 Rating

2

1

65 Table-2.17

Accessibility Rating

No of Respondent

Percentage

5 4 3 2 1

21 47 6 2 _

27.6 61.8 8.0 2.6 _

76

100

Total Insurance holders Total non users Total

24 100

Interpretation: The term accessibility here refers to the easy availability of the facilities that the company provides to its customers. The facilities may be regarding information about the company and the various products offered by them, it can be made available through internet and other media. According to the study nearly 62% of the respondents think it is highly important, while 2.6% of them feel that it is the least important and no respondent considers that it is not important that one may consider before taking any life insurance policy.

66 Chart-2.17

Accessibility

Respondents

Accessibility 50 45 40 35 30 25 20 15 10 5 0

47

21

6 5

4

3 Rating

2 2

0 1

67

Table-2.18 Company Image Rating

No of Respondent

Percentage

5 4 3 2 1

41 24 10 1 _

54 31.6 13.1 1.3 _

76

100

Total Insurance holders Total non users Total

24 100

Interpretation: Company image also plays an very important role in influencing the decision of a prospective customer while taking the final decision. From the study it has been found out that nearly 54% and 32% of the people feel that it is the highly and most important thing, which has higher influence than any other criterion that influences one’s decision regarding taking of life insurance policy, while for 1.3% of people it does not provide any significant importance in their decision making.

68

Chart-2.18 Company Image

Respondents

Company Im age 45 40 35 30 25 20 15 10 5 0

41

24

10 1 5

4

3

2

0 1

Rating

So, to conclude from the above chart-2.18, it can be said that the company image that the policy holder has to pay for taking any life insurance policy, plays a highly important role in influencing their decision, followed by the factors like premium, bonus and interest paid by the company, policy term and so on. So, those companies who are having brand image or name as well as providing all other complementary services, have a better chance of succeeding in the life insurance sector in comparison to other companies who are in the same field.

69 To further analyze the perception of the respondents about what they think as the important criteria before taking an insurance policy, I have taken two independent parameters, namely: a) Age of the People. b) Annual Income of the People. After taking these two independent parameters, the analysis is being made to see which age group people think what criterion is important or what is the difference in perception among the people who have annual income which are significantly different from each other. The number of respondents taken here is only 76 as those people who are not having any life insurance policy have been excluded from the purview of the study and these 76 respondents were allowed to rate the criteria according to their importance. (Rating 5 represents highly important,4 represents only important,3 represents neutrally important,2 represents least important and 1 represents not important).

2.19 Criteria before taking a life insurance policy On the basics of Age group: For conducting the study the ages of respondents are divided into five categories, those are as follows: a) Less than 30 years. b) Between 31- 40 years. c) Between 41 – 50 years. d) Between 51 - 60 years. e) More than 60 years.

70

Table-2.20 Age Group – Premium Age group

5

4

3

2

1

Total Respondent

Below 30 Yrs

20 (58.8%)

11 (32.4)

2 (5.9)

1 (2.9)

_

34 (100%)

31-40 Yrs

14 (53.8%)

10 (38.6%)

1 (3.8%)

1 (3.8%)

_

26 (100%)

41-50 Yrs

7 (46.7%)

7 (46.7%)

_

1 (6.6%)

_

15 (100%)

51-60 Yrs

_

1 (100%)

_

_

_

1 (100%)

Above 60 Yrs

_

_

_

_

_

_

Total Respondent

41 (54%)

29 (38.2)

3 (3.9)

3 (3.0)

_

76 (100%)

Interpretation: Now, from the above table-2.20 we can see that nearly 59% of the people who belong to the age group of less than 30 consider premium as the highly important criterion in comparison to only 54% of the people who belong to an age group of 30-40. So, people who have started their professional life consider more about the money that has to be spent on the insurance policy in comparison to the people who are working for a relatively longer period of time. Again, if we consider those people 41-50 years who have come to the important stage of their working life, we can see that these people also thing that the expense regarding the premium to be paid is the highly important criteria for them because they likely to spend or save their money on medical, education etc..

71

Chart-2.20 Age Group – Premium

Age group-Pre mium

Age Group

Above 60 Yrs 0

5

51-60 Yrs 010 41-50 Yrs

7

31-40 Yrs

7 14

Below 30 Yrs

4 3

010 10

20 0

10

2 1

110 11

20 Respondents

2 10 30

40

72 Table-2.21

Age Group – Charges Age group

5

4

3

2

1

Below 30 Yrs 31-40 Yrs

5 (14.8%) 4 (15.4%) 8 (53.4%) _

7 (20.5%) 3 (11.5%) 2 (13.3%) _

_

_

1 (3.8%) _

_

_

_

_

22 (64.7%) 18 (69.3%) 5 (33.3%) 1 (100%) _

_

_

_

17 (22.4%)

46 (60.5%)

12 (15.8%)

1 (1.3%)

_

41-50 Yrs 51-60 Yrs Above 60 Yrs Total Respondent

_

Total Respondent 34 (100%) 26 (100%) 15 (100%) 1 (100%) _ 76 (100%)

Interpretation: Now, if we consider the different charges (like Fund management charges, administration charges etc.) that the companies take from their policy holders, we can see that people who are having age less than 30 years and those who belong to the group of 30-40 years think in the same way in this matter. Nearly 15% of both the groups consider these charges are highly important, but not as much as they consider the cost relating to the premium they have to pay to the company.

73 Chart-2.21

Age Group – Charges .

Age group-Charge

Age Group

Above 60 Yrs 0

5

51-60 Yrs 010 41-50 Yrs

8

31-40 Yrs

4

Below 30 Yrs

5 0

5

4 3

20 18 22

10

2 1

3 10 7 20 Respondents

30

0 40

74 Table-2.22

Age Group – Policy Term Age group

5

4

3

2

1

Below 30 Yrs

10 (29.4%)

14 (41.2%)

9 (26.5)

1 (2.9%)

_

31-40 Yrs

10 (38.5%) 8 (53.3%) 1 (100%) _

15 (57.7%) 7 (46.7%) _

1 (3.8) _

_

_

_

_

_

_

_

_

_

_

_

29 (38.2%)

36 (47.4%)

10 (13.1%)

1 (1.3%)

_

41-50 Yrs 51-60 Yrs Above 60 Yrs Total Respondent

Total Respondent 34 (100%) 26 (100%) 15 (100%) 1 (100%) _ 1 (100%)

Interpretation: The policy term mainly depends on the wishes of the policy holder, so here we can see that only 29% and 41% of the people whose age is below 30 years, think this is highly important criterion, but people who a little bit more experienced know that insurer companies sometime provide extra benefits for longer policies in comparison to policies which have a shorter span of life, that’s why nearly 39% and 58% of people belonging to the age group of 31-40 years think that it is a highly important criterion which affects the decision regarding insurance.

75 Chart-2.22

Age Group – Policy Term

Age group-Policy Te rm

Age Group

Above 60 Yrs 0

5

51-60 Yrs 10 41-50 Yrs

8

31-40 Yrs

10

15

Below 30 Yrs

10

14

0

7

4 3

10

0

2 1

10 9 20

Respondents

30

10 40

76 Table-2.23

Age Group – Rider Benefits Age group

5

4

3

2

1

Below 30 Yrs 31-40 Yrs

6 (17.6) 6 (23%) 5 (33.3%) 1 (100%) _

15 (44.2%) 10 (38.5%) 7 (46.7%) _

8 (23.5%) 10 (38.5%) 3 (20%) _

5 (14.7%) _

_

_

_

_

_

_

_

_

_

18 (23.7%)

32 (42.1%)

21 (27.6%)

5 (6.6%)

_

41-50 Yrs 51-60 Yrs Above 60 Yrs Total Respondent

_

Total Respondent 34 (100%) 26 (100%) 15 (100%) 1 (100%) _ 76 (100%)

Interpretation: Mostly all the respondents of different age group are not interested in rider benefits, nearly 42% of the age group below 30, 31-40 and 41-50 years think that it is important ,where as only 23% of all age group think that it is highly important. So, most of them think that rider benefits are not so important and it does not influence their decision in a broad way.

77 Chart-2.23

Age Group – Rider Benefits Ag e g ro u p -R id e r B e n e fits Ab o ve 6 0 Yrs0

5

Age Group

5 1 -6 0 Yrs 10 4 1 -5 0 Yrs

5

3 1 -4 0 Yrs

6

B e lo w 3 0 Yrs

6

0

7

4 3

30 10

10 15

10

2 1

0 8

20 Re s ponde nts

5 0 30

40

78 Table-2.24

Age Group – Bonus and Interest Paid Age group

5

4

3

2

1

Below 30 Yrs 31-40 Yrs

17 (50%) 12 (46.2%) 10 (66.7%) 1 (100%) _

8 (23.5%) 13 (50%) 3 (20%) _

5 (14.7%) 1 (3.8%) 2 (13.3%) _

2 (5.9%) _

2 (5.9%) _

_

_

_

_

_

_

_

_

Total Respondent 34 (100%) 26 (100%) 15 (100%) 1 (100%) _

40 (52.6%)

24 (31.6%)

8 (10.5%)

2 (2.6%)

2 (2.6%)

76 (100%)

41-50 Yrs 51-60 Yrs Above 60 Yrs Total Respondent

Interpretation: In this scenario we can see that the thinking of the people belonging to different age group is quite similar, as nearly 53% of the respondents belonging to three different age groups, namely: <30, 30 – 40 and 40 – 50, think that it is a highly important criterion which influences the decision regarding life insurance policy and none of the total respondent think that it is the least important criterion among all.

79 Chart-2.24

Age Group – Bonus and Interest Paid

Age group-Bonus & Interest

Age Group

Above 60 Yrs 0 5

51-60 Yrs 010 41-50 Yrs

4 10

31-40 Yrs

12

Below 30 Yrs

2 13

17 0

3

3 20

10

1

10 8

20 Respondents

5

2 2 30

40

80 Table-2.25

Age Group – Services (both pre and post sales) Age group

5

4

3

2

1

Total Respondent

Below 30 Yrs

11 (32.4%)

15 (44.2%)

5 (14.7%)

2 (5.8%)

1 (2.9%)

34 (100%)

31-40 Yrs

6 (23.1%)

13 (50%)

6 (23.1%)

_

1 (3.8%)

26 (100%)

41-50 Yrs

9 (60%)

6 (40%)

_

_

_

15 (100%)

51-60 Yrs

_

1 (100%)

_

_

_

1 (100%)

Above 60 Yrs

_

_

_

_

_

_

Total Respondent

26 (34.2%)

35 (46.1%)

11 (14.5%)

2 (2.6%)

2 (2.6%)

76 (100%)

Interpretation: In this case, we can see that the people who belong to the age group of less than 30 years and may be taking an life insurance policy for the first time, give much importance on services in comparison to the people belonging to the age group of 30–40, who put more emphasize on the other benefits than services provided by the company, the percentage is almost 23 but which is 33% for age below 30 years and they think that it is highly important criterion.

81

Chart-2.25

Age Group – Services (both pre and post sales)

Age group-Services

Age Group

Above 60 Yrs 0 5

51-60 Yrs 010

4

41-50 Yrs

9

31-40 Yrs

6

6

Below 30 Yrs

2

13 11

0

3

0 6

10

15 10

20 Respondents

1

5 30

21 40

82 Table-2.26

Age Group – Accessibility Age group

5

4

3

2

1

Below 30 Yrs 31-40 Yrs

5 (14.7%) 6 (23.1%) 10 (66.7%) _

2 (5.9%) 4 (15.4%) _

2 (5.9%) _

_

_

_

_

_

_

_

25 (73,5%) 16 (61.5%) 5 (33.3%) 1 (100%) _

_

_

_

21 (27.6%)

47 (61.8%)

6 (7.9%)

2 (2.7%)

_

41-50 Yrs 51-60 Yrs Above 60 Yrs Total Respondent

_

Total Respondent 34 (100%) 26 (100%) 15 (100%) 1 (100%) _ 76 (100%)

Interpretation: Here, we can see that not much importance is given to the accessibility criteria by the respondents belonging to below 30 and 31-40 years, But only respondent belonging to 41-50 years nearly 67% of them consider that it is highly important, because of their long period of working age they like to get easy availability of the products offered. So only the age groups 41-50 years consider accessibility as an criterion for decision to take an life insurance policy.

83 Chart-2.26

Age Group – Accessibility

Age group-Accessibility

Age Group

Above 60 Yrs 0 5

51-60 Yrs 010

4

41-50 Yrs

10

31-40 Yrs

6

Below 30 Yrs

5 0

3

5 0

2

16 25 10

1

4 0

20 Respondents

2 20 30

40

84 Table-2.27

Age Group – Company Image Age group

5

4

3

2

1

Total Respondent

Below 30 Yrs

17 (50%)

12 (35.3%)

5 (19.2%)

_

_

34 (100%)

31-40 Yrs

12 (46.2%)

9 (34.6%)

5 (19.2%)

_

_

26 (100%)

41-50 Yrs

12 (80%)

2 (13.3%)

_

1 (6.7%)

_

15 (100%)

51-60 Yrs

_

1 (100%)

_

_

_

1 (100%)

Above 60 Yrs

_

_

_

_

_

_

Total Respondent

41 (53.9%)

24 (31.6%)

10 (13.2%)

1 (1.3%)

_

76 (100%)

Interpretation: In the case of company image also, we see most of the respondents nearly 41 with average percentage of nearly 54% consider company image as a highly important criterion this is mainly because people feel secure and comfortable of their money which they spend on the company which has a brand name or image. So, that company image has greater influence among the people before they take up life insurance.

85 Chart-2.27

Age Group – Company Image Age group-Company Image Above 60 Yrs 0 5

Age Group

51-60 Yrs 010

4

41-50 Yrs

12

31-40 Yrs

12

Below 30 Yrs

2 9

17 0

3

2 010

10

1

5 0 12

20 Respondents

5 30

20 40

So, to conclude it can be said that the thinking of people belonging to different age group are quite different in most of the aspects whole it comes to decide the important criterion regarding life insurance, it may be due to the fact that they have started their career, so they worry about the money they have to spend on insurance or it may be related to the fact that for many of the newcomers it is the first time that they are taking a life insurance policy on their own, so they do not have experience when it comes to life insurance in comparison to others who are having their own policy or those who are working for a longer span of time and are quite settled in their respective area of operation.

86

2.28 Criteria before taking a life insurance policy On the basics of Annual Income Level: For conducting the study the annual income of respondents is divided into four categories, those are as follows: a) Less than Rs. 1 lakh. b) Between Rs 1.01 – 3 lakh. c) Between Rs. 3.01 – 5 lakh. d) More than Rs. 5 lakh. Now, let us see the perception of people who belong to different income groups about the important criterion before taking a life insurance policy. Table-2.29

Annual Income – Premium Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

13 (44.8%) 25 (59.5%) 1 (50%) _

13 (44.8%) 16 (38.1%) 1 (50%) 1 (33.3%) 31 (40.8%)

2 (6.9%) _

1 (3.5) 1

_

_

_

_

1 (33.3%) 3 (3.9%)

1 (33.4%) 3 (3.9%)

_

29 (100%) 42 (100%) 2 (100%) 3 (100%) 76 (100%)

39 (51.4%)

_

_

Interpretation: In this scenario mostly the respondents of all the annual income groups think that premium to be paid in a policy is the most important criterion (nearly 54%), even though the income increases it is considered to be the highly important. So, people of all income groups put more emphasize on the money to be spent.

87 Chart-2.29

Annual Income – Premium Income-Premium

Annual Income

Above 5 Lakh 0

1

1

1

0 5

3.01-5 Lakh

1

1

0

4 3

1.01-3 Lakh

25

16

010

2 1

Below 1 Lakh 0%

13 20%

13 40%

60%

Respondents

2 10 80%

100%

88 Table-2.30

Annual Income – Charges Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

10 (34.5%) 6 (14.3%) _

11 (37.9%) 32 (76.2%) 2 (100%) 1 (33.3%) 46 (60.5%)

8 (27.6%) 4 (9.5%) _

_

_

_

_

_

_

1 (33.4%) 12 (15.8%)

_

_

1 (1.3%)

_

29 (100%) 42 (100%) 2 (100%) 3 (100%) 76 (100%)

1 (33.3%) 17 (22.4%)

Interpretation: As the charges taken by the companies is very less as compared to the premium they take, so here we can see that people pay less importance to it. But, here also we can see that nearly 35% of the people who are having annual income of less than 1 lakh, think this is highly important criterion, On the other hand people who are having income between 1.01 – 3 lakh, think that it is just an important criterion (nearly76%), but don’t think at all that this is the highly important criterion (nearly 14%). So, here also difference in income generates difference in opinion.

89 Chart-2.30

Annual Income – Charges Income-Charges

Annual Income

Above 5 Lakh

1

1

1

0 5

3.01-5 Lakh 0

2

0

4 3

1.01-3 Lakh

6

32

4 0

2 1

Below 1 Lakh 0%

10 20%

11 40%

60%

Respondents

8 80%

0 100%

90 Table-2.31

Annual Income – Policy Term Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

9 (31%) 15 (35.7%) 2 (100%) 3 (100%) 29 (38.1%)

15 (51.7%) 21 (50%) _

5 (17.3%) 5 (11.9%) _

_

_

1 (2.4%) _

_

_

_

_

_

36 (47.4%)

10 (13.2%)

1 (1.3%)

_

29 (100%) 42 (100%) 2 (100%) 3 (100%) 76 (100%)

_

Interpretation: In case of policy term we can see that there is no such difference in opinion among the people who belong to different income groups. As nearly 54% of the total respondents think it is highly important criterion and on the other hand 31.6% of the respondents think it is only important. The reason for the same can be that, people who are having less income now, may have a feeling that as the time goes on their income will increase, so they don’t put so much emphasis on policy term as compared to the other criteria.

91

Chart-2.31

Annual Income – Policy Term Income-Policy Term

Annual Income

Above 5 Lakh

3

0 5

3.01-5 Lakh

2

0

4 3

1.01-3 Lakh

15

21

5 10

2 1

Below 1 Lakh 0%

9 20%

15 40%

60%

Re sponde nts

5 80%

0 100%

92 Table-2.32

Annual Income – Rider Benefits Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

5 (17.3%) 9 (21.4%) 1 (50%) 3 (100%) 18 (23.7%)

13 (44.8%) 19 (45.3%) _

1 (3.4%) 4 (9.5%) _

_

_

10 (34.5%) 10 (23.8%) 1 (50%) _

_

_

32 (42.1%)

21 (27.6%)

5 (6.6%)

_

29 (100%) 42 (100%) 2 (100%) 3 (100%) 76 (100%)

_ _

Interpretation: Here, we can see that all respondents who are having income above 6 lakh think that rider benefits are highly important criterion in comparison to people who are having less income. The reason for the same may be as the income of a person increases he/ she will be liable to get more rider benefits in comparison to people who are having lesser income, so they put less importance on rider benefits. But, one thing is clear that very few people from all income class think that rider benefits do not carry any importance.

93 Chart-2.32

Annual Income – Rider Benefits

Income-R ider B enefits A bove 5 Lakh

3

0

Annual Income

5 3.01-5 Lakh

1

0

1

0

4 3

1.01-3 Lakh

9

19

10

4 0

2 1

B elow 1 Lakh 0%

5

13 20%

40%

60%

Re sponde nts

10

10

80%

100%

94 Table-2.33

Annual Income – Bonus and Interest Paid Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

13 (44.9%) 23 (54.8%) 1 (50%) 3 (100%) 40 (52.6%)

8 (27.6%) 15 (35.6%) 1 (50%) _

6 (20.7%) 2 (4.8%) _

2 (6.8%) _

_

_

2 (4.8%) _

_

_

_

24 (31.6%)

8 (10.6%)

2 (2.6%)

2 (2.6%)

29 (100%) 42 (100%) 2 (100%) 3 (100%) 76 (100%)

Interpretation: In case of bonus and interest paid by the insurer company, we can see that people who belong to the income groups of 1.01 – 3 lakh, 3.0 –5 lakh and above 6 lakh put more emphasis on this in comparison to the people who have income less than 1 lakh. The reason for the same may be due to the fact, that people who belong to the range of 1- 6 lakh as annual income, have an tendency to earn more than what they are earning and that’s why they think it as highly important criterion, On the other hand people who have income less than 1 lakh, do not have such income to invest in the company ( more emphasis is given by them on the safety of the money) and that is why they don’t put so much importance on bonus and interest paid by the company.

95 Chart-2.33

Annual Income – Bonus and Interest Paid Income-Bonus&Interest

Annual Income

Above 5 Lakh

3

0 5

3.01-5 Lakh

1

1

0

4 3

1.01-3 Lakh

23

15

20

2 1

Below 1 Lakh 0%

13 20%

8 40%

60%

Respondents

6 80%

20 100%

96 Table-2.34

Annual Income – Services (Both pre and post sales) Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

12 (41.4%)

11 (37.9%)

4 (13.8%)

_

2 (6.9%)

29 (100%)

12 (28.6%) _

21 (50%) 2 (100%) 1 (33.3%) 35 (46.1%)

7 (16.6%) _

2 (4.8%) _

_

_

_

_

11 (14.5%)

2 (2.6%)

2 (2.6%)

42 (100%) 2 (100%) 3 (100%) 3 (100%)

2 (66.7%) 26 (34.2%)

_

Interpretation: Now if we consider the services provided by the company we can see that the people who are having less income put more emphasis on this criterion (41.4%) because people are more conscious about their money than the people who belong to 1-3 lakh. So, they expect better services for their money even though It is less and among all respondents above 6 Lakh who have more job responsibility think service as a highly important criterion for decision making.

97 Chart-2.34

Annual Income – Services (Both pre and post sales): Income-Services

Annual Income

Above 5 Lakh

2

1

0 5

3.01-5 Lakh

2

0

4 3

1.01-3 Lakh

12

21

7

20

2 1

Below 1 Lakh 0%

12 20%

11 40%

60%

Re sponde nts

4 02 80%

100%

98 Table-2.35

Annual Income – Accessibility Annual Income(Rs) Below 1 Lakh 1.01-3 Lakh 3.01-5 Lakh Above 5 Lakh Total

5

4

3

2

1

Total

9 (31%)

19 (65.5%)

_

1 (3.5%)

_

29 (100%)

10 (23.8%) 1 (50%) 1 (33.3%) 21 (27.6%)

25 (59.5%) 1 (50%) 2 (66.7%) 47 (61.8%)

6 (14.3%) _

1 (2.4%) _

_

42 (100%) 2

_

_

_

6 (7.9%)

2 (2.7%)

_

_

3 (100%) 76 (100%)

Interpretation: If we consider the accessibility as one of the criterion for taking insurance policy, we can see that as the income of the person increases, they put less importance on the accessibility criterion (31.0% of people having income less than 1 lakh, 23.8% for 1.01 – 3 lakh, one respondent for 3.01 – 5 lakh and one respondent for more than 5 lakh). The same trend can be seen when they consider it as the only important criteria in taking a decision regarding life insurance. So, most of the people think it as a criterion which is not so important while taking their decision.

99 Chart-2.35

Annual Income – Accessibility

Income-Accessibility

Annual Income

Above 5 Lakh

1

2

0 5

3.01-5 Lakh

1

1

0

4 3

1.01-3 Lakh

10

25

6

10

2 1

Below 1 Lakh 0%

9 20%

19 40%

60%

Re spondents

010 80%

100%

100 Table-2.36

Annual Income – Company Image Annual Income(Rs)

5

4

3

2

1

Total

Below 1 Lakh 1.01-3 Lakh

16 (55.2%) 23 (54.8%)

9 (31%) 13 (30.9%)

3 (10.4%) 6 (14.3%)

1 (3.4%) _

_

29 (100%) 42 (100%)

3.01-5 Lakh Above 5 Lakh

1 (50%) 1 (33.3%)

1 (50%) 2 (66.7%)

_

_

_

_

_

_

Total

41 (53.9%)

24 (31.6%)

10 (13.2%)

1 (1.3%)

_

_

2 (100%) 3 (100%) 76 (100%)

Interpretation: The above table shows 41 respondents of all the income level with average of 54% consider company image as highly important criterion. When we compare company image among different age groups and annual income groups we find similar opinion, considering that it is highly important for decision making. This mainly because people feel safe and secure with the company they invest.

101 Chart-2.36

Annual Income – Company Image Income-Company Image

Annual Income

Above 5 Lakh

1

2

0 5

3.01-5 Lakh

1

1

0

4 3

1.01-3 Lakh

23

13

6

0

2 1

Below 1 Lakh 0%

16 20%

9 40%

60%

3 10 80%

100%

Respondents

So, to conclude it can be said that in most of the aspects, the opinion of the people belonging to different income groups differ from each other. The reason for the same can be the importance that they give on the sum they invest in taking a life insurance policy i.e. a person who is having income of less than 1 lakh will put more emphasis on a sum of Rs, 10000, in comparison to a person who is having an income of more than 5 lakh. So, the difference in income does show difference in opinion also.

102

2.8 To find whether gender bias influenced for investing in life insurance Table given below shows the data obtained during study of life insurance

Male Female Total

Having insurance

Not having insurance

Total

47(44.84) 29(31.16) 76

12(14.16) 12(9.84) 24

41 59 100

Source: Primary data Null Hypothesis (Ho): There is no gender bias for investing in insurance Alternative Hypothesis (H1): There is gender bias for investing in insurance. Chi square test Factor Gender

Level of significance 5%

Degree of freedom 1

Table value

Chi square

3.84

1.059

Result: Chi square is less than the table value. Hence accept the null hypothesis (Ho) We can conclude that gender bias doesn’t influence for investing in life insurance.

103

CHAPTER III FINDINGS, SUGGESTIONS AND CONCLUSION 3.1 FINDINGS The findings that can be drawn from the survey conducted by us can be summarized in the following way: a) Bank Deposits are the most preferred investment alternative which is available to people followed by alternatives such as Insurance, Real Estate, Gold and Silver, Mutual etc. b) It was found that 61 respondents were willing to take a life insurance under LIC and 33 respondents under ICICI Prudential Life Insurance. c) Among the 76 insurance holders 63 have policy of LIC whereas only 11 respondents have policy of ICICI Prudential Life Insurance. d) Only 47% of the total respondents are aware of the joint venture between ICICI bank with Prudential of UK to form a company called ICICI Prudential Life Insurance in the year 2000. 22 respondents are interested to invest in ICICI because of the company’s growth potential and brand image that ICICI has. e) The scheme mostly preferred by insurance holders was life protection schemes like death benefits followed by money growth plans like wealth creation and high return plans. f) It was found that nearly 50% of the respondents usually save less than 15% and the kind of investment mostly preferred by the respondents were both long and short term. g) According to the survey safety is the most important criterion which is excepted among all the respondents towards their investment alternatives followed by Return, Brand Name, Tax Benefits, Liquidity and Capital Growth. h) According to the study company image is to be the highly important criteria which we consider before taking up a life insurance this is mainly because people expect safety and security for their money which they invest, followed by the factor Premium which we pay to the insurer and then Bonus and Interest paid by the company, services etc.

104 i) People who belong to different age groups have different perception regarding the most important criteria before taking the decision on a life insurance policy. j) People who belong to different income groups also have different perception regarding the important criteria concerned with the life insurance.

105

3.2 SUGGESTIONS 1. Consumer should be aware of company’s profile and returns associated with insurance. 2. The Financial advisor should be right enough to serve the consumers. The consumer should also be aware of the advisor or others who is looking after their investments. 3. Company should publish their performance by comparing it with their competitors. 4. Company should adopt strategies to explore that private insurance companies are safer and securer than public insurance company like LIC. 5. Middle income people suggest that premium can be collected on monthly basis instead of twice a year. 6. Company’s reputation is more important because bad impression on image or brand name is considered while decision making among consumers.

106

3.3 CONCLUSION Insurance is a tool by which fatalities of a small number are compensated out of funds collected from plenteous. Insurance is a safeguard against uncertain events that may occur in the future. Over the last 5 to 6 years, the ICICI Prudential life insurance company have tripled investors money than the other competent, this progress leads to increase the company image and makes a way to lead the total insurance market. Thus the study also comprise company image is the highly important criteria that consumers consider before taking up a life insurance. This is mainly because people expect safety and secure for their money which they invest, followed by the factor Premium which we pay to the insurer and then Bonus and Interest paid by the company, services etc.

107

REFERENCES

TEXT BOOKS 1. PHILIP KOTLER (2001) ‘Marketing Management’, Prentice Hall Pvt.Ltd., New Delhi, Millennium edition. 2. KOTHARI C.R. (1999) ‘Research Methodology’, Wishwa Prakashan, New Delhi, 2nd edition. 3. LEON G. SCHFFMAN and LESLIE LAZAR KANUK (2007) ‘Consumer Behavior’, Prentice Hall Pvt.Ltd., New Delhi, 9th edition. WEB SITES 1. www.iciciprulife.com 2. www.irda.org

108

APPENDIX A Study of Consumer’s Perception about Life Insurance with special Reference to ICICI Prudential Questionnaire Dear respondent, This questionnaire is aimed at understanding your perception about life insurance .Your response will be dealt with strict confidentiality and it will be used only for academic purpose. Thank you for spending your valuable time to fill this questionnaire. 1. Name:

Gender: Male

Female

Contact No: 2. Age Group: Below 30

31-40

41-50

51-60

Above 60

3. Educational Qualification: Under Graduate

Post Graduate

Diploma

Others (Specify)………….

4. Occupation: Student

Employed

Self-Employed

1.01-3 Lakh

3.01-5 Lakh

Others (Specify)………….

5. Annual Income Level: Below 1 Lakh Above 5 Lakh

6. What percentage of your Salary do you usually save? Less Than 15% 15-20% Greater Than 25%

20-25%

109

7. What kind of investment do you prefer? Short Term

Long Term

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

Investment Alternatives

Rank

1.

Bonds & Debentures

2.

Equity/Shares

3.

Mutual Fund

4.

Public Provident Fund(PPF)

5.

Post Office

6.

Insurance

7.

Bank Deposits

8.

Real Estate

9.

Gold & Silver

10.

Other (specify)…………………….

Both

110

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

Highly important

Important

Neutral

Least important

Not important

Safety Capital Growth Liquidity Return Tax Benefit Company Profile & Brand Name

10. Do you have life Insurance Policy? ( If ‘NO’ then please go to question no. 14) Yes No

11. If ‘Yes’ Which Insurance Company Policy do you have? LIC ICICI Prudential

Bajaj Allianz HDFC Standard

12. What scheme of Insurance Policy have you taken? Life protection plan Education plan Health plan Money growth plan

Reliance life Others (Specify)……..

Retirement plan Others (Specify)……….

111

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

Highly Important

Neutral Important

Least Important

Not Important

Premium Charges Policy Term Rider Benefits Bonus & Interest Services (Pre & Post Sales) Accessibility Company Image 14. Are you aware about the joint venture between ICICI bank with Prudential Plc of UK to form a first private sector insurance company called ICICI Prudential Life Insurance in December 2000? Yes No 15. Would you like to invest in ICICI Prudential Life Insurance? No Yes

16. If, ‘YES’ what will make you to invest in ICICI Prudential Life insurance? Diversity Brand image Growth Potential Transparency

Utmost Good Faith

Others (Specify)…………….

112 17. Among the following Life Insurance Companies in which company you will be Willing to take a life insurance? Bajaj Allianz SBI Life Reliance Sahara OM- Kotak Mahindra

HDFC Standard Life ICICI Prudential Met Life ING INGVysya Vysya LIC

18. Suggestions _______________________________________ ________________________________________________ ________________________________________________

Thank you

Birla Sunlife TATA- AIG Max New York Max New York Aviva Dabur AXA-Bharti