Summer Internship Report On

“A STUDY ON FACTORS AFFECTING CUSTOMERS

PREFERENCE TOWARDS INVESTING LIFE INSURANCE
POLICIES”

Guru Gobind Singh Indraprastha University

In Partial Fulfillment of the Requirement for the Award of the Degree of
Bachelor of Business
Administration Batch 2022-25

Under the Institutional Guidance of Under the Corporate Guidance Of

Dr. Priyalaxmi Mr. Harsh Yadav

Submitted By

Rohan Saini
Enrolment no.- 36250601722

New Delhi Institute of Management

61, Tughlakabad Institutional Area, New Delhi-62
1
 Certificate
This is to certify that Summer Training Report “A STUDY ON
FACTORS AFFECTING CUSTOMERS PREFERENCE TOWARDS INVESTING
INLIFE INSURANCE POLICIES”

submitted by ROHAN SAINI to New Delhi Institute of Management, Guru Gobind Singh
Indraprastha University in partial fulfillment of requirement for the award of the
Bachelor of Business Administration degree is an original piece of work carried out under
my guidance and may be submitted for evaluation. The assistance rendered during the
study has been duly acknowledged. No part of this work has been submitted for any
other degree.

Dr. Priyalaxmi

2
3
 ACKNOWLEDGEMENT
Any accomplishment requires the effort of many people and this work is not
different. Regardless of the source, I wish to express my gratitude to those who
may have contributed to this work, even though anonymously.

First, I would like to express my deepest sense of gratitude to NEW DELHI

INSTITUTE OF MANAGEMENT for providing me with an opportunity for training and
encouragement in conducting the research work.

I would like to pay my sincere thanks to my project guides, Mr. Harsh Yadav Sir who is
the team leader of my team for giving me the approval and thanks to the staff to co-
operating me in my project and as well as giving me guidance in the problem faced.
Dr. Priyalaxmi under whose guidance I was able to complete my project
successfully. I have been fortunate enough to get all the support, encouragement
and guidance from her needed to explore, think new and initiate.

My final thanks goes to my parents, family members, teachers and friends who
encouraged me countless times to persevere through this entire process.

Rohan Saini

4
Sr. No. Table of Contents Page No.
1 EXECUTIVE SUMMARY 7-8

2 Chapter-1 INTRODUCTION 9-11

3 Purpose Of Study 10

4 Objective Of Study 10

5 Scope of study 11

6 Limitations of study 11

7 Chapter-2 12-21

Introduction to non-banking financial companies

8 Chapter-3 22-27
Introduction to insplore consultant

9 Chapter-4 28-33
Introduction to Insurance

10 Chapter-5 34-43
Introduction to life insurance

11 Chapter-6 44-45
Literature Review

12 Chapter-7 46-63
Data analysis

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13 Chapter-8 64-65
Research Methodology

14 Chapter-9 66-67
Findings from the study

15 Chapter-10 68-69
Recommendations

16 Chapter-11 70-72
Conclution

17 References 73

18 Appendices(Questionnaire) 74-75

6
EXECUTIVE SUMMARY

7
 EXECUTIVE SUMMARY
Name : Rohan saini
Enrollment Number 36250601722
Email ID : rohansaini1717@[Link]

Name of Organization : Insplore Consultant

Address of Company : 12th Floor, 1208, RG Trade Tower, Netaji Subhash Place, Pitampura,
New Delhi, Delhi, 110034
City : New Delhi

The study named “A STUDY ON FACTORS AFFECTING CUSTOMERS PREFERENCE TOWARDS

INVESTING IN LIFE INSURANCE POLICIES” is about understanding the factors that affect the customer’s
decision while buying Life insurance Policies. The entire Internship was a great learning because of its vast
exposure to products and corporate world.

The main objective of the project was to study the various factors influencing customer
investment decisions in Life insurance Policy. It also studies the impact of various demographic
factors on customer Life Insurance Investment Decision. It also evaluates various preferences in
a company, in an insurance plan, and also which company is preferred the most for Life
Insurance Policies.

The findings of the research were that customer decision to buy a Life Insurance Policy majorly
depends on demographic factors like the Age, Gender and Income Level. Occupation is not
dependent on taking Life Insurance Policies. LIC stands as the first preference in company and
Money back guarantee is the first preference for choosing a life insurance policy. Also,
customers prefer Money Back Policy and ULIP Plans for investment in Life Insurance Policies.
There are also recommendations included in the report for making Insurance as an Investment.

8
CHAPTER 1: INTRODUCTION TO STUDY

9
 CHAPTER 1 : INTRODUCTION TO STUDY
1. Purpose, Objective, Scope and Limitation of the Study
1.1. Purpose of the Study
 The study aims at understanding the market of Insurance. Insurance being one of the most
important Financial Product in the market, still has not reached a more number of
customers.
 The study also aims to understand various Life Insurance Products.
 The main motive of the study is to understand the various factors that affect the
customers decision in buying a Life Insurance Policy.
 The study also aims to understand the various types of products provided by
Insplore consultant.
 To understand the level of awareness regarding insurance products within the customers.

1.2. Objective of the Study.

The present Descriptive and Exploratory type of Research is chosen with an objective of
studying factors which influence customers policy buying decisions and also analyze the
customers preferences while Life policy Investment decision making. Factors related to
Insurance would be studied in this project. The aim of study is also to understand which is the
most preferred Company for buying Insurance policies. Following are the main objectives of the
study :

a) To study various factors influencing Customer Investment Decision in Life Insurance.

b) To study and analyze the impact of various demographic factors on customers life
insurance investment decision.
c) To evaluate preferences of the customers while taking life insurance investment decision.
d) To study and rank the factors responsible for the selection life insurance as an
investment option.
e) To offer suggestions for popularizing life insurance among the public at large.

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 1.3. Scope of the Study

The insurance industry is one of the fastest growing industries in the country and offers
abundance growth opportunity to the life insurers. When compared with the developed foreign
countries, the Indian life insurance industry has achieved only a little because of the lack of
insurance awareness, ineffective marketing strategies, poor affordability and low investment in
life insurance products. The huge and ever rising population levels in our country provide an
attractive opportunity but still nearly 70% Indian lives is un-insured. The study is basically
intended to discover and examine the factors affecting customers decision towards investment
in life insurance policy.

1.4. Limitations of the Study

 The study is limited to respondents from Pune area majorly.
 Lack of awareness regarding Insplore Consultant was a major problem in reaching to
customers.
 Getting Personal information like Income, Insurance policy was a difficult task.
 Lesser awareness of various Life Insurance Products was one major problem while
conducting the survey. It was difficult to make people understand each and every product
of Insurance.
 Understanding and filling the Google Form was a difficult task because of not so easy
understanding of Google Form and questions.

11
CHAPTER 2 : INTRODUCTION TO NON-
BANKING
FINANCIAL COMPANIES

12
CHAPTER 2 : INTRODUCTION TO NON-BANKING FINANCIAL
COMPANIES
2.1. Introduction to NBFCs

Definition of NBFCs : “NBFCs are Companies that are registered under The Companies Act, 1956
of India. NBFCs are engaged in business of Loans and Advances, Acquisition of shares, bonds,
hire purchase Insurance Business or chit-fund Business but does not include principal business
includes agriculture, industrial activity or the sale, purchase or construction of immovable
property.”

Non-Banking Financial Companies play an important and crucial role in broadening access to
financial services, enhancing competition and diversification of the financial sector. There are
different types of institutions involved in financial services in India. These include commercial
banks, financial institutions (FIs) and non-banking finance companies (NBFCs). Due to the
financial sector reforms, NBFCs have been emerged as an integral part of the Indian financial
system. Non-banking finance companies frequently act as suppliers of loans & credit facilities
and accept deposits, operating mutual funds and similar other functions. They are competitive
and complimentary to banks and financial institutions. Many steps were taken in 1995-96 to
reduce controls and remove operational constraints in the banking system. These include
interest rate decontrol, liberalization and selective removal of Cash Reserve Ratio (CRR)
stipulation, enhanced refinance facilities against government and other approved securities.

NBFCs have registered significant growth in recent years both in terms of number and volume
of business transactions (Table-2). The equipment leasing and hire purchase finance companies
finance productive assets. NBFCs role in financing consumer durables and automobiles are very
aggressive. The rapid growth in the business of NBFCs urged for effective regulatory action to
protect the interests of investors. The Reserve Bank has started regulating the activities of
NBFCs with the twin objectives of ensuring that they sub serve the financial system efficiently
and do not jeopardize the interest of depositors.

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 2.2 DIFFERENCE BETWEEN BANKS AND NBFCS

NBFCs perform functions similar to that of banks but there are a few differences:

 Provides Banking services to People without holding a Bank license.

 An NBFC cannot accept Demand Deposits.
 An NBFC is not a part of the payment and settlement system and as such.
 An NBFC cannot issue Cheques drawn on itself.
 Deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation
is not available for NBFC depositors, unlike banks.
 An NBFC is not required to maintain Reserve Ratios (CRR, SLR etc.)
 An NBFC cannot indulge Primarily in Agricultural, Industrial Activity, Sale-Purchase,
Construction of Immovable Property.
 Foreign Investment allowed up to 100%.

2.3. TYPES OF NBFCs

Asset
Finance
Company

Infrastructure
Investment
Debt Fund

Types of
Systemically
Loan
Important Core
Investment Companies
Company
Infrastructure
Finance
Company

14
 2.4. TYPES OF SERVICES PROVIDED BY NBFCs

NBFCs provide range of financial services to their clients. Types of services under non-banking
finance services include the following:

1. Hire Purchase Services

2. Leasing Services

3. Housing Finance Services

4. Asset Management Services

5. Venture Capital Services

6. Mutual Benefit Finance Services (Nidhi) banks.

 Hire Purchase Services

Hire purchase the legal term for a conditional sale contract with an intention to finance
consumers towards vehicles, white goods etc. If a buyer cannot afford to pay the price as a
lump sum but can afford to pay a percentage as a deposit, the contract allows the buyer to hire
the goods for a monthly rent. If the buyer defaults in paying the installments, the owner can
repossess the goods. HP is a different form of credit system among other unsecured consumer
credit systems and benefits. Hero Honda Motor Finance Co., Bajaj Auto Finance Company is
some of the HP financing companies.

 Leasing Services

A lease or tenancy is a contract that transfers the right to possess specific property. Leasing
service includes the leasing of assets to other companies either on operating lease or finance
lease. An NBFC may obtain license to commence leasing services subject to , they shall not hold,
deal or trade in real estate business and shall not fix the period of lease for less than 3 years in
the case of any finance lease agreement except in case of computers and other IT accessories.

15
  Housing Finance Services

Housing Finance Services means financial services related to development and construction of
residential and commercial properties. An Housing Finance Company approved by the National
Housing Bank may undertake the services /activities such as Providing long term finance for the
purpose of constructing, purchasing or renovating any property, Managing public or private
sector projects in the housing and urban development sector and Financing against existing
property by way of mortgage. ICICI Home Finance Ltd., LIC Housing Finance Co. Ltd., HDFC is
some of the housing finance companies in our country.

 Asset Management Company

Asset Management Company is managing and investing the pooled funds of retail investors in
securities in line with the stated investment objectives and provides more diversification,
liquidity, and professional management service to the individual investors. Mutual Funds are
comes under this category. Most of the financial institutions having their subsidiaries as Asset
Management Company like SBI, BOB, UTI and many others.

 Venture Capital Companies

Venture capital Finance is a unique form of financing activity that is undertaken on the belief of
high-risk-high-return. Venture capitalists invest in those risky projects or companies (ventures)
that have success potential and could promise sufficient return to justify such gamble. Venture
capitalist not only provides finance but also often provides managerial or technical expertise to
venture projects. In India, venture capital concentrate on seed capital finance for high
technology and for research & development. ICICI ventures and Gujarat Venture are one of the
first venture capital organizations in India and SIDBI, IDBI and others also promoting venture
capital finance activities.

 Mutual Benefit Finance Companies (MBFC's)

A mutual fund is a financial intermediary that allows a group of investors to pool their money
together with a predetermined investment objective. The mutual fund will have a fund
manager who is responsible for investing the pooled money into specific securities/bonds.
Mutual funds are one of the best investments ever created because they are very cost efficient
and very easy to invest in. By pooling money together in a mutual fund, investors can purchase
16
stocks or bonds with much lower trading costs than if they tried to do it on their own. But the
biggest advantage to mutual funds is diversification.

17
There are two main types of such funds, open-ended fund and close-ended mutual funds. In
case of open-ended fund, the fund manager continuously allows investors to join or leave the
fund. The fund is set up as a trust, with an independent trustee, who keeps custody over the
assets of the trust. Each share of the trust is called a Unit and the fund itself is called a Mutual
Fund. The portfolio of investments of the Mutual Fund is normally evaluated daily by the fund
manager on the basis of prevailing market prices of the securities in the portfolio and this will
be divided by the number of units issued to determine the Net Asset Value (NAV) per unit. An
investor can join or leave the fund on the basis of the NAV per unit.

In contrast, a close-end fund is similar to a listed company with respect to its share capital.
These shares are not redeemable and are traded in the stock exchange like any other listed
securities. Value of units of close-end funds is determined by market forces and is available at
20-30% discount to their NAV.

2.3. ROLE OF NBFCs IN INDIAN ECONOMY

NBFCs (Non-Banking Financial Companies) play an important role in promoting inclusive growth
in the country, by catering to the diverse financial needs of bank excluded customers. Further,
NBFCs often take lead role in providing innovative financial services to Micro, Small, and
Medium Enterprises (MSMEs) most suitable to their business requirements. NBFCs do play a
critical role in participating in the development of an economy by providing a fillip to
transportation, employment generation, wealth creation, bank credit in rural segments and to
support financially weaker sections of the society. Emergency services like financial assistance
and guidance is also provided to the customers in the matters pertaining to insurance.

NBFCs are financial intermediaries engaged in the business of accepting deposits delivering
credit and play an important role in channelizing the scarce financial resources to capital
formation. They supplement the role of the banking sector in meeting the increasing financial
needs of the corporate sector, delivering credit to the unorganized sector and to small local
borrowers. However, they do not include services related to agriculture activity, industrial
activity, sale, purchase or construction of immovable property. In India, despite being different
from banks, NBFC are bound by the Indian banking industry rules and regulations.

18
NBFC focuses on business related to loans and advances, acquisition of shares, stock, bonds,
debentures, securities issued by government or local authority or other securities of like

19
marketable nature, leasing, hire-purchase, insurance business, chit business. The banking sector
would always be the most important sector in the field of business because of its credibility in
supporting manufacturing, infrastructural development and even being the backbone for the
common man's money. But despite this, the role of NBFCs is critical and their presence in a
country would only boost the economy in the right direction.

P Vijaya Bhaskar, ex – Executive Director, RBI, explained how NBFC companies are game-
changers that are very important to the economy

 Size of sector : The NBFC sector has grown considerably in the last few years despite the
slowdown in the economy.
 Growth : In terms of year-over-year growth rate, the NBFC sector beat the banking sector in
most years between 2006 and 2013. On an average, it grew 22% every year. This shows, it is
contributing more to the economy every year.
 Profitability : NBFCs are more profitable than the banking sector because of lower costs. This
helps them offer cheaper loans to customers. As a result, NBFCs' credit growth - the increase
in the amount of money being lent to customers – is higher than that of the banking sector
with more customers opting for NBFCs.
 Infrastructure Lending : NBFCs contribute largely to the economy by lending to
infrastructure projects, which are very important to a developing country like India. Since
they require large amount of funds, and earn profits only over a longer time-frame, these are
riskier projects and deters banks from lending. In the last few years, NBFCs have contributed
more to infrastructure lending than banks.
 Promoting inclusive growth : NBFCs cater to a wide variety of customers - both in urban and
rural areas. They finance projects of small-scale companies, which is important for the
growth in rural areas. They also provide small-ticket loans for affordable housing projects. All
these help promote inclusive growth in the country.

20
NBFCs aid economic development in the following ways :

i. Mobilization of Resources - It converts savings into investments

ii. Capital Formation - Aids to increase capital stock of a company
iii. Provision of Long-term Credit and specialized Credit
iv. Aid in Employment Generation
v. Help in development of Financial Markets
vi. Helps in Attracting Foreign Grants
vii. Helps in Breaking Vicious Circle of Poverty by serving as government's instrument

The Technology Backbone

With the increasing role of NBFCs in the Indian Economy, the Reserve Bank of India has issued
the notification Master Direction - Information Technology Framework for the NBFC Sector this
year. The directions on IT Framework for the NBFC sector are expected to enhance safety,
security, efficiency in processes leading to benefits for NBFCs and their customers. NBFCs with
asset size above 500 crores are expected to adhere to the new "recommendations" by 30th
September 2018. Recommendations for smaller NBFCs include developing basic IT systems
mainly for maintaining the database. While larger NBFCs stare at a strict deadline, smaller
NBFCs, especially Fintech startups have a bigger problem at hand; an identity crisis! The
business models of startups like BankBazaar mandate that they do not become a NBFC, while
the nature of operations of startups like LendingKart makes them a NBFC as part of the legal
compliance.

21
CHAPTER 3: INTRODUCTION TO
INSPLORE
CONSULTANT

22
 CHAPTER 3 : INTRODUCTION TO INSPLORE
CONSULTANTS PVT LTD
[Link] THE COMPANY

INSPLORE is the choice of Multinationals and leading Indian Businesses

because it is the preferred talent acquisition partner for them. Our
Experts are helping the talent seeker and the Job Seeker to find each
other: We Inspire, You Explore.
We, as an expert in financial advisory, realise the need of every customer
who is looking for financial independence and help them to reach that
level of financial freedom. We understand how the perception regarding
the value of money changes as per different individuals’ desires. We
extend a helping hand to customers by assisting them in making crucial
financial decisions and managing their wealth effectively to ensure that
our customers stay stress free and get rid of their financial worries.
We believe in timely adaptation with the dynamic environment in order
to deal with any challenges ahead with utmost enthusiasm because we
understand the importance of taking the right action at the right time to
cope with the dynamic environment.

Our Identity
Insplore is dedicated to empower with relevant Jobs & Growth Opportunities.
We are a successful Conglomerate with the experts of Financial Advisors on our panel.
We have a Team of Professionals working every day to provide HR as well as Financial Solutions to the
Companies/ Clients.

Our Mission
We thrive to provide best wealth management advice through honest financial solutions as well
as inspire the candidates to explore job opportunities across various industrial sector.

Our Vision
Our vision is to become the most trusted financial advisor as well as most valuable recruitment
23
service provider.

24
 3.2. Insplore’s USP:

 A Wide Range of Products: Insplore Consultants is the only online financial marketplace in
India that offers a complete spectrum of financial products, ranging from retail lending
products, such as credit cards, personal loans, home loans, loans against property, auto loans
etc to investment products like mutual funds, Insurance and fixed deposit. Insplore
Consultants partners with over 50+ banks and other financial institutions, catering to all
segments with varied demographics.
 Unbiased & Customized Advise: Insplore Consultants offers customized solutions to all
lending and investment needs of a customer. The comparison engine is an intuitive platform
that provides unbiased choices to their customers, based on the profile and needs. After
processing the latest financial numbers from virtually all banks and fiscal organizations, this
engine helps users arrive at a smarter decision instantly.
 A Seamless Journey: Insplore Consultants also helps customers make the right choice and
assists them throughout the transaction process with the bank. A seamless product journey
and assistance over the phone from the sales force, makes the entire buying process at
Insplore Consultants simple and speedy.
 Paperless and Presence-less Processes: Insplore Consultants is focused on using technology
to build presence-less and paperless solutions in the financial services aggregation space.
Riding on the Indian Government's India Stack initiative that aims to digitize customer
identification and verification, Insplore Consultants is developing solutions where processes
are completed on its platform without the need for customers to either visit banks or do
multiple sheets of paperwork.

25
 Job Profile

Position: Intern
Company: Insplore Consultants Pvt Ltd
Location: New Delhi, India

Roles and Responsibilities:

Customer Interaction and Support: Engaged with customers to gather data on their insurance
preferences and provide them with information on various life insurance products.
Data Collection and Analysis: Conducted surveys and collected primary data via Google Forms and
telephonic interviews, targeting customer demographics and preferences for life insurance policies.
Market Research: Researched market trends in life insurance and analyzed factors influencing customer
choices, such as brand reputation, risk coverage, premium rates, and policy benefits.
Product Knowledge: Gained in-depth knowledge of financial products offered by Insplore Consultants,
including life insurance, loans, and mutual funds, which allowed for cross-selling opportunities.
Use of Analytical Tools: Utilized tools like SPSS and Microsoft Excel for statistical analysis, including chi-
square tests, correlation analysis, and weighted average ranking, to interpret customer responses.
Report Preparation: Compiled findings, insights, and recommendations into a detailed report on
customer preferences in the life insurance sector, contributing to Insplore’s strategy to enhance
customer satisfaction and market reach.
Skills Developed:

Communication and Presentation: Improved communication skills through customer interactions and
presenting research findings.
Time Management: Managed project timelines effectively to meet internship milestones and
deliverables.
Technical Proficiency: Enhanced proficiency in Microsoft Excel, PowerPoint, and statistical analysis
software, critical for data-driven decision-making.

26
 Targets Assigned
Customer Data Collection

Target: Gather data from at least 15 respondents in the family to analyze their preferences and factors affecting life insurance
investment decisions.
Objective: Understand the demographic influences and customer priorities when selecting life insurance policies.
Market Analysis and Insights

Target: Conduct a detailed analysis of market trends, focusing on factors like customer demographics, preferred companies,
policy types, and most attractive policy features.
Objective: Identify key customer drivers for insurance policy selection and provide actionable insights for Insplore
Consultants' strategy development.
Product Awareness and Recommendations

Target: Raise awareness of Insplore's life insurance products through customer interactions and recommend policy options
based on customer needs and preferences.
Objective: Increase customer understanding of life insurance offerings, aiming for a minimum of 10 product
recommendations per week.
Data Analysis and Report Compilation

Target: Utilize tools like SPSS and Microsoft Excel to analyze collected data and prepare a comprehensive report with findings
and strategic recommendations.
Objective: Submit a finalized report by the end of the internship, summarizing insights into customer preferences and
suggesting methods to enhance product appeal.
Professional Skills Development

Target: Enhance skills in time management, data analysis, customer communication, and financial product knowledge.
Objective: Achieve a high level of proficiency in Microsoft Excel and data analytics by applying these skills to real-time
customer data and market research tasks.

27
 Daily Report
Monday - Data Collection and Customer Interaction
Objective: Conduct customer outreach to gather data on insurance preferences.
Activities:
Reached out to customers via phone and email to explain survey objectives.
Guided respondents through the survey process on Google Forms, helping them understand questions on life insurance
preferences and demographic details.
Documented customer queries and feedback for reference in analyzing data trends.
Tuesday - Data Analysis and Report Drafting
Objective: Analyze collected data and begin drafting sections of the final report.
Activities:
Inputted customer survey responses into Excel and used filters and basic functions to clean data.
Conducted preliminary analysis to identify trends related to age, gender, income level, and insurance preferences.
Drafted a preliminary summary of findings based on initial data patterns, noting areas needing additional data collection.
Wednesday - Market Research and Product Knowledge Development
Objective: Research the life insurance market and develop an understanding of Insplore's offerings.
Activities:
Studied competitors in the insurance market to understand their popular products and customer appeal strategies.
Participated in a product knowledge session with the team, where different life insurance products, such as term plans, ULIPs,
and money-back policies, were explained in detail.
Compiled notes on how Insplore Consultants’ products compare to others in terms of features, risk coverage, and premium
options.
Thursday - Customer Follow-up and Data Verification
Objective: Follow up with customers who had partially completed surveys and verify responses for accuracy.
Activities:
Reached out to customers who had abandoned the survey halfway, encouraging completion and answering any concerns
they had.
Verified responses, especially those related to sensitive information like income level and policy preferences, to ensure data
accuracy.
Recorded reasons for incomplete surveys, noting areas where questions may need rephrasing for future data collection
improvements.
Friday - Weekly Summary and Team Reporting
Objective: Compile weekly findings and report progress to team leaders.
Activities:
Summarized weekly data collection progress and key insights from market research in a presentation format.
Attended a team meeting led by Mr. Harsh Yadav, where weekly accomplishments were discussed, and goals for the next
week were set.
Received feedback on data quality and additional factors to consider for next week’s analysis, including emphasizing customer
preferences in product features like risk coverage and premium flexibility.
Saturday - Data Insights and Presentation Preparation
Objective: Begin preparing insights for the final presentation.
Activities:
Consolidated data trends into a structured format, highlighting key insights into customer demographic preferences and most
popular insurance products.
Drafted visual aids like charts and graphs using Excel to depict customer trends in life insurance preferences.
Reviewed the internship's findings with a mentor for feedback, adjusting data interpretation based on their insights.

28
CHAPTER 4 : INTRODUCTION TO
INSURANCE

29
 CHAPTER 4 : INTRODUCTION TO INSURANCE
Definition : “Insurance is a contract, represented by a policy, in which an individual or entity
receives financial protection or reimbursement against losses from an insurance company.”

4.1- INTRODUCTION TO INSURANCE AND ITS COMPONENTS

Insurance is a means of protection from financial loss. It is a form of risk management, primarily
used to hedge against the risk of a contingent or uncertain loss.

An entity which provides insurance is known as an insurer, insurance company, insurance

carrier or underwriter. A person or entity who buys insurance is known as an insured or as a
policyholder. The insurance transaction involves the insured assuming a guaranteed and known
relatively small loss in the form of payment to the insurer in exchange for the insurer's promise
to compensate the insured in the event of a covered loss. The loss may or may not be financial,
but it must be reducible to financial terms, and usually involves something in which the insured
has an insurable interest established by ownership, possession, or pre-existing relationship.

The insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insurer will compensate the insured. The amount of money
charged by the insurer to the Policyholder for the coverage set forth in the insurance policy is
called the premium. If the insured experiences a loss which is potentially covered by the
insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.
The insurer may hedge its own risk by taking out reinsurance, whereby another insurance
company agrees to carry some of the risk, especially if the primary insurer deems the risk too
large for it to carry. Insurance involves pooling funds from many insured entities (known as
exposures) to pay for the losses that some may incur. The insured entities are therefore
protected from risk for a fee, with the fee being dependent upon the frequency and severity of
the event occurring. In order to be an insurable risk, the risk insured against must meet certain
characteristics. Insurance as a financial intermediary is a commercial enterprise and a major part
of the financial services industry, but individual entities can also self-insure through saving
money for possible future losses.

30
 4.2- INSURANCE SECTOR IN INDIA

The insurance industry of India consists of 63 insurance companies of which 24 are in life
insurance business and 39 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers, there are seven public sector insurers. In addition to these, there are two national re-
insurer. Other stakeholders in Indian Insurance market include agents (individual and
corporate), brokers, surveyors and third party administrators servicing health insurance claims.

Life insurance companies offer coverage to the life of the individuals, whereas the non-life
insurance companies offer coverage with our day-to-day living like travel, health, our car and
bikes, and home insurance. Not only this, but the non-life insurance companies provide
coverage for our industrial equipment’s as well. Crop insurance for our farmers, gadget
insurance for mobiles, pet insurance etc. are some more insurance products being made
available by the general insurance companies in India.

31
 4.3.1 – MARKET SIZE

Government's policy of insuring the uninsured has gradually pushed insurance penetration in
the country and proliferation of insurance schemes.

Gross premiums written in India reached Rs 5.53 trillion in FY18, with Rs 4.58 trillion from life
insurance and Rs 1.51 trillion from non-life insurance. Overall insurance penetration (premiums
as % of GDP) in India reached 3.69 per cent in 2017 from 2.71 per cent in 2001.

In FY19 (up to Jan 2019), premium from new life insurance business increased 3.91 per cent
year- on-year to Rs 1.59 trillion. In FY19 (up to Jan 2019), gross direct premiums of non-life
insurers reached Rs 1.39 trillion, showing a year-on-year growth rate of 12.65 per cent.

4.3.2 – GOVERNMENT INITIATIVES

The Government of India has taken a number of initiatives to boost the insurance industry.
Some of them are as follows:

 In September 2018, National Health Protection Scheme was launched under Ayushman
Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million
vulnerable families. The scheme is expected to increase penetration of health insurance
in India from 34 per cent to 50 per cent.
 Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana
(PMFBY) in 2017-18.
 The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India, which
are to looking to divest equity through the IPO route.

The government also strives hard to provide insurance to individuals in a below poverty line by
introducing schemes like the:

1. Pradhan Mantri Suraksha Bima Yojana (PMSBY),

2. Rashtriya Swasthya Bima Yojana (RSBY) and

3. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

Introduction of these schemes would help the lower and lower-middle income categories to
utilize the new policies with lower premiums in India.
32
 4.3.3 – ROAD AHEAD

The future looks promising for the life insurance industry with several changes in regulatory
framework which will lead to further change in the way the industry conducts its business and
engages with its customers.

The overall insurance industry is expected to reach US$ 280 billion by 2020. Life insurance
industry in the country is expected grow by 12-15 per cent annually for the next three to five
years.

Demographic factors such as growing middle class, young insurable population and growing
awareness of the need for protection and retirement planning will support the growth of Indian
life insurance.

33
 4.3.4 – MARKET SHARE

Market Share of Major Insurance

Companies

14%

LIC

HDFC Standard Life

5% 68% SBI Life Insurance

6% ICICI Prudential

7%

Interpretation : As we can see, according to IRDA, the highest market share currently in India is
of Life Insurance Company, the reason being its trustworthiness and its existence for these
many years. It is followed by HDFC Standard Life with 7% of Market share and SBI Life with 6%
of Market Share. ICICI Prudential holds 5% of Market Share. The remaining 14% has been a total
of all other Insurance Companies.

4.3.5 – TYPES OF INSURANCE

Life Insurance Car Insurance Health Insurance Home Insurance Travel Insurance

34
CHAPTER 5 : INTRODUCTION TO
LIFE
INSURANCE

35
 CHAPTER 5 : INTRODUCTION TO LIFE
INSURANCE
Life insurance is a contract that offers financial compensation in case of death or disability.
Some life insurance policies even offer financial compensation after retirement or a certain
period of time. Life insurance, thus, helps you secure your family’s financial security even in
your absence. You either make a lump-sum payment while purchasing a life insurance policy or
make periodic payments to the insurer. These are known as premiums. In exchange, your
insurer promises to pay an assured sum to your family in the event of death, disability or at a
set time. Life insurance can help you support your family even after retirement.

Definition : Life insurance (or life assurance) is a contract between an insurance policy holder
and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of
money (the benefit) in exchange for a premium, upon the death of an insured person (often the
policy holder).

The purpose of life insurance is to provide financial protection to surviving dependents after the
death of an insured. It is essential for applicants to analyze their financial situation and
determine the standard of living needed for their surviving dependents before purchasing a life
insurance policy. Life insurance agents or brokers are instrumental in assessing needs and
establishing the type of life insurance most suitable to address those needs. Several life
insurance channels are available including whole life, term life, universal life and variable
universal life policies. It is prudent to re-evaluate life insurance needs annually, or after
significant life events like marriage, divorce, the birth or adoption of a child and major
purchases, like a house.

5.1 -Tax Benefits associated with Life Insurance Policies :

 Life insurance not only ensures the well-being of your family, it also brings tax benefits.
 The amount you pay as premium can be deducted from your total taxable income.
 However, this is subject to a maximum of Rs 1.5 lakh, under Section 80C of the Income Tax
Act.
 The premium amount used for tax deduction should not exceed 10% of the sum assured.

5.2- How Life Insurance Works

36
There are three major components of a life insurance policy.
 Death benefit is the amount of money the insurance company guarantees to the
beneficiaries identified in the policy upon the death of the insured. The insured will choose
their desired death benefit amount based on estimated future needs of surviving heirs.
The insurance

37
 company will determine whether there is an insurable interest and if the insured qualifies for
the coverage based on the company's underwriting requirements.
 Premium payments are set using actuarially based statistics. The insurer will determine the
cost of insurance (COI), or the amount required to cover mortality costs, administrative fees
and other policy maintenance fees. Other factors that influence the premium are the
insured’s age, medical history, occupational hazards and personal risk propensity. The
insurer will remain obligated to pay the death benefit if premiums are submitted as required.
With term policies, the premium amount includes the cost of insurance (COI). For permanent
or universal policies, the premium amount consists of the COI and a cash value amount.
 Cash value of permanent or universal life insurance is a component which serves two
purposes. It is a savings account, which can be used by the policyholder, during the life of the
insured, with cash accumulated on a tax-deferred basis. Some policies may have restrictions
on withdrawals depending on the use of the money withdrawn. The second purpose of the
cash value is to offset the rising cost or to provide insurance as the insured ages.

5.3- Types of Life Insurance
5.3.1– Term Insurance
Term insurance is a type of life insurance policy that provides coverage for a certain period of
time, or a specified "term" of years. If the insured dies during the time period specified in the
policy and the policy is active - or in force - then a death benefit will be paid.

Term insurance is initially much less expensive when compared to permanent life insurance.
Unlike most types of permanent insurance, term insurance has no cash value. There are many
different types of term insurance policies available. Many policies offer level premiums for the
duration of the policy, such as 10, 20, or 30 years. These are often referred to as "level term"
policies. While premiums for these level term policies remain level for a set number of years,
after this time period the premium increases significantly, making the policy cost prohibitive.
Most term policies have a built-in privilege to convert to a permanent policy regardless of any
changes in the insured's health.

38
Term insurance has two features that make it attractive:

a) A guarantee on the premium and survivor benefit for a defined amount of years, depending
on the company, age of the insured and other factors.

No capability of accumulating cash inside the policy. You can't pay an extra premium to get
extra benefit. You can’t transfer money from other accounts into the policy. The carrier will
not pay dividends or apply interest to your account.

39
 5.3.2 – Whole Life Insurance

Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes
called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in
force for the insured's entire lifetime, provided required premiums are paid, or to the maturity
date. As a life insurance policy it represents a contract between the insured and insurer that as
long as the contract terms are met, the insurer will pay the death benefit of the policy to the
policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to
remain in force as long as the required premiums are paid, the premiums are typically much
higher than those of term life insurance where the premium is fixed only for a limited term.
Whole life premiums are fixed, based on the age of issue, and usually do not increase with age.
The insured party normally pays premiums until death, except for limited pay policies which
may be paid up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash
value category of life insurance, which also includes universal life, variable life, and endowment
policies.

Individuals may find whole life attractive because it offers coverage for an indeterminate length
of time. It is the dominant choice for insuring so-called "permanent" insurance needs, including:

a) Funeral expenses
b) Estate planning
c) Surviving spouse income
d) Supplemental retirement inco

Individuals may find whole life less attractive, due to the relatively high premiums, for insuring:

b) Large debts
c) Temporary needs, such as children's dependency years,
d) Young families with large needs and limited income.

40
 5.3.3 – Endowment Policy

An endowment policy is a life insurance contract designed to pay a lump sum after a specific term
(on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a certain
age limit. Some policies also pay out in the case of critical illness.

Policies are typically traditional with-profits or unit-linked (including those with unitised with-
profits funds the holder then receives the surrender value which is determined by the insurance
company depending on how long the policy has been running and how much has been paid into
it. Pension insurance provides many benefits. They can be used as a low-risk way to save.
Policyholders can choose how much to pay each month and how long they want to stay, usually
for 10 or 20 years.

Benefits of Endowment Plans :

1) Dual Benefit : Endowment Plans offer the dual benefit of Long Term Investment and
Insurance. Apart from paying the sum assured to the beneficiary in case of the policy
holder’s demise, endowment plans also pay a lump sum maturity amount is the policy
holder survives the policy tenure.
2) Safe : Even though the returns on endowment plans may be lower, they are risk free in
terms of the sum assured.
3) Disciplined Savings : Policy holders need to set aside a pre-determined amount towards
the premium payment at a stipulated time interval, thus encouraging a disciplined
approach to saving.
4) Assured bonus : Endowment plans declare an annual bonus, typically paid out as a specific
percentage of the sum assured. In case of policy holder’s survival, additional bonuses
accrued during the policy are paid in addition to the sum assured
5) Compounding returns : A key advantage of endowment plans is that they fetch returns on
a compounding basis during a policy term
6) High Liquidity : Endowment Policies are liquid in nature.

41
 5.3.4 – Money Back Policy

Money back plans protect your family’s financial interests from circumstances such as death or
critical illness of the policy holder. Periodic Payouts create wealth for meeting financial
commitments at key stages in life. Money Back plans offer true amalgamation of Insurance and
Investment. Secure your family financially.

Money back plans are one of the most popular life insurance plans in India. Under these plans,
policy holders receive a frequent payouts as the death benefit, in case the policy holder
survices. These packages include both insurance and investment plans. A money back plan is
ideal for people who want a guaranteed return on their investments and are looking for regular
payouts at the same time in additionn to an insurance cover for themselves for the same money
they are putting as a premium. Unline a standard life insurance policy that only pays an amount
after the maturity of the policy, the money back plan starts to pay an amount that is called a
‘survival benefit’ over the lifetime of the policy. This survival benefit is given after a few years
from the start of money back plan and continues until the maturity of the money back policy.
The survival benefit is basically the reward from the company to the insured individual for
surviving. The benefit is only paid if the insured is alive.

Money Back Policy Benefits :

a) Low Risk Exposure : Money Back policy plans are insurance cum return products, hence
they don’t entail high risk.

b) Regular Source of Income : Money Back policy provides frequent payouts during the
policy terms. This is known as Survival Benefits.
c) Insurance Coverage : Money Back Policy offers insurance coverage, thus providing
financial security to your family members to meet their obligations after your demise.
d) Assured Return on Investment : Money back plans offer an assured return on the
invested amount. Therefore, you need not worry about losing out on your investment.

42
 5.3.5 – Unit linked Insurance Plans

ULIP or Unit Linked Insurance Plan is a mix of insurance along with investment. From a ULIP, the
goal is to provide wealth creation along with life cover where the insurance company puts a
portion of your investment towards life insurance and rest into a fund that is based on equity or
debt or both and matches with your long-term goals. These goals could be retirement planning,
children’s education or another important event you may wish to save for.

When you make an investment in ULIP, the insurance company invests part of the premium in
shares/bonds etc., and the balance amount is utilized in providing an insurance cover. There are
fund managers in the insurance companies who manage the investments and therefore the
investor is spared the hassle of tracking the investments. ULIPS allow you to switch your
portfolio between debt and equity based on your risk appetite as well as your knowledge of the
market’s performance. Benefits like these which offer investors the flexibility of switching is a
huge factor contributing to the popularity of these investment instruments.

Benefits of ULIP :

a) Life cover: First and foremost, with ULIPs you get a life cover coupled with investment. It
offers security that a taxpayer’s family can fall back on in case of emergencies like the
untimely death of the taxpayer, etc.
b) Income tax benefits: Not many are aware that the premium paid towards a ULIP is eligible
for a tax deduction under Section 80C. Additionally, the returns out of the policy on maturity
are exempt from income tax under Section 10(10D) of the Income-tax Act.
c) Finance Long Term Goals: If you have long-term goals like buying a house, a new car,
marriage, etc., then ULIP is a good investment option because the money gets compounded.
As a result, the net returns are generally more.
d) The flexibility of a portfolio switch: As already mentioned, ULIPS are usually designed in a
way that they allow you to switch your portfolio between debt and equity based on your risk
appetite as well as your knowledge of how the market is performing

43
6.4– Consolidated benefits and information of Life Insurance Plans

- It is the most basic type of insurance.

- It covers you for a specific period.
Term Insurance - Your family gets a lump-sum amount in the case of your death.
- If, however, you survive the term, no money will be paid to you or
your family.

- It covers you for a lifetime.

- Your family receives a certain sum of money after your death.
Whole Life Insurance
- They will also be entitled to a bonus that often accrues on
such amount.

- Like a term policy, it is also valid for a certain period.

- A lump-sum amount will be paid to your family in the event
Endowment Policy of your death.
- Unlike a term plan, you get the maturity proceeds after the term
period.

- A certain percentage of the sum assured will be paid to

you periodically throughout the term as survival benefit.
- After the expiry of the term, you get the balance amount
Money-back Policy as maturity proceeds.
- Your family gets the entire sum assured in case of death during
the policy period. This is regardless of the survival benefit
payments made.

- Such products double up as investment tools.

- A part of your premium goes towards your insurance cover.
Unit-linked Insurance
- The remaining amount is invested in Debt and Equity.
Plans (ULIPs)
- A lump-sum amount will be paid to your family in the event
of your death.

44
CHAPTER 6 : NEED FOR THE
STUDY AND
LITERATURE REVIEW

45
 CHAPTER 6 : NEED FOR THE STUDY AND LITERATURE
REVIEW
Life Insurance is one of the most important and crucial product within Financial Products.
Human life is a most important asset and life insurance is the most important type of insurance
which provides financial protection to a person and his family at the time of uncertain risks or
damage. The motive of Life Insurance Policies is that it provides Safety and also Protection to its
users and also provides them a platform to encourage for Savings. Life is precious and so is Life
Insurance. With a huge population in India, Insurance companies find India as one of the most
potential market for selling Life Insurance. Customers are the main pillars for Life Insurance
Business. Every company tries to attract and retain existing customers to keep their profits high.
The proper understanding of customers, their needs and expectations help insurance providers
to bring improvement in product as well as services offered. In India, however, there is not
much of achievement for Life Insurance companies. The reasons are many, viz., low consumer
awareness, poor affordability, delayed customer services, lack of suitable products, etc.

6.1Literature Review
Athma. P and Kumar. R (2007) in the research paper titled “an explorative study of life
insurance purchase decision making: influence of product and non-product factors". The
empirical based study conducted on 200 sample size comprising of both rural and urban
market. The various product and non-product related factors have been identified and their
impact on life insurance purchase decision-making has been analyzed.

Girish Kumar and Eldhose (2008), published in insurance chronicle icfai monthly magazine
august 2008 in their paper titled "customer perception on life insurance services: a comparative
study of public and private sectors", well explained the importance of quality services and its
significance in raising customer satisfaction level. A comparative study of public and private
sectors help in understanding the customer perception, satisfaction and awareness on various
life insurance services.

46
CHAPTER 7 : DATA ANALYSIS

47
 CHAPTER 7 : DATA ANALYSIS
1.1. – Demographic Details of the Respondents.
1.1.1. – Age of the Respondents :

Sr. No. Age of Respondents Respondents Percentage

1. 21 to 30 years 72 47.68%
2. 31 to 40 years 59 39.07%
3. 41 to 50 years 16 10.59%
4. 51 to 60 years 4 2.64%
5. Above 60 years 0 0%
Total 151 100

Age of the Respondents

4
16

72 21 to 30 years

31 to 40
59
years 41 to

50 years 51

to 60 years

Interpretation :

The graph represents the ages of the respondents. The majority of the respondents, i.e. 72
were of the age 21 to 30 years, followed by 59 respondents of age 31 to 40 years. There are 16
respondents of age 41 to 50 years and 4 respondents from 51 to 60 years age. There were zero
respondents of age above 60 years.

48
 1.1.1. – Gender of the Respondents :

Sr. No. Gender of Respondents Respondents Percentage

1. Male 88 58%
2. Female 63 42%
Total 151 100

Gender of the Respondents

63

88

MALE FEMALE

Interpretation :

The respondents for the survey included 58% of Male respondents. Total male respondents were
88. On the other hand, there were 42% of female respondents. The total comber of female
respondents was 63.

49
 1.1.1. – Occupation of the Respondents :

Sr. No. Income of Respondents Respondents Percentage

1. Agriculture 1 0.6%
2. Business / Private Sector 62 41.05%
3. Government Service 27 17.88%
4. Homemaker 1 0.6%
5. Professional 32 21.19%
6. Student 28 18.54%
Total 151 100

Total

1
28

Agriculture

62 Business / Private
Sector Government
Service

32 Homemaker

Professional

1 Student

27

Interpretation :

The majority of respondents are 62 from Business/Private Sector background, followed by

Professional Sector of 32 respondents. 28 respondents were students and 27 respondents were
Government Service holders. The respondents included one each homemaker and agriculture
owner.

50
 1.1. 1. – Number of people holding Life

Insurance Question : Do you hold an

Insurance Policy(s)?

Sr. No. Responses Respondents Percentage

1. Yes 112 74.2%
2. No 39 25.8%
Total 151 100

Total

39

No

Ye

s
112

Interpretation :

112 out of 151 respondents were holding an insurance policy. Hence, there were 74.2% of
respondents who hold an insurance policy. 39 respondents out of 151 respondents did not hold
any insurance policy which contributed to 25.8% of respondents not holding an insurance
policy.

51
 8.2.2. – Number of people holding Insurance policies based on their Age

Sr. No. Age of Respondents Yes No

4. 21 to 30 years 39 33
5. 31 to 40 years 57 2
6. 41 to 50 years 12 4
6. 51 to 60 years 4 0
7. Above 60 years 0 0
Total 112 39

60 57

50

39
40
33

30 No

Yes

20 12

4 4
10 2

21 to 30 years 31 to 40 years 41 to 50 years 51 to 60 years

Interpretation :

From the graph it is clear that the number of people holding an insurance policy is maximum in
the age of 31 to 40 years followed by the age group 21 to 30 years.

Majority of the respondents, i.e. 57 out of 59 respondents hold an insurance policy. 12 people
out of 16 from the age group 41 to 50 years hold an insurance policy.

52
 8.2.2. – Calculation of association between Occupation of respondents and Life
Insurance Investment decision

Hypothesis :

H0 : Income has no significant impact on the customer life insurance investment decision.

H1 : Income has a significant impact on the customer life insurance investment decision.

Income X Dx Dx/10000 Dx2 Y Dy Dy2 Dx*Dy

₹0 - ₹20000 10000 50000 5 25 44 18.84 354.945 94.2

6
₹20001 - ₹40000 30000 30000 3 9 6 - 367.105 -
19.16 6 57.48
₹40001 - ₹60000 50000 10000 1 1 24 -1.16 1.3456 -1.16

₹60001 - ₹80000 70000 - -1 1 48 22.84 521.665 -

10000 6 22.84
₹80001 - ₹100000 90000 - -3 9 17 -8.16 66.5856 24.48
30000
₹100001 and
11000 - -5 25 12 - 173.185 65.8
above. 0 50000 13.16 6

36000 151 1484.83 103

0 4

Here, the value of correlation (r) = 0.319.

Since the calculated value of r is positive, it is concluded that there is a significant relationship
between monthly income and customer insurance investment decision. Hence income is one of
the important determinants in customer life policy buying decision.

53
 8.2.2. - Calculation of association between Occupation of respondents and Life
Insurance Investment decision

Hypothesis

H0 : Age has no significant impact on the customer life insurance investment decision.

H2 : Age has a significant impact on the customer life insurance investment decision.

Age X Dx Dx2 Y Dy Dy2 Dx*Dy

21 to 30 years 25. 15 225 39 -11 121 -165

5
31 to 40 years 35. 5 25 57 -29 841 -145
5
41 to 50 years 45. -5 25 12 16 256 -80
5
51 to 60 years 55. -15 225 4 24 576 -360
5
162 500 112 1794 -750

Here, the value of correlation (r) is 0.791.

Since the calculated value of ‘r’ is positive, it is concluded that there is a significant relationship
between age and customer insurance investment decision. Hence age affects the customer life
policy buying decision.

54
 8.2.2. - Calculation of association between Occupation of respondents and
Life Insurance Investment Decision

Hypothesis

H0 : Occupation is not dependent on the customer life insurance investment decision.

H1 : Occupation is dependent on the customer life insurance investment decision.

Customer Investment Decision based on the

Occupation
Sr. No. Occupation of Respondents High Medium Low Total
1. Agriculture 0 1 0 1
2. Business / Private Sector 30 27 5 62
3. Government Service 8 14 5 27
4. Homemaker 1 0 0 1
5. Professional 15 14 3 32
6. Student 12 14 2 28
Total 66 70 15 151

CHI-SQUARE TEST: chi-square test is applied to test the goodness of fit, to verify the
distribution of observed data with assumed theoretical distribution. Therefore it is a measure to
study the divergence of actual and expected frequencies; Karl Pearson’s has developed a
method to test the difference between the theoretical (hypothesis) & the observed value.

55
 4. My Occupation * 9. What preference would you give to Life Insurance?
Crosstabulation
9. What preference would you Total
give
to Life Insurance?
Hig Low Medium
h

4. My Agriculture Count 0 0 1 1
Occupation Expecte .4 .1 .5 1.0
d Count
Residual -.4 -.1 .5
Business / Count 30 5 27 62
Private Sector Expected 27.1 6.2 28.7 62.0
Count
Residual 2.9 -1.2 -1.7
Governme Count 8 5 14 27
nt Service Expecte 11.8 2.7 12.5 27.0
d Count
Residual -3.8 2.3 1.5
Homemaker Count 1 0 0 1
Expecte .4 .1 .5 1.0
d Count
Residual .6 -.1 -.5
Professional Count 15 3 14 32
Expecte 14.0 3.2 14.8 32.0
d Count
Residual 1.0 -.2 -.8
Student Count 12 2 14 28
Expecte 12.2 2.8 13.0 28.0
d Count
Residual -.2 -.8 1.0
Total Count 66 15 70 151
Expecte 66.0 15.0 70.0 151.0
d Count

56
 Chi-Square Tests

Asymptotic
Significance
Value df (2- sided)
a
Pearson Chi-Square 6.917 10 .733
Likelihood Ratio 7.434 10 .684
N of Valid Cases 151
a. 9 cells (50.0%) have expected count less than 5. The
minimum expected count is .10.

Interpretation :

Analysis :

Here, P value is not less than 0.05. Therefore, Accept H0

Hence, we can conclude that Occupation is not dependent on the customer life insurance
investment decision.

57
 8.2.2. - Calculation of association between Gender of respondents and
Life Insurance Investment Decision

Hypothesis

H0 : Gender is not dependent of the customer life insurance investment decision.

H1 : Gender is dependent of the customer life insurance investment decision.

Customer Investment Decision based on the Gender

Sr. No. Gender High Medium Low Total
1. Male 45 33 10 88
2. Female 21 37 5 63
Total 66 70 15 151

Analysis :

1. My Gender * 9. What preference would you give to Life

Insurance? Crosstabulation
9. What preference would you give Total
to Life Insurance?
Hig Low Medium
h
1. My Fema Count 21 5 37 63
Gender le Expecte 27.5 6.3 29.2 63.0
d Count
Residual -6.5 -1.3 7.8
Male Count 45 10 33 88
Expecte 38.5 8.7 40.8 88.0
d Count
Residual 6.5 1.3 -7.8
Total Count 66 15 70 151
Expecte 66.0 15.0 70.0 151.0
d Count

58
 Chi-Square Tests

Asymptotic
Significance
Value df (2- sided)
a
Pearson Chi-Square 6.666 2 .036
Likelihood Ratio 6.700 2 .035
N of Valid Cases 151
a. 0 cells (0.0%) have expected count less than 5. The
minimum expected count is 6.26.

Interpretation :

Here, H0 is rejected and H1 is accepted.

Hence, we can conclude that there is dependency between Gender of the customer and Life
Insurance Investment Decision. So, Gender influences customer Life Insurance policy buying
decision.

59
 8.2.8 – Preferences of the Policy Holders.

Life Insurance Companies Count Percentage

Max Life 36 16.36%
ICICI Prudential 22 10%
HDFC Standard 22 10%
SBI Life 34 15.45%
Bajaj Allianz 19 8.63%
LIC 85 38.63%
Star Health 1 0.45%
Axis Bank 1 0.45%

Life Insurance Companies

Axis Bank 1
Star Health 1

LIC 85
19
Bajaj Allianz 34
SBI Life 22
HDFC Standard 22
ICICI Prudential 36

Max Life

0 10 20 30 40 50 60 70 80 90

Interpretation :

From the above graph and table, we can see that the maximum preference of the people is Life
Insurance Company with 38.63% and 85 respondents. The second rank lies with Max Life with
16.36% and 36 respondents. With a close gap, SBI Life holds the Third place with 15.45% and 34
respondents, whereas HDFC and ICICI hold equal number of respondents and hold 10% with 22
respondents. Bajaj Allianz being the last with 8.63% with 19 respondents. Thus it can be
inferred that LIC of India is the most preferred life insurance company and majority of them
prefer government-owned LIC for getting insured because of security. The other private life
insurance companies are having less percentage of share and those who prefer private insurers
are because of better customer services and high returns.

60
 8.2.9. – Type of Policy Preferred

Types of Policy Count Percentage

Endowment 23 11.8%
Term Plan 43 22.16%
Unit Linked Insurance 48 24.74%
Money Back 50 25.77%
Don’t Own Any! 29 14.94%
General Insurance 1 0.5%

Count

General Insurance 1

Don’t Own Any! 29

Money Back 50

Unit Linked Insurance Policy 48

Term Plan 43

Endowment
23

0 10 20 30 40 50 60

Interpretation :

From the above graph, we can say that the maximum number of policies being purchased or
preferred in a market are Money Back Policy with 25.77% and 50 respondents, followed by ULIP
with 24.74% and 48 respondents. Term plan takes the third place with 22.16% and 43
respondent. Endowment plans are the least preferred in these set of respondents with only
11.8% and 23 respondents. Thus it can depict that among many plans available, the most
preferred one among the mass is money back plan. This plan helps you to withdraw your
money at regular intervals and still staying insured. This plan is famous for its high liquidity
advantage. The other product gaining popularity is ULIP, as its serve multiple purpose, it give
high returns, tax benefit, life insurance , critical illness cover and is admired for its flexibility for
paying premium amount.

61
 8.2.9. – The Most Attractive features in a Policy

For analyzing and ranking various features in a policy, weighted average method is being used.

Feature 1st 2nd 3rd 4th

Money Back Guarantee 75 51 14 8
Larger Risk Coverance 51 39 46 12
Low Premium 35 50 37 25
Company's Reputation 45 28 20 55

Rank 1st = 4 points, 2nd = 3 points, 3rd = 2 points, 4th = 1 point.

Feature 1st 2nd 3rd 4th Weighted Scores

Money Back Guarantee 75 51 14 8 489
Larger Risk Coverance 51 39 46 12 425
Low Premium 35 50 37 25 389
Company's Reputation 45 28 20 55 359

Interpretation :

From the weighted averages, we can rank the features as

1st = Money Back Guarantee

2nd = Larger Risk

Coverance 3rd = Low

Premium

4th = Company’s Reputation

Thus, we can say that the Money Back guarantee feature plays a vital role in buying decision of
a customer, followed by larger risk Coverance. Low Premium and Company’s reputation stand
on 3rd as well as 4th position respectively. Hence, these are the features a company should keep
in mind while selling a policy to a customer.

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 8.2.9. – Preferences in a Company :

Preference in a company Response Percentage

A Trusted Company 89 59.30%
Good Plans 63 42%
Friendly Service and Responsiveness 53 35.30%
Accessibility 27 18%

Preference in a Company

Accessibility 27

53
Friendly Service and Responsiveness

63
Good Plans

A Trusted Company 89

0 20 40 60 80 100

Interpretation :
It is evident from the graph that a customer looks for a trusted name or a company while
investing in life insurance policies. 59.30% people would prefer choosing a trusted company.
The second factor a customer would look for is a good plan with 42% people responding for it.
35.30% people whereas think that Friendly service and responsiveness is what they would
choose. Least number of responses were given to Accessibility with only 18%. Hence, we can
conclude that having a trusted name with good plans can be two factors to attract people for
buying Life Insurance Policies.

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 8.2.9. - Ranking various Benefits (as per the customer) responsible for investment in
life insurance products

For analyzing and ranking various benefits in a policy, weighted average method is being used.

Ranking of Factors 1st 2nd 3rd 4th 5th

Tax Benefit 69 46 19 7 2
Risk Coverage and Savings 34 22 21 39 23
Security with High Returns 46 39 45 8 1
Insurance Services 28 19 17 33 40
Premium Charges 40 39 28 12 21

Rank 1st = 5 points, 2nd = 4 points, 3rd = 3 points, 4th = 2 points, 5th = 1 point.

Ranking of Factors 1st 2nd 3rd 4th 5th Weighted Averages

Tax Benefit 69 46 19 7 2 602
Risk Coverage and Savings 34 22 21 39 23 422
Security with High Returns 46 39 45 8 1 538
Insurance Services 28 19 17 33 40 373
Premium Charges 40 39 28 12 21 485

Interpretation :

From the weighted averages, we can rank the features as

1st = Tax Benefit

2nd = Security with High

Returns 3rd = Premium Charges

4th = Risk Coverage and

Savings. 5th = Insurance

Services.

It can be depicted that Tax Benefit lies the main concern of customers while buying a policy and
then other benefits mentioned below

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CHAPTER 8 : RESEARCH METHODOLOGY

65
 CHAPTER 8 : RESEARCH METHODOLOGY
The present study is an exploratory and descriptive type of research study. The study aims to
find out the factors influencing customers life insurance investment decision and their
preferences at the time of policy buying decision. The respondents were majorly from the Pune
District. In order to conduct the study, a total of 151 population were taken for survey.

SOURCES OF DATA & DATA COLLECTION

The data for the study has been collected from both primary and secondary sources. The
primary data has been collected through Google Forms and Surveys. Various interviews were
conducted in order to collect the data. Customer Interaction and telephonic conversations
helped to understand various factors and problems of the customer which were mentioned in
the study. The secondary data has been collected from IRDA annual reports, insurance journals,
magazines and insurance website.

STATISTICAL TOOLS AND TECHNIQUES

For measuring various phenomena and analyzing the collected data effectively and efficiently to
draw sound conclusions, a number of statistical techniques including chi-square, correlation,
weighted average score have been used for the testing of hypotheses. SPSS and Microsoft Excel
has been used for the purpose of analysis.

66
CHAPTER 9 : FINDINGS FROM THE STUDY

67
 CHAPTER 9 : FINDINGS FROM THE STUDY
1. From the Study, it can be found that the customer decision to buy a Life Insurance Policy
majorly depends on demographic factors like the Age, Gender and Income Level.
2. Majority of the respondents from the age group of 31 to 40 years are found to be
interested in buying a Life Insurance Policy.
3. From amongst 151 respondents, 85 people have shown preference towards buying a Life
Insurance policy from LIC followed by Max Life Insurance amongst the private players.
There were being followed by SBI Life, HDFC and ICICI and lastly Bajaj Allianz.
4. The features that a policy holder may consider can be ranked as 1st = Money Back
Guarantee, 2nd = Larger Risk Coverance, 3rd = Low Premium and 4th = Company’s Reputation.
Thus we can infer that the Money Back Guarantee feature lies amongst the first feature a
consumer may prefer while investing in a Life Insurance Policy.
5. From the study it was also found out that majority of the policy holders owned the Money
Back Policy of LIC followed by ULIP Plans of private insurers. The Term Plan and
Endowment plans are still existing but has a lower popularity as compared to Money Back
and ULIP plans. Thus we can say that in present days people are more interested in policies
which give high returns along with risk coverage benefits.
6. The study also shows highest share in the market is still owned by LIC. And amongst the
private sectors, SBI Life, HDFC and ICICI are leading because of high returns assured by
them. People chose LIC because of the safety issues inn term of their investments.
Majority of the respondents look for a trusted name in the Insurance Company followed
by Good Plans, Friendly service and response and accessibility in the last

68
 CHAPTER 10 :
RECOMMENDATIONS

69
 CHAPTER 10 : RECOMMENDATIONS
1. In today’s competitive world, it is very important to satisfy the customer. It is one of the
most important aspect to retain the customers. Having customer retention helps a company
to survive in the market. Today, private insurers are hitting the market extensively and thus
through their best services and plans possible, they can reposition and differentiate
themselves from LIC.
2. As the study said, the customers look up for a trusted name, thus, like LIC, Private insurers
should also emphasis more on building brand awareness. From the survey, it was found that
31.13% of the respondents were not even aware of various Life Insurance Policies. Thus,
private insurers can use different modes of communication of reaching to people in order to
spread insurance awareness amongst the people.
3. If both the Private as well as Government Sector work together in order to spread awareness
amongst the people, it would be beneficial for both the sectors. To achieve greater insurance
penetration, healthier competition has to be intensified by both the sectors and they should
come up with new innovative products to offer greater variety or choice to the customers
and also make improvement in the quality of services and sell products through appropriate
distribution channel to win-win situation for both the parties.
4. Even today, there are many people who do not consider Life insurance policy as a source of
Investment. Thus, insurance companies should come up with plans with high risk coverage
and also focus on encouraging the customers in doing a long term investment. This will help
in more awareness as well as Investment in Life Insurance.
If insurance companies come up with products which can give high risk cover, with lesser
premium and more returns and more such innovative ideas, it would be helpful for the
insurance companies to attract more customers.

70
CHAPTER 11: CONCLUSION

71
 CHAPTER 11 : CONCLUSION
Life Insurance is an important form of insurance and essential for every individual. Life
insurance penetration in India is very low as compared to developed nations where almost all
the lives are covered. Customers are the real pillar of the success of life insurance business and
thus it’s important for insurers to keep their policyholders satisfied and retained as long as
possible and also get new business out of it by offering need based innovative products. There
are many factors which affect customers investment decision in life insurance and from the
study it has been concluded that demographic factors of the people play a major and pivotal
role in deciding the purchase of life insurance policies.

Life Insurance Companies thus should keep an eye on all these factors while designing or
promoting any life insurance policy as this would help them keep their customers satisfied and
would also help them in Customer Retention.

Life Insurance is growing with its various products like the Money Back and ULIP plans which
many of the customers are still unaware and thus a proper knowledge regarding the same can
be helpful to the customers to choose and invest in Life Insurance Policies.

Human life is not just unique but is also precious and needs to be secured as there are many
dependents on one human after the death. Thus, one needs to make sure that he/she secures
their lives by taking one or the other Insurance Policies.

72
 KEY LEARNINGS AND ACHIEVEMENTS IN SIP
Key Learnings :

i. Time Management & Punctuality.

ii. Being more Organized.
iii. Cross-selling of Products.
iv. Effective Communication Skills.
v. Enhanced Microsoft Excel and PowerPoint Presentation Skills.
vi. Understanding of Financial Products like Loans, Insurances, Investments.
vii. Learning of Application Review System (ARS) of Insplore Consultant.
viii. Studying and Verifying Documents related to Loans.
ix. Goal Setting from Mr. Sanjay Kad.
x. Positive Attitude and its Importance from Mr. Harsh Yadav
xi. Challenges and Journey of Director of Forbes Marshall, Mr. Kiran Vohra.
xii. Mutual Funds session with Mr. Ketan Mare from Sundaram Finance.
xiii. Financial Planning.
xiv. Portfolio Management.

Major Achievements :

a. Star Performer for the Month of April 2019.

b. Best Presentation for the Month of March 2019.
c. 6 Disbursements throughout the Internship.
d. Appeared in a YouTube advertising Campaign for Personal Loan Product of Insplore
Consultant .

73
 REFERENCES
Athma. P and Kumar. R (2007) in the research paper titled “an explorative study of life
insurance purchase decision making: influence of product and non-product factors". The
empirical based study conducted on 200 sample size comprising of both rural and urban
market.

Eldhose.v and kumar. G (2008), “customer perception on life insurance services: a comparative
study of public and private sectors", insurance chronicle ICFAI monthly magazine august 2008.

Media Reports, Press Releases, Press Information Bureau, Union Budget 2017-18, Insurance
Regulatory and Development Authority of India (IRDA).

Rajarajeshwari L, (September 2012), “Non-Banking Financial Companies” consists of a brief

information regarding NBFCs in India.

India Brand Equity Foundation Website ([Link])

74
 APPENDICES(QUESTIONNAIRE )

Myself, Prasad Hendre, Student of ICFAI Business School, Pune, pursuing PGPM Program, wish to
study in depth the importance of Life Insurance Policies and factors affecting for purchase of Life
Insurance Policies, as a part of Summer Internship Project. The survey would not take more than 5
minutes of your time.
The data collected will be confidential.

Email Address :

1. My Gender -  - Male  - Female

2. My Age - 21 to 30 years  - 31 to 40 years

 - 41 to 50 years  - 51 to 60 years
 - 61 years and above

3. Marital Status  - Single  - Married

4. My Occupation  - Govt. Service  - Business/Private

 - Professional  - Agriculture
 - Others :

5. My Salary Range (Monthly)  - ₹0 - ₹20000  - ₹20001 - ₹40000

 - ₹40001 - ₹60000 - ₹60001 - ₹80000
 - ₹80001 - ₹100000
 - ₹100001 and above.

6. Do you hold an Insurance Policy(s)?  - Yes  - No

(Please answer the further questions based on your thinking even if you don’t own an
Insurance, leave the question if you don’t want to answer it)

7. Do you consider Life Insurance policies as  - Yes  - No

a source of Investment?
8. Are you aware of various Life Insurance  - Yes  - No
Products ?

75
 9. What preference would you give to Life  - High  - Medium  - Low
Insurance?

10. Which Life Insurance do you prefer the  - Max Life  - ICICI Prudential
most for Insurance?  - HDFC Standard  - SBI Life
 - Bajaj Allianz  - LIC
 - Other -

11. Are you Happy with the Services?  - Yes  - No

12. What type of Insurance Policy do you hold? - Endowment  - Term Plan
 - Unit Linked  - Money Back
 - Don’t Own any
 -Others-

13. What are the features that you would  - Money Back Guarantee
prefer in Life Insurance Policy?  - Larger Risk Coverance
(Rank each feature in order of your  - Easy Access to Agents
Preference – 1 to 5)  - Low Premium
 - Company’s Reputation

14. What would you prefer in Insurance  - A trusted name

Company? (Multiple Choice)  - Good Plans
 - Friendly Service and Responsiveness
 - Accessibility

15. Rank Each benefit with the number of preference you would give for Investing in Life
Insurance (Rank each benefit on any number you would rank it on. You can give each
benefit only one rank)
Ranking 1st 2nd 3rd 4th 5th
Tax Benefit
Risk
Coverage &
Savings
Security
with High
Return
Insurance
Services

76
Premium
Charges

77
78