Objectives and Research Methodology

Objective of research To understand the likes, preferences of investors and their current investment pattern. To know the different media that influences the purchase decision of investor while investing in insurance policies. To know the factors that influences the investor while taking the decision to invest . To know the investors preference especially for insurance as an investment option. To know awareness and agreeableness of investor to invest in private insurance companies. Research methodology Data collection: Secondary data: collected from electronic documents from internet sites viz., google.com, etc.,irdaindia.org. Primary data: collected by survey method based on personal interview and self-administration of structured questionnaires. Sample design: Sampling frame : Gandhinagar & Ahmedabad. Sample unit: Individuals Sampling method: simple random sampling convenience Sample size : 150

Introduction To Insurance:
Life insurance made its debut in India well over 100 years ago. Insurance is no longer considered to be a mere tax saving tool. Increasing urbanization and nuclearisation of families has led to a state where insurance has become a necessity. And this is not just true for Life Insurance but also for maintenance of vehicles is the reason that people are increasingly opting for insurance on their own. Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance. Following are few of the definitions of insurance: Insurance is a plan by which large number of people associate themselves and transfer to the shoulders of all, risks that attach to individual. Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payment being made from the accumulated contributions of all parties participating in the scheme. Insurance is a contract in which a sum of money is paid to the assured as consideration of insurers incurring the risk of paying a large sum upon a given contingency.

Parties Involved In Insurance

The transaction of the insurance needs three types of parties. They are as follows: Insured The person who buys the policy of the insurance and agrees to follow all the terms and conditions levied by the insurance company and also agrees to pay the necessary premium is called the insured. In short, it is a customer of the insurance product. Insurer The supplier of the insurance coverage or the seller of the insurance policy is called as insurer. In short, they are the different insurance companies formed under the IRDA act. Intermediaries - Brokers/Agents The person between the insured and insurer is called as the intermediaries. They are called either as brokers or as agents. The intermediaries play a very vital role in the business of the insurance because they bring business for the insurance companies and they perform all the formalities on behalf of the insured also Today, it is widely accepted as one of the most attractive financial instruments in an individuals portfolio, that provides an assurance of security with attractive returns.

Types Of Policies : Savings Plans Endowment Assurance Plan It is a participating [with profit] plan that offers the following features: Provides financial support to the family by way of a lump sum payment in case of a unfortunate death of the life assured within the term of the policy. Provides a lump sum payment to the life assured on the survival up to the maturity. This lump sum is basic sum assured and bonuses.

Money Back Plan It is a participating [with profit] policy that offers following features: Payment of lump sum each of which is a proportion of the basic sum assured, at 5 years intervals during the term of the policy. On survival up to the maturity, a payment equal to basic sum assured plus any bonus additions less the cash lump sum paid earlier is provided. In case of the unfortunate death of the life assured within the term of the policy, the basic sum assured plus any bonus additions is provided. This is over and above the earlier payouts.

Childrens Plan Childrens Plan is designed to provide a lump sum to the child at maturity. It also provides financial security to the child in the future, even in case of the insured parents unfortunate death during the policy term. Childrens Plan receives simple reversionary bonuses, which are usually added annually. This is flexible plan with three options for you to choose from, depending on your requirements.

Investment Plan Single premium whole of Life insurance Plan It is a participating [with Profit] insurance plan that offers the following features. Investors money will be invested in with profit fund. This fund aims to provide secure and stable long-term growth. Even after choosing policy, investor can decide on the policy term. For 4 weeks after any one of the 10th, 15th, 20th and subsequent 5 years anniversaries, life assured can choose to receive the sum assured plus any attaching bonuses, in full. Once the money has been received, your policy will cease. In case of unfortunate death, nominee gets the sum assured secured by premium, plus any attaching bonuses. It does not require any medical test. Protection Plan Term Assurance (TA) Plan TA plan is a plan under which a sum insured is payable in case of death of the life assured during the term of the contract. One can choose the lump sum that would replace the income lost to ones family in the unfortunate event of ones death. Since this non-participating (without profit) plan is a pure risk cover plan, no benefits are payable on survival to the end of the term of the policy. Loan Cover Term Assurance (LCTA) Plan This plan provides a lump sum on the unfortunate death of the life assured during the term of the life assured during the term of the plan. The lump sum will be a decreasing percentage of the initial sum assured. As the outstanding loan decreases as per the loan schedule, the cover under the policy decreases as per the policy schedule. Since this is a non-participating pure risk cover plan, no benefits are payable on survival to the end of the policy.

Retirement Plan Personal Pension Plan This plan is a participating (with profits) plan, which is basically a savings contract, designed to provide an income for the life after retirement. It provides a national lump sum on retirement, comprising of sum assured plus any attaching bonus. Subject to the prevailing regulations, p[art of this lump sum can be taken in form of cash and the rest converted to an annuity at the rate then offered by HDFC Standard Life Insurance or with any other insurance company will accept such business. Rider Benefits The rider benefits can only be taken out in conjunction with an Endowment Assurance, Money Back, Personal Pension Plan or Protection Series Product and not on a stand-alone basis. These riders provide extra protection and are described in more detail below. Waiver Of Premium Benefit (WOP) If the life assured is disabled and is unable to pursue any occupation for a period of more than twenty six consecutive weeks then, under this rider all premiums falling due after the first twenty six weeks of such continuous disability are waived, but before the earliest of The recovery of the life assured The expiry date The termination of the policy The death of the life on whose disability the waiver claim is based Critical illness Benefit (CI) This benefit provides for the payment of an amount equal to the basic sum assured on diagnosis of serious disease. The life assured must be alive 30 days after notification of the serious disease. The 6 serious diseases are mentioned by the co. Cancer Coronary artery bypass Heart Attack

 Kidney/Renal failure Major organ transplant (as recipient) Stroke

Accidental Death Benefit (ADB) This benefit provides for the payment of an additional amount equal to the basic sum assured on the death as a result of an accident. Death must occur within 90 days of the accident. Double Sum Assured (DSA) This benefit provides for the payment of an amount equal to the basic sum assured as result of death by any cause. Accelerated Sum Assured Benefit (ASA) This benefit can be taken in conjunction with a protection series product. It provides an amount, equal to the death benefit on diagnosis of a critical illness. The illness covered under this rider is same as the Critical illness rider. Additional Term Benefit Rider (ATB) The benefit can be taken with conjunction with PPP. It provides for the payment of an amount agreed on policy inception, as a result of death, subject to minimum of Rs. 20,000.

History Of Insurance Sector In India

Life insurance in its existing form came to India from the United Kingdom with the establishment of a British firm. Oriental LIC in Calcutta in 1818 followed by Bombay Life Assurance Company in 1823. The Indian Life Assurance Company act 1912 was the first statutory measure to regulate life insurance business. Later in 1928, the Indian Insurance co. act was enacted to enable the Government to collect statistical information about both life and non-life insurance business transacted in India by Indian foreign insurer including provident insurance societies. In 1938 with a view to protecting the interest of insuring public earlier legislation was consolidated and amended by the insurance act, 1938 with comprehensive provision detailed and effective control over the activities of insurers. The act was amended in 1950 resulting in far reaching changes in the insurance sector. These included a statutory requirement of equity capital for companies carrying on life insurance business, ceiling on share holdings in such companies, stricter control on investment and such other information to the controller. The controller could also call for appointment of administrators and put a ceiling on expenses of management companies. By 1956, 154 Indian insurers and 16 foreign insurers were carrying on Life insurance business in India. Life India Corporation business was concentrated in urban areas and confined to the higher strata of the society. On January 19, 1956, the management of life insurance business of 245 Indian and foreign insurers then operating in India was taken over by the central Government. Life Insurance Corporation was formed in September 1956 by an act of parliament, viz. LIC ACT 1956 with a capital contribution of Rs. 50mn.and since then it has enjoyed a monopoly over the life insurance business in India. Due to concerns of Relatively low spread of insurance in the country.

 The efficient and quality functioning of the Public Sector insurance companies. The untapped potential for mobilizing long-term contractual savings funds for infrastructure. The finance manager Mr. C.D.Deshmukh while piloting the bill for nationalization outlined the objective of the LIC thus: To conduct the business with utmost economy with the spirit of trust ship; to charge premium amount higher than warranted by strict actual consideration; to invest the fund for obtaining maximum yield for the policy-holder consistent with safety of capital; to render prompt and efficient service to policy-holders thereby making Insurance widely popular. The (Congress) government set up an insurance Reforms committee in April 1993. The Committee submitted its report in January 1994, recommended a phased program of liberalization, and called for private sector entry and restructuring of the LIC. The United Front government moved an insurance bill but it did not pass. The BJP government moved an insurance bill again in 1998, which had also to be referred back to a select committee of parliament. But now the parliament has given a nod to the Insurance Regulatory and Development Authority (IRDA) bill with some changes in the original structure.

Private Players: After 1998 the following private players came in to existence. S.SSr.No. Registration Number 1 2 3 4 5 6 7 8 9 10 101 104 105 107 109 110 111 114 116 117 Date of Reg. Name of the Company

23.10.2000 HDFC Standard Life Insurance Company Ltd. 15.11.2000 Max New York Life Insurance Co. Ltd. 24.11.2000 ICICI Prudential Life Insurance Company Ltd. 10.01.2001 Om Kotak Mahindra Life Insurance Co. Ltd. 31.01.2001 Birla Sun Life Insurance Company Ltd. 12.02.2001 Tata AIG Life Insurance Company Ltd. 30.03.2001 SBI Life Insurance Company Limited . 02.08.2001 ING Vysya Life Insurance Company Private Limited 03.08.2001 Allianz Bajaj Life Insurance Company Ltd. 06.08.2001 Metlife India Insurance Company Pvt. Ltd.

Analysis
Data classification

Total sample size Classification criteria Profession wise Age wise

150 Categories Business Service Below 25 25-40 40 and above 0 to 10 k 10k to 20 k 20k and above No. of Percentage respondents 71 79 18 74 58 65 63 22 47.33 % 52.67 % 12 % 49.33 % 38.67 % 43.33 % 42 % 14.67 %

Income wise

Question. 1.

Age wise analysis of Investment avenues 70 60 50 40 30 20 10 0 insu real post mut shar fixed deb prov bon ranc estat offic ualf es dep entu iden ds 13 70 51 4 16 29 6 45 36 3 7 5 8 34 26 9 40 32 2 6 2 2 24 30 0 6 20

BELOW 25 25 TO 40 ABOVE 40

Income wise analysis of Investment avenues

70 60 50 40 30 20 10 0 real post mutu fixed debe provi insur shar bond estat offic alfun depo nture dent ance es s e esavi ds sits s fund 51 61 22 25 20 4 33 40 14 3 9 3 24 32 12 34 33 14 5 3 2 19 25 12 7 11 8

0 to 10k 10k to 20K 20k and above

Profession wise analysis of Investment avenues

70 60 50 40 30 20 10 0 real post mutu fixed debe provi insur shar bond estat offic alfun depo nture dent ance es s e esavi ds sits s fund 65 69 28 21 32 55 3 12 31 37 30 51 5 5 8 48 18 8

Business Service

Question. 2.

Overall analysis of Investment Preferences

4 3.5 3 2.5 2 1.5 1 0.5 0 insura real postof mutua fixed deben provid shares bonds nce estate ficesa lfunds depos tures ent 3.57 2.61 3.39 1.82 2.32 3.4 1.55 2.73 1.84

overall

Age wise analysis of Investmen Preferences

4 3.5 3 2.5 2 1.5 1 0.5 0 real post mut fixe deb prov insur shar bon estat offic ualf d entu iden ance es ds e esav unds dep res t 4 3.4 2.17 2.56 2.33 1.47 3.03 2.05

BELOW 25 3.44 2.94 3.56 2.11 2.39 25 TO 40 ABOVE 40 3.51 2.54 3.3 3.69 2.59 3.45 1.81 2.26

1.76 2.35 3.26 1.47 2.53 1.55

Income wise analysis of Investmen Preferences

4 3.5 3 2.5 2 1.5 1 0.5 0 insur real post mutu shar fixed debe provi bond ance estat offic alfun es depo ntur dent s 3.43 2.77 3.28 1.62 1.97 3.26 1.51 2.48 1.65 3.67 2.62 3.41 1.87 2.54 3.52 1.6 2.81 1.76

0 to 10k 10k to 20K

20k and above 3.73 2.09 3.64 2.27 2.73 3.45 1.55 3.23 2.64

Profession wise analysis of Investmen Preferences

4 3.5 3 2.5 2 1.5 1 0.5 0 insur real posto mutu share fixed debe provi bond ance estat ffices alfun s depo nture dent s 3.62 3.53 2.66 2.56 3.13 3.62 1.86 1.78 2.27 2.37 3.06 3.71 1.68 1.44 1.9 3.47 1.92 1.77

business service

Question. 3.

Analysis of respondents holding insurance

not holding 9%

not holding holding

holding 91%

Age wise analysis of respondents holding insurance policy

70 60 50 40 30 20 10 0 BELOW 25 25 TO 40 ABOVE 40 holding 14 68 54 not holding 4 6 4

Income wise analysis of respondents holding insurance policy

70 60 50 40 30 20 10 0 0 to 10k 10k to 20K 20k and above holding 53 62 21 not holding 12 1 1

Profession wise analysis of respondents holding insurance policy

80 70 60 50 40 30 20 10 0 business service holding 65 71 not holding 6 8

Question. 4.

Market Share of Insurance Com panies bajaj allianz 2% HDFC National 2% Tata Aig 1% Oriental 1% 2% Maxnewyork 2% icici 6%

lic bsl bsl 5% icici bajaj allianz HDFC National Tata Aig Oriental Maxnew york

Insurance Co. LIC Bsl ICICI HDFC National Max Newyork Tata AIG 1.1 Orienta l Bajaj Allianz

Market Share 79 5 6 2 1 2 1 2 2

lic 79%

Question. 5.

Reason for holding an insurance policy

120 100 80 60 40 20 0

Protectio Pension n 116 22

Savings 35

Investme nt 16

overall

Question. 6. Overall Analysis of various media influencing purchasing of Insurance policy

90 80 70 60 50 40 30 20 10 0 print media 21 agents 86 relative televisi word of professi society s on mouth on 35 20 25 15 28

overall

Age wise analysis of various media influencing purchasing of Insurance policy

50 40 30 20 10 0 print agent relativ televis word societ profes media s es ion of y sion 1 9 11 3 48 35 4 18 13 3 5 12 6 11 8 0 9 6 6 8 14

BELOW 25 25 TO 40 ABOVE 40

Income wise analysis of various media influencing purchasing of Insurance policy

40 30 20 10 0

print agent relativ televis word societ profes media s es ion of y sion 4 10 7 36 38 12 12 15 8 5 6 9 14 9 2 8 3 4 10 13 5

0 to 10k 10k to 20K 20k and above

Profession wise analysis of various media influencing purchasing of Insurance policy

50 40 30 20 10 0

Question.7.

print relativ televisi agents media es on 10 11 41 45 14 21 6 14

word profess society of ion 7 18 5 10 14 14

business service

Satisfaction with current insurance policy

Not Satisfied 17%

Satisfied Not Satisfied

Satisfied 83%

Reasons Should have more comprehensive cover Not satisfied with the services provided Low returns

Age wise satisfaction with current insurance policy

60 50 40 30 20 10 0 Below 25 25 to 40 40 and above satisfied 52 52 20 not satisfied 13 11 2

Income wise satisfaction with current insurance policy

60 50 40 30 20 10 0 0 to 10k 10k to 20K 20k and above satisfied 52 52 20 not satisfied 13 11 2

Profession wise satisfaction with current insurance policy

70 60 50 40 30 20 10 0 business service satisfied 62 62 not satisfied 9 17

Question. 8.

Preference for insurance policy offered by private co.

Prefer 43% Not prefer 57%

Prefer Not prefer

Age wise Preference for insurance by private co.

40 35 30 25 20 15 10 5 0 BELOW 25 25 TO 40 ABOVE 40 prefer pvt. 9 39 17 not prefer 4 30 30

Income wise Preference for insurance by private co.

35 30 25 20 15 10 5 0 0 to 10k 10k to 20K 20k and above prefer pvt. 25 31 9 not prefer 29 25 10

Profession wise Preference for insurance by private co.

34 33 32 31 30 29 28 business service prefer pvt. 33 32 not prefer 34 30

Limitations of the study Less number of respondents surveyed Respondents were hesitant to give certain information. In certain cases data is taken on the basis of observation and judgment.

CONVERSION PROCESS OF A LIFE INSURANCE POLICY

Approaching Prospectus

Fill up the proposal form

Check the form at local branch Is everythin g ok ?

No

Yes

Proposal form back to FC Is form properly filled up? Proposal form back to local No Policy immediately accepted branch No

Proposal form sent to HO Is there any further Check the form at local branch /medical Requirement ? Yes Yes

Further required documents/medical tests report sent to HO

Is rate up required?

Yes

Corrective actions at local branchreport sent to HO No

No

Is the prospectus suitable?

Yes

Decline the policy No Is postponeme nt required?

Accept the policy Yes

Postpone the policy