A STUDY ON FACTORS AFFECTING CUSTOMERS

INVESTMENT IN LIFE INSURANCE POLICIES

MS. ANILAMBICA KATA*

Asst Prof Dept of Commerce,

KBN COLLEGE, VJA

ABSTRACT

Human life is a most important asset where as life insurance is the most important type of
assurancewhich provides financial protection to a person and his family at the time of uncertain
risks or damage. Life insurance provides both safety and security to individuals and also
encourages savings among people. Life insurance affords both safety and protection to
individuals and also encourages savings among public. LIC of India plays a vital role in the well-
being of the people by providing insurance to millions of people against livesin jeopardy such as
uncertain death or accident.India is a country where the average selling of life insurance policies
is still lower than many western and Asian countries, with the second largest population in
world. This paper is an attempt to analyze the Factors affecting customer’s investment in LIC
Policies’ in India with special reference toVijayawada. The present exploratory and descriptive
based study was selected with an objective to identify those factors which influence customer’s
policy buying decision and also analyze the preferences of customers while taking LIC policy
investment decision-making. Various insurance related factors have been discussed in the paper.
The data for the study has been collected from both primary and secondary sources. The study is
basically intended to discover and examine the factors affecting customer’s decision towards
investment in life insurance policy.

KEY WORDS: Buying Behavior, Perception, Consumer’s Preferences, Risk Coverage, Tax Benefit

INTRODUCTION

Life is the most valuable gift of nature. Which is full of risks and uncertainties since, we are
social human beings, we cannot prevent the lives in jeopardy but we can find out certain ways to
minimize those risks and uncertainties? LIC is one that gives assurance to the financial risks and
uncertainties. The main task of LIC is to sell the insurance policies for the premium which are
paid in advance for insurance coverage.
In today’s cut throat competition, it IS very indispensable for life insurers to provide best
customer services, creating awareness about the LIC among public, emphasis on need based
innovative products at reasonable prices. So that, every individual can be able to afford and can
avail the benefits of insurance and protect their lives against future uncertainties.

REVIEW OF LITERATURE

Jayakar (2003) in his study emphasized that new products innovation; distribution and better use
of technology are helping the new private life insurers to take market share away from lic, a only
company before liberalization of insurance industry. With the privatization of insurance sector
and with the entrance and cut throat competition with the private sectors gaining an ever
increasing edge over the public sector.

Girishkumar 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. Acomparative study of public and private
sectors help in understanding the customer perception, satisfaction and awareness on various life
insurance services.

praveenkumartripathi (2008), in his summer training project report titled “customer buying
behavior with a focus on market segmentation” conduct a research based study on buying pattern
in the insurance industry with a special focus on HDFC standard life insurance. The various
segments of the markets divided in terms of insurance needs, age groups, satisfaction levels etc.
were taken into account to know the customer perception and expectation from private insurers.

NEED OF THE STUDY

The insurance industry is one of the fastest growing industries in the country and offers social
and economic security to the life insurers. When compared with the developed foreign countries,
the Indian life insurance industry has achieved very less growth; there might be uncountable
reasons behind like because of the lack ofinsurance awareness, inefficient 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 are un-insured. The study is basically intended to discover and examine the factors
affecting customer’s decision towards investment in life insurance policy.

PURPOSE OF THE STUDY

1. To explore the various factors influencing customer investment decision in life insurance.

2. To study and analyze the impact of various factors on customers life insurance investment
decisions.

3. To evaluate preferences of the customers while taking life insurance investment decision.

5. To put forward the suggestions for popularizing life insurance among the public at large.

RESEARCH DESIGN

Exploratory research is carried out to describe the phenomenon or market characteristics. This
study is done to understand investor behavior and describe characteristics of the target market.
This study is to evaluate customer preferences.

SAMPLING AND SAMPLE SIZE

For the present study the sample size was 150 collected from the respondents through convenient
random sampling method.

RESEARCH METHODOLOGY

The present study is an exploratory and descriptive type of research study. The study endeavors
to find out the factors influencing Individuals life insurance investment decision and their
preference impact on purchasing of any insurance policy during their investment decision.

DATA SOURCE

Research is based on primary data and secondary data. Secondary data was used to support the research
paper which consists of the essence of reputed journals, magazines and authentic websites. Whereas
primary data deals with well defined and drafted 20 questions questionnaire for analyzing different
aspects of human perceptions for insurance policies as investment decision.

Table 2: POLICY HOLDERS

Aspects vise <30 30-40 >40 Total

Life Insurance 57 25 12 94

Health 0 0 0 0
 Insurance

Both 35 14 07 56

Total 92 39 19 150

Table 2 shows those less than 30 yrs, 57 respondents are life insurance policyholders and 35
respondents are holders of both life and health insurance. Between the age group of 30-40, 25
respondents are holder of life insurance policy and 14 respondents are holders of both life and
health insurance policy. Under the category above 40 yrs, 12 respondents are holding life
insurance policy and only 7 respondents are holding both life and health insurance policy. It is
found that respondents of age less than 30yrs are the maximum holder of life insurance and both
health and life policies. It is also found that there are no customers with health insurance policy
alone in all age group.

Table 3: MEDIA AS SOURCE OF INFORMATION

Media <30 30-40 >40 Total

TV 33 5 11 49
Internet 58 16 0 74
Magazine 8 10 0 18
News Paper 0 0 9 9
Total 99 31 20 150
(Source: Primary Data)

From Table 3, it is clear that internet has the highest respondents i.e., 58 under the age group less
than 30 yrs followed by 16 respondents in the age group 30 – 40. TV is second top respondents
with 33 under the age group less than 30, 5 respondents between 30-40 yrs of age and 11
respondents under the age group more than 40. Magazine has 8 respondents in the age group
<30yrs, 10 respondents between the age 30-40yrs. Only 9 respondents have chosen newspaper as
source of information for insurance products.

Table 4: FACTOR FOR BUYING INSURANCE POLICY

Factor for Buying <30 30-40 >40 Total

Insurance Policy

Brand image 17 0 0 17

Tax benefit 54 25 4 83

Risk coverage 20 10 20 50

Total 91 35 24 150

(Source: Primary Data)

Table 2 shows that Tax Benefit is the most important factor for buying insurance policy with
49Respondents under the age group less than 30, 25 respondents between the age group 30-40
and 5 respondents under the age group more than 40. Next is the risk coverage with a total of 35
respondents – 15 respondents under 30yrs, 10 respondents between 30-40yrs and 10 respondents
above 40yrs. Brand comes the least respondents with 16 under 30 yrs.

CONCLUSION & SUGGESTIONS

The study concludes that all most all respondents are having awareness about both the health and
life insurance policies. The maximum respondents opted for both life and Health policies are less
30years Maximum customers go for public company for the insurance policies. Tax benefit has
given the top priority that which influences the customers to purchase the insurance policy and
family members are considered the most important factor for influencing them to purchase the
policy. Internet plays the most important factor for source of information with regard to
insurance products. Now a days, Indian Insurance industry is nominated as one of the fast
growing sectors with private and public companies both life and non-life insurance sector
companies. It is the responsibility of the insurance companies to come out with new innovative
products that satisfy the financial needs, expectations of public and to see that it provides a worry
free future to the public. While comparing the life and health insurance, penetration of life
insurance is more than health insurance. So with the increasing medical expenses and increasing
unknown diseases have given more responsibility to the health insurance providers to come out
with new products and increase awareness on health insurance among the public.

BIBLIOGRAPHY

• Athma, P. and kumar, R. (2007). An explorative study of life insurance purchase

decision making: influence of product and non-product factors ,Icfai journal risk

& insurance,4,19-21.

• Pa. Keerthi, and R.Vijayalakshmi, (2009).A study on the expectations and

perceptions of the services in private life insurance companies, SMART journals,

5, 60.

• Dr.PraveenSanu, GauravJaiswal, Vijay Kumar Panday, A study of buying

behaviour of consumers towardsLIC”, Prestige institute of Management,

Gwalior,3, 1.

• K. Selvavinayagam and R. Mathivanan,(2010) . A study on policy holders

preference and satisfaction of servicesrendered by selected life insurance

companies in Tamilnadu,Namakaldistrict,International Journal ofMarketing and

Trade policy, 2, 47-5 6.

• S. RaviKumar Sharma,(2005) .Insurance Perspective in Eastern UP - An Empirical

Study ,Indian Journal of Marketing ,35.

WEB REFERALS

http://www.bris.ac.uk/Depts/CMPO/workingpapers/wp139.pdf.

http://apps.aima.in/ejournal_new/articlesPDF/Gaurav_Jaiswal_NRC3_2408099220093389294.pdf

https://www.google.co.in/?gfe_rd=cr&ei=tdVpVOT8NIjV8gfc04CoDw&gws_rd=ssl#q=A+STUDY+ON
+FACTORS+AFFECTING+CUSTOMERS+INVESTMENT++TOWARDS+LIFE+INSURANCE+POLI
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