A SUMMER TRAINING PRESENTATION on INVESTORE BEHAVIOR TOWARDS INVESTING IN LIFE INSURANCE PRODUCT IN AHMEDABAD CITY At EDELWEISS FINANCIAL ADVISORS

LTD.

Submitted to :- Gandhinagar Institute of Technology

Prepared By

Nirav Parmar -127150592024

Sunil Malav -127150592017

Guided by:Prof. RATNA TRIVEDI

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Particular Objectives of the study Literature review Industry profile Company profile Research methodology Questionnaire analysis And its Interpretation Hypothesis Testing Findings Suggestions Limitations of the study Conclusion Bibliography

Slide No. 3 4 6 9 15 19 32 34 35 36 37 38

The following are the objectives of the Study:

To

know the investor behavior about the product. To know about the investors need for the product. To know about why the investors not taken any life insurance policy. To know about investors preference for investing the money. To know about what kind of Life insurance plan they prefer.

Heyman and Rowland (2006) Point out that investment officers of publicly held PC companies wrestle with the question of how best to contribute to shareholder value. One approach is to manage the investments independent of the insurance operations, as if they were a closed-end investment company that happens to be funded by insurance underwriting. Another approach is to invest funds primarily to defease the firms liabilities and thus support the insurance operations of a company whose principal value derives from its insurance activities. The authors emphasize the second approach. They argue that the investment policy of most insurance companies should have two primary objectives: 1. Immunizing insurance reserves with a fixed-income portfolio . 2. Earning abnormal returns on surplus in a responsible and disciplined way. The latter goal means adhering to an asset allocation approach that takes account of the risk-reward tradeoffs presented by a broad variety of investment types as well as the accounting treatment of investment income.

Liebenberg, Carson, and Hoyt (2009) examine life insurance policy loan demand in terms of four hypotheses that have been put forth in the literature. In contrast to previous studies that examined aggregate data, the authors use detailed data from the Survey of Consumer Finances that allow an alternative and in some cases more direct examination of policy loan demand based on individual household circumstances. Unlike prior studies, the authors find a significantly positive relation between loan demand and recent household expense or income shocks. By observing actual life insurance holdings and policy loan data for families, the authors provide evidence in support of the policy loan emergency fund hypothesis. The findings are particularly relevant for insurers since the results provide evidence of an increase in policy loan disintermediation following expense and/or income shocks at the household level, conditions that are particularly prevalent during recessionary times due to unemployment or reduced work hours. Such a finding is fundamental for insurers as they account for the effects of economic conditions in their estimates of policy loan demand.

1818 - British introduced the life insurance to India with the establishment of the Oriental Life Insurance Company in Calcutta. 1850 - Non life insurance started with Triton Insurance Company. 1870 - Bombay Mutual Life Assurance Society is the first India owned life insurer. 1912 - The Indian Life Assurance company Act enacted to regulate the life insurance business. 1938 - The Insurance Act was enacted.

1956 - Nationalization took place. Government took over 245 Indian and foreign insurers and provident societies. 1972 - Non-life business nationalized, General Insurance Corporation (GIC) came into being.

1993 - Malhotra committee was constituted under the chairmanship of former RBI chief R. N. Malhotra to draw a blue print for insurance sector reforms.
1994 - Malhotra committee recommended reentry of private players. 1997 - IRDA (Insurance Regulatory and Development Authority) was set up as a regulator of the insurance market in India.

2000 - IRDA started giving license to private insurers. ICICI Prudential, HDFC were first private players to sell insurance Policies. 2001 - Royal Sundaram was the first non-life private player to sell an insurance policy.

2002 - Bank allowed to sell insurance plans as TPAs enter the scene, insurers start setting non-life claims in the cashless mode.

Edelweiss capital was started by two IIM graduates Mr. Rashesh Shah and Mr. Venkat Ramaswam i . The Company is operating in India as an Integrated Investment Banking Company . Edelweiss strives to be a thinking organization, trying to be innovative and imaginative. The policy of the company ensures transparency and greater opportunities for all its clients

SNAPSHOT Approach- Client Focus, Execution orientation, Culture, Professional Integrity, Research Driven
Aim- building long term relationships with the clients and equipping the clients about the market knowledge so that they can address the day by day fast growing opportunities

USP- The single minded focus on thought leadership and relentless pursuit of the new and different is it in products, services or people, model of employee ownership Culture- Entrepreneurial and result driven emphasizing confidentiality and integrity Operations- stock broking, research services, distribution of financial products, depository services, and proprietary trading, 47 per cent of its revenue is from treasury and wholesale financing Research (POD) - 90 researchers, covers over 200 stocks across 19 sectors that accounts for about 70% of the total market capitalization

Offices- operates from 56 offices in 21 Indian cities, employs over 1600 employees Major clients- ESL focuses on the wholesale equity segment, providing broking services to Institutional and corporate clients and high net worth individuals Market Capitalization- Rs 5,500 crore (Rs 55 billion), Equity Base- over Rs 2,000crore Website- www.edelcap.com www.edelweiss.in

Name Industry : Corporate Office

Edelweiss Financial Advisers ltd. Finance & Investment Edelweiss House, Off C S T Road Kalinan ,Mumbai, Maharashtra-400098 Mr. Rashesh Shah ( Chairman , CEO) 532922 EDELWEISS BSR & Associates Link Intime India Pvt Ltd C-13 Pannalal Silk ,Mills Cmpd LBS Marg ,Bhandup West Mumbai - 400 078 372000 people 91-22-22864400/4820 91-22-22864278 investors@edelcap.com http://www.edelcap.com

Chairman BSE Code NSE Code : Auditor Registrars:

Number of clients Phone : Fax : E-mail Web :

Mission:

Providing high quality investment management services to a wide spectrum of investors. Assessing investors acceptable risk parameters and endeavor to achieve their financial goals. Adhering to a disciplined investment process to steadily grow our investors assets. Committed to offering exemplary services to our customers and setting the highest standards of ethics.

Vision:
To be an innovative and universally renowned asset manager providing excellent investment solutions, exemplary services and setting the highest ethical standards.

I.

Investment banking

II.

Capital markets
Asset management

III.

IV.

Housing finance
Insurance

V.

VI.

Commodity
Treasury

VII.

Research Design
TYPE OF DATA:Here we have use both the primary data and secondary data

Primary Data Secondary Data

Primary data are those, which are collected for the first time and thus happen to be original in character.

Secondary data, on the other hand are those, which have already been collected by someone in the past.

EXPLORATORY RESEARCH

The major purposes of exploratory studies are the identification of problems, the more precise formulation of problems and the formulations of new alternative courses of action. The design of exploratory studies is characterized by a great amount of flexibility and ad-hoc veracity .
DESCRIPTIVE RESEARCH The research design adopted in this study is DESCRIPTIVE RESEARCH . A descriptive research design is the one which is description of the state of affairs as it exists at present. It includes survey and fact finding enquiries of different kinds. The researcher has no control over the variables. We used this research design to find out the investors behaviors towards investing in life insurance product .

DATA SOURCE:

Primary data is collected from the Respondents directly . Respondents are the main source of getting information.
Secondary data are collected from the Books, magazines, different reports, publishes, internet etc. SAMPLING METHOD: The samples are selected by using Convenience Sampling Method . In convenience sampling selection, as the name implies, the sampler chooses the sampling units on the basis of convenience .

Sample Size Target Location Type of questionnaire No. of Questions involved

225 All people of Ahmedabad City AHMEDABAD Structured 11

1. Do you have any insurance policy? Yes [ ] No [ ]

Interpretation 1: According to the data maximum no. of people are aware with life insurance policy and have a policy (here 71% people Have Policy). Today Indians are aware with this investment because it covers risk of the life as well as gives better return on maturity.

2. If you have any insurance policy than what is you purpose for buying it? [ ]Old age saving [ ]Family Needs [ ]Time to time Needs [ ]To Protect ones Family from Unfortunate circumstances

Interpretation 2: Most of the people buy insurance policy for to protect ones family from unfortunate circumstances ,32% respondent to protect the own family from unfortunate circumstances , 31% respondent for time to time needs because today time is uncertain, 23% respondent take policy for their family needs, and 24% respondent for old age saving.

3. If you have not taken any insurance policy then tick the reason? why? [ ] I could not afford [ ] I dont see any benefit with it [ ] I dont understand that how it work [ ] I dont trust insurance companies [ ] If other, please specify

Interpretation 3: The above questions analysis gives idea about that for what reasons they are not taken any insurance policy, though this 13% respondent given for both I could not afford and they dont see any benefits with it, 6% respondent for they dont understand that how it work, 14% respondent for they dont trust on insurance company and 4% respondent for other reasons .so though this we says that most of the persons do not trust insurance company.

4. For whom you have purchased insurance policy? [ ] Self [ ] Spouse [ ] Children [ ] Parents [ ] Dependent brother and/or sister

Interpretation 4: In given Data most of the customers take the policy for own self 50% of customer are take the life insurance for own self , 19% of customer are purchased the insurance for spouse, 16% are tale for their children,25% are taken for parents and only 14% of response for the dependent brother or/and sister. So in this data the response are good for purchasing policy for own self

5. Which investment options do you prefer? [ ] Fixed Deposit [ ] Insurance [ ] Gold / silver [ ] Equity [ ] Mutual Fund [ ] NSC [ ] PPF [ ]Government / private Bonds [ ] Other

Interpretation 5: We Take the study of the 225 Sample and out of this most of the customer prefer the fixed deposit other than the life insurance so the customer are not much satisfied with the insurance .In other the customer prefer the NSC (National Saving Certificate) and PPF for investing the money.55% of the respondent prefer fixed deposit, 44% of the respondent prefer the insurance so the most of the respondent prefer the fixed deposit and insurance.

6. When you are buying an insurance policy your decision is influence by? [ ]Family [ ]Friends [ ]Professional group [ ]Brand and advertisement [ ]Financial Advisor

Interpretation 6: Insurance is now basic investment for consumers. But this is tradition of India that we do not believe on unknown people so when any one buy insurance policy then his or her decision is depend on family, friends and on other factors. In the study we found that 51% of respondents believe on their family to buy insurance policy but only 27% respondents decision depend on brand and advertisement of the company. So, a/c to study, we see that family and friends play a big role to buy an insurance policy

7. How much money do you wish/afford to invest as insurance Premium? (per annum) [ ] Less than 10,000 [ ] 11,000 to 20,000 [ ]20,001 to 30,000 [ ] 30,001 to 40,000 [ ]40,001 to 50,000 [ ]50,001 or above

Interpretation 7: Mostly people invest in insurance on the basis of their saving and according to their saving they purchase insurance policies. Here most of the people invest 11000 Rs. to 20,000 Rs. and very less number of people invest huge amount in insurance only 8% of people invest more than 50,000 in insurance

8. If you have any life insurance policy then which kind of plan would you prefer? [ ]Term Plan [ ]Health insurance [ ] Retirement plan [ ] child Education plan [ ] Money back plan

Interpretation 8: Most of respondents want mostly Money Back Plan and term plan. 44% respondents use Money back plan and term plan 35% respondents want to buy Health insurance and retirement plan. People show their interest towards money back plan because it provides both risk coverage for life and investment opportunity in securities. And 27% of customer want to buy the child education plan.

9. Select the period listed below as per your preference to pay premium. [ ] Monthly [ ] Quarterly [ ] Half Yearly [ ] Yearly

Interpretation 9: Insurance companies give a lot of facility to their loyal customers for payment of premium. Customers also pay the premium in four modes monthly, Quarterly, half yearly and yearly. Here 16 % respondents pay in monthly mode, 18% respondents pay Quarterly mode premium, 19% of Respondent pay in half-yearly mode premium and only 47% of respondent want to pay premium on yearly bases

10. What kind of return would you like to earn? Fixed [ ] Flexible [ ]

Interpretation 10. Through this study we found that most of customer want fixed return than the flexible 69% of the customer prefer fixed return and 31% of the customer want flexible return. From the above question we analyze that most customer preference towards the fixed return.

11. Are you satisfied with the return you are getting from the policy? [ ] Very Satisfied [ ] Satisfied [ ] Cant say [ ] Not much satisfied [ ]Dissatisfied

Interpretation 11: A/c to data, 31 % of respondent are satisfied with the return. About 21% are very satisfied on their investments return 25% of customers are dont take the decision about whether they satisfied or not.

Que 7 & Que Age Ho: Age is Independent on Insurance Premium Paid by The Individual H1: Age is dependent On Insurance Premium Paid by The Individual
Value D.F Assum p. Sign(2 sides)

Pearson Chi-Square
Likelihood Ratio N of Valid Cases

68.665a
69.985 224

27
27

.000
.000

Interpretation 1: The above table shows us that the probability is 0.000 and on comparing it with Alpha 0.05, it can be seen that the chi-square is < Alfa. So we rejected the Ho. Therefore Age is dependent on insurance premium paid by the individual.

Que 7 & Que Income Income (monthly) * 7. How much money do you wish/afford to invest as insurance Premium (per annum Cross tabulation H0: Income Is Independent on insurance premium pay by the individual. H1: Income Is dependent on insurance premium pay by the individual. Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio N of Valid Cases 97.700a 94.946 224 Df 27 27 sided) .000 .000

Interpretation 1: The above table shows us that the probability is 0.000 and on comparing it with Alpha 0.05, it can be seen that the chi-square is < Alfa. So we rejected the Ho. Therefore Income Is dependent on insurance premium pay by the individual

Now life insurance has become generic. People believe in Life Insurance Company only and therefore, everybody wants to go in for a policy with LIC. It will take time to private companies to win the confidence of the people. As far as future decision making about the policy is concerned most of the policy would go in for to protect ones family from unfortunate circumstances. In this study we found that 32% of the people have insurance policy to protect ones family from unfortunate circumstances. It has clearly come out that most of the people like to earn the fixed return 69% of the respondent like to earn the fixed return. A/c to survey it is cleared that most of the people dont take insurance policy because they dont trust on insurance companies, 14% of the respondent say that they do not trust on insurance companies. Most of People influenced by family and financial advisors when they are buying insurance policies. It has been clearly comes out that the most of the respondent prefer the term plan and the money back plan 44% of the respondent prefer the term plan and money back plan.

The

life insurance companies have to introduce that type of which is more protect the family from unfortunate circumstances
The

life insurance companies have to introduce that type of policy which provides the maximum fixed return to the policy holder.
The

life insurance companies should try to win trust of the customer so that the customer purchases the life insurance product. The life insurance companies should introduced the more term plan and the money back plan which provide more benefit to the investors.

Although every effort has been in to collect the relevant information through the sources available, still some relevant information could not be gathered. Busy Schedule of Concerned Executives: The concerned executives were having very busy schedule because of which they were reluctant to give appointment. Time: The time duration could not provide ample opportunity to study every detail of the company. Unawareness: Customers were unaware of many terms related to same while asking to them. Confidential Information: As the company on account of confidential report has not disclosed some figures. Moreover, in some cases separate accounts of division are not separately maintained thereby, leading to restrictions in study.

At last here we conclude that the life insurance policy is most needed in todays competitive world. In this study we conclude that the individual have to invest money because future is uncertain and all the persons has to done there financial planning. The positive impact is most of the people want to buy the life insurance policy and they aware about the insurance. Though this study we conclude that the individual have to save their money though the life insurance. Though the overall project report we conclude that investor behavior towards investing in life insurance product is on the basis of old age saving and to protect ones family from unfortunate circumstances Though the overall study we found that the most investors prefer the fixed deposit for their savings.

Books Referred: NARESH K MALHOTRA. (2008), MARKETING RESEARCH, SOUTH ASIAN PERSPECTIVE: DORLING KINDERSLEY (Page no 109 and 110) Internet Resources : Search Sites , Websites of the organization www.edleweiss.com Other sites www.bimaonline.com, www.irdaindia.gov , www.edelweissfin.com

Company Resources:
Product Brochures Inputs from company personnels.