1.

1) INTRODUCTION
Life is full of risk and uncertainties. Since we are social human being,
we have certain responsibilities too. Emotions and rationality play vital role on the
buying decisions of Indian consumers. They believe in future rather than the present
and desire to have a better and secured future, in this direction insurance services
have its own value in terms of minimizing risk and uncertainties. Indian economy is
developing and having huge middle-class societal status and salaried persons. Their
money value for current needs and future desires here the pendulum moves to
another side which generate the reason behind holding a policy. Insurance has
become an integral aspect in everyone’s life today. It is a written contract that offers
protection against future loss.

Insurance is a social device to ensure protection of economic value of asset

and life. In the insurance large number of people associate themselves and sharing
the risk commonly. The risk which can be insured are fire, perils of the sea, death,
accident and burglary. Any risk contingent upon these may be insured against at a
premium commensurate with the risk involved. Thus, the insurance is treated as a
collective bearing of risk exposure. There are two parties in insurance contract. The
insurer is the party who agrees to compensate the other person against possible losses
and the insured is the party who gets his life or property insured against risks. A
definite compensation is provided by the insurer to the insured on the happening of
the event which he insured.

Future is very uncertain, but there is a way to protect one’s family and
makes one’s children’s life safe and secure. Life insurance helps us to ensure that our
family future is not just secure but also prosperous. Life insurance is universally
acknowledged as tool to eliminate the risk, substitute certainly for uncertainty and
ensure timely aid for the family in the unfortunate event of the death of the
breadwinner. Life insurance is a contract of payment a sum of money to the person
assured on the happening of the event insured against maturity or at a specified date
at periodic intervals or at unfortunate death if it occurs earlier. It provides risk
coverage and returns for the whole life. The return may come to the policyholders on
monthly, quarterly, and on annual basis. The feature is possible in money back policy

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and in some other life insurance products.

There is also some non-life insurance which provides protection and financial
support to the people and the company and helps them to overcome the loses. Today
most people likes to join and invest in the insurance for risk hedging and tax saving
potential. The government also provides tax saving benefit for the insurance. This
encourage the people to save the money.

1.2)STATEMENT OF THE PROBLEM

Safety and security of the life is the most important. People buy product and services
based on some factors or his buying behaviour is influential in nature. To make a
sense of security and safety for the life and also for the family and to make the future
more prosperous the life insurance comes as a solution and eliminates the various
risks and uncertainties. This study is entitled as “Customer buying behaviour towards
life insurance, a study based on Kottayam district”.

1.3) SIGNIFICANCE OF THE STUDY

Investment behaviour differs from one to another. Especially when it comes to life
insurance there is large difference and influencing factor which govern the buying
behaviour of customer. Even though most of them are not be aware of life insurance
policies. Buying life insurance is one of the most important financial decision. We
can’t predict what will happen in future and it is always uncertain. Lot of people die
prematurely every year as result of illness or accident, and if we are the breadwinner
of the family and we passed away then it became a consequence for your loved ones
their ability to pay the debts and to maintain the standard of their living. Then the
life insurance comes as a solution to overcomes these. This study aims to know the
buying behaviour of consumer towards life insurance policies and attempts to
understand the factors affecting the purchasing decision of people while taking life
insurance policy.

1.4) SCOPE OF THE STUDY

These study aims at making an in depth study of life insurance. It helps to

understood that the insurance covers the risks and uncertainties and provide

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maximum return to the policyholders. As we know that financial security of our
family is very important, so we make an effort to explore the buying behaviour of
customer towards life insurance. We are conducting the study on the basis of
respondents or samples from Kottayam district. Here the research is conducted by the
selection of the policyholders to know their buying behaviour towards life insurance.

1.5) OBJECTIVES OF THE STUDY

■ To know the attitude of people towards life insurance policy.
■ To study the awareness among people regarding life insurance.
■ To analyse the purpose of customers while making life insurance investment.
■ To identify different factors influencing the purchasing decision of people
while taking life insurance policy.
■ To know the satisfaction level of the customers from insurance services.
1.6) METHODOLOGY
TYPES OF DATA

This study is based on both the primary data and the secondary data. Primary
data is extensively used and the secondary data is intensively used.
SOURCES OF DATA

Primary data are collected by sampling. A set of questionnaire is prepared for

this purposes. Sources of secondary data includes published documents and
other annual reports.
SAMPLE SIZE
The study on these topic is a complex and it is impossible to cover the whole.
This is a sample study and we choose hundred respondents from the
Kottayam district as a representative of the policyholders.
SAMPLING TECHNIQUE
Here, we use the convenient sampling technique for the data collection
because it is considered as an easier technique for collecting data and
information from the respondents.

TOOLS OF ANALYSIS

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 Data collected from various sources have been analysed with the help of
sta s cal tools. Sta s cal techniques like percentage analysis, composite
index, Likert scale have been employed for data analysis.

1.7) LIMITATION OF THE STUDY

■ study is very complex and a detailed analysis in the study is not
possible.
■ The wide nature of the topic compelled to limit the study to a few
respondents.
■ The There are few limitations in the sampling techniques.
■ Limited time to complete the study.
1.8) CHAPTER SCHEME

Chapter 1: INTRODUCTION
This chapter contains the introduction about the topic, importance,
statement of the problem, scope of the study, methodology, objectives and
limitations of the study.

Chapter 2: REVIEW OF LITERATURE

This chapter involves the details of the different studies conducted by
various persons.

Chapter 3: THEORATICL FRAMEWORK

The third chapter deals with the overview of the topic and the study.

Chapter 4: DATA ANALYSIS AND INTERPRETATION

Analysis of collected data and interpretation are provided in this chapter.

Chapter 5: FDINDINGS, SUGGESIONS AND CONCLUSIONS

This chapter deals with the findings Suggestions and conclusion.

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REVIW OF LITERATURE
A literature review is a scholarly paper which includes the current knowledge
including substantive findings, as well as theoretical and methodological
contribution to a particular topic.
Neha Sharma (2018) conducted a study on the topic “Buying behaviour of

customer towards life insurance policies” revealed that the selling of life insurance is
much lower in India while comparing to other countries. The Indian insurance is
looking very prospective to many multinational and Indian insurance sector for
expanding their market share. Before opening of multinational insurance company
life insurance company was the only company deals with the life insurance. Still it is
the biggest player in the market share.
“An International Analysis of Life Insurance Demand” (1993), by Mark J

Browne and kihong Kim shows that after the second world war the service sector
grows very fast. In 1989 the service sector accounted for 60% of the world’s GDP.
The insurance in service sector also grows considerably and about 10% annually.
These articles clearly examine the factors or variables that led to the variation in to
the demand of life insurance. The factors that were identified are dependency ratio,
national income, and price of insurance.
A Study Conducted by Mei-Fang Chen and Liang-Hung Mou in his article
“Impact of ethical dales behaviour on customer loyalty in the life insurance industry”
states that the ethical and unethical sales behaviour of a salesperson build or deplete
a customer trust in the consumer decision making. The study examines and says that
the ethical behaviour of a salesperson does play an important in winning customer
loyalty and customer trust. Customer trust exerts more influence on customer loyalty
and the customer trust in the salesperson has an implication for the life insurance.
A Study on “Consumer perception regarding life insurance policies”
conducted by Sandeep Chaudhary and Jasneet Koru (2016) reveals and states that
insurance is considered as a tool which provides protection to millions of people
against life risks such as death or accidents. This is considered as fastest growing
sector in India after the privatization. The study examines the determinants affect the

5
perception of consumer towards life insurance policies. The study concludes that
there are some factors like customer convenience, tangible benefits, company
reputation, customer satisfaction, timely services that prompt the consumer to
purchase the life insurance policies.
A Study Conducted by Thorsten Beck, Lanwebb (2003) article
“Economic, Demographic and institutional Determinants of Life Insurance
Consumption across countries” reveals that insurance is considered as an important
in financial sector and provides a wide range of financial services for consumer and
considered as a major source of investment in capital market. But change or
variation in life insurance sector is unclear. The study on this article finds and states
that economic factors like inflation, banking sector development and per capita
income are the most robust predicators of the use of life insurance. Education, Life
expectancy have no robust association with these sector. This resulted the need for
price stability and development in banking sector in an economy.
A Study conducted by J. Francois Octreville (1996) on the topic “Life
insurance market in developing countries” revealed that the developing countries are
the suppliers of life insurance. The supply also includes the service provided by
national companies with the local and or foreign capital. There is no factor affect the
supply of life insurance. Many developing countries considers financial institution
that are locally incorporated is an essential element in the economic and political
independence. The study developing countries present some empirical test of the
relationship between financial development and development of life insurance
sector.
A Study on “Predictive analysis of the factors that influence customer
preference for online platforms while buying insurance policy” by A Indira R
Neelamegam critically examines that, today is a digitalised world and in order to
cope up with these the insurance sector goes to a considerable change. In traditional
the insurance products sold by means of a broker, agents and bankers. As the
technology goes the IRDA changes the client expectations and purchase behaviour.
They use technological advancement, internet facilities and web aggregators. As the
consumer can avail the insurance services at their digital portal with a few mouse
click. Customer retention and acquisition are the critical aspect for many businesses

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irrespective of change in the business model. Understanding and fulfilling customer
requirement through these digital model is essential in the present era of a
developing technology.
Narayan H Jai (2009 in his article “Role of customer relationship
management in life insurance” has made an emphasis on the importance of customer
in the business of insurance. This paper has explained the market competition.
Understanding the customer need is very well. Insurance sector focuses on these and
make a fair treatment. Proper dealing with customer complaint, effective customer
grievance handling mechanism and fast claim settlement are the ways with level of
customer satisfaction can be increased. the success of a life insurance business
mainly depends on the prompt and fair way of dealing with the customer.
A study on “Customer perception towards service quality of life insurance
corporation of India” by Dr. Hs Sandha, Ms Neetha Bala (2011) states that life
insurance corporation of India is the leading company and has set up a benchmark in
enervating the whole concept of service quality. The present day aims at measure
customer perception towards life insurance service quality by applying a frame work
developed by Sureshcander (2001). The study finds that there are many factors
security and dynamic operations, credibility and dimensions and customer overall
evaluation of life insurance service quality. By concluding that there are three factors
like proficiency, physical and ethical excellence and functionality have significant
role on the overall service quality of life insurance in India.
Khan M K (1978) attempts to know the best opportunities and prospects in
the life insurance sector. The paper talks about the skill required for a career in life
insurance sector. It provides a lot of flexibility for the people who want to build their
careers in the sector. The relationship between the agent and the client is not
temporary and the service rendered has no substitute. He observes that the agent is
the server to the client.
Shesha Ayyar V. (1986) opines in the article entitled that the issues
connected with the development of a new policies such as the importance of
developing new schemes and the problems in developing the schemes. He also
includes the importance of ancillary benefit and hospitalization benefits.
Kotler (1973) considers that insurance to be included in the category of

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“unsought good” along with products such as preventive dental services and burial
plots. He notes that unsought good pose special challenges to the marketer.
Rajan Saxena (1986) in his article entitled “Life insurance services” discuss
the various issues and matters relating to the life insurance and hence he insists the
need for insurance sector in the economy and the various strategies related to the life
insurance.
Rao BSR and Appa Rao Machiruja (1988) in their article entitled that the
emerging trends in the insurance sector and the agents of life insurance should
improve their service to a financial expert. The change in these helps the economy to
get a better service field.
S. Raju and M. Gurupandi (2009) has of the opinion and view that the
policyholder opinion to choose a policy depend on many factors and determinants.
The attitude and social economic background also influence them while took a
policy. The study shows the attitude and the opinion of the policyholders towards the
life insurance.
Mehr and Cammack (1976) agrees that insurance is usually thought of as
product that spreads the risk of serious, but low-probability, losses among a group of
individuals, thus providing some financial protection to each individual.
Siddiqui et al (2010) in this article has tried to develop a perceived a service
quality in life insurance sector. The objectives if these was to make a service quality
structure for the life insurance sector and the importance of service quality
dimensions from customers. They also studied how the service are properly delivered
to the policyholder to meet their expectations.
Mishra M. N (1987) made a study that before 1960s the life insurance
company not gave much attention to the customer but on 1980 onwards it’s come to
an end and provides several remedial measures and provide better customer service
to improve their satisfaction.
Michael L. Smith (1982) said that a typical life insurance contract provides a
package of option or right to the policy owner that is not precisely duplicated by
other combination of commonly available contracts. Viewed from this perspective,
life insurance enjoys a unique position in the field of investment and should be
judged in this light. The paper shows that an options viewpoint provides a more

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complete explanation of policy owner behaviour towards life insurance than the
conventional savings and protection view.
John J Burnet and Bruce A Palmer (1984) in his article “Examining life
insurance ownership through demographic and psychographic characteristics”
examines that the various demographic and psychographic characteristics in term of
how well they relate to differing levels pf life insurance ownership. The findings on
the study suggest that belief in the traditional work ethic, fatalism, socialisation,
preferences, religion salience and assertiveness were the most important predictor
variable. Education, number of children and income were the rest demographic
predictors

3.1) Life insurance in India: A brief history

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Life insurance is one of the fastest growing sector in India since 2000 as government
allowed private players and FDI up to 26% and recently cabinet approved a proposal
to increase it to 49%. In 1999, mean risk per policy of Indian and foreign life insurers
amounted respectively to rs2950 and rs7859.Life insurance in India was nationalised
by incorporating Life insurance corporation (LIC)in 1956.All the private life
insurance companies at that time were taken over by LIC. In 1993 the government of
India appointed RN Malhotra committee to lay down a road map for privatisation of
the life insurance sector.

While the committee submitted its report in 1994, it took another six years
before the enabling legislation was passed in the year 2000, legislation amending the
insurance act of 1938 and legislating the insurance regulatory and development
authority act of 2000. In the same year, newly appointed insurance regulator IRDA
started issuing license to private life insurers.

The oriental life insurance company was the first life insurance company
in India that was established in Calcutta in 1818, though it failed in 1834.There are
currently a total of twenty-four life insurance companies in India. Of these Life
Insurance Corporation (LIC) is only the public sector insurance company. All others
are the private sector. The following are the some of the Life insurance companies in
India;

AGEON LIFE INSURANCE COMPANY:

AGEON Life insurance is a joint venture between one of the world’s

leading financial organisation and Bennett Coleman and company. It
started operation in 2008 with an aim to help people to plan their life in a
better way. The plans offered by the company are term plan, endowment
plan, and ruler plans.

AVIVA LIFE INSURNCE COMPANY:

With 121 networked center across the country AVIVA Life insurance serves
a large number of customer base country wise. These plans offered by the
company helps to fulfil the need of the buyers at economical price

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 level. The plans are ruler plan, child plan, health plan, term plan and
protection plans.

HDFC LIFE INSURANCE COMPANY:

HDFC Life insurance was founded in 2000 was one of the leading
insurance firm in India. In order to solve the need of customer the company provides
an array of individual and group insurance solutions like pension plan, saving and
health plan, protection plan, child plan and women plan.

SBI LIFE INSURANCE COMPANY:

SBI Life insurance company introduced in 2001. It is a joint venture

between State bank of India and BNP Paribas Cardiff. These company offers an
inclusive range of life insurance and pension products at very economical rate. It
offers variant plans like saving plan, unit link plans, protection plan, child plan to
cater to the need of an individuals.

LIFE INSURANEC CORPORATION OF INDIA:

LIC is the president of India oldest and leading life insurance company in
India which was established in 1956.The company is fully owned by the government
of India and it has its headquarters in Mumbai and has 2048 branches across India.

3.2) FEATURES OF LIFE INSURANCE

1. Waiver of premium:
This feature pays the premium of a policy if you become serious ill or disabled.
2. Accelerated death benefit:
This feature allows you to receive cash advances against the death benefit of your
policy if you are diagnosed with terminal illness. Many people with this benefit use
the money to help pay for treatment and other expenses when they have only a short
time to live.

3. Guaranteed purchase option:

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With this feature, you can purchase coverage at designated future dates or life events
without proving you are in good health.
4. Long term care riders:
Some life products include these option, which allow you to use the benefit of your
policy to pay for long term care in exchange for a reduced life benefit.

5. Cash value plans:

This type of policy pays out upon your death and also accumulates value during your
life time. You can use the cash value as a tax sheltered investment as a fund from
which you can borrow and use to pay the policy premiums later.

6. Mortgage protection:
This feature available in term life policies, will pay your mortgage if you die.
7. Survivor support services:
Some life policies offer services that provides objective and legal assistance to
beneficiaries.
8. Spouse or child term riders:
Life policies with this feature allow you to purchase term life insurance for your
spouse or dependent child, up to an age of 26. This option can be a more affordable
way to purchase coverage if you can’t afford separate policies.
9. Employee assistance programs:
This feature makes resources available to you for problems that can affect your
personal and professional life. Resources are usually free and help address issues
such as stress, marital problems, legal concerns and major life events.
10. Cash withdrawals and loan:
Many universal and whole life policies allow you to withdraw or borrow money
using the cash value of the policy as collateral. You can also use the cash value of
your life policy to pay your premiums if you need or want to stop paying premiums
for a period of time. You must pay back the loan or your beneficiaries will receive a
reduced death benefit.

3.3) FACTORS AFFECTING LIFE INSURANCE COVERAGE

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Age: Age is considered as a most important thing when it comes to life insurance.
Since there is less risk of death, younger individuals relieve lower rates.

Weight: If you are overweight or obese, you may end up paying more for your
coverage.

Gender: Statistics make gender a factor in life insurance coverage. Since women
generally live longer than men, they also tend to have lower insurance rates.

The policy: The policy and length of your policy and the amount of your benefit all
continue to the rate you will pay for your life insurance coverage. Basically longer
the term and larger the amount, the more you will pay.

Purpose of insurance: There are few differential reasons you might be purchasing a
life insurance policy, and each plays its own role in determining your rate. For
example, you are purchasing a policy as part of estate planning or for our family’s or
business protection your insurance rates will change accordingly

Occupation: If you work require you to perform dangerous duties that put you at a
risk of accidental death, you will pay a higher insurance rate. If you are exposed to
toxic chemicals or your job is known to have long term health effects, you will pay
more for your coverage.

Smoking: Smoking puts the policyholders at higher risk of all ailments, so if you are
a smoker that that’s as good as raising a red flag to the insurance companies. Most
smokers pay a premium twice as much as non-smoker does, thus affecting the
premium to a huge extent.

Drinking: Drinking of alcohol is injurious to health in more ways than one. If you as
the policyholder are a heavy consumer of alcohol this can affect your premium at
higher rates.

3.4)PRINCIPLES OF LIFE INSURANCE

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Utmost good faith:

Purchasing an insurance is entering in to a contract between insurer and insured. This

should be done in good faith by providing all relevant details with honesty. This the
insurer must explain all the aspects of the policy and ensure that there are no
unexplained or hidden clause.

Insurable interest:

Insurable interest is the pecuniary interest. It arises at the pecuniary relationship

between insurer and insured. Mere emotion ad expectation does not constitute
insurable interest. A person has an insurable interest in own life and insurable
interest in others life.

Risk and minimal loss:

Insurance is a risky and companies have to do business and profits keeping in mind
the risk factor. These principle states that the insured individual is expected to limit
his or herself from any hazards.

Proximate cause:

In life insurance the doctrine of causa proximal is not applied because the insurer is
bound to pay the amount of insurance whatever may be the reason. But there are
some exceptions like war risk suicide, and accident benefit cases.

Assignment and nomination:

Life policies re the only policy which can be assigned whether the assignee has an
insurable interest or not. The holder of the policy can nominate another person at the
time of initiating a policy or subsequently before the policy matures, nominate the
person to whom the money shall be paid in the event of his death. A nomination can
be cancelled before maturity.

3.5) TYPE OF LIFE INSURANCE POLICIES

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On the basis of method of premium payments:

⦁ Single premium policy: In this policy the whole premium is paid at

beginning of the policy. As comparable to the annual premium payable,
it is costlier, but as compared to aggregate of all annual premiums
payable it is much smaller. This type of policy can be affordable to
people who get lucky income and are not expected to continue such
income in subsequent the years.
⦁ Level premium policy: In this policy regular and equal premiums are
paid at definite intervals like monthly, quarterly, half yearly or yearly.
The premium is lesser than single premium. Thus it suits the
requirements of different types of policy holders.
On the basis of duration of the policy:

⦁ Whole life policy:

This policy is suitable for people of all ages who wish to protect their families from
financial crises that may occur owing to the policyholder’s premature death. This
policy runs for the whole life of the assured. The sum assured become payable to the
legal heir only after the death of the assured. The whole life policy can be of four
types.
Ordinary whole life policy-In this case, premium is payable periodically
throughout the life of the assured.
Limited payment whole life policy-In this case premium is payable for a
specified period only.
Single premium whole life policy- In this type of policy the entire premium is
payable in on single payment.
Convertible whole life policy- This policy can give the option to convert it in to
endowment policy at the end of the year
⦁ Term policy:
In case of term assurance policy, the company promises to the insured to pay the face
value mentioned in the policy in case he is no longer alive during the term of the
policy. This plan is most suitable for those who re initially unable to pay high
premium but require life cover. It can be

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 Renewable term policies –These policies are renewable at the expiry of term
for an additional period without medical examination. But the premium rate will be
increasing according to the attained age.
Convertible term policy –Under this policy an option to convert it in to whole
life or endowment policy is available.
⦁ Endowment policy:
Endowment plan is a life insurance which provides you with a combination of both
that is, an insurance cover, as well as a saving plan
It helps you in saving regularly over a specific period of time, so that you are able to
get a lump sum amount on policy maturity, if the policyholder survives the policy
term. The following are the endowment policies

Pure endowment policies: In this policy the insurer agrees to pay the assure or
his nominees as specified sum of money on his eth or on the maturity of the policy
whichever is earlier.
Ordinary endowment policies – This policy provides an ideal combination of
both the family protection and investment. It is a combination of pure and term.
Double endowment policy - Under this policy if the life assured dies during the
endorsement period, basic sum assured is payable and if he survives the end of the
term double the sum assured is paid.
Money back policy – This policy is useful for those who feel the need for lump
sum benefits at periodical intervals.
According to participation in profit:
⦁ With profit policy:
With profit policy is a policy wherein the assured is paid, in addition to the sum
assured, a share in the profits of the insurer in the form of bonus.
⦁ Without profit policy:
Without profit policy is a policy under which the assured does not get any share in
the profits earned by the insurer. He gets only the sum assured on the maturity of the
policy. This policy also called non-participating policy.
According to number of person insured

⦁ Single life policy:

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Under this policy only one life is insured. It can be one’s own life or other’s life. But
the fact is that this policy insures only one life. The policy amount is paid only when
the assured event occurs.

⦁ Multiple life policy:

This policy covers two or more lives and the policy amount is payable on the first
death. This is beneficial to the partners of a firm and to the husband and wife. It can
be of two types
Joint life policy – This policy covers two or more lives. The policy amount is
payable on the first death.
Last survivor policy – Here the policy amount is payable on the last death. So
long as any one of the insured is alive, no payment is made.
According to the method of premium payment

⦁ Single premium policy:

As the name implies, in this type of policy the whole premium is paid at beginning of
the policy. As compared to aggregate of annual premiums payable it is much smaller
because all the premiums are received in advance.
⦁ Level premium policy:
This is the most popular form of policy. In this policy, regular and equal premiums
are paid at a definite interval. The premium is lesser than the single premium and is
convenient to pay premiums at a regular period. The equal instalment can be paid
monthly, quarterly and half-yearly.
According to the method of claim payment

⦁ Lump sum policies:

Lump sum policies are the ones wherein the sum assured is paid in lump sum at the
happening of the event insured.

⦁ Instalment policy:
Such policies provide the insured a regular income until death starting from the
desired age. The various annuity policies and pension policies come under this
category. Some annuity policies pay the survivor a lump sum on the death of the

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insured in addition to the regular incomers while the insured is alive.
Annuity is a contract that provides an income for a specified period of time. Annuity
schemes are those wherein policyholder’s regular contribution over a period of time
accumulate to form a corpus with the insurer. The corpus is used to yield a regular
income that is paid to policyholders until death starting from the desired retirement
age. The following are the types of annuities
Immediate – An immediate annuity provides income for a guaranteed period of
time. Payment begin within one year of purchase.
Deferred – In the case of deferred annuity, the payments to the annuitant start
after certain deferment period. A deferred annuity can be converted in to a stream of
income at any time after 12 months.
Fixed and variable – A fixed annuity assures minimum rate of return. A variable
annuity offers a variety of investment fund account portfolios including growth –
oriented portfolios that can help you keep with inflation.
Unit-linked insurance policy (ULIP)

Unit-linked insurance policies provide insurance cover with investment

potential. A unit linked insurance policy is one in which the customer is provided
with a life insurance cover. The premium is paid is invested in either debt or equity
products or a combination of the two. It enables the buyer to secure some protection
for his family in the event of his untimely death. It provides him an opportunity to
earn a return on his premium paid.

In the event of the insured person’s untimely death his nominees would
normally receive an amount that is the higher of the sum assured or the value of the
units. However, there are some schemes in which the policyholder receives the sum
assured plus the value of the investments.

3.6)BENEFITS OF LIFE INSURANCE

RISK COVER:

Insurance provides risk coverage to the insured family in the form of monetary

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compensation in lieu of premium paid.

TAX BENEFITS:

Insurance premium is tax deductible under section 80c of the income tax act
1961.Under this section, investment made in the specified instruments are subjected
to rebate. Currently the amount available for invested in life insurance premiums,
pension superannuation fund, public provident fund, and employee provident fund.

LOAN FACILITY:

Insurance companies provides the option to the insured that they can borrow a
certain sum of amount. The option is available at selected policies.

GAURANTEED INCOME:

Insurance policies come with the guaranteed sum assured amount which is
payable on happening of the event.

PROMOTES SAVING:

Insurance policies come with the saving plan i.e., they invest your money in
profitable ventures.

DIFFERENCE PLAN FOR DIFFERENT USES:

Insurance company offer a different type of plan to the insured depending on his
need for insurance. More benefit come with more premium.

COVER HEALTH EXPENSES:

The life insurance policies cover the health expenses like hospitalisation expenses
and critical illness treatment.

RIDERS:

Riders are the additional benefit that can be bought and added to basic insurance
policy. These option allow you to increase your insurance coverage. The riders may
cover critical illness and personal accidents.

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RETURN ON INVESTMENT:

The money invested in life insurance is safe and cover risks. The money invested
will fetch good returns and will be returned fully as sum assured either after the
completion of the term.

VERDICT:

It goes without saying that life insurance is an absolute necessity. It is a risk

minimization and protection tool that must be purchased without any thought or
choice. After all it is the question of a life that supports a considerable number of
people. Hence, realize the significance of life insurance and compulsorily sign
yourself up for it.

LIFE STAGE PLANNING:

Life insurance aids you in life stage planning where you can plan your life’s
financial goal as per your convenience. It helps you for plan your life stage needs.
Life insurance not only provides for financial support in the event of untimely death
but also act as long term investment. You can meet your goals, be it your children’s
education, their marriage, building your dream home or planning a relaxed retired
life, according to your life stage and risk appetite.

DISADVANTAGE OF LIFE INSUANCE

OPPORTUNITY COST:

Currently, life insurance is seen as a luxury in the market, which means that we
constantly think about what we could be spending the money on elsewhere. If we
didn’t have to pay premiums (which we didn’t know legally) we wonder where the
extra money could go. With life insurance there shouldn’t be an opportunity cost
because you are spending money on keeping your family protected. With a life
insurance policy, you are ensuring that your family can pay bills, your children can
go to school etc…

LACK OF TRUST:

Finally, there are also people who lack the trust in the huge corporations and they

20
don’t want to give money away to a company that would collapse at any moment.

CONFUSING:

We know that the life insurance market can be a tricky one to understand. As a
result, the majority of people seem to forget about it all together.

EASY TO MISLEAD:

It is easy to mislead in life insurance policy if you are not el informed about the
terms and conditions.

BUYING COMPLEX LIFE INSURANCE PRODUCTS:

Most of people buy insurance products without proper understanding. Most of the
complex products give suboptimal returns and have no suitability for the buyers.
Agents frequently give bad advice to the holders for ma=ore commission.

BUYING EXPENSIVE POLICIES:

People have little clue and don’t compare life insurance products even from the
same provider. Sometime they buy insurance policies which are far too expensive
leading to heavy burden which is unnecessary.

BUYING LIFE INSURANCE WHEN YOU HAVE NO NEED:

People buy life insurance when they have no need. For example, an old woman
buying life insurance for a very long time period till you are 80 years old. At that age
you have no need. Since you would have no dependents and earning power as well.

AGE
Table 4.1
Classification on the basis of age
AGE FREQUENCY PERCENTAGE
Below 30 28 28

21
 31-40 15 15
41-50 23 23
51-60 27 27
Above 60 7 7
Total 100 100

The age wise classification of respondents reveals that out of 100 respondents, 28%
belongs to the age group of below 30, 15% belong to the age group of 31-40, 23%
belong to the age group of 41-50, 27% belong to the age group of 51 to 60.7% belong
to the age group of above 60.figure showing calculations 0f respondents on the basis
age.

Figure 4.1

22
 GENDER
TABLE 4.2
Classification on the basis of gender.
Gender Frequency Percentage
Male 67 67
Female 33 37
Total 100 100

Gender wise classification of the respondents reveals that 67% belongs to male and
37% belongs to female category.

Figure 4.2

23
 OCCUPATION
Table 4.3
Classification on the basis of occupation
Occupation Frequency Percentage
Government employees 8 8
Private employees 25 25
Business 17 17
Profession 10 10
Others 40 40
Total 100 100

The above table shows that 8% of the respondents belongs to government employees,
25% of the respondents belongs to private employees, 17% of the respondents
belongs to Business sector, 10% of respondents belongs to profession and 40%
belongs to others.

Figure 4.3

24
 ANNUAL INCOME
Table 4.4
Classification on the basis of annual income.
Annual income Frequency Percentage
Below 1 lakh 45 45
1- 5 lakh 50 50
5 – 10 lakh 5 5
Above 10 lakh
Total 100 100

The above table shows that most of the respondents have an annual income below 1
lakh and it is about 45%, 50% of the respondents have an annual income of 1 – 5
lakh, and 5% of the respondents have an annual income between 5 – 10 lakh.

Figure 4.4

25
 AWARENESS
Table 4.5
Classification on the basis of awareness.
AWARENESS FREQUENCY PERCENTAGE
YES 83 83
NO 17 17
TOTAL 100 100

The above table reveals that 83% of the respondents are aware of life insurance and
17% of respondents are not aware of life insurance.

Figure 4.5

26
 POLICY HOLDERS
Table 4.6
Classification on the basis of policy holders
STATUS FREQUENCY PERCENTAGE
YES 100 100
NO
TOTAL 100 100

The above table reveals that 100% of the respondents have life insurance policy

Figure 4.6

27
 TYPE OF POLICY
Table 4.7
Classification on the basis of policy scheme
Policy scheme frequency Percentage
Whole life policy 46 46
Endowment policy 22 22
Money back policy 22 22
Pension fund policy
Others 10 10
total 100 100

Above table reveals that out of 100 respondents , majority of the respondents (46%)
are holding Whole Life Policy, 22% holding endowment policy , 22% holding money
back policy and 10% hold other type of policy.

Figure 4.7

28
 BENEFICIARIES OF POLICY
Table 4.8
Classification on the basis of Beneficiaries of policy.
Beneficiaries Frequency Percentage
Self 58 58
Spouse 16 16
Children 15 15
Others 11 11
Total 100 100
The above table reveals that 58% of the respondents took policy to protect their own
life and 16% took policy for spouse. 15% of the beneficiaries are children and 11%
of the beneficiaries are others.

Figure 4.8

29
 VALUE OF POLICY
Table 4.9
Classification on the basis of policy value
Policy value Frequency Percentage
Below 200000 60 60
200000-500000 21 21
500000-1000000 17 17
Above 1000000 2 2
Total 100 100

The above table reveals that 60% of the respondents come under the category of
below 2,00000, 21% of the respondents are included in the range of
200000-500000,17% of the respondents have a policy value in between
500000-1000000 and only 2% of the respondents invest an amount above 10,00000
in life insurance.

Figure 4.9

30
 PERIODICITY OF THE POLICY
Table 4.10
Classification on the basis of periodicity of the policy
PERIOD FREQUENCY PERCENTAGE

Below 5 years 36 36

5 to 15 years 39 39

15 to 25 years 24 24

Above 25 years 1 1

Total 100 100

The above table reveals that 36% of the respondents hold the policy for the period
below 5 years,39% of the respondents hold policy for 5 to 15 years, 24% of the
respondents hold policy for 15 to 25 years and 1 % of the respondents hold policy for
above 25 years.

Figure 4.10

31
 PREMIUM RANGE
Table 4.11
Classification on the basis of preference of premium range
PREMIUM FREQUENCY PERCENTAGE

Below 10000 70 70

10000 to 30000 26 26

30000 to 50000 2 2

Above 50000 2 2

TOTAL 100 100

The above table shows that most of the respondents(70%) choose the premium range
below 10000, 26% choose the premium range between 10000 to 30000, 2% choose
the premium range between 30000 to 50000 and 2% choose above 50000 as their
premium range

Figure 4.11

32
 MODE OF PREMIUM PAYMENT
Table 4.12
Classification on the basis of mode of premium payment
MODE FREQUENCY PERCENTAGE

Cash 57 57

Cheque 19 19

Debit Card 12 12

Others 12 12

Total 100 100

From the above table it is clear that most of the respondents use cash as their mode
of payment,19% use cheque as their payment mode,12% use debit card as their
payment mode and 12% use other payment mode.

Figure 4.12

33
 PERIOD OF PREMIUM
Table 4.13
Classification on the basis of premium payment period
PERIOD FREQUENCY PERCENTAGE

Monthly 35 35

Quarterly 34 34

Half yearly 20 20

Yearly 11 11

TOTAL 100 100

The above table reveals that 35% of the respondents choose to pay monthly,34% of
the respondents choose to pay quarterly,20% of the respondents choose to pay half
yearly and 11% of the respondents choose to pay yearly.

Figure 4.13

34
 SOURCE OF INFORMATION
Table 4.14
Classification on the basis of source of information
SOURCE FREQUENCY PERCENTAGE

Newspaper and magazines 14 14

Friends 13 13

Bank 52 52

Agent 13 13

Others 8 8

TOTAL 100 100

From the above table it is clear that 14% of the respondents get the information
about life insurance from newspaper and magazine, 13% of the respondents get the
information from friends, 52% of the respondents get the information from bank,
13% of the respondents get the information from agents and 8% of the respondents
get the information about life insurance from other sources.

Figure 4.14

35
 MOTIVE OF PURCHASE
Table 4.15
Classification on the basis of motive of purchase
MOTIVE FREQUENCY PERCENTAGE

Security 41 41

Investment 26 26

Tax benefits 8 8

Savings 22 22

Agent force 1 1

Others 2 2

TOTAL 100 100

The above table shows that most of the respondents(41%)purchase the life insurance
policy for security, 26% purchase the life insurance policy for investment,8%
purchase the life insurance policy for tax benefits,22% purchase the life insurance
policy for savings,1% purchase the life insurance policy because of agent force and
2% of the respondents are motivated by other factors

Figure 4.15

Factors considering while taking policy

36
 Table 4.16
Classification of respondents on the basis of preference.
S Highly Important Neutral Least Not Total mean
l important important importa score score
nt
n
o
Variable w F w F w F w F w To
s F ei ei ei ei e tal
g g g g i we
ht ht ht ht g ig
ag a a a h ht
e g g g t ag
e e e a e
g
e
1 Premiu 45 225 36 144 14 42 5 10 - - 421 4.21
m
2 Policy 29 145 36 144 22 66 13 26 - - 381 3.81
terms
3 Larger 29 145 45 180 24 72 2 4 - - 401 4.01
risk
coverag
e
4 Compan 29 145 34 136 18 54 19 38 - - 373 3.73
y
credibili
ty
5 Easy 27 135 31 124 39 117 2 4 1 1 381 3.81
access
to
agents
6 Riders 23 115 33 132 28 184 16 32 - - 363 3.63
benefit
7 Growth 25 125 37 148 26 178 10 20 2 2 373 3.73
rate of
the
policy

The above shows the preference of customer while buying Life insurance policy.
From the table it is clear that all the respondents shows importance towards policy
preference

37
 ADDITIONAL BENEFITS
Table 4.17
Classification on the basis of additional benefits received
BENEFITS FREQUENCY PERCENTAGE

Bonus 47 47

Deduction in Premium 6 6

Cash back 42 42

Share in profit 5 5

TOTAL 100 100

From the above table it is clear that 47% receive bonus as additional benefits, 6%
receives deduction in their premium, 42% receives cash back and 5% receives share
in profit.

Figure 4.17

38
 AGE OF BUYING POLICY
Table 4.18
Classification on the basis of Right age to buy the policy
AGE FREQUENCY PERCENTAGE

Less than 25 years 29 29

25 to35 years 46 46

35 to 45 years 5 5

Above 45 years 4 4

Anytime 16 16

TOTAL 100 100

The above table shows that 29% of the respondents opinioned that to take the policy
before 25 years of their life time, 46% say to buy the policy in between 25-35 years,
5% of the respondents suggests to buy the policy in between 35-45, 4% optioned that
to buy the policy before the completion of 45 years and 16% of the respondent say
that anytime is suitable to take policy

Figure 4.18

39
 BENEFITS OF LIFE POLICY
TABLE 4.19
Classifica on of respondents on the basis of importance of policy.
Var R W R W R W R W R We R W R W T M R
iab a ei a ei a ei a e a igh a e a ei o e a
les n g n g n g n i n ted n i n gh t a n
K ht k ht k ht k g k sco k g k te al n k
e e e h re 6 h 7 d s
1 d 2 d 3 d 4 t 5 t sc c s
sc sc sc e e or o c
or or or d d e r o
e e e e r
s s e
c c
o o
r r
e e
It 57 399 3 18 6 30 4 16 9 27 16 32 5 5 527 5. 1
prote 27
cts
loved
ones
even
a er
your
gone
It 3 21 19 144 8 40 13 52 17 51 13 26 27 27 361 3. 5

40
helps 61
to
achie
ve
long
team
goals
Deali 2 14 7 42 2 100 19 76 16 48 18 36 18 18 334 3. 6
ng 0 34
with
dept
Tax 3 21 6 36 1 70 22 88 13 39 27 54 15 15 323 3. 7
savin 4 23
g
purp
ose
A tool 3 21 11 66 2 110 19 76 23 69 12 24 10 10 376 3. 3
for 2 76
force
d
savin
g
Peace 6 42 21 126 1 85 16 64 16 48 7 14 17 17 396 3. 2
of 7 96
mind
It is a 3 21 37 222 1 70 4 16 8 24 3 6 3 3 362 3. 4
secur 4 62
e
invest
ment
s

The above table shows the importance of life insurance policy. Most of the
respondents opinioned that it protects the loved one after their death. .They also
stated that life insurance policy gives peace of mind .Respondents give third priority
as it is a tool for forced savings and fourth importance to” It is a secure
investment”

41
 Table 4.20
Classification on the basis of difficulties faced by policyholders

S Variable Strongly Agree Neutral Disagre Strongly Total mean score

l Agree e disagree score
n
o
F W F W F W F W F
1 Difficul 10 50 33 132 34 144 19 38 - - 334 3.34
t in
initial
procedu
res
2 Attitude 6 30 33 132 44 132 17 34 328 3.28
of
agents
3 Lack of 6 30 36 144 33 99 23 46 2 2 321 3.21
suitable
plans

42
4 High 8 40 46 154 27 81 19 38 2343 3.43
premiu
m rate
5 Long 7 35 40 160 28 84 25 50 329 3.29
procedu
re for
claim
6 Terms 9 45 42 168 32 96 13 26 4 4 339 3.39
of the
policy

The above table shows the difficulties faced by the respondents while dealing with
life insurance policy. From the above table it is clear that all the respondents showing
neutral as their opinion.

LEVEL OF SATISFACTION
Table 4.21
Classification on the basis of Level of satisfaction
SATISFACTION FREQUENCY PERCENTAGE

Highly satisfied 12 12

satisfied 50 50

Neutral 30 30

Dissatisfied 8 8

Highly dissatisfied 0 0

TOTAL 100 100

From the above table it is clear that 12% of the respondents are highly satisfied with

43
the life insurance policy, 50% of the respondents are satisfied with the policy, 30%
are neutral from the services of the life insurance company and 8% of the
respondents are dissatisfied.

Figure 4.21

Findings:

This chapter provides findings based on the study. The suggestions that have been
identified from the study and the conclusion we arrive at where also included in the
study.

⦁ Most of the respondents belongs to the age group of below 30

⦁ 27% of the respondents belong to the age group of 51-60.
⦁ 67% of the respondents belong to the male category.
⦁ Most of the respondents (40%) belongs to other categories.
⦁ 50% of the respondents have an annual income between 1lk-5lk.
⦁ Most of the respondents (83%) are aware about the life insurance products.
⦁ All the respondents are buying the life insurance policy as part of their life.
⦁ 46% of the respondents choose the whole life policy.
⦁ Majority of the respondent choose the policy for their own benefits.
⦁ 16% of the respondents choose policy for their spouse.
⦁ Majority of the respondents (60%) choose below 2 lakhs as their policy value.
⦁ 39% of the respondents choose 5-15 years as their periodicity of the policy.
⦁ Majority of the respondents (70%) choose below 10000 as their premium

44
 range.
⦁ Most of the respondents use cash as their payment mode.
⦁ 35% of the respondents pay their premium monthly.
⦁ Majority of the respondents get the information about life insurance policy
from bank.
⦁ 41% of the respondents are of the opinion that the life insurance policy create
security in life.
⦁ The preference of respondents while buying life insurance policy shows
important.
⦁ Bonus is the additional benefits received frequently to the respondent.
⦁ 46% of the respondents are of the opinion that between 25-35 is the right age
to buy the life insurance policy.
⦁ Most of the respondents are of the opinion that the life insurance policy
protect the loved one after we are gone.
⦁ The respondents shows neutral in their opinion while dealing with difficulties
in life insurance policy.
⦁ 50% of the respondents are satisfied with the products &services of life
insurance company.

Suggestions:

• Ensure proper customer services by follow up of matters including premium

payment, give adequate clarification to customer queries.

• Customer friendly document, ie it should be made easier and faster avoiding

difficult questions and confusing terms.

• All the hidden charges should be clearly stated in the form and explained by the
agent.

• Claim settlement process should be made fast and must not involve lengthy
decision making process.

• More policy package should be introduced like adding low premium policy with
wide coverage.

• Give more awareness regarding life insurance policy to the customer.

45
• The approach of life insurance companies should be more positive.

Conclusion

Life insurance policy plays an important role in everyone’s life. Most of the
respondents consider life insurance policy as a risk transfer tool rather than for other
purpose. Insurance is considered as the most approachable and affordable risk
diversion tool among the general public. Certain people also consider insurance as a
savings tool in addition as an element of protection to their life. During the course of
the study we found that the customers are supplied with the necessary information
and knowledge regarding the scope of life insurance policy. Majority of the
respondents of our study are of the opinion that high premium rate is the major
problem faced by them while dealing with life insurance policies. In order to
overcome this situation, it is important for the companies to introduce policies with
lower premium rate. The general satisfaction level of the customers with regard to
policy and agents requires improvement.

46
BIBLIOGRAPHY
Neha Sharma (2018) A study of buying behaviour of consumer towards life insurance
policies: A study of Global Journal of research in business and management volume
no 6 () 2 pp477-483.
Mark J Browne and Kihong Kim (December (1993)) An international analysis of life
insurance demand. The journal of Risk and Insurance Volume no 60.
Mei Fang Chen, Liang –Hung Mau(2009) “The impact of ethical sales behaviour on
customer loyalty in the life insurance industry: A study services industries journal
Sadeep Chaudhary, Jasneet Kaur (July (2016)) consumer perception regarding life
insurance policies: A factor analytical approach: Internal journal of Information
Movement. (pp 30-40).
Thorsten Beck, Lanwe (I June (2003)) Economic, Demographic and Institutional
determinants of life insurance companies consumption across countries (pp 51-88)
J Francois Octreville (June (1996)) Life insurance markets in developing countries:
Journal of risk and insurance.
A Indira R Neelamegam International Journal of management and social sciences: A
study on predictive analysis of the factors that influence customers preference of
online platforms while buying life insurance policies.
Dr. Hs Sandha, Ms Neetha Bala (18 october 2011)) International Journal of business
and social science: A study on customer perception, towards service quality of life
insurance of India( vol 2)
John J Burnet and Bruce A Palmer (1984) The Journal of Risk and insurance: A study
on examining Life insurance ownership through demographic and psychographic
characteristics.(pp 453=467)
Narayan H (2009) Insurance profile, India: JAICO Publications.
Khan Mk “Prospects of a career in life insurance business in India An analysis ,
Indian Journal of Marketing (vol 7), February 6 (1978) pp 23-31.
Shesha Ayyar V “Product development “,Yogakshema July 1986, pp 16.
Rajan Saxena, “Marketing of life insurance services”, Yogakshema December (1986)
pp 15.
Kotler Marketing management Tenth edition (2000).
MM Abraham, Principles of Insurance (November (2015)) pp46-65.

Websites
47
www.scribd.com
www.wikipedia.com
www.shodganga.infibnet.com
www.bankbazar.com
https:/www.insuranceopedia.com

48
CUSTOMER BUYING BEHAVIOUR TOWRDS LIFE INSURANCE POLICY

Dear Respondent,
The questionnaire is based on a degree project about the customer buying behaviour
towards life insurance policy. We would be extremely grateful if you could spend a
few minutes time to fill this questionnaire. We declare that the information provided
by you will be taken only for academic purpose.
1.Name:
2. Age:
Below 30 31-40 41-50 51-60 Above 60
3. Gender:
Male Female
4. Occupation:
Govt. Employee Private Employee Business
Profession other
5. Annual income:
Below 1 lakh 1-5 lakh 5-10 lakh
Above 10 lakhs
6. Are you aware about the life insurance products?
Yes No
7. Do you have a life insurance policy?
Yes No
8. Which scheme of insurance policy have you taken?
Whole life policy Endowment policy
Money back policy Pension Fund policy others
9. For whom you purchased the policy?
Self Spouse Children Others
10. What is your policy value?
Below 2 lakh 2-5 lakh 5-10 lakh Above 10 lakh
11. What is the periodicity of the policy?

49
 Below 5 years 5-15 years 15-25 years
Above 25 years
12. Which premium range do you prefer?
Below 10000 10000-30000 30000-50000
Above 50000
13. Which mode of premium do you prefer?
Cash Cheque Debit card others
14. Which premium payment period is suitable for you?
Monthly Quarterly half yearly Yearly
15. From which source did you get information about life insurance?
Newspaper and magazine Friends Bank
Agent Others
16.What is the motive behind purchasing life insurance policy?
Security Investments Tax benefits Savings Agent force any others
17. Which feature of life insurance policy will you prefer while buying a policy?
(Mark your response by putting tick ( ).) ✓
Hi I Ne Lea Not
ghl m utr st im
y p al imp por
im o orta tan
por rt nt t
tan a
t n
t
Premium
Policy terms
Larger risk coverage
Company’s credibility
Easy access to agents
Rider benefits
Growth rate of the policy

18. Which of the following additional benefit do you receive frequently?

50
 Bonus Deduction in premium Cash back Share in profit
19. According to you, what is the right age to buy life insurance policy?
>25 years 25-35 35-45 <45years anytime
20. Why Life insurance policy is important?
(Rank the following from 1-7 on the basis of your priority)

Rank
It protects loved ones even after you are gone.
It helps to achieve long term goals.
Dealing with debt
Tax-saving purposes
A tool for forced saving
Peace of mind
It is a secure investment

21. What are the difficulties you are facing while dealing with life insurances
✓
policies ((Mark your response by putting tick ( ). )
Strongly Agree Neutral Disagree Strongly
agree disagree

Difficult initial
procedures
Attitude of agents
Lack of suitable plans
High premium rate
Long procedures for
claim
Terms of the policy

22. What is your level of satisfaction on the products and services of life insurance
companies?
Highly satisfied satisfied Neutral dissatisfied highly dissatisfied

51
52