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Analysis of Consumer Investment Buying Behavior and Innovation in Insurance in Present Scenario
Analysis of Consumer Investment Buying Behavior and Innovation in Insurance in Present Scenario
ANALYSIS OF CONSUMER INVESTMENT BUYING BEHAVIOR AND INNOVATION IN INSURANCE IN PRESENT SCENARIO
BY CHANI RAJ
CERTIFICATE
This is to certify that the project entitled, Analysis of consumer investment buying behavior and market potential Of ULIPs in the NCR Region, submitted in partial fulfillment of the degree of Master of Business Administration (MBA) as per requirement, is based on original project study, conducted by Chani Raj (Enroll. No. 07BS 1073), under my guidance and supervision.
ACKNOWLEDGEMENT
I take this opportunity to express my deep sense of gratitude to all those who have contributed significantly by sharing their knowledge and experience in the completion of this project work. I am greatly obliged to Dr. O.P.Gupta, Director, ICFAI Business School-Gurgaon, for providing me the right kind of opportunity and facilities to complete this venture. My first word of gratitude is due to Mr. Dipanjan Hore, Sales Manager-Kotak Direct, my corporate guide, for his kind help and support and for his valuable guidance throughout the project. I am thankful to him for providing me with necessary insights and helping me out at every single step.
My heartfelt thanks to our respected Faculty Guide namely Prof. Vikram Sharma. Without his continuous help the project would not have been materialized in the present form. His valuable suggestions helped me at every step.
Finally, I would also like to thank all my dear friends for their kind cooperation, advice and encouragement during the long and arduous task of preparing this report and carrying out the project. At last but not the least, who are always at the top of my heart, my dear family members whose blessings, inspiration and encouragement have resulted in the successful completion of this project.
Date: 15 May,2009
Chani Raj
EXECUTIVE SUMMARY
3
I ,Chani Raj ,enrollment no.7 BS1073, am a student of ICFAI Business School-Gurgaon. I was given the opportunity to pursue my internship in KOTAK DIRECT for a period of fourteen weeks. My project is titled Analysis of consumer investment buying behavior and innovation in insurance in present scenario. The basic project objectives are as follows: To study consumer investment behavior To study brand awareness of Kotak Comparison of ULIPs. To discuss various new avenues in insurance and find the Market potential of ULIP in NCR regions which was divided into four regions viz: Delhi, Gurgaon, Noida, and Greater Noida. As a part of my project I was required to carry out two surveys.
The following vital conclusions were derived: Trust needs to be developed among the customers both as far as the ULIP as a product is concerned Some respondents despite of knowing about ULIP were hesitant to talk on it because they were not too confident about their knowledge. This very fact completely declines the concept of providing switches as a lucrative feature in ULIP (which is done by most of the companies). The reason is that very rarely people have the ability or time to use these features. Awareness was missing specifically in Greater Noida and Noida in comparison to Delhi.
Important Recommendations that were suggested are: Building trust by providing the customers with adequate knowledge about the company and then the product. Enhancing the level of awareness in terms of the company, their Partners and then the product and special emphasis among the female chunk of the population.
Adequate advertisement via appropriate media should be done by the various companies as is done in the case of mutual Funds.
INTRODUCTION TO INSURANCE
4
HISTORY OF INSURANCE
Im sure weve all heard of the word, and have an idea of how it works. Is it a great thing? Is it something concrete or abstract? It depends on the context of the situation. A quick, simple definition of insurance could be as follows: Reimbursement in a situation of loss. Usually, someone decides that insurance is needed. In order for the concept of insurance to arise, a prepayment of some type is required. In the case of typical, everyday general auto, health and life insurance, for example, the pre payment is in the form of a premium. Prior to the eve of the year 2000, thousands of people flocked to the stores, stocking up on numerous supplies. They feared that something catastrophic was going to take place once the clock struck midnight, and if so, they wanted to do prepare. Isnt this a form of insurance? Sure in its basic definition. The supplies they purchased would act as reimbursement in the case of loss. Early insurance goes back to the Egyptian times. It was known that around 3000 BC, Chinese merchants dispersed their shipments among several vessels to avoid the possibility of damage or loss. There are some insurance companies around today in the United States that provided insurance back in the mid 1700s, as well as some that provided relief to banks during the 1930s and the Great Depression. Today, there is insurance for any aspects of daily living: Business, Auto, Health, Life and Travel. Each of those categories includes sub-categories, branching off into numerous divisions. From the beginning human societies sought ways to soften the shocks of existence. Our ancestors were very much aware that no individual could go it alone, that only by pooling the resources of the many could the unfortunate few be helped. This simple notion of mutuality persists like a welcome footpath through the incredible tangle of human history. While empires have risen and collapsed, through wars, famines and pestilence, during the ebb and flow of struggling generations, the idea of insurance as the victory of human thought over the rude violence of life Even as human society emerged from the darkness of unrecorded time, we see it at once. In ancient Babylonia, where from the confluence of two rivers, enterprising merchants sent caravans and ships to trade with all parts of the known world: with Egypt, Phoenicia, India and China. To reduce the risk of robbery, plunder and capture for ransom, the Babylonians devised a system of contracts in which the supplier of capital for a venture agreed to cancel the loan if the trader was robbed of his goods. The trader who borrowed the capital paid an extra amount for this protection (a premium) in addition to the usual interest. As for the lender, collecting these premiums from many traders made it possible for him to absorb the losses of the few. This arrangement proved to be more appealing and sensible than the earlier one of pledging not only the traders ships and other tangible property, but 5
also his life (as a slave) and those of his family as well. Accordingly, the practice was sensibly legalized in the Code of Hammurab. These arrangements became well known to the Phoenicians and to the Greeks, Hindus we discover a comprehensive code of sea laws, including a principle of jettison or general average. It states that if it becomes necessary to throw goods overboard in order to lighten the ships, such sacrifice for the common benefit should be made good by a common contribution. The very word insurance is derived from the Latin word for security.
they choose to opt for life insurance policies. If you plan for your future in a prudent manner, you can maximize the returns on your insurance portfolio.
Under Section 10(l0A) (iii) of the Income Tax Act, any payment received by way of commutations of pension out of the Jeevan Suraksha annuity plans is exempt from tax Under Section 10(10D), any sum received under a Life Insurance policy (not being a Key Man policy) is also exempt from taxation. But it is wise to remember that Pensions received from Annuity plans are not exempted from Income Tax. Section 80 CCC provides a deduction of up to Rs.10,000/- to an individual assessee for any amount paid or deposited to effect or keeping in force any annuity plan of LIC for receiving pension from the fund referred in sections 10 (23AAB). Presently LIC's Jeevan Suraksha plan is one such plan using such benefit.
risk. The funds do not offer a guaranteed or assured return. Insurance companies will only show you a projected return, which may or may not be achieved during the term of the policy. Are Ulips Similar To Mutual Funds? In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a better option if you have a five-year horizon. But if you have a long term investment horizon, then ULIPs have an edge. To explain this further a ULIP has high first-year charges towards acquisition (including agents commissions). As a result, they find it difficult to outperform mutual funds in the first five years. But in the long-term, ULIP managers have several advantages over mutual fund managers. Since policyholder premiums come at regular intervals, investments can be planned out more evenly. Mutual fund managers cannot take a similar long-term view because they have bulk investors who can move money in and out of schemes at short notice.
and he is consciously aware of the ratio of his premium towards investment and life cover.
COMPANY PROFILE
KOTAK GROUP is one of the top most financial product service providers in India. It is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. The group has a net worth of over Rs5,824 crores, employs around 20,000 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 370 cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The group services around 4.4 million customer accounts. It comprises of following sub units which combines to form such a vast company and group of people.
4. Kotak Mutual funds. 5. Kotak Private equity. 6. Kotak Investment banking. 7. Kotak Reality funds. . The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success.
KOTAK DIRECT
KOTAK DIRECT (A Subsidiary of KOTAK SECURITIES) deals with ULIPs (Unit Linked Insurance Plans). It was started in 2007 with the Head office in Mumbai. The various branches of Kotak Direct are located throughout the country & new branches are opening up as well. Kotak Securities, a subsidiary of Kotak Mahindra Bank, is the stock-broking and distribution arm of the Kotak Mahindra Group. The institutional business division, which brings you AKSESS, primarily covers secondary market broking. It caters to the needs of foreign and Indian institutional investors in Indian equities (both local shares and GDRs). The division also has a comprehensive research cell with sectoral analysts covering all the major areas of the Indian economy. Kotak Securities Ltd. is one of the oldest and leading stock broking houses in India with a market Kotak Securities Ltd. has also been the largest in IPO distribution. Kotak Securities has 877 outlets servicing over 4, 30,000 customers and a coverage of 321 cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited has over Rs. 3300 crore of Assets Under Management (AUM) as of 31st March, 2008. The portfolio Management Services provide top class service, catering to the high end of the market. Portfolio Management from Kotak Securities comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert. 10
MIDDLE LEVEL
TEAM of 10 TO 20
12
Form is
NO Error Free
fFrFreeFree YES
Form is
NO
Case is picked
NO
13
KOTAK SAFE INVESTMENT PLAN (KSIP) KOTAK SMART ADVANTAGE PLAN (KSAP) KOTAK HEADSTART FUTURE PROTECT
Depending upon the needs & wants, clients have the option of choosing between any of these three plans which provides them with various benefits & growth options along with an Insurance cover.
14
Kotak Safe Investment Plan is a Unit Linked Insurance Plan that combines the benefits of insurance and capital market returns into one. This plan from the stable of Kotak Life Insurance is a true reflection of the companys essence: innovation that will benefit the investor. What makes investing in Kotak Life Insurance truly unique is that you enjoy a Guaranteed Maturity Value with varying degrees of equity exposure depending on your risk appetite. So if the market value of your units is higher, you reap the benefits with the peace of mind that whilst in a bear market your investment is under-pinned by the Guaranteed Maturity Value. And there is more, the returns are totally Tax free.
KOTAK SMART ADVANTAGE (KSAP) Guaranteed returns of unto 275% of your first year premium at maturity Assured bonus additions at regular intervals during he policy term to enhance your fund value. 100% allocation of the premium from 2nd year onwards Unique fund offering maximum opportunity for growth and choice for your investment needs Maximum protection for your loved ones to choose from. KOTAK HEADSTART FUTURE PROJECT Every child is different. Each has their own set of dreams and aspirations. As a parent you would like to provide your child with all the building blocks that could develop his or her potential to the fullest. This could mean extra coaching or tuition for talented children, special training or equipment for natural athletes or professional training for born singers. Headstart Child Plans is a specially tailored, cost-effective plan, aims to give your children the financial means to pursue his or her dreams and live them.
The Headstart Advantage: Triple Death Benefit : Sum received at death =( Sum assured + Fund value + Remaining premium) 15
Dynamic Floor Fund Maximizes wealth while providing protection Joint life option Save for 2 children with one plan Additional bonus units Flexible Withdrawal Additional Benefits :
Term / Preferred Term Benefit:
In the event of death during the term of this benefit, the beneficiary would receive an additional death benefit amount, which is over and above the sum assured. The maximum amount of benefit you can avail is equal to the basic sum assured. Where the Term Benefit cover applied for is more than Rs.10 lakhs, better rates may apply.
This benefit provides an additional amount (over and above the sum assured) to the beneficiary in the event accidental death of the life insured. The maximum cover available under this benefit is equal to the basic sum assured (subject to a maximum of Rs.10 lacs).
This benefit can be added to the basic life insurance plan to provide financial support in the event of medical emergencies. On the first occurrence of critical illness during the term of the plan, you would receive a portion of the sum assured to reduce your financial burden in this emergency. The maximum Critical Illness Benefit that you can avail of is equal to half the basic sum assured (subject to a maximum of Rs.20 lacks).
16
In case of the unfortunate death of the proposer, this benefit keeps the policy alive by waiving all future premiums on the policy.
In case the proposer is permanently disabled as a result of accident, this benefit keeps the policy alive by waiving all future premiums on the policy.
17
KSAP
KSIP
HEADSTART
MATURITY AGE
MAX:75Years REGULAR:10/15 /20/25Years FOR MINOR: 10Years or 18 less entry age at last birthday whichever is higher. MIN: 10Years or 18 minus age at entry for minors; whichever Is higher MAX: 30Years
Min: Greater of (10 Yrs or 18 less childs present age) Max: 25 Yrs.
POLICY TERMS
MINIMUM PREMIUM
REGULAR PPT: Rs.15, 000 p.a. LIMITED PPT: Rs 25,000 p.a for 4-10 Yrs Rs 50,000 p.a. for 3 Yrs
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HIGH COVER: Policy MIN: 0.5 X term x annual (Policy term x (Policy term x premium annual premium.) annual premium.) LOW COVER: MAX: Any multiple MAX: Any multiple of premium, Greater of(5x annual of premium, subject to premium,0.5xpolicy subject to underwriting term x annual underwriting premiums ) Critical Illness Benefit Critical Illness Benefit
RIDERS BENEFITS
NO RIDERS BENEFITS
19
P LAN USP
KSAP
Upto return 275 on
KSIP
% Guaranteed type
HEADSTART
Triple Death Benefit Dynamic Floor of fund.
COMPARISON OF CHARGES:
POLICIES
KSAP
KSIP
HEADSTART
CHARGES
21
Years
<3600 0 2% 1% Nil
>=36000
Years
charges
Years
1 >2
14% 3.5%
1 2 3 4-10 >11
<Rs100000: flat fee of Rs.75 p.m. in year 1and Rs 40 p.m. in year2 onwards. >Rs.100000: No charges
22
Dynamic bond fund - 1.2% Dynamic floor fund- 1.75% Opportunities fund- 2% FUND MANAGEMENT CHARGES
0 .6%
0 .6%
1%
1%
1 .2%
1 .2%
1 .2%
1 .2%
1 .5%
1 .5%
SWITCHING CHARGES
First four switches in a year First four switches in First four switches are free. a year are free. in a year are free. Rs. 500 will be charged for Rs. 500 will be Rs. 500 will be every additional switch. charged for every charged for every additional switch. additional switch.
23
MORTALITY CHARGES
No mortality charges in 1st year. From year 2nd onwards, the cost of life cover & will be levied by cancellation of units on a monthly basis. Age (Yrs) Mortali ty charge s (Per 000) 2 5 35 4 5
3 .57
Thus is the cost of life cover & will be levied by cancellation of units on a monthly basis.
Thus is the cost of life cover & will be levied by cancellation of units on a monthly basis.
5 5
9 .04
1 .54
1 .83
Partial withdrawal not allowed in the first 3 years. From year 4th onwards, a part of the fund value can be withdrawn.
Partial withdrawal not Partial withdrawal allowed in the first 3 not allowed in the years. first 3 years. Subsequently, Subsequently, (7-N) % is charged on each (7-N) % is charged No other expense charges withdrawal, where N on each st for the 1 two withdrawals is the no. of year. withdrawal, where in the policy year. N is the no. of year. Additional expense of Rs. 500 per withdrawal for subsequent withdrawals.
COMPARISON OF PLANS
CHILDREN PLANS
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Children plan are those plans which are launched targeting young couples and who have a lot of dreams for their children, but may be their income will not allow them to fulfill their dreams after years down the line when their children actually want a adequate of lump sum with them for the purpose of higher education, professional qualification etc. As life is uncertain, these plans are launched keeping in mind that, whether parents will be their or not, children can fulfill their dreams.
Some of these plans are a. Headstart future protect(Kotak Mahindra OM) b. Smart kid(ICICI prudential) c. Childrens Dream plan(Birla Sun Life) d. Child Gain( Bajaj Allianz) Assumptions while comparing children plans provided by various Insurers1. Growth rate is expected to be 20% through out the policy. 2. Other charges are considered with fund management charges and expected to be approximately equal. 3. Annual Premium is considered to be same for a better comparison, except Kotak OM and ICICI Pru, because these companies are charging different allocation charges for different levels. 4. All companies are assumed to be equally proficient; they can offer same levels of returns. 5. Fund management charges charged by various companies are different, but for a better comparison we are charging same level of charges. In long term fund management can make a lot of difference in returns, but it is not feasible from a customers point of view, because he may not be able to compare all the plans in the best way.
25
From the above table, we can assume that Birla Sun life is providing maximum returns, but in the case of demise of proposer Kotak OM is the most beneficiary for family of proposer.
FAMILY PLANs
These plans are more focused on future protection and savings. As these plans are very different from children plans, because children plans are considered to be long term plans or most of the times considered for a fixed time period and some of the condition make it safe for Insurance companies to make it minimum exit period, but on the other hand Family Plans are more transaction based plans.
26
Charges are more in case of family plans, in comparison to children plans. So it becomes more difficult for any Investor to decide which policy can give him maximum benefits.
While comparing Family plans we are considering these charges as a base of comparison I. II. III. IV. V. VI. VII. Allocation charges Fund management charges Policy administration charges Death benefits Growth rate-30%p.a. Charges as fund management charges and mortality charges Policy administration are considered as a part of allocation charges and adjusted as a part of allocation charges only.
27
SURVEYS
SURVEY 1
In order to understand the behavior of customers towards ULIPs and to determine the various factors which a consumer actually takes into account while buying a ULIP, a survey was done. We prepared a questionnaire consisiting of 13 factors which plays an important role in choosing a ULIP and asked the respondents to rate these factors on a scale of 1 to 5(1 being least important & 5 being most important). This questionnaire was not specific to any particular company and aimed at determining the most important factors from the consumer point of view. With the help of data thus obtained, a complete analysis was done and results were obtained. Sample Size: The sample size of the survey was 100. The respondents were ensured complete confidentiality of their opinion and view. Sample Population: Our sample population belonged to all the sections of the society i.e. higher income group, middle income group and lower income group. As a result of this, the data thus 28
obtained was not confined to a particular section of the society and represented the view and opinion of all the classes of society in large.
29
ANALYSIS OF SURVEY 1
On the basis of the datas obtained, statistical methods were employed to determine the most important factors of the 13 factors which are most important from a consumer point of view before going for a ULIP.
30
29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73
5 5 3 5 5 3 5 5 5 5 4 5 4 5 5 5 5 4 4 5 5 5 5 5 5 5 5 5 5 5 4 5 4 5 5 5 5 5 5 5 5 5 5 5 4
4 4 4 4 4 4 5 4 4 4 4 5 3 3 5 4 4 4 4 5 5 4 4 4 1 4 5 4 4 4 4 5 3 5 4 4 4 4 4 4 5 5 5 5 4
4 3 4 5 1 4 4 4 1 1 5 5 3 3 1 2 1 3 2 3 1 4 3 2 4 1 5 3 3 3 3 3 2 2 4 1 3 4 5 2 4 3 4 3 2
4 4 5 4 3 3 4 5 5 5 4 5 5 5 5 3 3 3 3 4 3 5 4 3 2 3 4 4 4 4 3 4 2 3 4 3 4 4 3 4 5 3 3 4 3
3 2 5 5 4 4 5 5 5 5 5 4 5 5 5 5 5 4 3 5 4 5 4 4 3 4 5 5 5 5 5 5 4 3 4 4 5 4 5 4 5 3 4 5 3
5 4 3 3 2 3 4 3 5 5 3 3 1 2 1 1 1 1 1 1 1 2 3 1 2 1 3 2 3 1 3 2 2 2 2 2 1 1 2 2 5 2 3 1 1
3 4 3 4 4 4 5 4 5 5 2 3 4 4 5 4 4 4 4 5 5 5 4 5 3 3 5 5 5 4 4 4 4 5 4 3 2 4 5 4 5 3 4 2 2
5 5 4 4 5 3 5 5 5 5 4 5 5 3 5 5 5 3 4 5 5 5 5 5 5 4 4 5 5 3 4 4 5 5 5 5 5 5 5 5 5 5 5 4 4
5 4 3 5 4 3 4 5 5 4 4 4 4 4 5 5 5 4 3 4 3 4 3 4 4 4 4 2 3 4 3 5 3 4 3 4 4 5 5 4 3 4 3 5 4
4 1 4 4 5 4 5 4 5 3 2 3 5 5 3 4 4 3 2 4 5 5 3 4 3 5 5 4 5 5 4 3 3 4 2 4 3 5 2 2 5 3 4 5 2
4 3 3 3 2 3 5 5 1 1 1 3 3 5 3 4 4 1 3 4 5 5 3 3 2 1 4 2 3 2 1 2 3 5 4 2 3 4 4 3 3 4 2 5 1
4 4 4 4 5 3 4 4 1 1 4 4 5 4 5 3 3 4 3 4 3 2 5 3 4 5 3 4 2 3 4 4 4 4 4 4 5 3 3 4 2 4 4 3 5
4 4 3 4 3 3 4 5 5 4 4 4 3 5 5 4 4 4 5 4 4 5 5 5 5 5 3 4 5 5 4 5 5 5 5 4 4 4 5 5 5 5 5 5 5
31
74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 SUM
4 5 4 5 4 5 5 5 5 5 4 5 5 5 5 5 4 5 5 5 5 4 5 4 5 5 5 474
5 4 5 4 4 5 4 4 4 4 4 4 5 3 4 5 4 4 4 5 3 5 5 4 4 4 5 415
4 5 2 4 2 3 3 3 1 4 3 3 3 2 3 4 3 3 3 2 4 5 4 3 2 2 2 308
5 4 3 4 2 4 3 4 3 3 2 4 3 3 2 5 2 3 4 3 2 4 3 4 3 4 4 372
5 5 4 4 3 5 4 4 3 4 3 5 4 3 3 5 3 2 5 5 4 5 4 4 3 4 5 425 4 .25
3 4 2 1 1 2 1 3 2 2 1 1 3 2 3 1 2 1 1 3 2 4 3 2 2 1 1 212 2 .12
5 5 4 4 4 5 3 4 3 4 2 4 5 3 3 4 2 2 5 5 5 4 3 4 4 3 4 389 3 .89
3 5 4 3 5 4 5 5 5 5 3 5 4 5 5 5 5 5 4 5 3 5 3 4 4 3 5 451 4 .51
4 4 4 4 4 4 4 4 5 5 4 3 4 5 4 3 3 3 4 4 4 5 4 4 3 5 4 397
5 4 3 4 2 4 3 4 5 5 4 3 4 3 4 5 2 4 4 5 3 4 3 4 2 1 4 384
1 2 2 3 1 4 3 3 2 4 1 2 3 3 4 5 1 2 2 3 3 4 3 1 3 1 2 291
2 3 4 4 3 5 4 4 3 4 4 4 4 4 3 3 2 5 4 4 2 3 2 5 3 4 4 363
5 3 4 3 4 5 5 5 4 3 4 4 4 4 4 4 5 4 5 4 3 5 4 4 4 5 5 434
AVERAGE
4.74
4.15
3.08
3.72
3.97
3.84
2.91
3.63
4.34
MEDIAN
MODE
5 0.596623 5 0.355959 6
4 0.79 6 0.63 4
3 1.22 8 1.50 9
3 0.98 6 0.97 1
5 0 .99 0 .98
1 1 .16 1 .34
4 0 .94 0 .89
5 0 .75 0 .56
4 0.91 5 0.83 7
5 1.14 3 1.30 7
3 1.27 2 1.61 8
4 0.99 1 0.98 3
5 0.69 9 0.48 9
S. D.
VARIANCE
32
The 5 most important factors while buying an insurance plan especially ULIPs are as follows:
Sr. FACTOR
AVER -AGE
MEDI -AN
M ODE
S.D.
VARIANCE
33
No
.
1
0.35595 96 0.55545
0.48929
Tax Saving
0.97727
Policy Features
0.63384
34
Financial Health of the company gets an average of 4.51 (on a scale of 5) with both mean & median being 5. S.D & Variance are 0.75 & 0.56 respectively which also show quite a high degree of similarity in the views but comparatively lesser than RETURN ON INVESTMENT Factor. Comparison with Financial Products, Tax Saving & Policy Features are also very important factors & plays a very important role in the purchase of an Insurance Policy.
The above 5 factors are the most important ones which affect the purchase of an Insurance Policy. An Insurance company needs to pay a lot of attention on these factors before developing a policy as they play utmost importance in the purchase of an Insurance Policy
35
SURVEY 2
In order to understand the market potential of ULIPs in the NCR region, we prepared a questionnaire asking demographic questions such as name age, sex, occupation etc. This questionnaire was not specific to any particular company and aimed at determining if
There is any relation between age and preference for ulips
Income and preference for ulips Occupation and income for ulips . With the help of data thus obtained, a complete analysis was done and results were obtained. Sample Size: The sample size of the survey was 280. The respondents were ensured complete confidentiality of their opinion and view. Sample Population: Our sample population belonged to the NCR region namely Delhi, Gurgaon,Noida and Greater Noida.
MARKET PROFILE-DELHI
BRIEF DEMOGRAPHY OF THE CITY 36
PARAMETERS Population Area Literacy Rate Literacy Rate - Male Literacy Rate - Female
UNIT Lac./Crores Sq km % % %
DESCRIPTION 15,412,000
1,483 sq km 2
81.82 %
83.63% 60.28%
Delhi is a densely populated medium sized city industries and other offices.
Has a good youth population by virtue of the presence of several But there are only a few mid-sized markets and only few potential outlets The markets are modern and developed. There is sufficient awareness among consumers regarding new innovations in the field of commerce and industry. Purchasing power of the territory is also good The markets are small but moderately good.
MARKET PROFILE-GURGAON
BRIEF DEMOGRAPHY OF THE CITY
DESCRIPTION 220
37
Gurgaon is a huge market in terms of size and has around 25 market places Few markets are pro middle class and few exclusively cater to the elite class This city is an ideal combination of traditional culture and
modernization It has got a high purchasing power Youth and old age person are found more in this city. Mostly all the call centres of big MNCs are in this city.
MARKET PROFILE-NOIDA
BRIEF DEMOGRAPHY OF THE CITY
38
PARAMETERS Population Area Literacy Rate Literacy Rate - Male Literacy Rate - Female
UNIT Lac./Crores Sq km % % %
DESCRIPTION 293,908
203.16sq km 2
68 %
74% 61%
General Characteristics of the Markets The city makes for a good market place but the mostly there are small, crowded, traditional markets There are many offices and many of the persons are working in these offices so this city has good potential for the product placement. The persons here are much aware about the ULIPs than any other city. But there are only a few mid-sized markets The city and its consumers are growing up because of the growing industry.
UNIT Lac./Crores Sq km
DESCRIPTION 1,73,542
173.16sq km 2
39
% % %
68 %
74% 61%
General Characteristics of the Markets There are many offices and many of the persons are working in these offices so this city has good potential for the product placement. The persons here are much aware about the ULIPs than any other city. But there are only a few mid-sized markets The city and its consumers are growing up because of the growing industry.
q^= (1-p^) n= Size of Sample Confidence Level =95% Z at 95% = 1.96 By Using the Formula for Z-Test i.e.
P = p^ Z
DELHI
p^ =%age who are interested =60/70=8 q^ = 15 Z= 1.96 P = 85 1.96
p^ q^ n
85 15 70
P=851.96 x 4.26 P=858.37 P= {76.63%, 93.37 %} Therefore ULIP can be found popular among 76.63 % to 93.37% of population above 21 years of age and above 2 lacs income group in Delhi
GURGAON
p^ =%age who are interested = 55/70=78 q^ = 22 Z= 1.96 P = 78 1.96
78 22 70
P=781.96 x 4.95 P=789.70 P= {68.30 %, 87.70%} 41
Therefore ULIP can be found popular among 68.30 %to 87.70%of population above 21 years of age and above 2 lacs income group in Gurgaon.
NOIDA
p^ =%age who are interested = 52/70=74 q^ = 26 Z= 1.96 P = 74 1.96
74 26 70
P=741.96 x 5.24 P=7410.27 P= {63.63 %, 84.27%} Therefore the market potential for the region of Noida ranges from 63.63 %, to 84.27%
GREATER NOIDA
p^ = 80 q^ = 20 Z= 1.96 P = 80 1.96
80 20 70
P=801.96 x 4.78 P=809.37 42
P= {70.63 %, 89.37%} Therefore ULIP can be found popular among 70.63% to 89.37% of population above 21 years of age and above 2 lacs income group in Greater Noida.
43
Noida Number who prefer to have ULIP Number who do not prefer to have ULIP Total number sampled in each region 52
Gurgaon 55
Greater Noida 56
Delhi 60
Total 223
18
15
14
10
57
70
70
70
70
280
Suppose we find out the proportion of people who prefer to have ULIP: Pn Proportion in Noida who prefer ULIP Pg Proportion in Gurgaon who prefer ULIP Pu Proportion in Greater Noida who prefer ULIP Pd Proportion in Delhi who prefer ULIP Let: Ho: Pn= Pg=Pu=Pd Null hypothesis H1: Pn, Pg, Pu and Pd are not all equal Alternate Hypothesis Combined proportion who prefer ULIP = 223/280 = 0.8
Proportion of people who are interested in ULIP in each of the four regions:
Gurgaon 70
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Greater Noida 70
Delhi 70
Estimated proportion who prefer ULIP Number expected to have ULIP Total number sampled Estimated proportion not preferring ULIP Number expected not to buy ULIP
0.8 56 70 0.2 14
0.8 56 70 0.2 14
0.8 56 70 0.2 14
0.8 56 70 0.2 14
Gurgaon
Greater Noida
Delhi
52 56
55 56
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56 56
60 56
Frequency Frequency preferring not to invest in ULIP Observed Frequency Expected Frequency
18 14
15 14
14 14
10 14
52 55 56 60 18 15 14 10
56 56 56 56 14 14 14 14
-4 -1 0 4 4 1 0 -4 Total= 2.92
16 1 0 16 16 1 0 16
As the value at 3 degrees of freedom and 95% confidence interval is 0.352 which is much less than the calculated value that is 2.92. Thus, our Null hypothesis is rejected that is the proportion of people interested in investing in ULIP is not the same for all the four regions. Dependence of Age and Preference:
If we try to find out that if there is any relation between age and preference for ULIP, we find the tabulated data as follows: Crosstabs: Null Hypothesis: There is no association between age and preference of ULIP. Alternative Hypothesis: There is association between age and preference of ULIP.
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Age * Preference
Valid N 280
Percent 100.0%
Missing N 0
Percent .0%
Total N 280
Percent 100.0%
>50/21-30/31-40/41-50
Total
In the above table we are studying the cross tabulations between age and preference either to go for ULIP or not.
Chi-Square Tests
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Suppose we find out the proportion of people who prefer to have ULIP: Pa Proportion in age group 21-30 who prefer ULIP Pb Proportion in age group 31-40 who prefer ULIP Pc Proportion in age group 41-50 who prefer ULIP Pe Proportion in age group >50 who prefer ULIP Total proportion of interested people = 224/280= 0.8
Age group Total number sampled Estimated proportion who prefer ULIP Number expected to have ULIP Total number sampled Estimated proportion not preferring ULIP Number expected not to buy ULIP
Fo 102 59 27 34 25 18 14
Fe 102 62 33 28 25 15 8
fo-fe 0 -3 -6 6 0 3 6
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(fo-fe)^2 0 9 36 36 0 9 36
Chi cal = 7.61 As the value at 3 degrees of freedom and 95% confidence interval is 0.352 which is much less than the calculated value that is 7.61. Thus, our Null hypothesis is rejected and we can conclude that the preference of investment in ULIP and age group are not independent.
Crosstabs
Null Hypothesis: There is no association between income and preference. Alternative Hypothesis: There is association between income and preference.
Income * Preference
Valid N 276
Percent 98.6%
Missing N 4
Percent 1.4%
Total N 280
Percent 100.0%
Upto 2 Lacs
Yes/No Yes 55
Total No 10 65
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2-5 Lacs 5-7 Lacs 7-10 Lacs > 10 lacs Total Chi-Square Tests
97 47 17 6 223
22 12 8 2 53
119 59 25 8 276
Suppose we find out the proportion of people who prefer to have ULIP: Pa Proportion in income group (upto 2 lacs) who prefer ULIP Pb Proportion in income group (2-5 lacs) who prefer ULIP Pg Proportion in income group (5-7 lacs) who prefer ULIP Pc Proportion in income group (7-10 lacs) who prefer ULIP Pe Proportion in income group (>10 lacs) who prefer ULIP Total proportion of interested people = 223/276= 0.8
Income group Total number sampled Estimated proportion who prefer ULIP Number expected to have ULIP Total number sampled Estimated proportion not preferring ULIP Number expected not to buy ULIP
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Fo
fe
fo-fe
(fo-fe)^2
(fo-fe)^2)/fe
55 97 47 17 6 10 22 12 8 2
Chi cal =3.26
52 95 47 20 6 13 23 12 5 2
3 2 0 -3 0 -3 -1 0 3 0
9 4 0 9 0 9 1 0 9 0
As the value at 4 degrees of freedom and 95% confidence interval is 0.711 which is much less than the calculated value that is 3.26. Thus, our Null hypothesis is rejected and we can conclude that the preference of investment in ULIP and income level of the customers is not independent.
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Crosstabs
Null Hypothesis: There is no association between occupation and preference. Alternative Hypothesis: There is association between occupation and preference.
Occupation* Preference
Valid N 280
Percent 100.0%
Total N 280
Percent 100.0%
Occupation* Preference Crosstabulation Count Yes/No Yes Govt Service 24 Student Others Pvt Service Business Total 13 24 107 56 224 Total No 4 1 6 39 9 56 28 14 30 143 65 280
In the above tables we have shown crosstabs between occupation and preference
We have taken the categories of a) b) c) d) e) Government service Private Service Student business others Chi-Square Tests
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Suppose we find out the proportion of people who prefer to have ULIP: Pa Proportion in occupation group (Govt service) who prefer ULIP Pb Proportion in occupation group (private service) who prefer ULIP Pg Proportion in occupation group (student) who prefer ULIP Pc Proportion in occupation group (business) who prefer ULIP Pe Proportion in occupation group (others) who prefer ULIP Total proportion of interested people = 224/280= 0.8
Occupation Total number sampled Estimated proportion who prefer ULIP Number expected to have ULIP Total number sampled Estimated proportion not preferring ULIP Number expected not to buy ULIP
Fo fe
(fo-fe)^2)/fe
24 13 24 107 56 4 1 6 39 9
22 11 24 114 52 6 3 6 29 13
2 2 0 -7 4 -2 -2 0 0 -4 53
4 4 0 49 16 4 4 0 0 16
As the value at 4 degrees of freedom and 95% confidence interval is 0.711 which is much less than the calculated value that is 4.46. Thus, our Null hypothesis is rejected and we can conclude that the preference of investment in ULIP and occupation of the customers are not independent.
HENCE, WE GET AN OVERVIEW THAT THE PREFERENCE OF INVESTMENT DIFFERS AND IS SIGNIFICANTLY DEPENDENT ON AGE-GROUP, INCOME, AND OCCUPATION OF THE CUSTOMERS.
RECOMMENDATIONS
1. Building trust by providing the customers with adequate knowledge about the company and then the product. 2. The private players should try to establish Brand awareness and credibility especially among the senior customers so as to divert their interest from the clean sweep made by LIC and UTI.
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3. The companies should target more of female consumers as they have money to invest but are completely unaware about the options available to them and ULIP should be made to look more attractive to them. 4. Adequate advertisement via appropriate media should be done by the various companies as is done in the case of mutual Funds.
5. Customers are not aware about the ULIP being offered by their own banks.So,
6. Certain discount charges should be made available because of the severe competition within the private players as well as the biggest threat posed by LIC and SBI. 7. ULIP is a highly untapped market and here the right strategies and hitting the bulls eye by propagating the most sought after benefit among the customers will attract most of the customers.
8. Every individual should be encouraged to do insurance planning. Life Insurance
cover should be taken when young and the person is able to service the premiums. The amount of coverage depends on the requirements.
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Questionnaire No.
Sir/Madam,
This research project is a part of our curriculum. This is a general study of Insurance Plans especially ULIP & thus we seek to know only your general views about insurance companies. This is not specific to any particular company.
Please grade the following questions on the given 1 to 5 scale. Features preferred during purchase of ULIP. (1 Not required at all; 5 Very essential)
Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13
Factors Return on Investment Policy Features Investment Risk Length of Investment Tax Savings Forced Savings Brand Equity of the company Financial Health (Company) Core competency of the company in that sector. Interpersonal Skills (Sales Staff) Influence of Relatives/Friends in investment decision making Post Sales Services support. Comparison with other Financial product (eg. Mutual Funds) 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5
When you think of investment in Insurance, which company name immediately creeps in your mind? Rank in the order of preference.
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Sr. No. 1 2 3 4 5
Company HDFC Life Insurance ICICI Prudential KOTAK Life Insurance LIC OTHERS
Rank*
While investing in an insurance policy whether the company is local or multinational affects your decision & Why?
. Thank You for your cooperation & we assure you complete confidentiality of the information you have so kindly, sincerely & patiently shared with us.
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QUESTIONNAIRE
We are conducting a survey on the Unit Linked Insurance Plan (ULIP). We request the Respondents to provide their valuable views on the same by answering to this Questionnaire .The information provided by you will be used solely for Academic purpose and to study the present Market Potential of ULIP.
NAME: AGE: a) 15-20 yrs c) 31- 40 yrs e) >50 yrs GENDER: a) Male OCCUPATION: a) Government Service c) Business e) Others ANNUAL INCOME: a) Up to 2lacs c) 5-7 lacs e) Above 10 lacs
PLACE:
b) Female
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(ii) If No, then would you like to invest in ULIP? a) Yes b) No 3. What is the reason for investment in the ULIP? a) Child Education b) Child Marriage c) Pension d) Income Growth e) Tax Rebate f) 2 in 1 benefits 4. What is your time horizon when investing in ULIP? a) Up to 3 yrs b) Between 4-7 yrs c) 7-10 yrs d) 10-15 yrs e) Over 15 yrs 5. When investing in a ULIP, what would be your preference? a) Low Risk, Low Gain b) Moderate Risk, Moderate Gain c) High Risk, High Gain d) No Risk
REFERENCES
Books: 1. Churchill & Brown; Basic Marketing Research;Thomas Publications,5th edition 2. Paul Hague, Nick Hague and Carol-Ann Morgan; Market Research in Practice; Kogan Page limited,1st South Asian edition 2004. 3. Harper W.Boyd, Jr. Ralph Westfall, Stanley F. Stasch; Marketing Research; All India Traveller Book Seller, 7th edition. 4. William O. Bearden, Richard G. Netemeyer, Mary F. Mobley; Handbook of Marketing Skills; SAGE Publications. 5. Malhotra Naresh (2002), Marketing Research, Prentice Hall of India. 6. Kotler Philip(2004),Marketing Management Websites:
www.kotakdirect.in http://www.thehindubusinessline.com/2005/07/04/stories/2005070401261200.htm
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www.wikipedia.org http://www.thehindubusinessline.com/2004/09/14/stories/2004091400100900.htm www.mouthshut.com www.financeindiamart.com www.businesstoday.com www.howstuffworks.com www.google.com www.icici.com www.kotak.com www.hdfcbank.com
Personnel:
1 2
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