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ABSTRACT

The wealth of products and services produced in a country make our economy strong. The insurance industry has changed rapidly in the changing economic environment throughout the world. Today Insurance Industry contributes about seven percent GDP of Indian economy. The increased pace of market competition due to liberalization and privatization forced life insurers to be competitive by cutting cost and serving in a better way to the customers. This study analyses the buying behavior of the customers of Life Insurance, The various factors influencing their buying decision. Also, the types of insurance policy taken by consumer, the main reason for purchasing an insurance policy, what criteria consumers apply before selecting an insurance company. For this a survey was conducted in various parts of NEW DELHI.A sample size of 100 individuals has been selected for the analysis and their responses have been recorded through a questionnaire. The target respondents are well educated, familiar with English, spread over major urban centres having a higher socioeconomic and income profile and spread across a range of occupations, professions and different age groups.

LITERATURE REVIEW
With the initiation of the deregulation in the Indian insurance market, the monopoly of big public sector companies in life insurance as well as general (non-life insurance) market has been broken. New private players have entered the market and with their innovative approaches and better use of distribution channels and technology, they are eating in to the shares of established public sector companies in Indian Insurance Market. McKinseys director in India and banking industry expert Leo Puri says the opening of insurance has been a smooth deregulation process. The state mammoth, the LIC has not been destabilized and the objective of deregulation has been met. Employment has grown so as the insurance business. Consumer attitudes and perception about insurance have changed; Insurance is now considered a viable financial instrument to meet different needs. Bajaj Allianzs Ghosh. In 2010-11, the life insurance sector grew by 15%, . Life Insurance penetration (i.e. premium as a percentage of GDP) in India was 2.26% as against the global penetration level of 5.23%. The marketplace is getting competitive, but the market share of private insurance companies remains very low -- in the 10-15 percent range. The heavy hand of government still dominates the market, with price controls, limits on ownership, and other restraints. Indian insurance industry is anticipated to witness a 500% growth and reach to US$ 60 Billion in the coming four years, thanks to swelling demand in semi-urban and rural areas, reported industry chamber Assocham. Assocham stated that semi-urban areas would have a share of US$ 35 Billion and urban areas would account for US$ 25 Billion in the US$ 60 Billion industry. Anil K Agarwal, Ex-President, Assocham (Associated Chambers of Commerce and Industry of India), reported that a large segment of rural India is still untouched because of long distances, poor distribution and high return costs.

A Research Analyst at RNCOS says that the progress in the semi-urban and rural areas would largely fuel the growth in insurance sector. The other factors that would boost the growth in this sector are improving economic scenario, increasing disposable incomes, and rising product demands. Despite a large and growing economy, the insurance market in India is not yet of commensurate size. Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. With one of the lowest insurance penetration levels in the world, there exists significant potential for further growth in both life and general insurance business. Confederation of Indian Industry (CII) strongly feels that this higher growth and increase in the spread of insurance business cannot occur in isolation. The full potential of the Indian insurance sector can be realized only if all the stakeholders - the public and private insurance players, government bodies and the regulator - work in unison to achieve the common goal. However, there is one big reason for alarm. Insurers do need access to substantial capital in order to keep up this growth despite their initial losses. But many private sector insurers are struggling to raise the required capital. Thats because the government has not yet raised the ceiling for foreign direct investment (FDI) in insurance companies from 26 per cent of equity to 49 per cent, as outlined by the previous government. And this is acting as an artificial constraint on the sectors ability to raise capital. And because of the 26 per cent FDI cap, the burden of funding the growth falls on the Indian promoter. Many of them have no expertise, usually no sense of a long-term commitment to the business. They are essentially investors looking for returns, and now not only are they earning nothing, they are actually losing money. While strong Indian banks that are partners in a life insurance venture can infuse capital, industrial houses for which this is a diversification do have a capital constraint, says Vinod Wadhwani, Director, Investment Banking, at Ambit Corporate Finance Pte. Ltd.