PERCEPTION OF RURAL PEOPLE TOWARDS LIFE

INSURANCE POLICY WITH SPECIAL REFERENCE

TO KOTTAYAM DISTRICT
 CONTENTS

CHAPTER NO TITLE PAGE NO

LIST OF TABLES
LIST OF FIGURES
1. INTRODUCTION

Introduction
Statement of problem
Objectives
Hypothesis of study
Scope of study
Importance
Research Methodology
Limitation of the study
Chapterization

2. REVIEW OF LITERATURE
3. THEORETICAL BACKGROUND OF
STUDY
4. DATA ANALYSIS AND
INTERPRETATION
5. FINDINGS, CONCLUSIONS AND
SUGGESTIONS
BIBLIOGRAPHY

APPENDIX
 LIST OF TABLES

TABLE LIST OF TABLES PAGE

NUMBER NUMBER

4.1 Gender wise classification

4.2 Age wise classification

4.3 Educational classification of respondents

4.4 Marital status wise classification

4.5 Occupation of respondents

4.6 Annual income of the respondents

4.7 Percent of monthly saving income of the respondents

4.8 Preference of insurance company

4.9 Source of Information on insurance policies

4.10 Awareness on Life insurance policy

4.11 Term of insurance policy

4.12 Mode of premium payment

4.13 Periodicity of premium payment

4.14 Rating on the service of premium collection mechanism

4.15 Rating of premium paid in private insurance as against
public life insurance company
4.16 Reason for preference in buying LIC policy

4.17 Policy preference

4.18 Satisfaction level on policies

4.19 Better awareness on the policy taken

4.20 Advantages of private insurance Products

4.21 Reasons for buying insurance policy

4.22 Difficulties faced during the selection of life insurance

4.23 Benefits of insurance

4.24 Clarification of query

4.25 Overall satisfaction level

 LIST OF FIGURES

FIGURE LIST OF FIGURES PAGE

NUMBER NUMBER

4.1 Age wise classification

4.2 Educational classification of respondents

4.3 Marital status wise classification

4.4 Occupation of respondents

4.5 Annual income of the respondents

4.6 Percent of monthly saving income of the respondents

4.7 Preference of insurance company

4.8 Source of Information on insurance policies

4.9 Awareness on Life insurance policy

4.10 Term of insurance policy

4.11 Mode of premium payment

4.12 Periodicity of premium payment

4.13 Rating on the service of premium collection mechanism

4.14 Rating of premium paid in private insurance as against

public life insurance company
4.15 Reason for preference in buying LIC policy

4.16 Policy preference

4.17 Satisfaction level on policies

4.18 Better awareness on the policy taken

4.19 Advantages of private insurance Products

4.20 Reasons for buying insurance policy

4.21 Difficulties faced during the selection of life insurance

4.22 Benefits of insurance

4.23 Clarification of query

4.24 Overall satisfaction level

CHAPTER I
INTRODUCTION
PERCEPTION OF RURAL PEOPLE TOWARDS LIFE INSURANCE POLICY
WITH SPECIAL REFERENCE TO KOTTAYAM DISTRICT

INTRODUCTION
Human life is a most precious asset and life insurance is one of the ways which provides
financial protection to a person and his family at the time of any disaster. Life insurance
provides both safety as well as protection to individuals and also boosts savings among
people. Insurance companies play an important role in the welfare of human well-being by
providing protection to millions of people against life risks such as uncertain death or
accident. Insurance in any economy is regarded as a pillar of growth and works as a catalyst
in the overall development of the economy. The industry always remains a source of long-
term funds, which are vital for the development of the basic infrastructure of a country. The
insurance industry helps in giving depth to the debt and capital market and also vitalizes the
market for government bonds. Well run insurance companies are of the best recyclers of a
country’s money in the interest of the country’s overall development, particularly because
these companies match their liabilities with local assets. Insurance is basically defined as a
financial agreement that redistributes the cost of unexpected losses. Today, it stands both as a
service and industry in its own right. The purpose of insurance is to safeguard the interests of
people from uncertainty by providing certainty of payment at a given contingency.
The importance of insurance is unquestionable in modern economies as it serves a broad
public interest and is vital to individuals’ security. In today’s context, though the customer
has a variety of products to choose from, wise choices are possible only with requisite
awareness. With the rise of affluence and increased product awareness, the middle class is
fast emerging as the most lucrative segment of the Indian market for financial services
companies. India has a large working population with higher disposable income than in the
past and therefore a great propensity to buy product to meet their growing aspirations. The
core benefit of life insurance is that the financial interests of one’s family remain protected
from circumstances such as loss of income due to critical illness or death of the policyholder.
Simultaneously, insurance products also have a strong inbuilt wealth creation proposition.
The customer therefore benefits on two counts and life insurance occupies a unique space in
the landscape of investment options available to a customer.
Life insurance allows long term savings to be made in a relatively painless manner
because of the low and convenient investments made through premiums. Moreover, it
encourages 'forced thrift' which means the insured is made to pay premiums and save money,
which he/she may not do in the regular course of life. More investment options make your
money work harder, but there are no substitutes to the life insurance. Because only a life
insurance gives you both – risk cover against your life as well as returns on your money
invested. Amongst the most known benefits of Life Insurance is the savings on your income
taxes. Most importantly it provides you with that unique sense of security and peace of mind
that no other form of investment provides. So, a life insurance policy is an ideal tool to gain
security and ensure savings. If you require loans, say for building a house, it can be easily
obtained against a life insurance policy. Life insurance cannot be compared with any other
form of investment as life insurance gives you a lifelong benefit and returns on your money
when it is most required. Insurance premiums are linked to age of the life insured and the
earlier you buy social environment or through observations
Attitudes are generally considered as judgements and these are results of either direct
experience of the social environment or through observations. So attitude can be considered
as a hypothetical construct, which represents degree of liking or disliking of an individual
towards a particular object. Winning and losing are two opposite sides of a same coin and
that coin is attitude. Attitude is composed of beliefs about the consequences of performing
the behaviour and evaluation of how the consumer will feel about those consequences.
Attitude may be defined as an enduring organization of motivational, emotional, perceptual,
and cognitive process with respect to same aspect of our environment.
Rural area is a geographic area that is located out- side the cities. It is considered as
any place with a population of not more than 5000 and with a population density of not more
than 400 per square kilometre and where, more than 25 percent of men are engaged in
agriculture. Where agriculture and farming is the primary occupation and the existence of
poverty is very high. Some times its so happens where the farmers are unable to produce the
food grains due to crop failure or any other reasons, there may be less production of milk
because of death of cattle, sometimes there may be any risk happening to the farmer or his
family member’s health, in such cases they are unable to bare the loss. So insurance is a kind
of solution for all such cases. Insurance is a risk transfer mechanism that ensures full or
partial financial compensation for the damage or loss caused by events. Insurance is based on
trust. Once that is established, its benefits can be better explained. Rural insurance is a form
of risk management primarily used to hedge against the risk of a contingent uncertain loss
caused by events to the rural people. The present study attempts to identify the attitude of
rural peoples while selecting life insurance policy and to identify about what extent they are
aware about the insurance policies
STATEMENT OF PROBLEM

Insurance companies in an economy serve as financial intermediaries. By their nature,

they bear risk and these risks partly depend on the insurer’s ability to anticipate the frequency
magnitude of the risk they promise to cover. They transfer resources from those who would
save to those who will invest. Future is full of risk and uncertainties. People believe in future
rather than the present and desire to have a better and secured future. In this direction,
insurance service has 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 has the pendulum moves to another
side which generate the reasons behind holding a policy. Insurance industry is a service-
oriented unit. The industry provides services that help people to compete with the unexpected
situations. It is also essential that insurance schemes should attract and satisfy policyholders
in different ways. The policyholders once they become a part of a policy framework feel safe
against all odds. The tastes and preferences of each policyholder different from another. The
insurance companies in India (both private and public) deliver variety of policies suiting the
tastes and preferences of the general public. It is observed that many policyholders have
taken policies from both public and private companies. It is clear indication that they are very
much interested in utilizing maximum benefits from insurance schemes. Some people give
more importance to money value and high returns on their investments whereas others give
more weight age for risks than returns. The taste and preference of the customers should be
identified and the factors that affect their perception should be prioritized.
For the success of every initiatives it is necessary to assess the attitude of the people
towards it, likewise nowadays insurance sector also have a tremendous role in every person’s
life especially in case of rural peoples. Now a there is so many changes were happened in
lifestyle and living habits of the peoples thus the growth of insurance industry also grew up.
Nowadays most of the people opt insurance policy like medical insurance, life insurance,
vehicle insurance etc to protect and to safeguard their interests and concerns. Here also most
of the peoples opt this as an opportunity for reducing their tax liability arising out of their
incomes too. But in case of rural peoples most of them were unaware about the recent plans
and they were followed by lack of knowledge in this area. Most of the peoples were invested
in insurance policy by trusting their agents as they were in turns to complete their targets
prescribed by the firms. Most of the people were unaware about the benefits and other
matters related to their payments so it becomes necessary to bring awareness on insurance
accordingly and to give basic idea about need, importance and awareness of insurance in
rural areas. It is from this need, the researcher has come to the topic “A study on perception
of rural people towards life insurance policy with special reference to kottayam district”

OBJECTIVES OF THE STUDY

The major objectives of the study are as follows;
1. To get an overview of different investment schemes of LIC
2. To understand the effect of life insurance policy in promoting saving habits among
Rural people
3. To assess the major problems faced by the rural people while taking investment
decisions of life insurance policy.
4. To understand satisfaction level of policy holders

HYPOTHESIS OF THE STUDY

1. H0: There is no significant difference between age groups and total awareness
levels of policy holders.
2. H0: There is no significant difference between occupation groups and total
awareness levels of policy holders

SCOPE OF THE STUDY

This study is basically conducted to know the attitude of rural people towards
insurance policy. The attitude of people may vary under different circumstances and
areas. The required data of the study is collected from the people living in rural areas
of Kottayam District. A sample of 100 respondents is taken for the study. This study
may support the life insurance companies in improving the performance based on the
needs and wants of the people from rural side.
IMPORTANCE OF THE STUDY
Insurance companies play an important role in the welfare of human well-being by
providing protection to millions of people against life risks such as uncertain death or
accident. Even the life insurance is fastest growing service sector in India after privatization
and increase in FDI. Insurance generates significant impact on the economy by mobilizing
domestic savings. Insurance turn accumulated capital into productive investments. Insurance
enables to mitigate loss, financial stability and promotes trade and commerce activities those
results into economic growth and development. Thus, insurance plays a crucial role in
sustainable growth of an economy. India is well known for rural areas because more than 70
percent of the population belongs to rural areas. Most of the rural people are illiterate and
they were not aware of insurance. So it is very important to study about rural sector, and
bring awareness on insurance accordingly. This study gives basic idea about need,
importance and awareness of insurance in rural areas.
1.6 RESEARCH METHODOLOGY

Research design or methodology is simply a plan for study. It is called a blue print to carry
out the study. The success of market survey depends heavily on the data collection and
analysis. The data sources can be classified into two:

PRIMARY DATA:

Primary data was gathered from direct observation or data personally collected. It refers to
that data which is collected for a specific purpose from the field of enquiry and are original in
nature.
Primary data was collected through survey method. A structured questionnaire was
Administrated online using goggle form. Primary data collected from respondents belongs to
Kottayam district

SECONDARY DATA

Secondary data are those which have been already collected by others for a specific purpose
and are subsequently used for application in different conditions. It is the second hand
information about an event that has not been personally witnessed by the researchers. The use
of secondary data saves time and money. The purpose is to increase the accuracy of analysis.
The secondary data collected from the website, Newspaper, Booklet, Internet, etc……

SAMPLE SELECTION & SAMPLING TECHNIQUE:

The sample size of 100 respondents was drawn out of the selected district. Simple Random
sampling method is used for sampling selection

TOOLS FOR ANALYSIS

Statistical tools like percentage analysis, ranking method and chi square test were used for the
purpose of analysis
LIMITATIONS OF THE STUDY
The major limitations of the study are:
 The study is based on opinion of 100 respondent’s selected using convenience
sampling method. Limitation of sampling may affect the study.
 Time and present pandemic situation act as major constraint in the work.

CHAPTERISATION
I. 1st chapter deals with Introduction
II. 2nd chapter deals with Review of literature
III. 3rd chapter deals with Theoretical Background of insurance sector
IV. 4th chapter deals with Data Analysis and Interpretation
V. 5th chapter deals with Findings, Conclusion and Suggestions
 CHAPTER II
REVIEW OF LITERATURE
A literature review is a text of a scholarly paper, which includes the current knowledge
including substantive findings, as well as theoretical and methodological contributions to a
particular topic. A review of some of the related articles summarized below.

According to Outreville (1996), an analysis of data of 48 developing countries showed that

life insurance development is significantly related to personal disposable income and to the
country’s level of financial development .Further, they, found education increases risk
aversion and encourages people to go for life insurance.

According to Alinvi and Babri (2007), the study was specifically conducted on young
consumers from 18-27 years in their article tried to find answer to question how could
insurance company enhance their ability of constant changes in customer preference in an
increasingly competitive environment. In this theory they found income flow, age, family
size as significant determinant, information about product and services also affect consumer
preference, options of products and services i.e. customer choice along with time play
important role.

According to Sahu et al. (2009); there are 6 factors which affect the buying behaviour while
purchasing life insurance policies namely consumer loyalty, service quality, ease of
procedures, satisfaction level, and company image and company client relationship. There is
no difference between the perception of male and female preferences

According to M.Epctimchin (2011); company loyalty is the major factor influencing

purchasing decision and company client relationship and company and services i.e. customer
choice along with time play client relationship as the last in life insurance. These factors are
beneficial to company as well as consumer.
According to Manuel (2013); the main attributes which affect decision making of
consumers life insurance policies are return on investment, company reputation, premium
outflow, service quality and product quality. The majority of respondents belong to age group
of 19-28 years, male consumers captures 74 percent of the market, dominant income group
was 5001- 10000 and LIC had the major stake.
According to Yadav and Tiwari (2012); the features that policyholders consider while
making a purchase can be ranked as follows: company reputation, money back guarantee,
risk coverage, low premium and easy access to agents as 1st, 2nd, 3rd, 4th and 5th
respectively. Thus he concluded that goodwill of the company is the most influencing factor
while policy buying decision. It was found that majority of respondents preferred money back
policy. While studying the reason for purchase of insurance policy was most (54.6 percent) of
the respondent's have opted for LIC policies because of safety and rest of the respondent's
opted for private players for higher returns .The study area is limited to Jabalpur district, of
Madhya Pradesh and sample size is 150 policyholders of LIC and different private life
insurers have been selected through a stratified and purposive sampling method.
Ahmed,et al (2007) stated that among private local and foreign insurance clients prefer
foreign private insurance companies due to experiences in operation and wide area coverage.
Companies must invest on building their reputation in order to reduce outflow of clients
Hammond et al (1967) stated the first model of life insurance demand focused on
demographic and social factors such as order of birth, age, level of education and number of
dependants.
Jayaraman13 stated that the organizational infrastructure in the rural areas needs to be
enlarged so as to bag the growing insurance potential there. Srinivasamurthy14, in his
research report titled; “Improvement in Productivity of Administrative Personnel in the Field
of Insurance” highlighted the major issues relating to the productivity of administrative
personnel in the LIC. The impact of major issues on productivity had been analyzed in that
paper.
Kaur and Negi (2010) stated that customized and timely service; brand USP, considerate
employee, price immunity as major factors affecting the satisfaction of customers. They even
found that maximum life covered under insurance are of male than female and satisfaction
level among public and private sector insurance companies is same.
Mahajan (2013) said that there are 5 stages in consumer decision making process in life
insurance i.e. need recognition, search of alternative, evaluation of alternative, purchase
decision and post purchase evaluation. Special considerations pertaining to insurance industry
are perceived risk, risk and standardization and risk and information. She even formulated
certain stages to improve customer awareness about benefits of life insurance products like
focusing on marketing techniques. Thus she concluded that the consumer’s perception
towards Life Insurance Policies is positive. There is a positive mind sets developed for their
investment pattern, in insurance policies. Still some actions need to be for developing
insurance market.
Manits and Farmer (1968) found through simple correlation analysis that relative personal
income, population and employment had effect on insurance demand.
Meena15 in her thesis titled “Utilization of Life Insurance Corporation by Policyholders of
Madurai City: An Empirical Study” has studied the utilization of the LIC by policyholders
and analyzed the various factors which influence the level of utilization. She concluded that
unless the corporation made its schemes attractive and effective, with good returning capacity
and high bonus to the policyholders, it was bound to fail in its operations. She has also
suggested that every expenditure be curtailed so that the corporation can pay letter returns
Namasivayam and Ganesan 18 in their article titled “India’s Growing Life Insurance
Business” said that the opening of insurance industry allowed14 private players of leading
Indian corporate to join hands with insurance conglomerates in other countries. Which finally
trapped the public sector undertaking to change its competitive mask not only to retain the
market share but also to safeguard the realistic and reliable entity are the minds of the
common investors forever. The major constraint in the receipt of premium is time factor and
rigid structure of instalments posed the investors more inconvenience only due to outmoded
approach in the design of collecting premium since the inception of LIC. Finally, they
concluded that the state owned monopoly had achieved the commendable growth in its
financial track path not, only prior to the reforms but also after the liberalization had taken
place in the industry. LIC knows the entire country “INDIA” better, before as well as after
the reforms, but it should have to study the pulse of the investor’s base in order to retain the
market leadership over the other players for continuous outstanding growth
Prasad and Chakraborty17 have analyzed the performance of LIC and have pointed out
that the LIC has slowly assigned a smaller percentage of its income to the policyholders.
During the first year, after nationalization in1987, it distributed 31.5 per cent of its total
income to policyholders by way of different benefits. This percentage was 26.9 in 1976-77,
24 per cent in1982-83 and 24.8 per cent in 1989-90. They feel that it is difficult to justify his
tendency.
Sandhu and Bala (2011) they conducted a study in three cities of Punjab to find out factors
affecting service quality of LIC. They used the factor analysis technique and consequently
found 7 factors composed of proficiency, media and presentations, physical and ethical
excellence, service delivery process and purpose, security and dynamic operation, credibility
and functionality. Along with these factors managerial implication like performance of agents
also affect customer satisfaction.
Singh et al. (2014) stated that only age of respondent has significant impact on choice of
insurance product. Whereas various demographic factors such as gender, education, and
annual income did not have significant impact on choice of insurance product.
Thomas16 has analyzed the various social security schemes of Life Insurance Corporation. It
created a social security fund in 1988-89 with the object to extend insurance benefits to
economically weaker sections of the society in the organized sector. The main schemes
introduced by the LIC are, group insurance, group insurance scheme for Integrated Rural
Development Programme loans and rural group insurance schemes. The various schemes
launched by LIC with the assistance of Central Government were meant to be a great relief to
the poor people in the rural areas. But in reality, these schemes were not properly
implemented by the authorities.
Truett&Truett (1990) revealed that age, education, and level of income affect the demand
for life insurance in Mexico and USA.

REFERENCE

 Jain V; Saini B, “Indian Consumer Demeanour for Life Insurance”, International

Journal of Research in Finance & Marketing, Volume 2, Issue 11, pp 29-35.
 Singh S; Sirohi N & Chaudhary K, “A Study of Customer Perception towards Service
Quality of Life Insurance Companies in Delhi NCR Region”, Global Journal of
Management and Business Research, Volume 14 Issue 7, pp 19-32.
 Mahajan K, “Analysing Consumer Decision Making Process in Life Insurance
Services”, International Journal of Marketing, Financial Services & Management
Research, Vol.2, No. 5, pp 60-68.
 . Yadav B; Tiwari A, “A Study On Factors Affecting Customers Investment Towards
Life Insurance Policies”, International Journal of Marketing, Financial Services &
Management Research, Vol.1 Issue 7, pp 106-123.
 Singh H, “An Empirical Study of Life Insurance Consumer's Behaviour in Uttar
Pradesh”, An Internationally Indexed Refereed Research Journal & A complete
Periodical dedicated to Humanities & Social Science Research, Half Yearly Vol-5,
Issue-1, pp 1-7.
 Sandhu H; Bala N, “Customers’ Perception towards Service Quality of Life Insurance
Corporation of India: A Factor Analytic Approach”, International Journal of Business
and Social Science, Vol. 2 No. 18, pp 219231.
 Thakur I, Nigam A, “ A Study Of Factors Affecting Customer’s Investment Towards
Life insurance Policies”,AltiusShodh Journal of Management and Commerce.
 Gaikwad A And Vibhute S, “ A Study On Buying Behaviour Of Customers Towards
Life Insurance In Kolhapur”, Indian Streams Research Journal, Volume-3, Issue-7,pp
1-7
 Gupta U, Sinha R , “ A Comparative Study on Factors Affecting Consumer’s Buying
Behaviour towards Home Loans”,IOSR Journal of Business and Management,
Volume 17, Issue 2 , pp 13-17
 Reddy P; Jahangir Y, “Customer Perception Towards Life Insurance Services in Rural
Market”, Indian Journal Of Applied Research, Volume : 5 | Issue : 1 ,pp 272-275
 Alinvi F&Babri M, “Customers’ Preferences of Insurance Services “, International
Business Program Bachelor Thesis, pp1-96.
 Sahu P; Jaiswal G and Pandey V, “A Study of Buying Behaviour of Consumers
towards Life Insurance Policies”, Asian Journal of Management Research, Volume 3,
Issue ¾, pp 1-10. 13. Chowdhury T; Rahman M and Afza S, “Perceptions Of The
Customers’ Towards Insurance Companies In Bangladesh”, BRAC University
Journal, Vol. IV, No. 2, 2007, pp. 55-66
 CHAPTER III
THEORETICAL FRAMEWORK OF THE STUDY
INTRODUCTION
This chapter begins with a brief description of the evolution of life insurance. The history
and milestones of life insurance in India is described followed by the description of the
emergence and growth of private insurance players in the Indian market. The competition that
is prevailing in the insurance industry is explained and the need for insurance companies to
become a learning organization is further discussed. The significance of the study to
insurance companies is described and the chapter concludes with the profile of the insurance
companies chosen for the study.
Evolution and meaning of Insurance
Some kind of life insurance was practiced in ancient Rome, where citizens used to form
burial clubs that would meet the funeral expenses of its members. The code of ‘Manu’ that
was in force during the Reign of Cholas in South India shows that there was the practice of
marine insurance carried out by traders in India with those in Sri Lanka, Egypt and Greece.
As the European civilization progressed, welfare practices also became more refined. With
the discovery of new lands, sea routes and the consequent growth in trade, there was a need
to protect the traders from loss on account of fire, shipwrecks and the like. As a result the
need for insurance came into existence. Insurance is “a contract for reducing losses from
accident incurred by an individual party through a distribution of the risk of such losses
among a number of parties”. The definition goes on to say: “In return for a specified
consideration, the insurer undertakes to pay the insured or his beneficiary some specified
amount in the event that the insured suffers loss by pooling both the financial contributions
and the ‘insurable risks’ of a large number of policyholders. The insured is typically able to
absorb losses incurred over any given period much more easily than would the uninsured
individual”.
History of Life Insurance in India
The insurance sector in India has come back to the square one from being an open
competitive market to nationalization and back to a liberalized market once again. The
business of life insurance started in India in the year 1818, with the establishment of the
Oriental Life Insurance Company in Calcutta.
Milestones in the Life Insurance Business in India:
• 1912: The Indian Life Insurance Companies Act enacted as the first statute to regulate the
life insurance business.
• 1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information both about life and non-life insurance businesses
• 1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.
• 1956: 245 Indian and Foreign Insurers and Provident Societies taken over by the Central
Government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with
a capital contribution of Rs. 5 crore from the Government of India.
• 1993: The Indian government constituted the “Malhotra Committee” to suggest reforms in
the Insurance Industry.
• 1994: “Malhotra Committee” submitted its report.
• 1999: the Insurance Regulatory Development Act (IRDA) was passed in the Indian
Parliament and the door was opened for private companies with foreign equity.
Composition of Authority
The sec.4 of IRDA Act' 1999, (which was constituted by an act of parliament) specify the
composition of authority, who were appointed by the Government of India. The authority
is a ten-member team consisting of
 A Chairman
 Whole-time members
 Four part-time members

Duties, Powers and Functions of Authorities in IRDA

Sec.14 of IRDA Act’ 1999 lays down the duties, powers and functions for the authorities in
IRDA. It is subject to the provisions of this act and any 12 other law for the time being in
force. The authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business. The powers and functions of the authority shall
include:
 Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend
or cancel such registration;
 Protect the interests of the policy holders in matters concerned with assigning the
policy, nomination by policy holders, insurable interest, settlement of insurance
claim, surrender value of policy and other terms and conditions of contracts of
insurance;
 Specify the requisite qualifications, code of conduct and practical training for
insurance intermediaries and agents;
 Specify the code of conduct for surveyors and loss assessors;
  Promote the efficiency in the conduct of insurance business;
 Promote and regulate professional organizations connected with the insurance and
reinsurance business;
 Levy the fees and other charges for carrying out the purposes of this act;
 Control and regulation of the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under sec.64U of the Insurance Act,
1938;
 Specify the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance
intermediaries
 Regulate the investment of funds by insurance companies;
 Regulate the maintenance of margin of solvency;
 Adjudication of disputes between insurers and intermediaries;
 Supervise the functioning of the Tariff Advisory Committee;
 Specify the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations;
 Specify the percentage of life insurance business and general insurance business to
be undertaken by the insurer in the rural or social sector; and
 Exercise such other powers as may be prescribed.

Need for life insurance

 In order to meet Family’s Financial Requirements- In case you are the only person
in your family who is an earning member, then the family’s income will cease when
you are no more. If any miss happening occurs, then with no stable source of income,
the standard of living of family members will fall and they may not be able to meet
even basic needs like education. Therefore, your life insurance policy will help your
family during such times.
 For Loans and Expenses Repayment- You may have taken a loan or you may have
borrowed money from a friend for starting a business. Also, you might have several
other family responsibilities. In all these cases it is your spouse or children who will
have to bear the heavy burden of paying off the loan in your absence.
  Diverse Investment Options-You can also use your life insurance Policy as a good
investment tool. There are various kinds of insurance policies in which you can park
your surplus funds and can earn return either in lump sum or at regular intervals of
time. For example, retirement plans, child insurance plans, whole life insurance plans,
Term life insurance plans etc. are all good life insurance policies.
 Illnesses and Accidents-Life insurance policies are always a very good protection
option as well against the financial pressure that you might face during a serious
illness or accident. It helps you to get treatment from the best hospitals without
worrying about the financial burden. Usually all insurance policies should be
purchased when you are young and free of illnesses.
 For Tax Benefits-Life insurance policies are an excellent instrument of saving tax
too. Under Section 80C of the IT Act, many of the insurance schemes in India
including the life insurance schemes offer tax deductions on Premium payments.
 Draw Loans Against Insurance - Besides using your life insurance Policy amount to
repay your loans and expenses you can also use your Policy to draw a loan against it. It
could be used as a security in the banks or financial institution while taking loans.
o Retirement plan
o Term insurance plan
o Group plans
Growth of Life Insurance in India
Before the private players entered into the market, LIC was the only dominant player
in the public sector. LIC enjoyed over 98 percent of the market share in the early stage of
liberalization and private players suffered losses in the first year of their operations. But
LIC’s market share has drastically reduced and now it is nearly 78 percent and 22 percent of
the market share has been gained by the private players. It could be seen that the Indian life
insurance industry is an underdeveloped one, as 80 percent of the Indian population is still
not under the insurance coverage. Therefore, there is ample scope for the growth of the life
insurance sector in India. Previously, customers were insured with public insurance
companies with no flexibility and transparency in the products. They have visualized the life
insurance as a tax saving device only. As the private players entered, the change has taken
place in terms of offering flexibility and transparency. Customers are looking for new and
innovative products and are more interested to take insurance from private players due to its
attractive features and services.
Emergence of Private Insurance Players
The Government of India liberalized the insurance sector in March 2000, which lifted the
entry restrictions for private insurance players, allowing foreign players to enter into the
Indian market and start their operations in India. Each foreign company needs to have a 26
percent equity capital to enter into the Indian insurance market. Many foreign companies
have joined their hands with the Indian companies and started their operations in early 2001.
Currently there are 26 life insurance companies that are operating in the private sector.
However, the private insurance companies have three times more products than public
insurance companies. Analysts found that the private insurance players have established their
own identities in the Indian market within a short period of time. India has the world’s top
companies like AIG, New York Life, ING, Lombard, Aviva, MetLife, etc.; competing in the
same market. The private sector players have seen 200 percent growth in the second year of
liberalization. The current annual growth in 15 the average insurance premium in India has
been 8.2 percent compared with the global average of 3.4 percent.
Life Insurance in Rural Channels & its Perception
At present 8-10 percent rural households are covered under life insurance schemes and
remaining 90 percent can be targeted for new innovative insurance schemes. About 200
million rural populations out of 700 million have the surplus money to save money to their
available option post offices and a few limited commercial banks rural extension counters.
With the majority of the population still residing in rural areas, the development of rural
insurance will be critical in driving overall insurance market development over the longer
term. There is a need to create a broader awareness about life insurance in all geographic
areas in India through specific collective campaigns. This is an important precondition to
developing insurance and increasing penetration. Awareness is lacking not only in rural areas,
small towns and among the less educated persons. Even in urban areas, vast segments of
population seem to have erroneous perception or impression which needs to be corrected.
Before proceeding to rural channels we try to give concepts of perception.
Rural Customer Perception of Life Insurance
Customer awareness or perception as a concept is of universal concern for all economies of
the world. In the context of a booming Indian economy and unprecedented growth being
witnessed by Insurance industry - especially life insurance -, it would be interesting to
examine this concept in depth. Perception is defined as "the process by which an individual
receives, selects, organizes, and interprets information to create a meaningful picture of the
world". Perception is the process by which an individual selects, organizes and interprets
information to create a meaningful picture of the world. Individuals act and react on the basis
of their perceptions, not on the basis of objective reality. Hence, for a marketer to know the
customers’ perception is more important than their knowledge of objective reality. What
consumers think about a product, and what it actually is affects their actions. Individuals
make decisions and take actions based on what they perceive to be reality is very important to
marketers to understand the whole notion of perception and is related concepts, so they can
more readily determine what factors influence consumers to buy.
Selective perception process
Stage Description
 Selective exposure consumers select which promotional messages they will expose
themselves to.
 Selective attention consumers select which promotional messages they will pay
attention to.
 Selective comprehension consumers interpret messages in line with their beliefs,
attitudes, motives and experiences.
 Selective retention consumers remember messages that are more meaningful or
important to them.
Low penetration of insurance in India, as elsewhere, has varied explanations, economic and
sociological. One basic factor that puts a brake on growth is low propensity to consume: low
propensity for life insurance, not necessarily because of considerations of affordability nor
because of inadequate range of insurance products and services. The major determining
factor is lack of awareness of life insurance per se and this phenomenon is not confined to
rural and semi rural segments of society: it pervades urban populace as well. Surprising, isn’t
it- but true. Customer’s awareness is the mainspring of demand creation which runs the
wheels of industry – any industry for that matter. To this ‘demand’ curve, suppliers and
service providers respond, by making available to consumers what they want, meeting their
needs and expectations. This is the way two usages ‘customer needs’ and ‘customer
satisfaction’ emerged and these later travelled to domains of ‘customer delight’ and
‘customer happiness’. Customer’s awareness, thus, becomes the genesis for business entities.
For life insurers to initiate, expand, grow and sustain by responding to larger and larger
volumes of demand emerging with greater awareness, and setting in place supply chain
management. For life insurers to penetrate significantly and forge ahead in the emerging
market, enhancing customer awareness becomes the prime focus of all activities
Types of Policies
There are primarily seven different types of insurance policies when it comes to life
insurance. These are:
 Term Plan - The death benefit from a term plan is only available for a specified
period, for instance, 40 years from the date of policy purchase.
 Endowment Plan - Endowment plans are life insurance policies where a portion of
your premiums go toward the death benefit, while the remaining is invested by the
insurance provider. Maturity benefits, death benefit and periodic bonuses are some
types of assistance from endowment policies.
 Unit Linked Insurance Plans or ULIPs - Similar to endowment plans, a part of your
insurance premiums go toward mutual fund investments, while the remaining goes
toward the death benefit.
 Whole Life Insurance - As the name suggests, such policies offer life cover for the
whole life of an individual, instead of a specified term. Some insurers may restrict the
whole life insurance tenure to 100 years.
 Child’s Plan - Investment cum insurance policy, which provides financial aid for your
children throughout their lives. The death benefit is available as a lump-sum payment
after the death of parents.
 Money-Back - Such policies pay a certain percentage of the plan’s sum assured after
regular intervals. This is known as survival benefit.
 Retirement Plan - Also known as pension plans, these policies are a fusion of
investment and insurance. A portion of the premiums goes toward creating a
retirement corpus for the policyholder. This is available as a lump-sum or monthly
payment after the policyholder retires.
Major players in Insurance sector
 Bharti AXA Life Insurance :
Bharti AXA is a joint venture between Bharti Enterprises, a trusted brand name which
is the largest in the telecom industry with a strong financial base and AXA, world
leader in financial protection and wealth management and largest in the insurance
industry (in terms of revenue). Promoter Sunil Bharti Mittal, Founder, Chairman and
Managing Director of Bharti Group can be labelled as the most ambitious telecom
entrepreneur in India. Bharti Cellular Limited (BCL) was formed by Mittal in the year
1995, to offer cellular services under the brand name Airtel. Within a few years Bharti
 became the first telecom company to cross the 2-million mobile subscriber mark.
Now Mittal heads a successful empire focused on different areas of business with a
market capitalization of approximately $2 billion, employing over 5,000 people and
still growing. Bharti AXA Life Bharti AXA Life Insurance Company Limited started
operations on 22nd Aug, 2006.
 HDFC:
HDFC Standard Life, one of India’s leading private life insurance companies, offers a
range of individual and group insurance solutions. It is a joint venture between
Housing Development Finance Corporation Limited (HDFC), India’s leading housing
finance institution and Standard Life plc, the leading provider of financial services in
the United Kingdom, with HDFC Ltd. holding equity of 72.43% and Standard Life
(Mauritius Holding) Ltd. holding 26.00%. HDFC Standard Life’s product portfolio
comprises solutions, which meet various customer needs such as protection, pension,
savings, investment and health.
 Max New York Life Insurance Company Ltd:
It is a joint venture between Max India Limited, one of India's leading multi-business
corporations and New York Life International, a Fortune 100 company. In line with
its vision to be the most admired life insurance company in India, it has developed a
strong corporate governance model based on the core values of 24 excellence,
honesty, knowledge, caring, integrity and teamwork. The company has positioned
itself on the quality platform. Incorporated in 2000, Max New York Life started
commercial operation in April 2001. In line with its values of financial responsibility,
Max New York Life has adopted prudent financial practices to ensure safety of
policyholder's funds.
 ICICI Prudential:
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank; one
of India's foremost financial services companies and prudential plc, a leading
international financial services group headquartered in the United Kingdom. Total
capital infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74%
and Prudential plc holding 26%. The company began its operations in Dec 2000, after
receiving approval from Insurance Regulatory Development Authority (IRDA).
Today, the company’s nation-wide reach includes over 1,900 branches (inclusive of
26 1,074 micro-offices), over 210,000 advisors; and 7 banc assurance partners.
 Bajaj Allianz:
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest
Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance
conglomerate globally and one of the largest asset managers in the world, managing
assets worth over a Trillion (Over INR. 55, 00,000 Crore). Allianz SE has over 119
years of financial experience in over 70 countries around the world. The company
started its operations in India, in the year 2001.. The company’s business philosophy
is to ensure excellent insurance and investment solutions by offering customized
products, supported by the best technology.
 Reliance Nippon life insurance:
Reliance Nippon Life Insurance Company (RNLI) is one of the life insurance
companies in India. The firm offers life insurance products targeted at individuals and
groups, catering to four distinct segments: protection, children, retirement and
investment plans. It is rated as the top 3 most trusted service brands in the insurance.
 Star Health:
Star Health and the Allied Insurance Company Limited is the first standalone health
insurance company in India covering health, accident care and overseas travel
insurance. The company started its operation on May 2006 with the grant of IRDA
License to do General Insurance Business.
 PNB MetLife India:
PNB MetLife India insurance company limited is one of the leading life insurance
companies in India since2001. PNB MetLife has as its shareholders MetLife
international holdings LLC (MIHL), Punjab National Bank (PNB), Jammu& Kashmir
bank limited (JKB), M. Pallongi and company private limited and other private
investors. MIHL &PNB are majority stakeholders. 9. Birla Sun Life Established in
2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between
the Aditya Birla Group, a well known and trusted name globally amongst Indian
conglomerates and Sun Life Financial Inc, leading international financial services
organization from Canada. The local knowledge of the Aditya Birla Group combined
with the domain expertise of Sun Life Financial Inc., offers a formidable protection
for its customers’ future.
  SBI life insurance:
SBI life insurance is a joint venture life insurance company between state banks of
India (SBI); the largest state owned banking and financial services company in India
and BNP Paribas Cardiff. BNP Paribas is a French multinational bank and financial
services company with global headquarters in Paris. SBI owns 62.1% of the total
capital and BNP Paribas Cardiff 22%of the capital.

Life Insurance the Corporation of India:

Life Insurance the Corporation of India was founded in 1956 when the Parliament of India
passed the Life Insurance of India Act that nationalized the private insurance industry in
India. Over 245 insurance companies and provident societies were merged to create the state
owned Life Insurance Corporation. The Oriental Life Insurance Company, the first company
in India offering life insurance coverage, was established in Calcutta in 1818 by Anita
Bhavsar and others. Its primary target market was the Europeans based in India, and it
charged Indians heftier premiums. Surendranath Tagore (son of Satyendranath Tagore) had
founded Hindustan Insurance Society, which later became Life Insurance Corporation. The
Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance
provider.
 OBJECTIVES OF LIC
 Spread Life Insurance widely and in particular to the rural areas and to the
economically backward classes with a view to reaching all insurable people in the
country and providing them adequate financial cover against death at a reasonable
cost.
 Maximize mobilization of people's savings by making insurance linked savings
adequately attractive.
 Bear in mind, in the investment of funds, the primary obligation to its policy holders,
whose money it holds in trust, without losing sight of the interest of the community as
a whole; the funds to be deployed to the best advantage of the investors and the
community as a whole, keeping in view national priorities and obligations of
attractive return.
 Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.
 Act as trustees of the insured public in their individual and collective capacity. o
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
 Involve all people working in LICI to the best of their capabilities in furthering the
interests of the insured public by providing efficient services with courtesy.
 CHAPTER IV
ANALYSIS AND INTERPRETATION OF DATA
DATA ANALYSIS AND INTERPRETATION

The present study is about “Perception of rural people towards life insurance policy
with special reference to kottayam district”. A sample of 100 respondents among rural people
was drawn from kottayam district and has given back the duly filled up questionnaire. Simple
random sampling method is adopted for data collection and Google form questionnaire
circulated through electronic media

Table no 4.1
Gender wise classification

Category Respondents Percentage

Male 60 60

Female 40 40

Total 100 100

Source: Primary data

Table no 4.1 states that Out of the 100 respondents around 60 percent of the
respondents are male and 40 percent are female category. It shows that males are
mainly taking life insurance policy than female.
 Table no 4.2
Age wise classification of respondents

Age Frequency Percentage

Below 25 20 20
25 – 40 42 42
40 – 55 20 20
Above 55 18 18
Total 100 100
Source: primary data

Table no 4.2 shows the age wise classification of respondents, Out of 100 respondents 42
percent of the respondents belongs to the category of 26 - 40 year, 20 percent of the
respondents belongs to below 25 year and 41 - 55year,18 percent of the respondent’s belongs
to the above 55 category.

Figure no 4.1
Age wise classification of respondents

45

40

35

30

25

20

15

10

0
Below 25 25 – 40 40 – 55 Above 55
 Table no 4.3
Educational classification of respondents

Educational No. of respondents Percentage

Qualification

School level 25 25
Graduate 43 43
Post Graduate 20 20
Professional 12 12
Total 100 100
Source: Primary data

Table no 4.3 reveals that 43 percent of the respondents are graduates which shows graduates are more
interested in investing in life insurance

Figure no 4.2
Educational classification of respondents

45

40

35

30

25

20

15

10

0
School level Graduate Post graduate Professional
 Table no 4.4
Marital status wise classification

Marital Status Frequency Percentage

Married 58 58
Unmarried 42 42
Separate 0 0
Total 100 100
Source: Primary data

The above table shows that the 58 percent of the respondents are married and 42 percent of
the respondents are unmarried

Figure 4.3
Marital status wise classification

60

50

40

30

20

10

0
Married Unmarried Separate
 Table no 4.5
Occupation of respondents

Occupation Respondents Percentage

Agriculture 50 50

Self employed 16 16

Professional 14 14

Government servant 18 18

Others 2 2

Total 100 100

Source: Primary data

Out of the 100 respondents 50 percent of the respondents are agricultural employees, 18
percent of the respondents belong to other category, and 16 percent of the respondents are
self-employed and professional.

Figure no 4.4
Occupation of respondents
 50

45

40

35

30

25

20

15

10

0
Agriculture Self employed Professional Government servant Others

Table no 4.6
Annual income of the respondents

Annual Income Respondents Percentage

Less than 50000 42 42
50000 – 100000 36 36
100000 – 200000 18 18
More than 200000 4 4
Total 100 100
Source: Primary data

The above table shows the annual income of respondents. Out of 100 respondents, 42
percent of the respondent’s annual income falls below 50000, and 36 percent of the
respondent’s annual income belongs to 50000 - 100000, 18 percent of the respondent’s
annual income 100000-200000, only 4 percent of the respondent’s annual income fall above
200000.

Figure no 4.5
Annual income of the respondents
 ANNUAL INCOME WISE CLASSIFICATION

45

40

35

30

25

20

15

10

0
Less than 50000 50000 - 100000 100000 - 200000 200000 above

Table no 4.7

Percent of monthly saving income of the respondents

Percent of monthly savings Frequency Percentage

based on income
Below 15 percent 34 34
15 – 20 percent 30 30
20 – 25 percent 20 20
Above 25 percent 13 13
Total 100 100
Source: Primary data

Table 4.7 shows that 34 percent of the respondents are saving their income below 15 percent
and 30 percent of the respondents are saving their income 15-20 percent, 20 percent of the
respondent’s saves their monthly income 20-25 percent and only 13 percent of the
respondents save their monthly income above 25 percent.

Figure No 4.6
 Percent of monthly saving income of the respondents

35

30

25

20

15

10

0
Below 15% 15 - 20% 20 - 25% Above 25%

Table no 4.8
Preference of insurance company

Insurance company Frequency Percentage

LIC India 70 70
HDFC Life insurance 20 20
ICICI Prudential Life 6 6
insurance
Max Life insurance 4 4
Total 100 100

The above table show the selection of insurance company, Majority (70 percent) of the
respondents preferred LIC India, 20 percent of the respondents select HDFC Life insurance
company, 6 percent of the respondents choose ICICI Prudential insurance company and only
4 percent of the respondents choose Max Life insurance company.

Figure no 4.7
Preference of insurance company
 70

60

50

40

30

20

10

0
LIC HDFC ICICI MAX

Table no 4.9
Source of Information on insurance policies

Source of information Frequency Percentage

Agents 16 16
Newspaper 18 18
Friends 28 28
Family 20 20
Tax Consultants 6 6
Television 12 12
Total 100 100
Source: primary data

Table no 4.9 shows the source of information influencing respondents in taking insurance
policies. 28 percent of the respondents know about the insurance policies through friends, 20
percent of the respondents by family, 18 percent of the respondents by newspaper and 16
percent of the respondents by insurance Agents, 12 percent of the respondents know by
television and only 6 percent of the respondents know by tax consultants.

Figure no 4.8
Source of Information on insurance policies

30 28

25

20
20 18
16

15
12

10
6

0
Agents Newspaper Friends Family Tax Consultants Television

Table no 4.10
Awareness on Life insurance policy

Option Frequency Percentage

Not at all aware 10 10
Fully Aware 36 36
Partly Aware 54 54
Total 100 100

Source: Primary data

Table no 4.10 shows that out of 100 respondents 54 percent of the respondents are fully
aware of the life insurance policy and only 10 percent of the respondents are not at all aware
of the life insurance policy.
 Figure no 4.9
Awareness on Life insurance policy

60

50

40

30

20

10

0
Not at all aware Fully Aware Partly Aware

Table no 4.11
Term of insurance policy

Term (Year) Frequency Percentage

Less than 2 year 6 6
2 – 5 year 56 56
5 – 10 year 22 22
More than 10 year 16 16
Total 100 100
Source: primary data

The given table shows the period of policy opted by the respondents. 56 percent of the
respondents choose investment period of 2 to 5 year and 22 percent of the respondents choose
5 to 10 year period, 16 percent of the respondents choose their investment period more than
10 year and only 6 percent of the respondents select less than 2 year insurance policy.

Figure no 4.10
Term of insurance policy

60

50

40

30

20

10

0
Less than 2 year 2 – 5 year 5 – 10 year More than 10 year

Table no 4.12
Mode of premium payment

Mode of Premium Payment Frequency Percentage

Cash 35 35
Cheque 6 6
Debit Card 24 24
Credit Card 14 14
Draft 16 16
Savings Account 5 5
Total 100 100
Source: Primary data

Table 4.12 mentioned that out of the 100 respondents, 24 percent of the respondents mode of
premium payment was through Debit card, 20 percent of the respondents premium payment
was through savings account and by cash, 16 percent of the respondents premium payment
was through draft, 14 percent of the respondents payment was through credit card and only 6
percent of the respondents has done their payment by mode of cheque.

Figure no 4.11
Mode of premium payment

35

30

25

20

15

10

0
Cash Cheque Debit Card Credit Card Draft Savings Account

Table no 4.13
Periodicity of premium payment

Periodicity of premium Frequency Percentage

payment
Monthly 54 54
Quarterly 20 20
Half yearly 16 16
Yearly 10 10
Total 100 100
Source: Primary data

Table No 4.13 point out that 54 percent of the respondents choose Monthly mode of payment,
20 percent of the respondents choose quarterly, 16 percent of the respondents choose half
yearly and 10 percent choose yearly mode of premium payment

Figure no 4.12
Periodicity of premium payment

60

50

40

30

20

10

0
Monthly Quarterly Half yearly Yearly

Table no 4.14
Rating on the service of premium collection mechanism

Rate of service Frequency Percentage

Excellent 34 34
Very good 40 40
Average 16 16
Bad 6 6
 Very worse 4 4
Total 100 100
Source: primary data

The table no 4.14 shows the rate of service of premium collection mechanism in insurance
company. 40 percent of the respondent’s opinion is very good 34 percent of the insured
person’s opinion is excellent and 16 percent of the insured person’s opinion is Average, 6
percent of the respondent’s opinion is bad and 4 percent of the respondent’s opinion is very
worse.

Figure no 4.13
Rating on the service of premium collection mechanism

40

35

30

25

20

15

10

0
Excellent Very good Average Bad Very worse

Table no 4.15
Rating of premium paid in private insurance as against public life insurance company

Variable Frequency Percentage

Very Cheap 4 4
Cheap 8 8
At par 40 40
Expensive 26 26
 Very Expensive 22 22
Total 100 100
Source: Primary data

Table no 4.15 shows premium rate of private insurance as against public insurance company
40 percent of the respondent’s opinion is at par and 26 percent of the respondent’s opinion is
expensive and 22 percent of the respondent’s opinion is very expensive. 8 percent of the
respondent’s response is cheap and only 4 percent of respondent’s opinion is very cheap.

Figure no 4.14
Rating of premium paid in private insurance as against public life insurance company

45

40

35

30

25

20

15

10

0
Very Cheap Cheap At par Expensive Very Expensive

Table no 4.16
Reason for preference in buying LIC policy

Public Frequency Percentage

LIC is govt. Backed 20 20
Trust on LIC 50 50
 Safety and security of 30 30
money in LIC
Total 100 100
Source: primary data

Table 4.16 states that 50 percent of the respondents prefer to buy public insurance policy
because of their trust in LIC. 30 percent of the respondents prefer to buy LIC policy because
they trust safety and security of money in LIC. 20 percent of the respondents prefer public
insurance policy because they known LIC is Government backed policy.

Figure no 4.15
Reason for preference in buying LIC policy

50
45
40
35
30
25
20
15
10
5
0
LIC is govt. Backed Trust on LIC Safety and security of money in LIC

Table no 4.17
Policy preference

Policies Frequency Percentage

Endowment policy 8 8
Children policy 26 26
 Money back policy 38 38
Single premium policy 10 10
Pension plan policy 18 18
Total 100 100
Source: primary data

Above table shows policy preference of respondents 38 percent of the respondents prefer
money back policy, 26 percent of the respondents have children policy and 18 percent of the
respondents have pension plan policy, 10 percent of the respondents have single premium
policy and only 8 percent of the respondents have endowment policy.

Figure no 4.16
Policy preference

40

35

30

25

20

15

10

0
Endowment policy Children policy Money back policy Single premium Pension plan policy
policy

Table no 4.18

Satisfaction level on policies

 Opinion Number of respondents Percent
Highly satisfied 35 35
Satisfied 42 42
Neutral 17 17
Dissatisfied 4 4
Highly dissatisfied 2 2
Total 100 100
Source: Primary data

Table No 4.18 shows that 42 percent of the respondents are satisfied with the policies of the
provider, 35 percent are highly satisfied, 17 percent does not have any opinion, 4 percent are
dissatisfied and 2 percent are highly dissatisfied

Figure no: 4.17

Satisfaction level on policies

45 42

40
35
35

30

25

20 17

15

10
4
5 2

0
Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied

Table no 4.19
Better awareness on the policy taken

Variable Frequency Percentage

Strongly Agree 14 14
 Agree 32 32
Neutral 34 34
Disagree 12 12
Strongly Disagree 8 8
Total 100 100
Source: Primary data

Table no 4.19 shows that out of 100 respondents 34 percent of the respondents agree that they
have better awareness on the policy taken 32 percent of the respondents agrees, 14 percent of
the respondents strongly agrees, 12 percent of the respondents do not agree and 8 percent of
the respondents opinion strongly agrees.

Figure no 4.18
Better awareness on the policy taken

35

30

25

20

15

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table no 4.20
Advantages of private insurance Products

Private Frequency Percentage

Return is high in private 30 30
 sector
Better customer service in 52 52
private sector
Private companies have 18 18
innovative products
Total 100 100
Source: primary data

Table 4.20 shows preference of buying private insurance policy. 50 percent of the
respondents prefer private insurance policy because return is high in private sector, 32
percent of the respondents choose private insurance policy because of better customer service
in private sector, and 18 percent of the respondents buy private insurance only for the reason
private companies have innovative products.

Figure no 4.19
Advantages of private insurance Products

60
50
40
30
20
10
0

Table no 4.21
Reasons for buying insurance policy

CRITERIA Life Tax Saving Retirement As a

insurance rebate or Benefit security
RATING coverage Capital to raise loan Overall
Growth

Frequency

Frequency

Frequency

Frequency

Frequency

Frequency
percent

percent

Percent

Percent

Percent

percent
Strongly 60 60 20 20 16 16 12 12 18 18 10 10
agree

Agree 30 30 52 52 34 34 24 24 26 26 40 40

Neutral 6 6 18 18 30 30 22 22 20 20 34 34

Disagree 4 4 2 2 14 14 18 18 26 26 10 10

Strongly 0 0 8 8 6 6 24 24 10 10 6 6
disagree
Total 100 100 100 100 100 100 100 100 100 100 100 100

Source: Primary data

The above table shows the reasons for buying insurance policy, 60 percent of the respondents
strongly agree that life insurance coverage, 30 percent of the respondents agree, 6 percent of
the respondents are neutral and 4 percent of the respondents disagree. On the basis of tax
rebate 20 percent of the respondents strongly agree, 52 percent of the respondents agree, 18
percent of the respondents are neutral, 2 percent of the respondents disagree and 8 percent of
the respondents strongly disagree. On the basis of savings or capital growth 16 percent of the
respondents strongly agree, 34 percent of the respondents agree, 30 percent of the
respondents are neutral, 14 percent of the respondents disagree and 6 percent of the
respondents strongly disagree. On the basis retirement benefit 12 percent of the respondents
strongly agree, 24 percent of the respondents agree, 22 percent of the respondents are neutral,
18 percent of the respondents disagree and 24 percent of the respondents strongly disagree.
On the basis as a security to raise loan 18 percent of the respondents strongly agree, 26
percent of the respondents agree, 20 percent of the respondents are neutral, 26 percent of the
respondents disagree and 10 percent of the respondents strongly disagree.

Figure no 4.20
Reasons for buying insurance policy

40

35

30

25

20

15

10

0
Strongly agree Agree Neutral Disagree Strongly

Table no 4.22
Difficulties faced during the selection of life insurance
 Problem Weighted score Rank
Fear of fraud 150 5
Difficulties in the return of 180 4
claim
Trust of agent 200 3
Fear of losing money 420 2

Absence of knowledge 460 1

Source: Primary data

The given table shows the difficulties faced during the selection of LIC. Absence of
knowledge is the main important problem faced, ranked 1 with weighted score of 460

Figure no 4.21
Difficulties faced during the selection of life insurance

500
450
400
350
300
250
200
150
100
50
0

Table no 4.23
Benefits of insurance
 Benefits Frequency Percentage
Cover future uncertainty 54 54
Tax deductions 10 10
Future Investment 36 36
Total 100 100
Source: Primary data

Table 4.23 shows the benefits of insurance policy. 54 percent of the respondents choose
insurance on account of its future uncertainty coverage, 36 percent as future investment and
10 percent take for getting tax deduction

Figure no 4.22
Benefits of insurance

60

50

40

30

20

10

0
Cover future uncertainty Tax deductions Future Investment

Table no: 4.24

Clarification of query
 Opinion No of respondents Percentage
Advisor 10 10
Company Website 25 25
Customer Care 55 55
Branch Manager 10 10
Total 100 100
Source: primary data

The above able 4.24 states that 55 percent of the respondents clarify their query with
customer care, 25 percent from company website and 10 percent from branch manag+0er or
advisor.

Figure no: 4.23

Clarification of query

60

50

40

30

20

10

0
Advisor Company Website Customer Care Branch Manager
 Table no: 4.25

Overall satisfaction level

Opinion No. of respondents Percentage

Yes 55 55
No 45 45
Total 100 100

Source: Primary data

The above table 4.25 states that 55 percent of the respondents are overall satisfied with their
current policy and 45 percent of the respondents are not satisfied.

Figure no: 4.24

Overall satisfaction level

60

50

40

30

20

10

0
Yes No
TESTING OF HYPOTHESIS
1. H0: There is no significant difference between age groups and total awareness levels of
policy holders

Result of Hypothesis Testing

Table no 4.22
Relationship between age groups and total awareness level

Null Hypothesis Level of Degrees Chi – Table Result

significance Of Square Value
Freedo Value
m
There is no 0.05 6 2.42 12.592 Ho is
significant relation accepted
between age groups
and total awareness
levels of policy
holders

From the above table 4.22 it is clear that there is no association between age groups and total
awareness levels of policy holders because of calculated value (2.42) is less than the table
value (12.592), hence null hypothesis (H0) is accepted
2. H0: There is no significant difference between occupation groups and total awareness
levels of policy holders

Result of Hypothesis Testing

Table no 4.23
Relationship between occupation groups and total awareness level

Null Hypothesis Level of Degrees Chi – Table Result

significance Of Square Value
Freedo Value
m
There is no 0.05 8 21.08 15.51 Ho is rejected
significant relation
between occupation
groups and total
awareness levels of
policy holders

Table 4.23 states that that calculated chi square value at 5 percent level of significance with 8
degree of freedom 21.08 is higher than the table value 15.51, hence null hypothesis (H0) is
rejected. This states that there is significant relation between occupation groups and total
awareness levels of policy holders.
 CHAPTER V
FINDINGS, CONCLUSION AND SUGGESTIONS
5.1 FINDINGS
The major findings are as follows;

 In rural area, majority of the respondents are male.

 Majority of the respondents are coming under the age group 25 – 40.
 Out of the respondents taken for the study 50 percent of the policy holders are
working under agriculture sector.
 Majority of the respondents taking insurance policy are graduates
 Majority of the respondents have annual income less than 50000
 Only 15 percent of the respondent’s monthly income is being saved.
 Majority of the respondents prefer public insurance companies in opting for life
insurance policy.
 Majority of the respondents preferred LIC.
 Majority of the respondents states that friends are the main factor influencing them for
taking insurance policies.
 Majority of respondents have not read the policy proposal form.
 People prefer cash their mode of premium payment.
 Majority people choose monthly mode of premium payment.
 Most of the people rated very good for the service of premium collection mechanism.
 Majority of the respondent’s states that premium rate of the insurance company is at
par while comparing with the public insurance company.
 Most of the respondents prefer buying public insurance policy (LIC) as their trust on
LIC is more.
 Majority of the respondents prefer money back policy.
 Most of the respondents are partly aware about the life insurance policy
 High return makes the respondents to choose private insurance company.
 Majority of the respondents prefer money back policy.
 Based on the reasons for buying insurance policy life insurance coverage is the most
preferred reason.
 Absence of knowledge is the main difficulty faced by most of the respondents during
the selection of Life insurance.
 Majority of the respondents states that future uncertainty coverage act as the main
benefit of insurance

Hypothesis testing
 Hypothesis 1- Association of age groups and total awareness level
From the chi square test it is clear that there is significant difference age groups and
total awareness level in life insurance policy. Thus, null hypothesis is rejected
 Hypothesis 2- Association of occupation and total awareness level
From the chi square test it is clear that there is significant difference between
occupation and total awareness level. Thus, null hypothesis is accepted
CONCLUSION
The insurance sector has a vast potential not only because incomes are increasing and assets
are expanding but also because the volatility in the system is increasing. In a sense, we are
living in a riskier world. Trade is becoming increasingly global. Technologies are
changing and getting replaced at a faster rate. In this more uncertain world, for which
enough evidence is available in the recent period, insurance will have an important role to
play in reducing the risk burden individuals and businesses have to bear.There is low level
of awareness and understanding of life insurance products, and more generally, of the
operation of life insurance companies in rural customers. There is confusion in the minds of
customers between life insurance, general insurance, health insurance, and some investment
products (such as endowment products).Insurance companies are consequently directing
their strategies towards increasing customer satisfaction and loyalty through improved
service quality both for rural or urban markets. It is becoming desirable for insurance
companies to develop a customer centric approach for future survival and growth. The
awareness has already dawned that prompt, efficient and speedy service alone will tempt the
existing customers to continue and induce new customers to try the services of the company
and with the increasing demands from different customer insurance sector has become
competitive. Customers are becoming increasingly aware of their expectations, and demand
higher standards of services, as technology is enabling them to make comparisons quickly
and accurately. Their perceptions and expectations are continually evolving, making it
difficult for service providers to measure and manage services effectively.
With increase in population and income there is a wide scope in insurance sector.
Insurance sector provides some security to the customers for any type of miss-happening. In
this sector, IRDA plays an important role and time to time gives important guide lines to
various companies. Still, LIC plays an important role and has maximum share in this sector.
The roles played in perception of life insurance policies in rural market by members of the
family varies with knowledge parameters as well as with the typed of products and
sometimes with the company name also. While a number of psychological variables are
useful in obtaining into consumer's perception towards buying life insurance policies in
rural areas. The insurance company name also plays an important role in purchasing. Since
no insurer player is using proper channels for effective rural reach, it can well be said that
the rural market is not sleeping any longer; the insurance players are!
SUGGESTIONS

For the overall improvement, the following suggestions should be considered:

 Insurers will have to pay special attention to the characteristics of the rural labour
force, like the prevalence of irregular income streams and preference for simple
products, before they can successfully penetrate this sector.
 More intense research works should be initiated, studying the specific needs and
attributes sorted by the rural customer for different kinds of product categories.
 Focus should be given on improvement of services given by the rural agents.
 Insurer should spread more awareness and relax the product complications to make it
easier to understand.
 More branches should be opened in semi-urban areas or rural areas.
 Marketer should follow the strategy of ‘Good quality products and services in lower
premium category for rural customers.
BIBLIOGRAPHY
 BIBLIOGRAPHY

THESIS AND DISSERTATION

 Meena15“Utilization of Life Insurance Corporation by Policyholders of Madurai

City”

 Singh S; Sirohi N & Chaudhary K, “A Study of Customer Perception towards Service

Quality of Life Insurance Companies in Delhi NCR Region”,

 Mahajan K, “Analysing Consumer Decision Making Process in Life Insurance

Services”,

 . Yadav B; Tiwari A, “A Study On Factors Affecting Customers Investment Towards

Life Insurance Policies”,

 Singh H, “An Empirical Study of Life Insurance Consumer's Behaviour in Uttar

Pradesh”,

BOOKS

 Bhargava, B.D, “Insurance Meaning and its Principles”, Pearl Books, New
Delhi, 2008.
 Black & skipper, "Life &Health Insurance,” Pearson’s edition, New Delhi
-2000.
 Gupta, P. K. "Fundamentals of Insurance", New Delhi: Himalaya Publishing
House, 2006
 Joseph M Belt, "Life Insurance – A Consumers Hand Book" Indiana university
press London-1973.
 Mishra, M.N., "Insurance Principles and Practice", S. Chand & Company Ltd.
Ram Nagar, New Delhi, 2004
JOURNALS
 Ashfaque Ahmed And Neetu Kwatra, "Level of Customers Satisfaction
with Their Perception on The Quality Of Insurance Services", GALAXY
International Interdisciplinary Research Journal, Vol.2 (3), March 2014
 Rajagopalan, R., "Comparing Traditional Life Insurance Products in The
Indian Market: A Consumer Perspective," Journal of Insurance and Risk
Management, Vol. 4, No. 8, pp. 27-40, 2006
 Reddy, G.S. "Customer Perception towards Private Life Insurance
Companies' Policies with Reference to Bangalore City", Indian Journal of
Marketing, Vol. 35, No. 4, pp. 913, 2005
 Sandhu H.S, "Customers’ Perception towards Service Quality of Life
Insurance Corporation of India: A Factor Analytic Approach", International
Journal of Business and Social Science, Vol. 2 No. 18, 2011.
 Saibaba, R., Prakash, B. and Kalyani, V. "Perception and Attitude of
Women towards Life Insurance Policies", Indian Journal of Marketing, Vol.
32, No. 12, pp. 10-12, 2002
WEBSITES
 www.insuranceindia.com
 www.conind.com
 www.google.com
 www.irda.com
 www.insurance.com
APPENDIX
 QUESTIONNAIRE

A STUDY ON PERCEPTION OF RURAL PEOPLE TOWARDS LIFE

INSURANCE POLICY WITH SPECIAL REFERENCE TO KOTTAYAM DISTRICT

Dear Respondents,

The questionnaire that follows is intended to give an idea about the

“PERCE”. This survey is conducted to prepare a project which is to be submitted to the
University of Kerala of the requirement for the partial fulfilment of M.Com degree. Any
information furnished by you will be kept confidential and will be used only for academic
purposes. Expecting your co-operation.

1. Respondent Name:

2. Age

Below 20 20 – 30

30 – 40 Above 40

3. Gender

Male Female

4. Educational qualification

School level Graduate

Post Graduate Professional

5. Occupation

Self-employed Agriculture

Professional Others

6. Marital status

Married Unmarried

Separate
7. Annual Income

Less than 50000 50000 – 100000

100000 – 200000 More than 200000

6. What percentage of your monthly income usually saves?

Less than 15% 15 – 20%

20 – 25% More than 25%

7. Do you have life insurance policy?

Yes No

8. What are the names of life insurance companies you have heard?

Life Insurance corporations of India

HDFC Life insurance Co. Ltd

Max Life insurance Co. Ltd

ICICI Prudential Life insurance Co. Ltd

9. How do you know about life insurance?

Newspaper Friends & Relatives

Insurance agents Tax consultants

Television Websites

10. Have you read the policy proposal form?

Yes No

11. If no, why?

Language Barrier Illiteracy

Time constraints others

12. Given below source reasons for buying insurance policy please tick appropriate column
according to your degree of demand

Reasons Strongl Agree Neutral Disagree Strongly

y Disagree
Agree
Life insurance coverage
Tax rebate
Saving or Capital growth
Retirement benefit
As a security to raise
loan

13. What parameters do you took into before you take up a life insurance policy?

Parameter Very imp Important Moderately Slightly Not

Important Important Important
Premium
charges
Policy term
Bonus/ Interest
Service
Accessibility
Company
charge

14. You have been dealing with above insurance company for the last how many years?

Less than 2 years 5 – 10 years

2 – 5 years More than 10 years

15. What is the periodicity of premium?

Monthly Quarterly

Half yearly Yearly

16. Your mode of premium payment

Cash cheque credit card

 Debit card draft through savings a/c

17. How do you rate the service of premium deposit mode of a life insurance company?

Excellent Very good Average

Bad Very worse

18. How do you found the premium rate of private insurance as against public life insurance
company?

Very cheap Cheap

At par Expensive

Very Expensive

19. Have you faced any difficulties during the selection of LIC?

Yes No

20. If yes what were the difficulties you faced? (Please mark ranks i.e. 1, 2, 3...)

Reasons Rank
Fear of fraud
Difficulties in the return of claim
Trust of agent
Fear of losing money

Absence of knowledge

21. Between public and private insurance from which do you prefer to buy insurance policy?

Public Private

22. What is the main reason which made you buy LIC?

LIC is government backed

Trust on LIC

Safety and security of money in LIC

23.Are you satisfied with the policies of the insurance provider?

Highly satisfied Satisfied

Neutral Dissatisfied

Highly dissatisfied

24. If you want to clarify any query to whom do you consult first?

Advisor company website

Customer care Branch manager

25. How do you perceive the benefits of insurance provided?

Cover future uncertainty

Tax deductions

Future investment

26. Are you aware of the life insurance policies?

Not at all aware

Fully aware

Partly aware

27. Which of the following policies you have?

Endowment policy

Children policy

Money back policy

Single premium policy

Pension plan policy

28. Are you satisfied with your current policy?

Yes No

Your suggestion as a customer ...................