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A REPORT ON Customers PERCEPTION TOWARDS LIFE INSURANCE AFTER PRIVATIZATON

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LIST OF ILLUSTRATIONS
LIST OF FIGURES S.No 1 2 3 4 5 6 7 TITLE OF FIGURES No of males and females surveyed Educational qualifications of males Educational qualifications of females Popularity percentage of life insurance companies Familiarity of schemes among people Purpose of Insurance Ranking of some benefits of insurance (figures expressed in %) Insurance as the viable option for investment Availability of Insurance Cover Estimate of IT professionals enrolled into insurance Type of investment interested in Mode of premium payment Services provided by the insurance company (figures expressed in %) Returns given by the insurance company (figures expressed in %) Ratings of various insurance companies Privatization of insurance Availability of good services after privatization PAGE No. 34 35 35 36 37 38 39

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LIST OF TABLES S.No 1 2 3 4 TITLE OF TABLES Popularity percentage of life insurance companies Familiarity of schemes Purpose of Insurance Ranking of some benefits of insurance (figures expressed in %) Estimate of IT professionals enrolled into insurance Mode of premium payment Ratings of various insurance companies PAGE No. 36 37 38 39

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5 . The project report is structured according to the data procured from the websites of life insurance companies. The survey is conducted only in the Delhi so the statistical data collected. This report also takes in to consideration the new innovative and contemporary products available to the customers in the market and to which level they are satisfied with these products and what is their recommendation for any changes that should be done in the products. analyzed and results drawn only reflects views and perception of local residents. professionals about the life insurance and insurance products. SCOPE AND LIMITATIONS The purpose of this report is to find out the change in the perception of the people towards life insurance after privatization and to understand and compare the current insurance market with the market existing before opening up of the industry for the private and outside players with some current issues and latest development. IRDA annual report. and insurance council of India and through the survey conducted by means of preparing a questionnaire. A small sample size is taken for conducting the survey.PURPOSE. So the results through this effort may vary and deviate from the actual findings and proceedings.

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initially into an economy. In this regard. the Gross Domestic Product of the countr y is predominantly derived from the services sector.INDUSTRIAL ANALYSIS Historical Background: The Indian economy is currently showing signs of vibrancy. to look into the modifications. the regulatory frame work of the insurance sector. has transformed itself in stages over the period of the five year plans. has resulted in the establishment of a statutory body. for regulating the players and in broadening the sector by admission of new players from the private sector. Today. And insurance being a service industry could prima facie act as an engine of growth. where industry assumed a leadership role accompanied by a perceptible change in the last few years or so with an accent on information technology and other service sectors. the history of development of insurance industry in India has 7 Subsequent sections of this report deal with these . Government's decision to accept the recommendations of the This will naturally have its effect on the state of capital market of which insurance sector is an Committee on Reforms in th e Insurance Sector and to constitute an interim Insurance Regulatory Authority. integral part. it is also depicting a qualitative change in its composition. by an executive order in January 1996. obviously necessary steps are required to be taken to sustain this process of growth and towa rds this end a coordinated approach is necessary. As more than 42% of the country's current GDP is being generated by the services sector. Such a development has had a ripple effect leading to the establishment and development of professional institutions that are connected with the industry. aspects. which had been essentially built on agricultural The economy wealth.

insurance market has been In fact. But decidedly the f irst step in this direction has now been taken by admission of new p layers and the Authority hopes that this step.been one of under-performance and under-achievement. will be a significant one. as a result of the transformation that has been ushered in with t he current developments in the insurance sector. Also added to these statements is a short table which depicts the state of insurance penetration in the Indian context. Appreciation for the necessity to cover risks of both personal lives and property has been very poor. 8 . market are changing. In the statements that follow. There is still considerable work to be done in this area by insurance companies. Coverage of property to risks of different types has always been a secondary consideration of its owners and has been prompted by lenders' requirements. A discerning reader may note that the level of development of insurance in the country is still not on the same level as the development noticed in the neighborhood but the increase shown in a period of the past few years is encouraging. albeit slowly. the growth in the life driven by income tax mainly considerations and this had been the primary reason why the urban population has been a major beneficiary of life policies. The compelling reason for the same which was to provide an opportunity for the consumers to have a choice in the matter of selection of their risk bearers is slowly unfolding into a system whereby newer and newer dimensions are being added to the product profiles that the companies produce. the Authority portrays some basic and fundamental statistics that relate to the Indian economy which are relevant to the insura nce industry. the industry shall not move in the high gear for development. though small in nature. Unless there exists a compulsion on the part of All these characteristics of the current owners to cover the risks of loss.

they have been active for so little a time that their effect on the market will be felt only in the years to come. Some of the hopes have been achieved . to a great extent.in the areas of innovation of products. A frequently asked question is: what is the optimum number of insurance companies that is ideal for India’s needs? Considering that life insurance penetration is 3% of GDP and that one is aiming at say 7% or 8% of GDP. CURRENT DEVELOPMENTS IN ULIP It is nearly seven years since the Indian insurance market was opened up. The annual ‘new business’ growth has been a round 100% for the last three years and it looks likely that such a growth will continue for some time. By the end of the financial year 2007 -08 we are likely to see more than twenty life insurance companies in India. In life insurance. extension of facilities to cus tomers etc.The opening of the market to private participation is a bold experiment and was necessitated by the public perception of a necessity to have a free availability of choice to customers. bring about a rationalization of premium structure. however. end cross subsidization. The functioning of the old insurers gave enough hopes to nurture and encourage these thoughts. we can say that we have a long way to go and that there is room for more insurance companies. The new companies have also supported this philosophy by their current actions. has been due to ULIP products is another matter 9 . provide covers which were lacking in the market and provide the necessary resources for infrastructure development. Hopes were entertained that the opening up of the market will deepen the insurance penetration. we have seen unprecedented growth which is continuing. that va st sections of people are still not covered by life insurance and large geographical areas are untouched by insurance. That such an incredible growth.

GIC and its subsidiaries with regard to the restructuring of boards and flexibility in investment norms aimed at channeling funds to the 10 .TABLE 1 MILESTONES OF INSURANCE REGULATIONS IN THE 20THCENTURY Year Significant 1912 Regulatory Event The Indian Life Insurance Company Act 1938 1938The Insurance Act: Comprehensive Act to regulate insurance business in India 1956 Nationalization of business in india 1972 1972Nationalization insurance business in India 1993 1994 Setting up of Malhotra Committee Recommendations of Malhotra Committee 1995 Setting up of Mukherjee Committee of general life insurance 1996 Setting up of (interim) Insurance Regulatory Authority (IRA) 1997 The Government gives greater autonomy to LIC.

(2) The level of customer satisfaction is high for the LIC (one of the 11 . (1) It was perceived that private companies would not promote insurance in rural areas. (2) The Government would be in a better position to channel resources for saving and investment by taking over the business of life insurance. the LIC has become very successful. (1) Despite being a monopoly. In some ways. The IRA bill is renamed the Insurance Regulatory and Development Authority (IRDA) Bill1999Cabinet clears IRDA Bill2000President gives Assent to the IRDA Bill Sources: Various Monopoly Raj The nationalization of life insurance was justified mainly on three counts. Life Story of the Life Insurance Corporation The life insurance industry was nationalized under the Life Insurance Corporation (LIC) Act of India. 25 insurance companies were already bankrupt and another 25 were on the verge of bankruptcy). OCB’s and FII’s 1999 The Standing Committee headed by Murali Deora decides that foreign equity in private insurance should be limited to 26%. (3) Bankruptcies of life insurance companies had become a big problem (at the time of takeover.infrastructure sector 1998 The cabinet decides to allow 40% foreign equity in private to insurance companies-26% foreign companies and 14% to NRI’s. the LIC has managed to capture some 30 odd percent of it. it has some 60-70 million policyholders. The experience of the next four decades would temper these views. Given that the Indian middleclass is around 250-300 million.

Around 48% of the customers of the LIC are from rural and semi-urban areas. This is not surprising. This is even more surprising given the levels of economic development in Chile and Italy. some 1.findings of the Malhotra Committee. The prominence of some developing countries is more surprising. see below). Specifically. when the income level improves. For example. Table 2 shows that in many developed countries. Thus. (3) Market penetration in the rural areas has grown substantially. One exogenous factor has helped the LIC to grow rapidly in recent years: a high saving rate in India. insurance (especially life) is likely to grow rapidly. 12 . This figure has doubled between 1985 and 1995. Life Insurance in India: A World Perspective In many countries. Thus. Even though the saving rate is high in India (compared with other countries with a similar level of development). This probably would not have happened had the charter of the LIC not specifically set out the goal of serving the rural areas.percent of the GDP are in life insurance related savings vehicles.3. we can conclude that there is an insurance culture in India despite a low per capita income. nearly half of the investments are in physical assets (like property and gold). Indians exhibit high degree of risk aversion. South Africa features at the number two spot. India is nestled between Chile and Italy. a significant fraction of domestic saving is in the form of (endowment) insurance plans. This bodes well for future growth. Insurance has been a form of savings. In addition. Around twenty three percent are in (low yielding but safe) bank deposits. This is somewhat surprising given the frequent delays in claim settlement.

Curiously. and to develop an effective instrument for mobilization of financial resources for development. (d) To make recommendations on regulation and supervision of the insurance sector in India. (c) To take specific suggestions regarding LIC and GIC with a view to improve the functioning of LIC and GIC. (c) It suggested that settlement of claims were to be done within a specific time frame without delay. (a) To suggest the structure of the insurance Industry. intermediaries like agents etc. to have a variety of insurance products with a high quality service. (b) To make recommendations for changing the structure of the insurance industry. Mumbai should start new courses and diploma courses for intermediaries of the insurance sector. The union of the LIC made political capital out of this finding (The following are the purposes of the committee. (f) To make recommendations on any other matter which are relevant for development of the insurance industry in India. It also investigated the level of satisfaction of the customers of the LIC. (b) The committee suggested that the Federation of Insurance Institute. (c) The LIC should use an MBA specialized in Marketing (a similar suggestion for the GIC subsidiaries). and ultimately. (e) To make recommendations on the role and functioning of surveyors. indicating that the market should be opened to private-sector competition. Train these people after the identification of training needs. to assess the strengths and weaknesses of insurance companies in terms of the objectives of creating an efficient and viable insurance industry. the level of customer satisfaction seemed to be high.Malhotra Committee Liberalization of the Indian insurance market was recommended in a report released in 1994 by the Malhotra Committee. The committee made a number of important and far-reaching recommendations. (d) The committee 13 . for changing the general policy framework etc. to have a wide coverage of insurance services. in the insurance sector. foreign private-sector competition.(a) The LIC should be selective in the recruitment of LIC agents.

(f) It also made a number of recommendations to alter the existing structure of the LIC and the GIC. Instability in Central Government.Mukherjee Committee Immediately after the publication of the Malhotra Committee Report. Unfortunately. a new committee (called the Mukherjee Committee) was set up to make concrete plans for the requirements of the newly formed insurance companies. The bill was awaiting ratification by the Indian Parliament. etc. from the information that filtered out it became clear that the committee recommended the inclusion of certain ratios in insurance company balance sheets to ensure transparency in accounting. However. (i) The committee suggested some norms relating to promoters’ equity and equity capital by foreign companies. This Act repealed the monopoly conferred to the Life Insurance Corporation in 1956 and to the General Insurance Corporation in 1972. The authority created by the Act is now called IRDA. (g) The committee insisted that the insurance companies should pay special attention to the rural insurance business. vigilance. changes in the insurance industry appeared imminent. including entry to new players and the minimum capital level requirements for such new players should be Rs. improving customer service and use of technology. On December 7.1999. Insurance Regulatory Act (1999) After the report of the Malhotra Committee came out.has several recommendations on product pricing. However. the Indian Cabinet approved an Insurance Regulatory Authority (IRA) Bill that was designed to liberalize the insurance sector. He argued (probably on the advice of some of the potential entrants) that it could affect the prospects of a developing insurance company. 100 crores (about USD 24 million). the BJP Government fell in April 1999. An election was held in late1999. But. New licenses are being given 14 . Recommendations of the Mukherjee Committee were never made public. changes in insurance regulation could not pass through the parliament. On March 16. systems and procedures. The deregulation was put on hold once again. A new BJP-led government came to power. But the Finance Minister objected. It has ten members. The dramatic climax came in 1999. 1999. the new government passed the Insurance Regulatory and Development Authority (IRDA) Act. a lower capital requirement could be considered for a co-operative sectors' entry in the insurance business. (h) In the case of liberalization of the insurance sector the committee made several recommendations.

Curiously. 2001). The second stipulates that the "Appointed Actuary" has to be a Fellow of the Actuarial Society of India. Initial margins are set high (compared with developed countries). the disclosure requirements have been kept rather vague. but he or she may be an external consultant if the company happens to be a non-life insurance company. The margins vary with the lines of business (for example. Rangachari set forth a set of regulations in an extraordinary issue of the Indian Gazette that details of the regulation. all the insurers are forced to provide some coverage 15 .asp).Fifth. Seventh. Given that there has been a dearth of actuaries in India with the qualification of a Fellow of the Actuarial Society of India. Each license has its own capital requirements (around USD24 million for life or non-life and USD48 million for reinsurance). Mr. Regulations The first covers the Insurance Advisory Committee that sets out the rules and regulation. non-life and reinsurance insurance businesses. Third. As a result. the Appointed Actuary would be responsible for reporting to the IRDA a detailed account of the company. some companies have not been able to attract a qualified Appointed Actuary (Dasgupta.org/press. for life insurers the Appointed Actuary has to be an internal company employee. IRDA has separated out life. More than a dozen institutions have been recognized by the IRDA for training insurance agents (the list appears online at http://www.irdaonline. the IRDA has set up strict guidelines on asset and liability management of the insurance companies along with solvency margin requirements. this becomes a requirement of tall order. the Chairman of the IRDA. Fourth. insurance agents should have at least a high school diploma along with training of 100 hours from a recognized institution.Some Details of the IRDA Bill On July 14. This has been done despite the recommendations to the contrary by the Mukherjee Committee recommendations. 2000. The IRDA is also in the process of replacing the Actuarial Society of India by a newly formed institution to be called the Chartered Institute of Indian Actuaries (modeled after the Institute of Actuaries of London). N. a company has to have separate licenses for each line of business.to private companies (see below). fire insurance has a lower margin than aviation insurance). Sixth. Therefore.

(1) In respect of a life insurer. ING-Vyasa. It is well known that the SBI has long harbored plans to become a universal bank (a universal bank has business in banking. Max-New York Life. (b) three percent in the second financial year. insurance and in security). (d) twelve percent in the fourth financial year. This is a joint venture between Mumbai based Industrial Credit & Investment Corporation and the London based Prudential PLC. (b) seven percent in the second financial year. In the first round of license issue. (a) five percent in the first financial year. Note that all of these companies are either in the life insurance business or in the non-life insurance business. This partnership won over several others (with Fortis and with GE Capital). the following companies have thus been granted licenses: ICICI -Prudential. Tata-AIG General. However. The entry of the SBI has been awaited by many. It is a joint venture between Indian Farmers' Fertilizer Cooperative and Tokio Marine and Fire of Japan. Reliance General. 2000. SBI-Cardiff Life. It is a partnership between Delhi based pharmaceutical company Max India and New York Life. No stand-alone health insurance company has been granted license so far. No license has been granted for reinsurance business so far (the size of the reinsurance business can be 10-20% of the total revenue). (c) ten percent in the third financial year. Reliance Life. Bajaj-Allianz General.New Entry Immediately after the passage of the Act. (2) In respect of a general insurer. (3) IFFCO Tokio General Insurance Company.for the rural sector. not all the partnerships panned out in the end (see below) There are three other companies with "in principal" approvals:(1) Max New York Life.(2) ICICI Prudential Life Insurance Company. HDFC-Standard Life. Enter the Dragon On December 28. (e) fifteen percent in the fifth year (of total policies written direct in hat year). Royal-Sundaram. the following companies made public statements that they already were in the process of setting up insurance business with foreign partnerships (see Table 3). To date (end of April 2001). 16 . a number of companies announced that they would seek foreign partnership. IFFCO-Tokio Marine. Tata-AIG Life. (a) two percent in the first Financial year. the State Bank of India (SBI) announced a joint venture partnership with Cardif SA (the insurance arm of BNP Paribas Bank). this would be a natural expansion. Bajaj-Allianz Life. the New York based life insurance company. (c) five percent thereafter (of total gross premium income written direct in that year). For bank with more than 13. Birla-SunLife. In mid-2000.000 branches all over India.

Third. it will dilute its holding to 5060%. It wanted to retain its own brand name. This ruled out an American partner (where underwriting insurance business by banks have been strictly forbidden by law). In Continental Europe. Dabur Group and Allstate also parted company.Re-pairing of Partners A curious trend has developed by the end of 2000. Cardif is the third largest insurance company in France.the SBI was absent. by the end of July 2000. Second. it is called bancassurance (in France) or allfinanz (in Germany).Similarly. the SBI will sell insurance in 00 branches. The management of Hindustan Times realized that they are heavily reliant on a steady daily cash flow (Kumari. More than 60% of life insurance policies in France are sold through the banks. Probably the most dramatic breakdown took place between Hindustan Times (a newspaper group) and the Commercial Union of the UK. Fourth. the Reserve Bank of India (RBI) needed to clear participation by the SBI because in India banks are allowed to enter other businesses on a "case by case" basis. it did not want the partner to become dominant in the long run (when the 26% foreign investment cap is eventually lifted). the SBI was allowed to do so (with a promise that its share would be eventually diluted). the SBI was seeking a foreign partner to help with new product design. First. Dabur has decided to tie the knot with another divorcee . Kotak-Mahindra and Chubb declared their divorce. There were several reasons for this delay. Several divorced partners have come back to the field to tie knots to some other partners. Allianz has announced a new partnership 17 . This kind of synergy between a bank and an insurance company is extremely rare in many parts of the world. it wanted a partner that is well versed in the universal banking business. This was the first for a bank to enter the insurance market. 2001).The SBI entry is groundbreaking for several reasons. Insurance is a completely different business.Commercial Union. Their shareholders would revolt if they faced large one-time losses (common in insurance business). Second. Broken Marriages Several partnerships broke down during the year 2000. Over the course of the next twelve months. Initially it will hold 74% ownership of the joint venture company with Cardif. Over time. even though the regulators have said that banks would not (generally) be allowed to hold more than 50% of an insurance company. Allianz and Alpic broke their partnership. Over a period of 2-3 years it will expand operation in 500 branches.

with the giant Indian scooter-maker Bajaj. however.Back to the Future: Mostly Swaraj with a Foreign Twist At present. This will place India as the sixth largest market in the world (after the US. Germany. 18 . 312 million middle class consumers in India have enough financial resources to purchase insurance products like pension. Japan. UK and France). health care.5 per cent of this insurable population. accident benefit. property and auto insurance. Only 2. The potential premium income is estimated at around US $80 billion. have insurance coverage in any form. life.

with an open mind. Which distribution channel would customer preferred to get insurance policy through banks. it is the plan for collecting and utilizing data so that desired information can be obtained. but also in market research and further contexts. Quantitative experiments all use a standard format. QUALITATIVE: Qualitative research a method of inquiry employed in many different academic disciplines. Qualitative researchers aim to gather an in-depth understanding of human behavior and the reasons that govern such behavior. This hypothesis must be provable by mathematical and statistical means. 3. to establish novel facts. 4. with a few minor inter-disciplinary differences. or as any systematic investigation. traditionally in the social sciences. and is the basis around which the whole 19 . 2. usually using a scientific method.CHAPTER-2 RESEARCH OBJECTIVES AND METHODOLOGY OBJECTIVES OF THE STUDY: 1. To understand the growth of bancassurance in india as a new concept 2. QUANTITATIVE: Quantitative research design is the standard experimental method of most scientific disciplines. There are two types of research design: 1. of generating a hypothesis to be proved or disproved. To suggest the ways and means to improve the existing performance by way of collecting responses from the customers.  RESEARCH DESIGN: The research design is defined as. RESEARCH METHODOLOGY OF THE STUDY RESEARCH Research can be defined as the search for knowledge. To know the awareness of the customer and view points of the customer about insurance as well as bancassurance.

experiment is designed. Mail surveys 4. and natural or contrived. as: 1. based on the method or mood of administration.) personal observation b) . Surveys involve the administration of a questionnaire and may be classified. OBSERVATIONAL METHODS may be classified as structured or unstructured. Internet surveys 2. The two basic means of obtaining primary quantitative data and descriptive research our survey and observation.mechanical observation DATA COLLECTION: There are two sources of data collection: PRIMARY DATA COLLECTION In primary data collection. disguised or on disguised. 1. The major methods are: a.. we collect the data our self using methods such as interviews and questionnaires. traditional telephone interviews 2. where is observation entails recording responded behavior. There are many methods of collecting primary data and the main methods include:    questionnaires interviews Observations SECONDARY DATA COLLECTION 20 .SURVEY METHODS involves a direct questioning of respondents. in-home personal interviews 3.

CONVENIENCE SAMPLING This method of sampling involves selecting the sample elements using some convenient method without going through the rigor of sampling method. statistics or financial) or qualitative data (usually words or text). Here Convenience sampling technique has been used.OF QUESTIONS: TYPE OF QUESTIONS: Both open ended and close ended questions LIMITATIONS OF THE STUDY: 21 . EXPLORATORY RESEARCH: aims to gain familiarity and new insights into any phenomenon while analytical research aims at analyzing the current scenario and thereby using that to project the future performance. the area selected for the study was DELHI-NCR. Quantitative data may often be presented in tabular or graphical form. There are different methods of sampling. SAMPLING INSTRUMENTS:   NO. This research aims at studying the historical performance of the company in bancassurance and it also evaluates the future prospects of the company SAMPLING SIZE: 50 CUSTOMERS SAMPLING TECHNIQUE: SAMPLING DESIGN: A sampling design is a definite plan for obtaining a sample given population. RESEARCH DESIGN: Exploratory Research.All methods of data collection can supply quantitative data (numbers. The researcher may make use of any convenient base to select the required number of samples. Accordingly.

 Time has played a biggest constraint that the research could not be carried out comprehensively as the duration of the study was only a month  As a research contains the secondary data for knowing the customer perception or satisfaction  The sample size for collecting the primary data was meager as it includes only 75 respondents hence the conclusion would not be a universal one  Personal biases and prejudices of the customers may also affect the study. 22 .

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Specify_______________________ Email id __________________________________ 1.Questionnaire Name__________________________________________ Age_____ Gender: Male/Female Educational Qualification: a) Engineering b) CA/MBA c) MCA d) Others If Others. Tick the life insurance companies you are familiar with:1) LIC 3) SBI Life 2) 4) ICICI-Prudential Bajaj-Allianz 24 .

Tick the types of schemes you are familiar with:1) Term plan 2) Endowment plan 3) Money Back plan 4) ULIP ( Unit Linked Insurance Plan) 5) Child plan 6) Pension plan 3. Rank the following benefits of Insurance on a 1-5 scale: _____ Financial Expenses _____ loved Ones’ future security _____ Exemption from tax _____ Mortgage payments/Rent fund _____ College/School Education 25 . Tick on what the life insurance company provides? a) Security for life b) Investment Opportunity c) Tax Benefits d) High returns e) Pension 4.5) Max New York Life 6) Birla Sun Life 2.

.................................... Do you think insurance is the viable option for investment? Yes No Why?........ 7............................................... .................... ………………………………………………………………………………………… …… 8..........................................5................................... What type of investment are you interested in? Short term Long term ULIP Why?............. then which company?............................. .............. What is idea behind your investment in insurance? Tax Benefit Future Security High Returns 9............ 6............................................... Do you have any insurance cover? Yes No If Yes........................... What is the mode of your premium payment? 1) Monthly 2) Quarterly 3) Half-Yearly 4) Yearly 26 .............................................................

5. body………………… 27 . After privatization whether the public is getting good products/service? Yes No 15. of private insurance companies is good for the public? Yes No 14. …. Which is the most trusted insurance company at present? (Both in the public and the private sector) Rate on the basis of 1-5 scale appropriate no.least trusted …. Are you happy with the returns given by the insurance company? Yes No 12.) 1.Sun Life 1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4 5 5 5 5 5 13.10.Most trusted (Tick the LIC SBI-Life ICICI-Prudential Bajaj-Allianz Birla. Are you happy with the services provided by the insurance company? Yes No 11. Facilitator…………………… A govt. Entry of large no. What do you think about the role of the IRDA? Regulator ……………….

The survey includes response from professionals. The response is quantified by means of response obtained in the form of answers and views put forward by the people in a survey conducted. and housewives and working in different sectors and fields in delhi. 28 . businessmen. tables and pie diagrams are done to represent the findings of the survey.ANALYSIS OF THE study The survey was conducted to understand the knowledge and perception of the people towards life insurance after privatization. daily workers. line graphs. Almost everyone knew insurance and relates insurance with LIC and those who have invested in insurance products mainly invested for availing tax exemption and all traditional reasons of investing like risk coverage and loved ones future security while some of them also said that insurance is not a good option for investment due to inflation and when long term gains were considered. Use of bar.

16 29 .No of males and females software professionals surveyed 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 24 7 male female Educational qualifications of males 16.66 Engg.33 MCA Others 4. CA/MBA 20.83 58.

93 61.74 BIRLA HDFC SBI Even though. 30 .Educational qualifications of females 42. CA/MBA MCA Others 14.85 42.29 45. the private sector insurance companies are increasing.29 LIC 80.16 41.28 0 Popularity percentage of life insurance companies 61.64 ICICI BAJAJ 67.85 Engg. This is also depicted by the pie-chart as shown above. the most sought after insurance company even among people is LIC which has the highest market share in India.

74 61. life insurance .74 Among many plans available. LIC 2.29 Familiarity of Schemes 25. it give high returns. HDFC 6.64 67. critical illness cover and is admired for its flexibility for paying premium amount.29 41. 31 .CATEGORY RESPONSE (in %) 1. This plan is famous for its high liquidity advantage. the most preferred one among the mass is money back plan.93 45.8 58.06 38.7 term plan endowment plan money back ULIP 67. ICICI 3. as its serve multiple purpose. This plan helps you to withdraw your money at regular intervals and still staying insured. BAJAJ 4.16 61. SBI 80. tax benefit. The other product gaining popularity is ULIP (unit linked insurance plan). Birla 5.

SCHEMES 1. Even the IT returns are also 100% tax free on annual basis.74 58.29% view insurance tax saving product. Term plan 2. After that around 46 percent buy insurance to cover risk followed by good returns and savings objective. Life insurance plans of some private insurance companies are giving 100% tax exemption.7 67. Money back 4.8 38.06 Objective for investment in Insurance Among the surveyed people about 61. CATEGORY RESPONSE (in %) 32 . ULIP RESPONSE (in %) 25. Endowment plan 3.

High Returns 5.e. Life Insurance 2. Tax Benefit 4.58 29.1.03 Ranking of some benefits of insurance (figures expressed in %) Among some benefits of insurance. people take insurance so that their loved ones and they themselves get secured and enjoy the life cover. CATEGORY 33 RESPONSE (in %) .16 32. loved ones’ security secured the least percentage i. overall the highest rank. Savings 45. Investment 3. So.29 22.25 61.

The reasons were there that it is the medium of tax benefit. Final Exp. 254 187 200 316 374 Insurance as the viable option for investment 80% 60% 40% 20% 0% yes no 20% 80% Among the surveyed. 80% of them said that insurance is the viable option for investment. risk coverage and regular savings. Loved ones’ security 3. But. Children Edu. Housing Loans 5. 2. 20% of them said that it is not favorable for investment due to inflation and comparatively less returns than other financial instruments. 34 . Income Needs 4.1.

90% of them said that they had life-insurance cover but only 10% of them were devoid of insurance but were planning to take one in the future. Estimate of IT professionals enrolled into insurance About 54. And the rest all insurance companies having their insurance cover are far less 35 .Availability of Insurance Cover Among the people surveyed.83% of IT professionals have chosen LIC as their premier insurance investment company.

this illustrates that even the IT professionals have faith in LIC as their most favored life insurance company. Reliance RESPONSE (in %) 54.90 3. LIC 2.83% people said that the type of investment which they are interested in is long term investment.25 Short term Long term 54.22 6. ING-Vyasa 7. Long life insurance cover will naturally give them high risk coverage and higher returns. 36 .45 12. Tata. So. Bajaj. Birla Sun-Life 3.45 3. This is because they wanted to reap benefits for a longer term.as compared to LIC.MetLife 5.22 6.AIG 9.83 ULIP About 54.12 32.ICICI 4.Allianz 6. SBI-Life 8.22 3.45 Type of investment interested in 16.83 6. HDFC 10.22 6. INSURANCE COMPANY 1.45 3.

58% favored monthly and half yearly medium of premium payment.58 22. MODE OF PREMIUM PAYMENT 1.7 22.yearly 4.58 half yearly yearly About 38. Quarterly 2.Mode of premium payment 38.58 22.7 Services provided by the insurance company (figures expressed in %) 37 .7 quarterly monthly 22. Half. And only 22. Monthly 3.7% of them said that they paid their premium through quarterly and yearly mode. Yearly RESPONSE (in %) 38.7 38.58 38.

32% of people said that they were happy with the services provided by the insurance company. debentures.45 Yes No About 90.100 80 60 40 20 0 90. But 22.96% of people have view that they were happy with the returns given by the insurance companies. This shows that life insurance companies are fairly performing well especially in India.45% were not satisfied.96 Yes 22.58 No Yes No About 70.58% were not. shares. securities and 38 .32 6. Returns given by the insurance company (figures expressed in %) 80 60 40 20 0 70. The reason for their dissatisfaction is that they think that other financial instruments like bonds. And only 6.

12 3.5 3 2.03 3.16 3. The other private life insurance companies are having less percentage of share of it. 39 .5 2 1.64. It has a rating of 4.5 4 3.5 0 4. Ratings of various insurance companies 5 4.64 mutual funds are other good options for investment and they think that insurance does not provide investment opportunity for the short term.INSURANCE COMPANY 1.64 4. LIC RATING 4.12 LIC SBI-Life ICICI Bajaj-Allianz Birla SunLife LIC of India is the most preferred life insurance company even among software professionals as depicted through the above bar graph.5 1 0.

12 3.03 3. SBI-Life 3.2. Only 22% of them think that that investing in a private insurance company is risky because the returns are not guaranteed.Sun Life 4. Availability of good services after privatization 40 .16 3. Birla. ICICI 4.12 Privatization of insurance 25 20 15 10 5 0 Yes No 7 24 78 % people of those surveyed were of the view that privatization is good for the public. This is because they think that the many private insurance companies have come up with some attractive plans like ULIPs which are fetching good returns even for a short period.Allianz 5. Bajaj.

35 Yes No 70.19.35% think that services are not good after privatization as they have less belief on these private life insurance companies or they do not consider life insurance as important investment option and also the private insurance companies have high premium allocation charges and high surrender charges.96 About 70. fixed charges and other formalities. Only 19. This is because they have come up with some new schemes and plans which are innovative and are giving better returns even for a short period than compared to plans pertaining to public sector insurance company like LIC. 41 .96 % of people think the insurance companies are providing good services even after privatization.

Investors/Insu rance seeker has to take switching charges into consideration as they have a long -term implication on the returns generated. 42 . you may be better off investing elsewhere after securing your life insurance needs. 4. The Insurance Regulatory and Development Authority has to issue set of guidelines on ULIP policies offered in the m arket. 1. If you feel equipped to manage your investments on your own or are not comfortable with long lock -ins or you can't make the most of these tax breaks. as they have been generated during the biggest Bull Run in recent stock market. The high returns (above 20 per cent) are definitely not sustainable over a long term. 2.CONCLUDING REMARKS Unit Linked products are finally products of choice. There is a great need to disclose the risk involved in the schemes properly to the investor/insurance seeker by the insurance/investment companies. The charges in the initial years should be brought down. 3. 5.

com 3. www.sbilife. www.REFERENCES 1.irdaonline.co.com 2.in 43 . www. www.lifeinsurancecouncil.com 4.licindia.

4. 5. 6. Analysis Suggestions Limitations Add conclusions Add some details of the co. 3.Changes 1. 7. Make it cut short the historical background Impact of privatization 44 . 2.