CHAPTER 1INTRODUCTOIN1

1.1INTRODUCTION TO THE STUDYEveryone is exposed to various risks. Future is very uncertain, but there is wayto protect ones family and make ones childrens future safe. Life Insurance companies help us to ensure that our familys future is not just secure but also prosperous. Life Insurance is particularly important if you are the sole breadwinner foryour family. The loss of you and your income could devastate your family. Lifeinsurance will ensure that if anything happens to you, your loved ones will be able to manage financially. This study titled Study of Consumers Perception aboutLife Insurance Policies enables the Life Insurance Companies to understand how consumers perception differs from person to person. How a consumer selects, organizes and interprets the service quality and the product quality of different LifeInsurance Policies, offered by various Life Insurance Companies.Insurance is a tool by which fatalities of a small number are compensated out offunds (premium payment) collected from plenteous. Insurance companies pay backfor financial losses arising out of occurrence of insured events e.g. in personal accident policy death due to accident, in fire policy the insured events are fire and other allied perils like riot and strike, explosion etc. hence insurancesafeguard against uncertainties. It provides financial recompense for losses suffered due to incident of unanticipated events, insured with in policy of insurance. Moreover, through a number of acts of parliament, specific types of insurance are legally enforced in our country e.g. third party insurance under motor vehicles Act, public liability insurance for handlers of hazardous substances under environment protection Act. Etc.2

WHAT IS INSURANCEIt is a commonly acknowledged phenomenon that there are countless risks in everysphere of life .for property, there are fire risk; for shipment of goods. Thereare perils of sea; for human life there are risk of death or disability; and soon .the chances of occurrences of the events causing losses are quite uncertainbecause these may or may not take place. Therefore, with this view in mind, people facing common risks come together and make their small contribution to the common fund. While it may not be possible to tell in advance, which person will suffer the losses, it is possible to work out how many persons on an average outof the group, may suffer losses. When risk occurs, the loss is made good out ofthe common fund .in this way each and every one shares the risk .in fact they share the loss by payment of premium, which is calculated on the likelihood of loss .in olden time, the contribution make the above-stated notion of insurance DEFINITION OF INSURANCE Insurance has been defined to be that in, which a sum of money as a premium is paid by the insured in consideration of the insurers bearingsthe risk of paying a large sum upon a given contingency. The insurance thus isa contract whereby:a. Certain sum, termed as premium, is charged in consideration, b. Against the said consideration, a large amount is guaranteed to be paid by the insurer who received the premium, c. The compensation will be made in certain definite sum, i.e., the loss or the policy amount which ever may be, and d. The payment is madeonly upon a contingencyMore specifically, insurance may be defined as a contact between two parties, wherein one party (the insurer) agrees to pay to the other party (the insured) orthe beneficiary, a certain sum upon a given contingency (the risk) against whichinsurance is required.3

TYPES OF INSURANCE Insurance occupies an important place in the modern world because of the risk, which can be insured, in number and extent owing to the growing complexity of present day economic system. The different type of insurance have come about by practice within insurance companies, and by the influence of legislation controlling the transacting of insurance business, broadly, insurance may be classified into the following categories: 1. Classification from businesspoint of view a) Life insurance, and b) General insurance 2. Classification on the basis of nature of insurance a) b) c) d) e) Life insurance Fire insurance Marine insurance Social insurance, and Miscellaneous insurance3. Classification from risk point of view a) b) c) d) Personal insurance Property insurance Liability insurance Fidelity general insurance4

THE IMPORTANCE OF INSURANCE Insurance benefits society by allowing individuals to share the risks faced by many people. But it also serves many other importanteconomic and societal functions. Because insurance is available and affordable,banks can make loans with the assurance that the loans collateral (property thatcan be taken as payment if a loan goes unpaid) is covered against damage. This increased availability of credit helps people buy homes and cars. Insurance alsoprovides the capital that communities need to quickly rebuild and recover economically from natural disasters, such as tornadoes or hurricanes. Insurance itselfhas become a significant economic force in most industrialized countries. Employers buy insurance to cover their employees against work-related injuries and health problems. Businesses also insure their property, including technology usedin production, against damage and theft. Because it makes business operations safer, insurance encourages businesses to make economic transactions, which benefits the economies of countries. In addition, millions of people work for insurance companies and related businesses. In 1996 more than 2.4 million people workedin the insurance industry in the United States and Canada. Insurance as an investment that offers a lot more in terms of returns, risk cover & as also that taxconcessions & added bonuses Not all effects of insurance are positive ones. Thepossibility of earning insurance payments motivates some people to attempt to cause damage or losses. Without the possibility of collecting insurance benefits,for instance, no one would think of arson, the willful destruction of property by fire, as a potential source of money.5

THE INSURANCE INDUSTRY TODAY Since the 1970s, the insurance business has grown dramatically and undergone tremendous changes. As a result of the deregulation offinancial services businesses including insurance, banking, and securities tradingthe roles, products, and services of these formerly distinct businesses have become blurred. For instance, citizens in the U.S. state of California voted in 1988 to allow banks to sell insurance in that state. In Canada, banks may also soon be allowed to sell insurance. Advances in communications technology have alsoallowed traditionally distinct financial businesses to keep instantaneous trackof developments in other businesses and compete for some of the same customers.Some insurance companies now offer deposit accounts and mortgages. In the UnitedStates, life insurance companies now sell more pension plans and other asset management services than they do conventional life insurance. Developments in computer technology that have given insurance providers the ability to quickly access and process information have allowed them to custom-design policies to fit theneeds of individual customers. But the increasing complexity of policies has also made some aspects of buying and selling insurance more difficult. In addition, improvements in geological and meteorological technology have the potential tochange the way property insurers calculate risks of damage. For example, as scientists improve their abilities to predict severe weather patterns, such as hurricanes, and geological disturbances, such as earthquakes, insurers may change how they provide protection against losses from such events6

EVOLUTION OF INSURANCE IN INDIA The marine insurance is the oldest form of insurance. If we trace Indian history there are evidence that marine insurance was practiced here about three thousand years ago. The code of Manu indicates that there was the practice of marine insurance carried out by the traders in India withthose of Srilanka, Egypt and Greece .it is wonderful to see that Indians had even anticipated the doctrine of average and contribution. Fright was fixed according to season and was then very much at the mercy of the wind and other elements. Travelers by sea and land were very much exposed to the risk of losing their vessels and merchandise because of piracy on open seas and highway robbery of caravans was very common. The practice of insurance was very common during the ruleof Akbar to Aurangzeb, but the nature and coverage of the insurance in this period is not well known. It was the British insurer who introduced general insurance in India in the modern form. The Britishers opened general insurance in Indiaaround the year 1700 .the first company known as the sun insurance office was set up in Calcutta in the year 1710. This was followed by several insurance companies like London assurance and royal exchange assurance (1720), Phoenix Assurance Company (1782). Etc. General insurance business in the country was nationalized with effect from 1st January 1973 by the General Insurance Business (Nationalization) Act, 1972. More than 100 non-life insurance companies including branchesof foreign companies operating within the country were amalgamated and groupedinto four companies, viz., the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd., and the United IndiaInsurance Company Ltd. with head offices at Calcutta, Bombay, New Delhi and Madras, respectively.7

Life insurance in the current form came in India from united kingdom with the establishment of a British firm, oriental life assurance company in 1818 followedby Bombay life assurance company in 1823, the madras equitable life insurance society in 1829 and oriental life assurance company in 1874.prior to 1871, Indianlives were treated as sub standard and charged an extra premium of 15% to 20%. Bombay mutual life assurance society, an Indian insurer that came in to existencein 1871, was the first to cover Indian lives at normal rates. The Indian insurance company Act 1923 was enacted inter alia, to enable the government to collectstatistical information about life and nonlife insurance business transacted inIndia by Indian and foreign insurer, including the provident insurance societies. The first half of the 20th century marked by two world war, the adverse affects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression.The first half of the 20th century was also marked by struggles for Indias independence. The aggregate effect of these events led to a high rate of bankruptciesand liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover In thisbackground, the Parliament of India passed the Life Insurance of India Act on 19th June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, by consolidating the life insurance business of 245 private lifeinsurers and other entities offering life insurance services.8

Since 1972, the insurance sector has been totally under the control of government of India through LIC and GIC and its subsidiaries. As a result, revenue of both of them increased in the last years .the amount of savings pooled by LIC increased from Rs.2704 crores in 1974 to Rs .57670 in 1994 with an annual growth rateof 16.53% .similarly premium underwritten by GIC rose from 280 crores in 193 to7647 crores in 1998 showing an annual growth rate of 25.18%. Despite increase in premium collected by both LIC and GIC their were inefficiency and red tapeisumcreeped in to the insurance sector. Apart from that a major policy shift by theNarasimha Rau government during 1990s.the Indian economy opened for foreign competition .In this background The government of India in 1993 had set-up a high powered committee by R.N Malhothra ,former governor reserve bank of India, to examine the structure of Indian insurance sector and recommended changes to make itmore efficient and competitive keeping in view structural changes in other partof the financial system of the country. Insurance sector has been opened up forcompetition from Indian private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of holder of insurancepolicy and to regulate, promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private players into the insurance market, which was hitherto the exclusive privilege of public sector insurance companies/ corporations.9

EVOLUTION OF INSURANCE ORGANIZATION With a view to serve the society, the insurance organizations have been developed in different forms with innovation of insurance practice for social welfare and development; some of these forms are outlined here.a) Self-insurance The arrangement in which an individual or concern sets up a private fund to meet the future risk. If some losses happened in the future the firm meets the loss out of the fund. While it may be called self insurance it is nota single matter of fact, insurance at all because there is no hedge, no shifting, or distributing the burden of risk among larger Persons. It is merely a provision to meeting the unforeseen event. Here the insured become the insurer for the particular risk. But it can be effectively worked only when there is wide distribution of risks subjected the same hazard.b) Partnership A partnership firm may also carry on the insurance business for the sake of profit. Since it is not an entity distinct from the persons comprising it, the personal liability of partners in respect to the partnership debts isunlimited. In case of huge loss the partners may have to pay from their own personal funds and it will not be profitable to them to starts insurance business .in the early period before the advent of joint stock companies many insurance undertakings were partnership firms or unincorporated companiesc) Joint stock companies The joint stock companies are those, which are organized by the shareholders who subscribe the necessary capital to start the business.These are formed for earning profits for the stockholders who are the real owners of the companies. The management of a company is entrusted to a board of directors who is elected by the shareholders from amongst themselves. The company can operate insurance business and policyholders have nothing to do with the management of the concern. But in life insurance it is the practice to share certainportion of profit among the certain policyholders.10

d) Mutual fund companies The mutual fund companies are co- operative associationformed for the purpose of effecting insurance on the property of its members. The policyholders are themselves the shareholders of the companies each member isinsured as well as insured. They have power to participate in management and inthe profit sharing to the full extent. Whenever the income is more than the expenses and claims, it is accumulated I the form of saving and is entitled in reducing the rate of premium. Since the insured are insurers also, they always try to reduce the management expenses and to keep the business at sound level.e) Co-operative insurance organizations Cooperative insurance organizations arethose concerns, which are incorporated and registered under Indian cooperative societies Act. The concerns are also called co operative insurance societies thesesocieties like mutual fund companies are non profit organization .the aim is toprovide insurance protection to its members at the lowest reasonable net cost .the Indian insurance Act. 1938, has provided specialprovisions for the co-operative insurance societies, but after nationalization the societies have ceased to exist.f) Lloyds AssociationLloyds association is one of the greatest insurance institutions in the world. Taking its name from the coffee house Lloyd where underwriters assembled to transact business and pick-up news. The organization traces its origins to the latterpart of the seventeenth century .so it is the oldest insurance organization in existing form in the world. In 1871,Lloyds Act was passed incorporating the members of the association into a single corporate body with perpetual succession anda corporate seal .the powers of Lloyds corporation were extended from the business of marine insurance to the other insurance and guarantee business. The Lloyds Association also publishes, Lloyds list and register of shipping for the information of insuring public and the insurers11

g) State InsuranceThe government of a nation, some times, owns the insurance and runs the businessfor the benefit of the public. The sate insurance is defined as that insurancewhich is under public sector. In Brazil, Japan and Mexico, the insurance are largely nationalized. Previously, the state undertook only those insurances, whichwere regarded as vital for the national interest.INSURANCE SECTOR REFORMSHaving looked at the insurance sector, the efforts made by the government to make the industry more dynamic and customer friendly. To begin with, the Malhotra committee was set up with the objective of suggesting changes that would achievethe much required dynamism. The Malhotra Committee Report In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. In 1994, the committee submitted the report and gave the following recommendations: Structure Government stake in the insurance Companies to be brought downto 50% Government should take over the holdings of GIC and its subsidiaries sothat these subsidiaries can act as independent corporations All the insurance companies should be given greater freedom to operate12

Competition Private Companies with a minimum paid up capital of Rs.1bn should beallowed to enter the industry No Company should deal in both Life and General Insurance through a single entity Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate in each stat Regulatory Body The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from 75%to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time). Customer Service LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry. Overall, the committee strongly felt that in order to improve thecustomer services and increase the coverage of the insurance industry should beopened up to competition. But at the same time, the committee felt the need toexercise caution as any failure on the part of new players could ruin the publicconfidence in the industry13

Few Life Insurance policies are:Whole life policies - Cover the insured for life. The insured does not receive money while he is alive; the nominee receives the sum assured plus bonus upon death of the insured. Endowment policies - Cover the insured for a specific period.The insured receives money on survival of the term and is not covered thereafter. Money back policies - The nominee receives money immediately on death of theinsured. On survival the insured receives money at regular intervals during theterm. These policies cost more than endowment with profit policies. Annuities /Children s policies - The nominee receives a guaranteed amount of money at a pre-determined time and not immediately on death of the insured. On survival the insured receives money at the same pre-determined time. These policies are best suited for planning children s future education and marriage costs. Pension schemes - are policies that provide benefits to the insured only upon retirement. If the insured dies during the term of the policy, his nominee would receive the benefits either as a lump sum or as a pension every month. Since a single policy cannot meet all the insurance objectives, one should have a portfolio of policiescovering all the needs14

1.2 BACKGROUND OF THE STUDY Life Insurance is a contract for payment of a sum ofmoney to the person assured on the happening of the event insured against. Usually the insurance contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death if itoccurs earlier. Obviously, there is a price to be paid for this benefit. Amongother things the contracts also provides for the payment of premiums, by the assured. Life Insurance is universally acknowledged as a tool to eliminate risk, substitute certainty for uncertainty and ensure timely aid for the family in the unfortunate event of the death of the breadwinner. In other words, it is the civilized worlds partial solution to the problems caused by death. Life insurance helps in two ways dealing with premature death, which leaves dependent families tofend for themselves and old age without visible means of support. The most common types of life insurance are whole life insurance and term life insurance. Whole life insurance provides a lifetime of protection as long as you pay the premiums to keep the policy active. They also accrue a cash value and thus offer a savings component. Term life insurance provides protection only during the term ofthe policy and the policies are usually renewable at the end of the term15

There are many Life Insurance Companies like LIFE INSURANCE CORPORATION OF INDIABAJAJ ALLIANZ LIFE INSURANCE COMPANY ICICI PRUDENTIAL LIFE INSURANCE COMPANY HDFC STANDARD LIFE INSURANCE COMPANY BIRLA SUN-LIFE INSURANCE COMPANY ING VYSYA LIFE INSURANCE COMPANY METLIFE INSURANCE COMPANY TATA AIG LIFE INSURANCE COMPANY MAX NEW YORK LIFE INSURANCE COMPANY OM KOTAK MAHINDRA LIFE INSURANCE COMPANY16

CHAPTER 2RESEARCH DESIGN17

RESEARCH DESIGN2.1 STATEMENT OFperception aboutunderstand, howvice and product

THE PROBLEM This Study will help us to understand the consumerslife insurance companies. This study will help the companies toa consumer selects, organizes and interprets the Quality of seroffered by life insurance companies.

2.2 SCOPE OF THE STUDY This study is limited to the consumers within the limit of Bangalore city. The study will be able to reveal the preferences, needs, perception of the customers regarding the life insurance products, It also help the insurance companies to know whether the existing products are really satisfying the customers needs .2.3 NEED FOR THE STUDY 1) The deeper the understanding of consumers needs and perception, the earlier the product is introduced ahead of competitors, the expected contribution margin will be greater .Hence the study is very important. 2) Consumer markets and consumer buying behavior can be understood before sound product and marketing plans are developed 3) This study will help companies to customize the service and product, according to the consumers need. 4) This study will also help the companies to understand the experience and expectations of the existing customers. 5) Apart from creating, manufacturing and distribution capabilities for life insurance products, an in depth study of the consumers, their preferences and demand for their product is very necessary for setting up an efficient marketing network.18

2.4 OBJECTIVE OF THE STUDY o Ascertain the profile and characteristics of potential buyers.o To have an insight into the attitudes and behaviors of customers.o To find out the differences among perceived service and expected service . o To produce an executive service report to upgrade service characteristics of lifeinsurance companies.o To access the degree of satisfaction of the consumers with their current brandof Insurance products.2.5. REVIEW OF LITERATURE: The literature review section critically examine therecent or historically significant studies, company data or industry reports that acts as a basis for proposed studies to begin with the research discussion ofthe related literature and relevant secondary data from a comprehensive prospective, moving to more specific studies, that are associate with research problem.Basically the literature should be applied to the study, than the researcher proposes. The literature may also explain the needs for the proposed work to appraise the short comings and informational gaps in secondary data sources. To carrythe research work the researcher has gone through a few reports, books, journalsand websites. The details regarding Life Insurance Industry, history, origin and growth of the industry is also taken from some books, magazines etc. The sources of this information are as follows: Catalogues and Broachers from various life insurance companies. Articles from magazines and news paper. Information fromvarious websites.19

2.6 RESEARCH DESIGN: A research design is a basic plan, which guides the researcher in the collection and analysis of data required for practicing the research.Infect the research design is the conceptual structure where the research is conducted. It constitutes the Blue Print for the collection, measurement and analysis of the data. The study is carried out to understand the Consumer Perception about life insurance companies in Bangalore city .For this study the researcher used exploratory research design. This research covers 50 consumers in Bangalore city, belonging to various age groups.2.7 SAMPLE DESIGN: The process of drawing a sample from a large population is called sampling. Population refers to the total of items about which information is defined. Well-selected samples may reflect fairly and accurately the characteristics of the population. Sampling Unit: The sample unit of this survey was thecustomers having life insurance policies in Bangalore city. Sample Size: The sample size was 50 customers of different life insurance companies, from the various parts of the Bangalore city. Sampling Technique Adopted: Convenient sampling2.8 SOURCES OF DATA: After identifying and defining the research problem and determining specific information required to solve the problem the researcher willlook for the type and sources of data which may yield the desired results, whiledeciding about the method of data collection to be used for the study, there are two types of data.20

Secondary Data: Secondary data means data that are already available i.e. they refer to the data which have been collected and analyzed by someone and can saveboth money and time of the researcher. Secondary data may be available in the form of company records, trade publications, libraries etc. Secondary data sourcesare as follows: Company Reports Daily Newspaper Standard Textbook Various WebsitesPrimary Data: Primary data are those, which are collected for the first time. Primary data is collected by framing questionnaires. The questionnaire contained questions, which are both openended and closed-ended. Open-ended questions are questions requiring answers in theresponders own words. Closed-ended questions are those wherein the respondent hasto merely check the appropriate answer from a list of options available. Any doubts raised by the respondents were clarified to get the perfect answers from the distributors. Openended questions yielded more insightful information, whereasclosed-Ended questions were relatively simple to tabulate and analyze.2.9 FIELD WORK: An interview-schedule and well-structured questionnaire is administered to the target respondents to collect primary data (Copy of questionnaireis attached in the appendix) Open and close-ended questions are used in the questionnaire. The orders of the questions are in such a manner that they begin with simple questions and lead on the questions that needed more involvement from respondents.The secondary data are collected from periodicals, magazines, journals and Internet.21

OPERATIONAL DEFINITIONS OF THE STUDY Marketing: Marketing is a social and managerial process by which individuals and group obtain what they need and want through creating, offering and exchanging products of value with others . Marketing Management: Marketing Management is the process of planning and executing the conception, pricing, promotion and distribution of individual and organizational goals.Marketing Research: Marketing research is the systematic and objective search for, and analysis of information relevant to the identification and solution of any problems in the field of marketing.Consumer Research: Consumer research is the methodology used to study consumer behaviour.Consumer Behaviour: Consumer behaviour is the study of how individuals make decisions to spend their available resources [time, money, efforts] on consumption related items . Market Segmentation: Market segmentation is the process of dividing a market in the distinct subsets of consumer with common needs or characteristics and selecting one or more segments to target with distinct marketing mix.Positioning: Positioning is the act of designing the companys offering and imageso that they occupy a meaningful and distinct competitive position in the targetconsumers mind.22

Perception: Perception is the process by which an individual selects, organizes,and interprets information input to create a meaningful picture of the world. For a marketer to influence a motivated buyer to buy their products rather than competitors they must be careful to take the perception process into account while designing their marketing campaigns. Perception therefore influence what product consumer buys.Attitude: An attitude is a person enduring favorable or unfavorable evaluation,emotional feeling, and action tendencies towards some object or idea.Attributes: Attributes are the strengths and weaknesses of a brand that create attitudes and are used by consumers to choose between brands that are relativelysimilar or functionally equivalent.Values: A value is a concept of the desirable. An internalized standard of evaluation a person possession. This standard determines or guide an individual evaluation of the many objects encountered in everyday life.Brand: A brand is a name, term, sign, symbol, or design or a combination of them, used to identify the goods or services of one seller or group of seller and the differentiate them from those of competitors.23

2.10 LIMITATIONS OF THE STUDY Although the study was carried out with extreme enthusiasm and careful planning there are several limitations, which handicapped the research viz.Time Constraints: The time stipulated for the project to be completed is less and thus there are chances that some information might have been left out, howeverdue care is taken to include all the relevant information needed.Sample size: Due to time constraints the sample size was relatively small and would definitely have been more representative if I had collected information frommore respondents . Accuracy: It is difficult to know if all the respondents gave accurate information; some respondents tend to give misleading information.24

CHAPTER 3PROFILE OF THE INDUSTRY25

3.1 INDUSTRY PROFILEHistory and Development of Life Insurance Life Insurance, in its present form, came to India from the United Kingdom with establishment of a British firm, Oriental Life Insurance Company in Calcutta in 1818, followed by Bombay Life Assurance Company in 1823, the Madras Equitable Life Insurance society in 1829 and Oriental Government security Assurance Company in 1874. Prior to 1871, Indian Lives were treated as sub-standard and charged an extra premium of 15% to 20%. Bombay Mutual Life Assurance Society, a Indian insurer which came into existence in 1871was the first to cover Indian lives at normal rates.The Indian life Assurance Companies Act, 1912 was the first statutory measure toregulate life insurance business. Later, in 1928, the Indian Insurance Companies Act was enacted, to enable the government to collect statistical information about both life and non-life insurance business transacted in India by Indian andforeign insurers, including the provident insurance societies. Comprehensive arrangements were, however, brought into effect with the enactment of the Insurance Act, 1938.By 1956, 154 Indian insurers, 16 non-Indian insurers and 15 provident societieswere carrying online insurance business in India. On 19th January 1956, the management of the entire life insurance business of 229 Indian insurers and provident insurance societies and the Indian life insurance business of 16 non-Indian Life insurance companies then operating in India, was taken over by the central Government and then nationalized on 1st September 1956 when the Life Insurance Corporation came into existence.With largest number of life insurance policies in force in the world, Insurancehappens to be a mega opportunity in India. Its a business growing at the rate of15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the countrys GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP.26

Yet, nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is anindicator that growth potential for the insurance sector is immense.A well-developed and evolved insurance sector is needed for economic developmentas it provides long-term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next tenyears India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country.INSURANCE AND BUSINESS ENVIRONMENT Insurance is considered as one of the important segment of the economy for its growth and development. This industry provideslong term funds which are essential for the growth and development of the nation .so the growth of insurance industry largely depends up on the environment inwhich they exists. Here I would like to mention about Indian business environment and their impact on insurance sector. There are two type of environment whichaffect the business one is environment which is internal to the organization (internal environment) and the other one which is external to the organization (external environment). Internal environment includes management, technology, competitors, employees, shareholders, policyholders, marketing intermediary etc. The external environment of insurance business has been classified in four parts, namely legal, economic, financial, and commercial. let us discus them in detail bytaking one by one.27

THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) The Malhotra Committeefelt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body- The Insurance Regulatory and Development Authority. Based on the Malhotra committee report in April 2000 IRDA was incorporated. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. Section 14 of the IRDA Act 1999, lays the duties, power andfunctions of the authority .the authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and reinsurance business.Reforms and ImplicationsThe liberalizations of the Indian insurance sector has been the subject of muchheated debate for some years. The sector is finally set to open up to private competition. The Insurance Regulatory and Development Authority bill will clear the way for private entry into insurance, as the government is keen to invite private sector participation into insurance. To address those concerns, the bill requires direct insurers to have a minimum paid-up capital of Rest. 1 billion, to invest policyholders funds only in India; and to restrict international companiesto a minority equity holding of 26 percent in any new company. Indian Promoterswill also have to dilute their equity holding to 26 percent over a 10-year period. Over the past three year, around 30 companies have expressed interest in entering the sector and many foreign and Indian companies have arranged alliances. Whether the insurer is old or new, private or public, expanding the market will present challenges. A number of foreign Insurance Companies have set up representative offices in India and have also tied up with various asset management companies. Some of the Indian companies, which have tied up with International partners, are.28

Indian Partners Bombay Dyeing Tata Dabur Group ICICI Sundaram Finance HindustanTimes Ranbaxy HDFC CK Birla Group DCM Shriram Godrej M A Chidambaram Cholamandalam SK Modi Group 20th Century Finance Alpic Finance Vysya Bank Kotak MahindraInternational Partners General Accident, UK American Int. Group, US Liberty Mutual Fund, US Prudential, UK Winterthur Insurance, Switzerland Commercial Union, UK Cigna, US Standard Life, UK Zurich Insurance, Switzerland Royal Sun Alliance,UK J Rothschild , UK Met Life Guardian Royal Exchange, UK Legal and General, Australia Canada Life Allianz Holding, Germany ING Chubb, USThe likely impact of opening up of Indias insurance sector is that private players may swamp the market. International insurers often derive a significant part of their business from multinational operations. Multinational insurers are indeed keenly interested as; perhaps there home markets are saturated while emergingcountries have low insurance penetration and high growth rates29

Type of life insurance policiesWhole life insurance Whole life is a form of permanent insurance, with guaranteed rates and guaranteed cash values. It is the least flexible form of permanent insurance.Universal life insurance Universal life is similar to whole life, except that you can change the death benefit (the money paid to the beneficiary when the insured person dies), the amount of premiums and how often you pay the premiums.Variable life insurance Variable life insurance is the riskiest form of permanent insurance, but it can also give you the best return for your money. Essentially, the life insurance company will invest your insurance premiums for you. If the investments do well, the death benefit and cash value of the policy go up. Ifthey do poorly, they go down. It s a little like putting your savings into the stock market.Group life insurance Many companies allow their employees to buy group life insurance through the company. Usually, you can get very good rates for this insurance but you have to give the insurance up when you stop working there. For that reason, group insurance can be a good way to buy a little extra life insurance, but it does not make sense to make it your main policy.30

There are a number of policies for specific insurance needs. Some of these include:1. Family income life insurance. This is a decreasing term policy that providesa stated income for a fixed period of time, if the insured person dies during the term of coverage. These payments continue until the end of a time period specified when the policy is purchased.2. Family insurance. A whole life policy that insures all the members of an immediate family -husband, wife and children. Usually the coverage is sold in unitsper person, with the primary wage-earner insured for the greatest amount.3. Senior life insurance. Also known as graded death benefit plans, they providefor a graded amount to be paid to the beneficiary. For example, in each of thefirst three to five years after the insured dies, the death benefit slowly increases. After that period, the entire death benefit is paid to the beneficiary. This might be appropriate if the beneficiary is not able to handle a large amountof money soon after the death, but would be in a better position to handle it afew years later.4. Juvenile insurance. This is life insurance on a child. Coverage is paid for by an adult, usually the parents or guardians. Such policies are not considered traditional life insurance because the child is not producing an income that needs to be protected. However, by buying the policy when the child is young, the parents are able to lock in an extremely low premium rate and allow many more years of tax-deferred cash value buildup .31

5. Credit life insurance. This insurance is designed to pay off the balance of aloan if you die before you have repaid it. Credit life insurance is available for many kinds of loans including student loans, auto loans, farm equipment loans, furniture and other personal loans including credit cards. Credit life insurance can be purchased by an individual. Usually it is sold by financial institutions making loans, like banks, to borrowers at the time they take out the loan. Ifa borrower dies, the proceeds of the policy repay the loan directly to the lender or creditor.6. Mortgage insuranceThis decreasing term coverage is designed to pay off the unpaid balance of a mortgage if you die before the mortgage is paid off. Premiums are generally level throughout the term of the policy. The policy is usually independent of the mortgage, meaning that the financial institution granting the mortgage is separate from the insurance company issuing the policy. The proceeds of the policy are paidto the beneficiaries of the policy, not the mortgage company. The beneficiary is not required to use the proceeds to pay off the mortgage7. Annuity An annuity is a form of insurance that enables you to save for your retirement. Basically, you give the insurance company money for a certain periodof time, and then after you retire they will pay you a certain amount of money every year until you die. There are many different forms of annuities. . Most people who buy annuities are 55 or older32

3.2 PROFILE OF THE ORGANISATIONS:LIFE INSURANCE CORPORATION OF INDIALife Insurance Corporation of India was formed in September 1956 by passing LICAct, 1956 in Indian parliament. On the nationalization of the life insurance in1956, the premium rating of Oriental Government security life Assurance companywere adopted by LIC with a reduction of 5% of the tabular premium or Re. 1 per thousand sum assured, whichever was less. This reduction was made in anticipationof economies of scale that would emerge on the merger of different insurers ina single entity.Life Insurance Corporation Of India - there are many things to consider as LifeInsurance Corporation of India offers various insurance products which are verycomplex, but underlying this complexity is a simple fact. The building blocks for all Life Insurance Corporation of India are (1) investment return; (2) mortality experience; and (3) expense management; for your Life Insurance Corporation Of India33

Objectives of LICSpread Life Insurance much more widely and in particular to the rural areas andto the socially and economically backward classes with a view to reaching all insurable persons 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 policyholders, 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 as well as the community as a whole, keeping in view national prioritiesand 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 capacities. Meet the various life insurance needs of the community that would arise inthe changing social and economic environment.Involve all people working in the Corporation to the best of their capability infurthering the interests of the insured public by providing efficient service with courtesy.Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective34

VISION "A trans-nationally competitive financial conglomerate of significance tosocieties and Pride of India MISSION "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitivereturns, and by rendering resources for economic developmentVarious policies offered by life insurance corporation of India are 1) Whole Life Schemes Whole life with profit Limited payment whole life Single Premium wholelife Convertible whole life plan

2) Endowment Schemes Endowment plan with profit Limited payment Endowment JeevaMitra (Double Cover) Jeevan Mitra (Triple cover) Bhavishya Jeevan Jeevan AnandNew Jana Raksha3) Term Assurance Plan Anmol Jeevan 2 Year Term Assurance Covertible Term New Bima Kiran35

4)

Plan for needs of Children Komal Jeevan Jeevan Sukanya Jeevan Kishore Jeevan Baya Jeevan Chaya Marriage/educational annuity Deffered Endowment5) Periodic Money Back Plan Jeevan Samridhi Jeevan Rekha Plan Money Back Plan Jeevan Surabhi Jeevan bharathi6) Medical benefits linked insurance Asha Deep II Jeevan Asha II7) For benefits to Handicapped Jeevan Aadhar Jeevan Vishwas8) Plans to cover housing loans Mortagage redemption9) Joint life plan Jeevan sathi36

10) Investment plan Bima Nivesh Triple cover11) Capital market linked plan Bima plus.Description of the LIC Policies Whole life plan: Whole life plan are those policies which life assured has to pay premiums till his death the sum assured will be paid to his dependent generally 70 years is assumed as a maximum age for payment of premium. Under the whole life premium are payable throughout the life timeof the life assured and this is the cheapest form of policy. This plan is ideally suited to person who wants maximum provision for his family at minimum cost.It also meets the needs for funds required for funeral, religious rites and ceremonies to be performed, tax liabilities if any and expenses connected with the last sickness and hospital charges etc.Endowment Assured Plan: Endowment plans are not covering the risk for whole lifeof the life assured. The term of risk cover under this plan is as per the needof life assured. Endowment assurance plan are the most popular. They are eminently Suited to meet it one policy the twin demands of old age provision and risk cover for family. The sum assured is payable on maturity or at death if earlier.Thus an Endowment Assurance Policy provides for retirement and also serves as ameans of family provisions.Term Assurance Under the term assurance the risk cover is generally for specificshort term. Such term assurance is maximum for 2 years. Generally this type ofassurance is useful for air traveling.37

Money Back Plans Under this plan specific percentage of sum assured will be backed to the life assured after specific period of time. This plan is of special interest to person who besides desiring to provide for their own old age and family feels the need for lump sum benefits at periodical intervals. Under these policies part of the sum assured is paid to the life assured in installments at selected intervals. Children Plan Under the children plans the risk on the life of the children where covered generally this type of plans are helpful in educationand marriage of the children. Jeevan Balya: This plan is designed to enable a parent to provide for the child by payment of a very low premium an Endowment Assurance Policy, the risk under which will commence from the vesting date. In addition, Premium benefit and income benefit are included as additional benefit by payment of appropriate additional premium during the deferment period. This policyshall be cancelled in case the life assured shall die before the deferred datesand in such an event provided the policy is then in full force in for a reducedcash option. Marriage Endowment/ educational annual plan Every father desires to see that his children are well settled in life through sound education, leading to good jobs and happy marriage. These needs arise at ages which can be approximately anticipated. Say when the children are between 18 to 25 year of age. This plan provides for a sum assured to keep aside to meet marriage educational expenses of children. Under this plan the S A along with the vested bonus shall bepayable at the end of the selected term either is lump sum or in ten half yearlyinstallment, at the option of the life assured nominee beneficiary. Jeevan Mitra This plan provides additional insurance cover equal to the sum assured in theeven of death during the term of policy so that the total insurance cover in theevent of death is twice the basic sum assured. i.e. The basic sum assured is doubled and the accrued bonus is also paid.38

ING VYSYA LIFE INSURANCEING Vysya Life Insurance Company Private Limited entered the private life insurance industry in India in September 2001, and in a short span of 18 months has established itself as a distinctive life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor force.It also distributes products in close cooperation with its sister company ING Vysya Bank through Bank assurance. Currently, it has over 3000 advisors working from 22 locations across the country and over 300 employees. ING Vysya Life Insurance Company is headquartered at Bangalore and has established a strong presencein the cities of Delhi, Mumbai, Kolkata, Hyderabad and Chennai. In addition INGVysya Life operates in Vizag, Vijaywada, Mangalore, Mysore, Pune, Nagpur, Chandigarh, Ludhiana and Jaipur. ING Vysya Life has pioneered product innovations in the Indian life insurance market with customer-oriented cash bonus endowment andmoney back products. (Reassuring Life and Maximising Life), the first anticipated whole life product (Fulfilling Life) and the first Term/Critical Illness combination product (Conquering Life). Conquering Life is an innovative term and critical illness product that has been launched recently. Conquering Life provides affordable term cover and critical illness coverage for 10 critical illnesses ofupto 50% of the Sum Assured. ING Vysya Life declared a bonus in September 2002 of 5% (cash bonus - payable immediately) and 4% (reversionary bonus payable at the end of the term).39

The company has over 25,000 customers at the end of 2002 and has achieved a first premium income of Rs. 17 crores in 2002. ING Vysya Life Insurance is a joint venture between ING Insurance International BV a part of ING Group, the world s largest life insurance company (Fortune Global 500, 2002), ING Vysya Bank, with 1.5 million customers and over 400 outlets and GMR Technologies and Industries Limited, part of GMR Group also based in Bangalore and involved in the field of power generation, infrastructural development and several other businesses. ING Vysya Life has a paid up capital of Rs.140 crores and an authorised capital of Rs.200 crores. Life insurance products offered by the company are: 1) Protection plan Critical illness plan Endowment plan2) Savings plan Endowment plan Child protection plan Money back plan3) Investment Plan Whole life plan Limited payment endowment plan Anticipated whole life plan40

TATA-AIG Life Insurance Tata-AIG Life Insurance Company is a joint venture between the Tata Group and American International Group Inc (AIG), the leading US-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in America. Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIGs global businesses also include financial services and asset management, including aircraft leasing, financial products, tradingand market making, consumer finance, institutional, retail and direct investmentfund asset management, real estate investment management, and retirement savings products. TATA holds 76% shares and AIG holds 24% shares in the total share capital of TATA AIG. Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers abroad array of life insurance products to individuals, associations and businesses of all sizes, with a wide variety of additional coverage to ensure our customers can find an insurance product to meet their needs. Tata-AIG Life Insuranceand Tata-AIG General Insurance, both joint ventures between the Tata Group and American International Group (AIG), provide life and general insurance policies and solutions to companies, institutions and organizations across India. It is licensed to operation on 12th February 2001. TATA-AIG life is spread over28 branchoffices and 39 training offices across the country.Tata-AIG Life offers a broad array of life insurance products and solutions to corporate and other organizations. These products and solutions have various valueadded benefits and options that deliver flexibility and choice to the company sclients. Tata AIG Life has completed its 4th year of operations and registereda Total Premium of Rs. 497 Crores for the period April 2004 - March 2005.41

The company has some 20 life insurance products with over 250 product combinations, including endowment to term, pension to group life and credit life, money back to whole life plans, etc. Tata-AIG Life uses different distribution channels,including direct marketing, brokerage and banc assurance, to service client groups in 19 Indian cities. Tata-AIG Life is the first private insurer in India tooffer group retirement schemes. Additionally, the company s group management division focuses on providing employee benefit solutions. PRODUCTS The product range of TATA-AIG Life is wide-spread across different segments. Some of the products are mentioned below.Maha life Invest Assure Health Protector Star Kid Shubh Life Nirvana Nirvana Plus Money Saver Plan Health First Assure Golden Life Assure 10, 20, 30 years Security and Growth Assure Educate at 18, 21 Assure Career Builder Plan at 27 AssureGolden Years Plan Assure 21 Money Saver Plan Assure 1/5/10/15/20/25 years/ to age lifelines TROP42

HDFC STANDARD LIFE INSURANCEThe Partnership: HDFC and Standard Life first came together for a possible jointventure, to enter the Life Insurance market, in January 1995. It was clear fromthe outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 year jointventure agreement. Around this time Standard Life purchased a 5% stake in HDFC,further strengthening the relationship. The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture. In October 1998,the joint venture agreement was renewed and additional resource made available.Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore,in January 2000 an expert team from the UK joined a hand picked team from HDFCto form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank. In a further development Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on20th July 200043

Incorporation of HDFC Standard Life Insurance Company Limited: The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Companies ambition from as far back as October 1995, was to be the first private company to re-enter the life insurance market in India. On the23rd of October 2000, this ambition was realized when HDFC Standard Life was theonly life company to be granted a certificate of registration. HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standard Life s existing investment in the HDFC Group, this is the maximum investment allowed under current regulations. HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance company s in India are measured. Products offered by the company are: INDIVIDUAL PLAN With Profit Endowment Assurance WithProfits Money Back Single Premium Whole of Life Term assurance Plan Loan Cover Term Assurance Personal Pension Plan Childrens PlanGROUP PLANS Group Term Insurance Development Insurance Plan44

ICICI PRUDENTIAL LIFE INSURANCE COMPANYICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, apremier financial powerhouse, and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority(IRDA). ICICI Prudentials equity base stands at Rs. 925 crore with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the quarter ended June 30, 2005 , the company garnered Rs 335 crore of new business premium for a total sum assured of Rs 2,619 crore and wrote 111,522 policies. For the past fouryears, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life. Products offered by ICICI Prudential are1. 1) 2) 3) 4)Savings Plan Smart kid Life Time Save n Protect Cash Bak2. Protection plan Life Guard 45

3. 4. 5. Extra Protection Through Riders Retirement Plans Forever Life Life link pensionLife time pension Reassure Investment Plans Assure Invest Life Link Group plansGroup Superannuation Group Gratuity Group Term Assurance46

OM KOTAK MAHINDRA LIFE INSURANCE COMPANYEstablished in 1985 as Kotak Capital Management Finance promoted by Uday Kotak the company has come a long way since its entry into corporate finance. It has dabbled in leasing, auto finance, hire purchase, investment banking, consumer finance, broking etc. The company got its name Kotak Mahindra as industrialists Harish Mahindra and Anand Mahindra picked a stake in the company. Kotak Mahindra istoday one of India s leading Financial Institutions Old Mutual plc is an international financial services group based in London with expanding operations in life assurance, asset management, banking and general insurance. Old Mutual is listed on the London Stock Exchange (where it is included on the FTSE 100 Index) andalso on the South African, Namibian, Malawi and Zimbabwe stock exchanges. It has 156 years of experience in the life insurance business. The Products offered by the Company are Individual Plan Kotak Endowment Plan Kotak Term Plan Kotairement Income Plan Kotak Child Advantage Plan Kotak Preferred Term Plan Kotak Capital Multiplier Plan Kotak Safe Investment Plan Riders Exclusions Under Riders47

Group Plan Kotak Term Group plan Kotak Gratuity Group plan Kotak Credit Term Group plan Riders Exclusions Under RidersRural Kotak Gramina Bima Yojana48

MET LIFE INSURANCE COMPANYMetLifeFor almost 137 years, Metropolitan Life Insurance Company has been insuring thelives of the people who depend on them. Their success is based on their long history of social responsibility, strong leadership, sound investments, and innovative products and services. MetLife Begins The origins of Metropolitan Life Insurance Company (MetLife) go back to 1863, when a group of New York City businessmen raised $100,000 to found the National Union Life and Helping and Healing People In 1909, MetLife Vice President Haley Fiske announced that "insurance, not merely as a business proposition, but as a social program" would be the future policy of the company Supporting Country and Community Over the years, MetLife has made a difference by supporting urban renewal projects and community financing. The company s social commitment and its commitment to the security of its policyholders have proven to be good business. MetLife Today In 2001 MetLife was the first insurance company to establish a financial holding company with a nationallychartered bank.Products Offered by the company are 1) Whole Life Met 100 Non par Met 100 Gold par Met 100 Platinum par49

2) Endowment Met Gold par Met Platinum par Met Junior par Met junior Non par3) Money Back Met Sukh Met Junior MB4) Term Met Mortagage Protector Met Riders Accidental death50

BIRLA SUN LIFE INSURANCE COMANY LIMITEDBirla Sun Life Financial Services offers a range of financial services for resident Indians and Non Resident Indians. Brought together by two large, powerful and reputed business houses, the Aditya Birla Group and Sun Life Financial , it isour aim to offer diverse and top quality financial services to customers. The Mutual Fund and Insurance companies provide wealth management and protection products to customers while the Distribution and Securities companies provide brokerage and trading services for investment in equities, debt securities, fixed deposits, etc.Insurance is not about something going wrong. It s often about things going right. One of the wonders of human nature is that we never believe anything can actually go wrong. Surely, life has its share of ifs. At Birla Sun Life however, they believe it has its equally pleasant share of buts as well. Birla Sun Life stand committed to help you realize those happy moments which make a life. Be it living the same lifestyle in your post retirement days or providing a secure futurefor your loved ones, in case something happens to you. The life insurance products offered by the company areIndividual life Premium Back Term Plan Flexi Secure Life Retirement Plan SinglePremium Bond Birla Sun Life Term Plan Flexi Life Line Whole Life Plan Flexi CashFlow Money back PlanGroup Life Pro Group Term Insurance Group Superannuation Plan Group Gratuity Plan 51

MAX NEW YORK LIFE INSURANCE COMPANY LTD.Max New York Life today emerged as the country s leading private life insurancecompany having recorded a sum assured of over Rs 2100 crore for the year endingMarch 31, 2002. This was the first full year of operations for Max New York Life.The company has sold over 64,000 policies in the last financial year. The totalannualized first year premium for the financial year was over Rs 43 crore with the First Year Premium Income amounting to over Rs 38 crore. This has exceeded the expectations of the company and the projections as submitted to IRDA. Over 70per cent of the premia income was from protection-oriented Whole Life Policies,which reinforces the company s focus on providing the true value of life insurance to the customerGiven the better-than-expected performance of the company, the shareholders haveincreased their investment in the company to Rs 250 crore with an authorized share capital to Rs 300 crore making Max New York Life Insurance Company among thehighest capitalized life insurance companies in India Max New York Life also met its commitment for the rural and social sectors.The company has 11 offices, over 1900 Agent Advisors and over 490 employees. MaxNew York Life believes in delivering top value to all its stakeholders. As partof the best practices adopted, the Company instituted satisfaction survey s conducted by independent agencies to measure the satisfaction levels of its customers, agents and employees. Max New York Life has clearly emerged as delivering top value across all these stakeholdersMax New York Life offers a suite of flexible products. It has eight base products and nine options & riders that can be customized to over 250 combinations enabling customers to choose the policy that best fits their need52

The products are Whole Life Participating d Convertible Whole Life-Non-Participating, Children Endowment at age 18, Children Endowment at age 24, 20-year Endowment Participating Policy, Endowment to age 60, Five-year Term Renewable an, EasyTerm53

BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITEDBajaj Allianz life Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Auto holds 74% and Allianz, AG, holds the remaining 26% Germany. In itsfirst year of operations, the company has acquired the No. 1 status among the private non-life insurers. As on 31st March 2003, Bajaj Allianz General Insurancemaintained its leadership position by garnering a premium income of Rs.300 Crores. Bajaj Allianz also became one of the few companies to make a profit in its first full year of operations. Bajaj Allianz made a profit after tax of Rs.9.6 crores Bajaj Allianz today has a network of 42 offices spread across the length and breadth of the country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all the offices are interconnected with the Head Office at Pune. In the firsthalf of the current financial year, 2004-05, Bajaj Allianz garnered a premium income of Rs. 405 crores, achieving a growth of 84% and registered a 52% growth inNet profits of Rs.20 Crores over the last year for the same period. In the financial year 2003-04, the premium earned was Rs.480 Crores, which is a jump of 60%and the profit zoomed by 125% to Rs. 21.6 Crores54

CHAPTER 4ANALYSIS AND INTERPRETATION55

4.1 INTRODUCTION TO ANALYSIS: In order to extract meaningful information from the data them. The analysis can be conducted by using simple statistical tools like percentages, averages and measures of dispersion. Alternatively the collecteddata may be analyzed, the data analysis is carried out. The data are first edited, coded and tabulated for analyzing by using diagrams, graphs, charts, picturesetc. Data analysis is the process of planning the data in an ordered form, combining them with the existing information and extracting from them.Interpretation is the process of drawing conclusions from the gathered data in the study. In this research the researcher has analyzed the data using percentages and graphs.4.2 DATA ANALYSIS TOOLS USED:In this research the data analysis tools used are percentages and graphs. The various attributes were analyzed separately and the importance to each was calculated on the basis of the percentage. The rank having the maximum percentage was taken to be preferred importance to the particular attribute. After looking at each attribute separately, all the attributes were considered together to developa map on the most preferred rank for all the attributes.56

TABLE 1 AGE OF RESPONDENTSSL.NOAGE IN YEARSNUMBER OF RESPONDENTS 24PERCENTAGE OF RESPONDENTS 48 %1.19 282.29 381326 %3.39 48612 %4.49 58612 %5.59 6800%6.69 7812%TOTAL50100 %

SOURCE :- SURVEY DATAINFERENCE: The above table classified the respondents according to their age group. The majority of the respondents belong to the age group 19 to 28 years with48% and the second age group is 29 to 38 years with 26%, followed by 39 to 48 years and 49 to 58 years with 12% each.57

GRAPH 1 AGE OF RESPONDENTS60% 48%50%40%30%26%20% 12% 10% 0% 0% 19 - 28 YRS 29 - 38 YRS 39 - 48 YRS 49 - 58 YRS 59 - 68 YRS 69- 78 YRS 2% 12%58

TABLE 2DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALETYPES OF RESPONDENTSNUMBER OF RESPONDENTSPERCENTAGE OF RESPONDENTSMALE RESPONDENTS3468%FEMALE RESPONDENTS1632%TOTAL50100 %SOURCE: - SURVEY DATAINFERENCE: This table helps us to understand that there are more number of maleconsumers with 68% market share than the female consumers with 32% Market share.59

GRAPH 2 DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALE80% 70% 60% 50% 40% 32% 30% 20% 10% 0% 68%TSD ENR ES PO NM A LEFE M A LER ES PON DEN TS60

TABLE 3DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATIONSL.NOOCCUPATIONNUMBER OF RESPONDENTSPERCENTAGE OF RESPONDENTS 4%1.STUDENTS22.GOVERNMENT EMPLOYEES PRIVATE EMPLOYEES HOUSE WIVES2040 %3.2448 %4.24%5.RETIRED PERSONS TOTAL24%50100 %SOURCE :- SURVEY DATAINFERENCE: It could be inferred that majority of consumers of life insurance policies are private employees with 48% and Government employees with 40%, followedby students, house wives and retired persons with 4 % each.61

GRAPH 3 DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION60%50% 40% 40%48%30%20%10% 4% 0%ES YE ES EN TS ES W IV SO N ED PE R ET IR R YE S4%4%EM PL ODEM PLUOSTTM ENNG OVEPRRIV ATE62HOUSE

TABLE 4TABLE SHOWING INCOME GROUP OF RESPONDENTSSL.NOINCOME GROUPNUMBER OF RESPONDENTSPERCENTAGE OF RESPONDENTS 10 %1.LESS THAN 5000 5001 10,00052.1632 %3.10001 150001734 %4.15001 20000816 %5.20001 2500024%6.GREATER THAN 30000 NIL12%7.1

2%TOTAL50100 %SOURCE: - SURVEY DATAINFERENCE: The majority of dominant income group having life insurance policiesbelong to the income group of 10,001 to 15,000, which is middle class group. Followed by the income group of 5,001 to 10,000.63

GRAPH 4 GRAPH SHOWING INCOME GROUP OF RESPONDENTS40% 35% 30% 25% 20% 15% 10% 5% 0% 2500015000 20000 25000 NIL64

TABLE 5DIFFERENCIATION OF RESPONDENTS ACCORDING TO THE ASSETS OWNEDSL.NOASSETSNUMBER OF RESPONDENTSPERCENTAGE OF RESPONDENTS1.HOUSE1938 %2.TWO WHEELER CAR2550 %3.612 %TOTAL50100 %SOURCE: - SURVEY DATAINFERENCE: This table helps us to know that most of consumers with life insurance policies own two wheelers with 50%, 38% of consumers own house and12% of the consumers own car.65

GRAPH 5 DIFFERENCIATION OF RESPONDENTS ACCORDING TO THE ASSETS OWNED60% 50% 50%40%38%30%20% 12% 10%0% HOUSE TWO WHEELER CAR66

TABLE 6MARKET SHARE OF DIFFERENT LIFE INSURANCE COMPANIESCOMPANIESNUMBER OF RESPONDENTS 39PERCENTAGE OF RESPONDENTS 78 %LICTATA AIG12%HDFC36%ICICI48%MAX NEWYORK12%KOTAK MAHINDRA12%ALLIANCE BAJAJ12%SOURCE: - SURVEY DATAINFERENCE: This table helps us to understand the market share of different lifeinsurance companies. LIC has a major share of 78 %, followed by ICICI Prudentialwith 8% market share, followed by HDFC Standard Life with 6% market share.67

GRAPH 6 MARKET SHARE OF DIFFERENT LIFE INSURANCE COMPANIES90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2% 6% 8% 2% 2% 2% 78%A IGIC IC ILI CR KR AFCH DN EW YOA H IN DTA TAXK O68ALL IAM ATA KN C EMB AJAJ

TABLE 7TABLE SHOWING ATTRIBUTES FROM RESPONDENTSSL.NOATTRIBUTERESPONDENTSRANK1.RETURN ON INVESTMENT COMPANY REPUTATION PREMIUM OUTFLOW SERVICE QUALITY PRODUCTQUALITY1712.1323.1034.745.35SOURCE :- SURVEY DATAINFERENCE: This table shows the strengths and weaknesses of the company, and what are the important criteria or attributes on which decision making is done. From this table we can infer that consumers give more importance for Return on investment, secondly they prefer company reputation, and then premium outflow followed by service quality and product quality.69

R ET U RN O N IN10 12 14 16 18 0 2 4 6 8C O M PA TM EN T17VE SNY R EP U TA TI O13PR EM IU M N O U TF LO W SE R VI C E Q U AL I TYGRAPH 7GRAPH SHOWING ATTRIBUTES FROM RESPONDENTS70PR O DU CT Q U AL IT Y7 310

TABLE 8FACTORS WHICH INFLUENCED TO SELECT LIFE INSURANCE COMPANYSL.NOFACTORSRESPONDENTSRANK1.PERSONAL INTEREST2512.FAMILY1123.FRIENDS634.AGENTS545.ADVERTISEMENT256.OTHERS16

SOURCE :- SURVEY DATAINFERENCE: This table is helpful in knowing which media is best suitable for promoting a life insurance company. It can be seen that personal factor influencesa consumers to select a life insurance company, followed by family, friends , agents and advertisements.71

GRAPH 8FACTORS WHICH INFLUENCED TO SELECT A LIFE INSURANCE COMPANY3025 252015 11 10 6 5 5 2 1 0IL Y EN TS ES T S T VE RT IS EM EN D M IE N ER O TH STE RFAFRNALINAGSOPE R72AD

TABLE 9VALUE OF RESPONDENTS LIFE INSURANCE POLICYSL.NOAMOUNTNUMBER OF RESPONDENTS 0PERCENTAGE OF RESPONDENTS 0%1.< 100002.10000 25000510 %3.25000 50000816 %4.50000-1000001530 %5.> 1000002244 %SOURCE :- SURVEY DATAINFERENCE: It can be inferred that majority of consumers buy the life insurancepolicy which costs more than Rs. 1,00,000 followed by Rs. 50,000 to Rs.1,00,000,followed by Rs. 25,000 to Rs. 50,000.73

GRAPH 9 VALUE OF RESPONDENTS LIFE INSURANCE POLICY50% 45% 40% 35% 30% 25% 20% 15% 10% 10% 5% 0% > 10000 10000 25000 25000 50000 50000 100000 > 100000 0% 16% 30% 44%74

TABLE 10RESPONDENTS PREFERENCE TO INVEST THEIR MONEYNUMBER OF RESPONDENTS INSURANCE COMPANY 24PERCENTAGE OF RESPONDENTS 48 %BANK2652 %TOTAL50100 %SOURCE :- SURVEY DATA INFERENCE: From the table it is clear that majority of people (52%) prefer to invest in Bank and others (48%) prefer to invest in Insurance companies.75

GRAPH 10 RESPONDENTS PREFERENCE TO INVEST THEIR MONEY53% 52% 52% 51% 50% 49% 48% 48% 47% 46% INSURACE COMPANY BANK76

TABLE 11SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE COMPANYRESPONSENUMBER OF RESPONDENTS 47PERCENTAGE OF RESPONDENTS 94 %YESNO36%TOTAL50100 %SOURCE :- SURVEY DATAINFERENCE: From this table it could be inferred that 94% of the consumers are satisfied with the service and quality of products of their life insurance companies. Only 6% of consumers are not satisfied.77

GRAPH 11SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE COMPANY100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%94%6%YESNO78

TABLE 12RATINGS OF THE SERVICES OFFERED BY THE RESPONDENTS LIFE INSURANCE COMPANYRATINGSNUMBER OF RESPONDENTS 7PERCENTAGE OF RESPONDENTS 14 %EXCELLENTVERY GOOD1224 %GOOD2040 %AVERAGE1122 %POOR00%TOTAL50100 %SOURCE: - SURVEY DATAINFERENCE: From this table it could be inferred that 40% of the consumers have rated service offered as good, 24% of them have rated them as very good, 22% of them have rated as average and 14% of them have rated as excellent.79

GRAPH 12RATINGS OF THE SERVICES OFFERED BY THE RESPONDENTS LIFE INSURANCE COMPANY45% 40% 35% 30% 25% 20% 15% 10% 5% 0%O O D40%24% 14%22%0%E VE R A G PO O R O O D G80EX C EL LE N TVE R YGA

TABLE 13CONSUMERS WILLINGNESS TO COMMUNICATE THE SERVICE OFFERED BY THEIR LIFE INSURANCECOMPANYRESPONSESNUMBER OF RESPONDENTS 39PERCENTAGE OF RESPONDENTS 78 %YESNO1122 %TOTAL50100 %SOURCE :- SURVEY DATAINFERENCE: From this table it can be noted that the majority of consumers (78%)would like to communicate to others about the service offered by life insurancecompanies and 22% of consumers would not like to communicate the service offered.81

GRAPH 13CONSUMERS WILLINGNESS TO COMMUNICATE THE SERVICE OFFERED BY THEIR LIFE INSURANCECOMPANY90% 80% 70% 60% 50% 40% 30% 20% 10% 0%YES NO78%22%82

TABLE 14NUMBER OF LIFE INSURANCE COMPANY KNOWN BY RESPONDENTSNUMBER OF LIFE INSURANCE COMPANY KNOWNNUMBER OF RESPONDENTSPERCENTAGE OF RESPONDENTS1012%TOTAL50100 %SOURCE :- SURVEY DATAINFERENCE: This table helps us to know the consumer awareness about the life insurance companies. 58% of the consumers are aware about 5 to 7 life insurance companies, followed by 36% consumers who know less than 5 life insurance companies.83

GRAPH 14NUMBER OF LIFE INSURANCE COMPANY KNOWN BY RESPONDENTS70% 60% 50% 40% 30% 20% 10% 0% 10 58%36%4%2%84

TABLE 15SCORES OF DIFFERENT LIFE INSURANCE COMPANIESCOMPANIESSCORESRANKLIC3451ICICI PRUDENTIAL2112HDFC1943TATA AIG1234ING VYSYA1215BIRLA SUNLIFE1186MET LIFE907OTHERS418SOURCE:- SURVEY DATA

INFERENCE: From the table we can rank the life insurance companies, LIC stands first, followed by ICICI Prudential followed by HDFC Standard life, followed by TATA AIG.85

GRAPH 15SCORES OF DIFFERENT LIFE INSURANCE COMPANIES9 8 7 6 5 4 3 2 1 0L VY SY A LA SU N LI FE M ET LI FE LI C FC IG TI A H D ER O TH A8 7 6 5 4 3 2 1ENTADTAR UIPINGIC ICB IR86S

CHAPTER 5FINDINGS, CONCLUSION AND SUGGESTIONS87

5.1FINDINGSThe majority of respondents belonged to the age group of 19 to 28 years which formed 48% followed by age group of 29 to 38 years which formed 26%.The male consumers capture the Market share with 68%, followed by the female consumers with 32%.The majority of the consumers of life insurance companies are private employeeswith 48% and Government employees with 40%The dominant income group having life insurance group belong to the group of 10001 to 15,000 followed by 5,001 to 10,000.LIC has a major market share of 78%.The factors which influenced to select a life insurance company is the personalfactor, followed by family, friends, agents and advertisements.88

The value of respondents life insurance policy costs more than 1, 00,000 followed by 50,000 to 1,00,000.Majority of the people (52%) prefer to invest in bank others (48%) prefer to invest in insurance company.Majority of consumers are satisfied with the service and quality of products oftheir life insurance companies.Majority of consumers (78%) would like to communicate the service offered by life insurance companies.Majority of consumers (58%) are aware about 5 to 7 life insurance companies.LIC stands first followed by ICICI prudential, followed by HDFC Standard Life.89

5.2 CONCLUSION An Insurance policy is an investment oriented plan. As compared to other investment plans, the investment portfolio of the Insurance Policy functions like a mutual fund and other investment. It is invested in a portfolio of debt and equity instruments, in conformity with the announced investment policy.Hence it grows or erodes in line with the performance of that portfolio.From this study it reveals that the consumers attitude towards Insurance Policy and Insurance Company changed a lot. A 5 years before the consumers and the general public were not interested to take an Insurance Policy but now days there aremany options and choices in front of the customers. They are interested to takehigh return policies in order to secure their lives. People are aware of all the benefits and returns of insurance policies. As a result of this new international and domestic companies are coming to the Indian Market.Since there are many players in the Indian Insurance Market the competition level is very high. So the companies are introducing new schemes. From this it is found that The LIC is the major market share holder in the insurance field. Even if there are many players in this field still it is an untapped market. Only a few portion of Indian population is insured.90

5.3 RECOMMENDATIONS AND SUGGESTIONSWith regard to insurance companies, consumers respond at different rates, depending on the consumers characteristics. Hence Insurance companies should try to bring their new product to the attention of potential early adopters.a) Due to the intense competition in the life insurance market, the life insurance companies have to adopt better strategies to attract more customers.b) Keeping the cost, quality and return on investment in tact is necessary in order to tackle the competition.c) Life insurance products are taken mainly by middle and higher income group. Hence they should be regarded as maim targeted income groups. Life insurance products which are suitable for lower income group should also be released so that the market share increases.d) Return on investment, company reputation and premium outflow are most preferred attributes that are expected by the respondents. Hence greater focus should be given to these attributes.91

e) Private life insurance companies should adopt effective promotional strategies to increase the awareness level among the consumers.f) Life insurance companies should ask for their consumer feedback to know whether the consumers are really satisfied or dissatisfied with the service and product of the companies. If they are dissatisfied , then the reasons for dissatisfaction should be found out and should be corrected in future.g) The LIC brand name has earned a lot of goodwill and enjoys a high brand equity. As there is intense competition in life insurance market, LIC should work hard to maintain its top position and offer better service and product.92

BIBLIOGRAPHY93

BIBLIOGRAPHY1) 2) Dr. Singh, Avtar, Principles of Insurance Law, S Chand & Sons, Delhi,2003.Leon G. Schiffman, Lestie Lazar Kanwk, Consumer Behaviour, Himalaya Publishers,Delhi,20043) Kotler Philip, Marketing Management, Pearson Education Inc. 11th Edition. 4)Stanton William J, Etzel Michael J, Walker Bruce J, Fundamentals of Marketing, McGraw-Hill international, Singapore, 20025) 6) 7) Ravi Shankar, Services Marketing, Prentice Hall, 2000. Valarie Azithaml, Marry Jo Bittner, Services of Marketing, Prentice Hall, 2001 Rutchnee .T & K.S.Arun Kumar,Consumer preference & buying perception of ready made silk garments,PGDSM,International center for training & research in tropical sericulture, Newspapers: Economic Times Business Line94

World Wide Web: www.lic.com www.irda.org www.wikipedia.com95

ANNEXURE96

QUESTIONNAIREA STUDY CONDUCTED TO UNDERSTAND THE CONSUMERS PERCEPTION ABOUT LIFE INSURANCE POLICIES1. Name : 2. Age:3. Address:3 a. Phone number: 4. Occupation: 5. Monthly income: 25,0006. Do You Own House Two Wheeler Car7. Do you have a Life Insurance Policy with any Life InsuranceCampany? Yes No7.a) If yes, name the Company___________________________________b) Name the policy which you own_____________________________97

8. What factors do you consider while selecting a life insurance company? Premium Outflow Service Quality Return on Investment Company Reputation Product Quality9. What factors influenced to select a Life Insurance company? Personal interestAgents Friends Advertisements Family others10. What is the value of your life insurance? >10,000 50,000-1,00,000 10,000-25,000 >1,00,000 25,000-50,00011. Do you prefer to invest your money in a Insurance company or in a Bank? Insurance Company Bank12. Are you satisfied with your current Life Insurance Company? Yes NoIf Yes Why?___________________________________________ If No Why?___________________________________________13. How do you rate the service offered by your Life Insurance Company? Excellent Average Very Good Poor Good98

14. Would you like to communicate the service offered by your Life Insurance Company to others? Yes No15.How many Life insurance Compannies do you know? 1016. How do you rate the following Life Insurance Companies? LIC HDFC ING VYSYA MET LIFE INDIA INSURANCE BIRLA SUNLIFE ICICI Prudential TATA AIG Others17. Would You like to continue with the same Life Insurance Company? Yes No18. Any suggestions for improving the service offered by life insurance companiesThank You.99