Life Insurance Policy Holdings: A Study on Motivational Factors of LIC
In the Indian economic scenario, there were satisfactory levels of growth in employment opportunities in the economy, leading many people to enjoy improved standard of living. Disbursable income of households was more and this provided them leverage to think about financial planning. Financial planning includes not only distribution of savings amongst different avenues of investment, but also includes the methods of facing contingencies e.g. opting for Life Insurance cover. The dominance of the state−owned Life Insurance Corporation of India in insurance sector was put into test when its gates were thrown open for the entry of private players. Due to competition, different Private players offered policies at competitive prices. This forces the Life Insurance Corporation of India to draw new strategies to deliver goods. In human life, wherever there is uncertainty there is an involvement of risk. Uncertainty is the truth of life. The instinct and need for security against such a risk is a motivating force for human behavior and action. Insurance is universally acknowledged as it eliminates risk and provides timely aid to the family after the unfortunate occasion. The need for life insurance differs, according to age, family size, etc. Each plan of life insurance provides a kind of need. Thus, the success of a life insurance company depends on the efficiency of the company fulfilling the expectations of the policyholders. The paper focuses on the awareness and level of satisfaction of the policyholder in the study area.
Key words: Insurance, policyholder, LIC, satisfaction, awareness, product, service.
Today, only one business, which affects all walks of life, is insurance business. That’s why insurance industry occupies a very important place among financial services operative in the world. Owing to growing complexity of life, trade and commerce, individuals as well as business firms are turning to insurance to manage various risks. Therefore a proper knowledge of what insurance is and what purpose does it serve to an individual or an organisation is therefore necessary.
Insurance is a mechanism that ensures an individual to thrive on adverse consequences by compensating the individual his/her loss financially. Every individual in this world is subject to unforeseen and uncalled for hazards or dangers, which may make him and his family vulnerable. At this place, only insurance helps him not only to survive but also to recover his loss and continue his life in a normal manner, which would otherwise be unthinkable.
Insurance industry has always been a growth−oriented industry globally. On the Indian scene too, the insurance industry has always recorded noticeable growth vis−a−vis other Indian industries. The Triton General Insurance Co Ltd. was the first general insurance company to be established in India in 1850, which was a wholly British−owned company. The first general insurance company to be set up by an Indian was Indian Mercantile Insurance Co. Ltd., which was established in 1907. There emerged many a player on the Indian scene thereafter.
The general insurance business was nationalised after the promulgation of General Insurance Business (Nationalisation) Act, 1972. The post−nationalisation general insurance business was undertaken by the General Insurance Corporation of India (GIC) and its 4 subsidiaries:
1. Oriental Insurance Company Limited; 2. New India Assurance Company Limited; 3. National Insurance Company Limited; and 4. United India Insurance Company Limited
Towards the end of 2000, the relation ceased to exist and the four companies are, at present, operating as independent companies. The Life Insurance Corporation ( LIC) was established on 01.09.1956 and had been the sole corporation to write the life insurance business in India.
The Indian insurance industry saw a new sun when the Insurance Regulatory & Development Authority (IRDA) invited the applications for registration as insurers in August, 2000. With the liberalisation and opening up of the sector to private players, the industry has presented promising prospects for the coming future. The transition has also resulted into introduction of ample opportunities for the professionals including Chartered Accountants. The Indian Insurance industry is featured by the attributes: Low market penetration; Ever−growing middle class component in population. Growth of consumer movement with an increasing demand for better insurance products; Inadequate application of information technology for business. Adequate fillip from the Government in the form of tax incentives to the insured, etc. The industry formations need to keep vigil on these characteristics of the Indian market and formulate their strategies to entail maximum contribution to the output of the sector.
The Indian life and non−life insurance business accounted for merely 0.42 percent of the world’s life and non−life business in 1997. The figures of the basic parameters of the industry’s performance viz. Insurance Density and Insurance Penetration also are evident of the hitherto existing low−yield Indian market conditions.
The term "Insurance Penetration" broadly measures the contribution of the insurance industry in relation to a nation’s entire economic productivity. The figure of premium vis−à−vis the GDP of 1999 stood at 0.54 percent for non−life insurance business and 1.39 percent for the life insurance business. The term " Insurance Density" reflects the Insurance purchasing power. The premium per capital in India amounted to US $ 2.40 for non−life insurance and US $ 6.10 for life insurance in 1999 but with the deregulation of the sector, a sea change in the scene is most likely.
The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalized market again. Tracing the developments the Indian insurance sector reveals the 360−degree turn witnessed over a period of almost two centuries.
Life insurance has come a long way from the earlier days when it was originally conceived as a risk covering medium for short periods of time, covering temporary risk situations, such as sea voyages. As life insurance became more established, it was realized what a useful tool it is for a number of situations that includes temporary needs/threats, savings, investment, retirement etc.
STATEMENT OF THE PROBLEM
The utilisation of LIC is increasing day by day. However, since there are other cheaper modes of schemes like children scheme, etc, the level of utilisation of LIC facilities is still to be improved. In this context, it is appropriate to identify the factors influencing the utilisation of LIC and also the satisfaction of policyholders. Moreover, the LIC policyholders suffer from a lot of problems with the money, timing, etc. Hence, the present study is undertaken with the following objectives.
OBJECTIVES OF THE STUDY
To present a brief profile to the policyholders. To ascertain the factors which influenced the policyholders to select a policy? To measure the satisfaction of policyholders concerning LIC services. To offer valuable suggestion to improve the performance of LIC.
To give specific focus to the objectives, a hypothesis has been formed to be tested by using appropriate statistical tools. The level of satisfaction of policyholders is independent of age, sex, education, marital status, family size and occupation.
The primary data were collected from policyholders who took life insurance policies in Komarapalayam town. For the purpose of collecting the primary data, an interview schedule was used by the Researcher. The present study has followed the convenient sampling method for the research work. A sample of 100 respondents was selected for the study.
After collecting the primary data with the help of interview schedule, a thorough verification of data was made. Then editing work was undertaken. Further, in order to process the responses of policyholders, a master table was prepared and a code was given to indicate each of the information to be used for analysis. After preparing the master table, the information was transcribed into tally sheet and with the help of these tally sheets, classification tables were prepared for further analysis.
TOOLS OF ANALYSIS
To analyse the relationship between personal factors and level of satisfaction of the policyholders, simple percentage analysis and a Chi−square test were used.
In order to measure the satisfaction, the policyholders were classified into three groups, namely high, medium and low level satisfaction.
LIMITATIONS OF THE STUDY
The present study has been undertaken facing the following limitations. The study is mainly based on the information given by the respondents, and the facts given by them are subject to their beliefs, attitudes, etc. Due to the time and economic constraints of the researcher, the number of respondents has been limited to 100 only. Since the study has been undertaken in Komarapalayam town only, the findings cannot be generalised as a whole.
Since the data collected from the respondents are subject to their tastes, perception, etc, the findings of the study may not be suitable if there is a change in the tastes, belief of policyholders etc in future.
FINDINGS OF THE STUDY
In order to test the relationship between the Personal characteristics of the respondents and their level of awareness regarding the LIC service, the Chi−square test was applied. Personal characteristics considered were Age, Gender, Educational Qualification, Occupation, Marital Status, Income per month and Number of Family members and Number of earning members in the family. Chi−square test revealed that the Personal characteristic viz.., Gender, Educational Qualification, etc are associated with the level of awareness. Age, Martial status, Earning per month, Number of family members and Number of Earning Members in the family are not associated with the level of awareness. The analysis, through the testing of null hypothesis, revealed that the following factors influence the level of satisfaction towards the services of LIC of India Education Occupation Again, the analysis showed that the following factors do not influence the level of satisfaction. Age Gender Family monthly income Marital status Size of the family Number of earning member The study among the correlation between the experience and average against sold products and the relationship between experience of LIC agent and average of taking product in the field is positively correlated. The study among the correlation between the numbers of family members and number of product in the family in the field are negatively correlated.
Accordingly the factors which influence select LIC policy are tested through ranking. The analysis revealed that Agent recommendation is ranked as first with the total score of 860, advertisement is ranked as second with the total score of 777, suggestion from friends and relatives is ranked as third with the total score of 620, tax benefits is ranked as fourth with the total score of 597, premium amount is ranked as fifth with the total score of 571, assured return is ranked as sixth with the total score of 523, risk is ranked as seventh with the total score of 434, bonus is ranked as eighth with the total score of 414, convenience is ranked as ninth with the total score of 404, regular income is ranked as tenth with the total score of 391. It is concluded that most of the respondents have been influenced by the factor of agent´s recommendation. On the basis of the analysis done with the data from all the individual consumers as well as from the record of LIC product related to its agents a detailed analysis is made on the basis of which the final result is achieved. In that branch money back product is sold more in number and the LIC depends upon the features of the product. In the same product the one−time users of money back product are more. The endowment product is the highly sold product by the agents. The products of the LIC are reached only through the agents. In this branch mostly the degree holders are working as full time agents. The full time agents increase the volume of business. From the analysis it is concluded that the agents increase the volume of business. From the analysis it is also concluded that the agents’ service and branch service are up to the satisfaction of the consumers.
The following suggestions, based on the findings of the study, are given for the growth of LIC. It was surprising to note that there were many policyholders who had taken only one life insurance policy. Holding of more than one policies helps one to get greater service from the corporation. Hence it is suggested that the corporation can introduce prize schemes and give it extensive publicity in order to persuade people to take more policies. Published literature, containing details of all types of policies must be made easily available to the prospective policyholders. At present, each division includes many districts under its operational area. For the purpose of providing quality service, each district must have a divisional office.
Thus it may be concluded from the analysis that the study was of great help to the policyholders, as it was aimed at finding the awareness and satisfaction towards the services of LIC policyholders. Hence the prospective customers, who propose to buy the insurance products and avail of the services of an insurance company for the first time, can get benefited if they select the best service provider that can provide all these factors in the most comprehensive way. (Various data sheets available with the Author)
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