34087770 life-insurance-corporation-o-india-research-report


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34087770 life-insurance-corporation-o-india-research-report

  1. 1. A RESEARCH REPORT ONCustomer preference towards child education plan of Life Insurance Corporation of India Submitted in partial fulfilment for the award of the degree Master of Business Administration Chhattisgarh Swami Vivekananda Technical University, Bhilai Submitted by- Lomash singh MBA – Semester III (Session 2010-2011) Approved By- Guided By- Mr. Saket Jeswani Mr. Mahendra Ikhar HOD- MBA LecturerShri Shankaracharya Institute of Technology and Management Junwani, Bhilai (C.G.) - 490020
  2. 2. DECLARATIONI the undersigned solemnly declare that the report of the thesis work entitled Consumerpreferences towards LIC child education plan based on my own work carried out during the courseof my study under the supervision of Mr. Mahendra sir I assert that the statements made and conclusions drawn are an outcome of my researchwork. I further declare that to the best of my knowledge and belief the report does not contain anypart of any work which has been submitted for the award of MBA degree or any otherdegree/diploma/certificate in this University or any other University of India or abroad. Lomash singh Enrollment No: AE7159[Type text] Page 2
  3. 3. CERTIFICATEThis is to certify that the work incorporated in the thesis consumer preference towards childreneducation plan offered by life insurance corporation of India is a record of research workcarried out by lomash singh bearing Enrollment No.: <> under my guidance and supervision for thepart fulfillment for the award of MBA Degree of Chhattisgarh Swami Vivekananda TechnicalUniversity, Bhilai (C.G.), India.To the best of my knowledge and belief the thesis i) Embodies the work of the candidate him/herself, ii) Has duly been completed, iii) Is up to the desired standard both in respect of contents and language for external viva. Mr. Mahendra Ikhar Lecturer[Type text] Page 3
  4. 4. ACKNOWLEDGEMENTI express my sincere thanks to Mr. Mahendra (Lecturer) without whose support this project wouldhave not become possible. Her valuable guidance and critical comments helped in successfulcompletion of this project. Lastly; I am thankful to my parents for their blessings and support and almighty who is alwaysthere with me. Lomash singh[Type text] Page 4
  5. 5. CHAPTER 1INTRODUCTIONCustomer perceptions are dynamic. First of all, with the developing relationship betweencustomer and company, his perceptions of the company and its products or services willchange. The more experience the customer accumulates, the more his perceptions will shiftfrom fact-based judgments to a more general meaning the whole relationship gains for him.Over time, he puts a stronger focus on the consequence of the product or serviceconsumption. Moreover, if the customers’ circumstances change, their needs andpreferencesoften change too. In the external environment, the offerings of competitors, with which acustomer compares a product or service will change, thus altering his perception of thebestoffer around. Another point is that the public opinion towards certain issues can change.If life insurance buying is approached in the proper manner it can be very beneficial to yourself andyour family. You need to take the time to give some thought to a subject that can be veryunpleasant. I guess that is why most people dont think about it, or at best think about it only afterthey have had a brush with death, or when a life insurance professional brings up the subject.Sometimes these people wait until it is too late to do something about such a critical matter. Theyfind themselves uninsurable when they discover they have some critical illness. People should givelife insurance buying serious thought at least once per year as ones situation may change and youfind that your need for life insurance may change as a result.It is the duties of the parents to look after their children well and care for them. As there are manydebates going on about “do the children need LIC policy?”, many do not bother about theimportance of such insurance plans for children. In many of the cases, the policies taken for thechilds welfare has remained a great gift to them.[Type text] Page 5
  6. 6. The policies may help them in their education or in their future. Sometimes the money obtained bythe policies becomes the foundation of the successful life of the children. The Life InsuranceCorporation has taken all these into considerations and has created many policies for the children.The parents are very caring about their children and I have seen people who take up the insurancepolicies for their new born babies. This will really help in the near future of the child for anypurpose. The parents consider this as a stable coverage for their children.Some of the best benefits of the child insurance policies are that the amount can help for thecollege education of the child, there is a accrued cash benefit, offers premium stay, there is apermanent protection that is offered, etc.Some of the popular insurance plans in LIC for the benefit of the children are jeevan anurag,komal jeevan, jeevan kishore, jeevan chhaya, etc. the basic benefit is the policy holder is paidsome percent of the basic at the beginning of each year during the policy time. He is also paidsome percent when the policy matures. All these plans also have the benefit of paying the basicamount, when the insured person dies, that is paid during the signing of the insurance.Take up a policy and start saving for your children’s education!CONTRIBUTIONParticipate in Gross domestic productAccording to the chairman of Life Insurance Corporation of India (LIC), the company has set targetfor the collection of a total premium income of Rs.176,000 crore in the current fiscal (2009-10)."We are expecting to collect around Rs.176,000 crore by the end of March this year and hope toincrease it by 18 percent next fiscal (2010-11)," LIC chairman T.S. Vijayan told reporters.The LICs premium income was Rs.153,000 crore in the previous fiscal (2008-09).Vijayan was talking about the investment plans at the foundation stone ceremony of a companyhousing complex in Kolkata. He also said that the company would invest around Rs.200,000 croreof investment in the current fiscal"We expect it to grow by 20 percent next fiscal (2010-11)," Vijayan said.It is said that the companys income from its real estate business has been around Rs.200-300crore in this fiscal.Finance Minister Pranab Mukherjee said, "Of the total GDP (gross domestic product) of thecountry, 4 percent is contributed by LIC."Mukherjee said every year the LIC contributes a large dividend to the countrys treasury."We have given a dividend of Rs.929 crore to the government this year," Vijayan said.[Type text] Page 6
  7. 7. EXECUTIVE SUMMARYAs the study of the customer preference towards the insurance sector plays a vital rolein understanding the contribution of insurance industry. I want to study the customer perception & preferences for the various facilitiesprovided by the insurance policies. A comparison between private insurance industries will help in assessing theexpectation of the customers about the services provided by them.Study of this project has been done in Bhilai. Project began with a pilot surveyin the region of CIVIC CENTER BHILAI based upon the performance in pilot survey we did somechanges in the questionnaire and than I did my research in Bhilai-Durg .My questionnairewas designed based on the funnel approach.The following data analysis tools are used for the primary data, which was collectedusing questionnaire.• Percentage method.This analysis will provide public as well as private insurance players to improve theirquality standards and also to provide better facilities to the customers.[Type text] Page 7
  8. 8. CHAPTER 2COMPANY PROFILEThe Oriental Life Insurance Company, the first corporate entity in India offering life insurancecoverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Europeans inIndia were its primary target market, and it charged Indians heftier premiums. The Bombay MutualLife Assurance Society, formed in 1870, was the first native insurance provider. Other insurancecompanies established in the pre- The Life Insurance Corporation of India (LIC) (Hindi: ) is the largest life insurance company in India, and also the countrys largestinvestor.; it is fully owned by the Government of India. It also funds close to 24.6% of the IndianGovernments expenses. It has assets estimated of Rs. 8 trillion (US$ 178.4 billion). It was foundedin 1956.Headquartered in Mumbai, which is considered the financial capital of India, the Life InsuranceCorporation of India currently has 8 zonal Offices and 101 divisional offices located in differentparts of India, at least 2048 branches located in different cities and towns of India along withsatellite Offices attached to about some 50 Branches, and has a network of around 1.2 millionagents for soliciting life insurance business from the public.HistoryIndependence era included Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life)[Type text] Page 8
  9. 9. The first 150 years were marked mostly by turbulent economic conditions. It witnessed, Indias FirstWar of Independence, adverse effects of the World War I and World War II on the economy ofIndia, and in between them the period of world wide economic crises triggered by the Greatdepression. The first half of the 20th century also saw a heightened struggle for Indiasindependence. The aggregate effect of these events led to a high rate of bankruptcies andliquidation of life insurance companies in India. This had adversely affected the faith of the generalpublic in the utility of obtaining life cover.The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the firstregulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of1928 authorized the government to obtain statistical information from companies operating in bothlife and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter statecontrol over an industry that had seen several financially unsound ventures fail. A bill was alsointroduced in the Legislative Assembly in 1944 to nationalize the insurance industry.With the change in the Indias economic philosophy from the early 1990s, and the subsequentrelaxation of state control over several sectors of the economy, the monopolistic position of the LifeInsurance Corporation of India was diluted, and it has had to compete with a number of othercorporate entities, Indian as well as transnational Life Insurance brands. However, it still managesto be the largest player in the Indian market, with the lions share of 55%.The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of theSubsidiariesLIC owns the following subsidiaries: Life Insurance Corporation of India International: This is a joint venture offshore company promoted by LIC which commenced operations in July, 1989 with the objectives of offering US$ denominated policies to cater to the insurance needs of NRIs and providing insurance services to holders of LIC policies currently residing in the Gulf. LIC International operates in all GCC countries. PeopleLIC is one of the largest employers in India. The organization is headed by 4 officers, namely theChairman and three Managing Directors. The top brass is appointed by the Government of Indiaafter an intensive selection procedure. Though the company was accused to go by mere seniority[Type text] Page 9
  10. 10. in number of years for the selection of the senior management, this has changed as seen in thecase of Thomas Matthew and A. Dasgupta (Managing Directors). The Chairman assumes authority of the CEO and chairs the board while the Managing Directors are allotted the three main categories of the organizations functioning. The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major IT infrastructure turnaround that the organization has witnessed and for its advanced EDMS structure. D.K. Mehrotra manages the Marketing Units of LIC, which also happens to be one of the largest spenders on advertising in India. Thomas Mathew manages the close to $187 billion investment portfolio of the company, which is the largest investor in the country. A. Dasgupta manages the engineering and other functions, many of which are very advanced in the Indian corporate scenario.Objectives of LIC of India Spread and provide life insurance to the masses at a reasonable cost. Spread Life Insurance widely and in particular to the rural areas and to 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 peoples 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 priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering 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 Objective.[Type text] Page 10
  11. 11. Jeevan Anurag Benefits LIC’s Jeevan ANURAG is a with profits plan specifically designed to take care of the educational needs of children. The plan can be taken by a parent on his or her own life. Benefits under the plan are payable at prespecified durations irrespective of whether the Life Assured survives to the end of the policy term or dies during the term of the policy. In addition, this plan also provides for an immediate payment of Basic Sum Assured amount on death of the Life Assured during the term of the policy. Assured Benefit Payment of 20% of the Basic Sum Assured at the start of every year during last 3 policy years before maturity. At maturity, 40% of the Basic Sum Assured along with reversionary bonuses declared from time to time on full Sum Assured for the full term and the Terminal bonus, if any shall be payable. For example, if term of the policy is 20 years, 20% of the Sum assured will be payable at the end of the 17th,18th, 19th year and 40% of the Sum Assured along with the reversionary bonuses and the terminal bonus, if any, at the end of the 20th year. Death Benefit Payment of an amount equal to Sum Assured under the basic plan immediately on the death of the life assured. Jeevan Chhaya Features Ideal for parents having less than a year old child. Makes provision for education/ marriage of the child. Extra benefit of waiver of premium in case of death of the policy holder. Suitable For: Couples having a less than one year child (not an adopted child) can avail themselves of this plan, in order to ensure that an adequate financial provision is made for the higher education of the child. The child should not have completed one year of age on the date of Registration of the proposal. Either father or mother or each one of them individually can take policies under this plan under Non-medical Scheme. This plan is also allowed to others subject to medical examination.[Type text] Page 11
  12. 12. Special Features: This policy is given under non-medical scheme up to sum assured of Rs.1 lakh, if the prospect is having a child of less than one year of age as on date of registering the proposal. This non-medical is exclusive for other policies. Jeevan Kishore Features High bonus from day one. Child becomes owner of the policy automatically at the age of 18 years. Risk commences after 2 years of policy or on completion of 7 years of age, whichever is later. No medical examination of the child if age is less than 10 years. Suitable For: Parents of children who wants to provide a lump sum amount at a particular age of the child. The amount can be used for any particular need of the child like marriage or start in life. Special Features: This policy is issued with profit, but bonus for waiting period will vest immediately on the Policy anniversary from which risk is covered or at the end of 5 years from commencement of the policy whichever is later, provided the policy is in force. No medical examination will be necessary if the age of the child is less than 10 years last birthday. Else medical examination is necessary. Komal Jeevan Benefits In the ever demanding and competitive environment , it is essential to provide the best education to your children which can be very expensive. Fortunately, the sooner you start investing for their education , the more flexibility youll have and will enable your children to achieve proficiency in their career endeavors. This would make the children proud of their parents effort and call them The Best Parents. LIC now introduces a new plan to take care of these needs – A Komal Jeevan Plan with payment of premium ceasing on policy anniversary immediately after the child attains 18 years of age. The plan, besides offering risk cover , also offers payment of Sum Assured in installments at age 18,20,22,24 and Guaranteed and Loyalty additions, if any, at the age 26. Policy As A Gift: The close relations such as grandparents, elder brothers or sisters, uncles both from paternal[Type text] Page 12
  13. 13. or maternal side can gift single premium policy for love and affection under this plan. in such cases also, the policies will be proposed by father, mother or legal guardian. Current Market Share of LIFE INSURANCE COMPANIES LIC still remains the largest life insurance company accounting for 64% market share. Mainly owing to entry of private players with innovative products and better sales force. LICs market share 74.18%[Type text] Page 13
  14. 14. CHAPTER 3LITERATURE REVIEWBrief History of the Insurance Sector in IndiaInsurance sector in India is one of the booming sectors of the economy and is growing at therate of 15-20 per cent annum. Together with banking services, it contributes to about 7 percent to the countrys GDP. Insurance is a federal subject in India and Insurance industry inIndia is governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 andGeneral Insurance Business (Nationalization) Act, 1972, Insurance Regulatory andDevelopment Authority (IRDA) Act, 1999 and other related Acts.The origin of life insurance in India can be traced back to 1818 with the establishment of theOriental Life Insurance Company in Calcutta. It was conceived as a means to provide forEnglish Widows. In those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered riskier for coverage. The Bombay Mutual LifeInsurance Society that started its business in 1870 was the first company to charge samepremium for both Indian and non-Indian lives. In 1912, insurance regulation formally beganwith the passing of Life Insurance Companies Act and the Provident Fund Act.Insurance sector in India grew at a faster pace after independence. In 1956, Government ofIndia brought together 245 Indian and foreign insurers and provident societies under onenationalized monopoly corporation and formed Life Insurance Corporation (LIC) by an Actof Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5 crore.[Type text] Page 14
  15. 15. CHAPTER 4RESEARCH METHODOLOGYOBJECTIVES OF STUDY  To know market position of life insurance corporation of India plan market.  To know consumer behaviour for purchase of child education plan.The methodology section will consist of three sections. Section A. The first section will describe the objectives of the study. Section B. The second section will discuss about the research plan and sampling plan used in the study. The following table can be taken as a guideline for preparing this section. RESEARCH PLAN Research Design: Descriptive Research Method Used Survey Research Technique Used Questionnaire Data Collection From Bhilai Sampling Plan Simple Random No. of samples collected 50The research should also present why he has chosen the design he has chosen. And he should also writeabout something about the design / method / technique and sampling plan to support his study. In any casethe researcher should not write what he has not done in the study.[Type text] Page 15
  16. 16. Section C will contain the demographic characteristics of the respondents. A sample is shown below: Measure Item Number of Respondents 0-20 0 Age 20-30 16 30-50 34 < 1 Lakh 3 Income 1-3 Lakhs 28 3-5 Lakhs 19 Total 50Test adopted : Z– test Z– test is based on the normal probability distribution and is used for judging thesignificance of several statically measures, particularly the mean. The relevant test statistic Z , is worked outand compared with its probable value at a specified level of significance when the sample size is more than30 and it is used for judging the significance of the measure concerned. This is most frequently used test inresearch studies.Formula of “Z” test z=where , X=mean Mean of Population S.D. = Standard deviation n = No . of attributes[Type text] Page 16
  17. 17. CHAPTER 5Data Tabulation, Analysis and ResultsTable for calculation of value of Z :Sl. No. xi Xi -1 22 2 42 20 0 03 21 1 14 23 3 95 29 9 816 33 13 1697 14 -6 368 14 -6 369 18 -2 4 10 17 -3 9 11 14 -6 36 12 13 -7 49 TOTAL 238 434 n = 50 , 22 238/12 = 19.83 = 20 (approx.) S.D .= = = = 6.281 = 6.28 Z= = = = = │ 1.10│ = 1.10At 5% level of significanceCritical value ( Z α ) = 0.3749[Type text] Page 17
  18. 18. Hо : The Null Hypothesis is that Customers are satisfied with Child Education Plan , andH : The Alternative Hypothesis is that Customers are not satisfied with Child Education Plan .So we have calculated the value of Z-test ,Here the Critical value is less than the Calculated value (i . e. , Critical value is 0.3749 andCalculated value is 1.10 )So , the Null Hypothesis is rejected and Alternative Hypothesis is accepted .The conclusion is that the Customers are not satisfied with Child Education Plan .4.1 DATA ANALYSIS & INTERPRETATION :- 1. Which child plan you have taken ? options Respondents Jeevan Chhaya 13 Jeevan Kishore 10 Jeevan anurag 22 Komal Jeevan 5 Jeevan Chhaya Jeevan Kishore Jeevan anurag Komal Jeevan 10% 26% 44% 20%[Type text] Page 18
  19. 19. CHAPTER 6FINDING OF THE STUDYINTERPRETATION :- According to the survey , it is analysed that 10 % of the respondents areinterested for Komal Jeevan plan, where as 26 % for Jeevan Chaaya plan. The majority of therespondents have selected Jeevan Anurag plan & 20 % are with Jeevan kishore plan.The buying of Life insurance policies is dependent on income.• There is no impact of age on the rationale behind holding life insurance policy.• Unit linked life insurance policy is preferred the most.• Among 50 respondents maximum no. of policy holders are having sum total ofamount of insurance policy premium as 2-3.99 lac.[Type text] Page 19
  20. 20. CHAPTER 7Recommendations of the studyLife insurance companies should be more reliable and stable towards their investorsby providing better facilities.• Life insurance companies should give emphasis on their after-sale-service.• The promotional activities of insurance companies should be good.• Life insurance companies should provide the necessary information and theimportance of life insurance to the customers.• They should adopt better marketing techniques to increase awareness among thecustomers. Influencing Advertisements should be adopted to attract more & more consumers .• Policy features should be improved / changed for satisfying the loyal Customers .• Improvement in service image of the product .• Introduce some other features in the plan for increasing the number of customers .• Last but not the least , It should be more return / tax rebate conscious .• Improvement in premium ,tax benefit ,documentation[Type text] Page 20
  21. 21. Chapter 8: Limitations of the study Sample size is small ; It is not possible to cover all the consumers in Bhilai & Durg. Availability of less time duration . Biased feedback by the Consumers ; as Human Perception differs from person to person. Some people hesitate to express their actual views regarding the product due to some personal reasons . Some of the difficulties and limitations faced by me during my research work, which are asfollows:• Lack of awareness among the people• Bad image of the people towards Insurance sector• Lack of awareness about the earning opportunity in the Insurance sector• The sample size chosen for the questionnaire was only 150 and that may notrepresent the true picture of the consumer perception about the Life Insurance sector.• Customers do not like their money locked up for many years.• Many people do not agree to fill the questionnaire because of lack of time[Type text] Page 21
  22. 22. Chapter 9:Conclusions of the studySo , it can be concluded that the consumers are not much satisfied with the Child Education Plan of“LIC” & the Advertising efforts of the Company are not much influencing to the Consumers andthere need to be an improvement /change for satisfying the consumers of LIC , which will result inan increased Goodwill , Brand Image , Sales & Profit as well .BIBLIOGRAPHY:- C. R. Kothari (Research Methodology ) , Second Edition , Chapter 9 – Testing of hypothesis – I (Parametric or Standard Tesys of Hypothesis ), page no. 184 to 197 . C. R. Kothari (Research Methodology ) ,New age International Publishers , Second Edition , Chapter 1– Research Methodology : An Introduction, page no. 2 to 5 . P . N .Arora & S . Arora ( Statistics) ( C . A. Foundation course ) , S . Chand & Co . Ltd., First Edition , Chapter 10 – Tests of Significance , Page No . 362 to 408 . www.lic.com/history.html www.Wikipedia.encyclopedia.com/lichtml www.licindia.com/pepsi.html[Type text] Page 22
  23. 23. QuestionnaireI am a student of MBA II Semester of SSITM Bhilai. As a part of my course curriculum I amconducting a survey on Customer preferences toward purchase of child education plan offeredby Life Insurance Corporation. I would be grateful to you for providing your genuine responses.1. Which Child plan you have taken? a) Jeevan chaya b) Jeevan kishor c) Jeevan anurag d) Komal jeevan2. How much the following Factors are important for you while selecting a Child plan? Average Strongly Strongly agree agree agree agree Factors Dis Dis 1 2 3 4 51 Premium2 Rate of return3 Documentation4 Duration5 Growth rate6 Tax Benefits7 Brand name3. Are you willing to take any new insurance plan of LIC in near future? Yes No4. Please provide the following details which would help in supporting our research. Theinformation will be kept strictly confidential and for the purpose of analysis only. Please tickthe appropriate option.a) Name b) Age <20 20-29 30-39 ≥40 Annual 3-4.99 ≥5c) Gender Male  Female  d) <1 Lakh 1-2.99 Lakhs Income Lakhs Lakhs Self-e) Profession Student Housewife Employed Other Employed[Type text] Page 23
  24. 24. [Type text] Page 24
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  26. 26. ANNEXURE V: RESEARCH METHODOLOGYThe methodology section will consist of three sections. Section C. The first section will describe the objectives of the study. Section D. The second section will discuss about the research plan and sampling plan used in the study. The following table can be taken as a guideline for preparing this section. RESEARCH PLAN Research Design: Descriptive Research Method Used Survey Research Technique Used Questionnaire Data Collection From Bhilai Sampling Plan Simple Random No. of samples collected 50 The research should also present why he has chosen the design he has chosen. And he should also write about something about the design / method / technique and sampling plan to support his study. In any case the researcher should not write what he has not done in the study. Section E. Section C will contain the demographic characteristics of the respondents. A sample is shown below: Measure Item Number of Respondents 0-20 0 Age 20-30 16 30-50 34 < 1 Lakh 3 Income 1-3 Lakhs 28 3-5 Lakhs 19 Total 50[Type text] Page 26
  27. 27. [Type text] Page 27