Ijm 06 10_015

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International Journal of Management (IJM)
Volume 6, Issue 10, Oct 2015, pp. 116-125, Article ID: IJM_06_10_015
Available online at
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=6&IType=10
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
___________________________________________________________________________
RELATIONSHIP BETWEEN DIFFERENT
FACTOR AND THEIR FINANCIAL GOAL
FOR OPTING UNIT LINKED INSURANCE
PLANS
Pawan Nagorao Bahekar
Researcher, Nagpur
Dr. Prafulla W Sudame
Associate Professor, C.P & Berar College, Mahal, Nagpur
ABSTRACT
The insurance sector aids to recover the losses of financial sector. Unit
Linked Insurance Plan (ULIP) is a life insurance plan which provides for the
benefit of risk cover as well as flexibility in investment. With the entry of
foreign insurance companies the international practices and systems were
also introduced in India. Present study investigates the relationship of various
factors such as Age, Marital status, Type of family, Educational Qualification
and Nature of employment of investors with their financial goal for opting
Unit Linked Insurance Plans. The study was carried out by using survey
methodology. For that responses were collected from 550 ULIP customers
from 11 district of Vidarbha Region in Maharashtra by using a reliable and
valid questionnaire. The collected data was analysed by using chi-square test
for investigating relation between different factors related to ULIP investors
and their financial goals of opting ULIP.Study results indicated that there is
significant relation between Marital Status, Age, Educational Qualification,
Nature of employment and family type with Primary financial goal for opting
ULIP plans. Authors suggested that a the tendency of investors to switch
between different options should be studied in detail and the influence of the
Company’s brand image on the performance of the ULIPs should be evaluated
Key words: ULIP, Financial Goal
Cite this Article: Pawan Nagorao Bahekar and Dr. Prafulla W Sudame.
Relationship between Different Factor and Their Financial Goal for Opting
Unit Linked Insurance Plans, International Journal of Management, 6(10),
2015, pp. 116-125.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=6&IType=10

Relationship between Different Factor and Their Financial Goal For Opting Unit Linked
Insurance Plans
1. INTRODUCTION
The insurance sector aids to recover the losses of financial sector. Life Insurance is
one of the fastest growing sector in India since 2000 which is due to permission of
Government to Private players and FDI up to 49% participation in this sector. Life
Insurance in India was nationalised by incorporating Life Insurance Corporation
(LIC) in 1956. LIC was a master player transacting the life insurance business in
India. In 1993 the Government of India appointed RN Malhotra Committee to
structure for privatization of the life insurance sector.1
Unit Linked Insurance Plan (ULIP) is a life insurance plan which provides for the
benefit of risk cover as well as flexibility in investment. The investment in ULIPs is
denoted as unit and is represented by the value called Net Asset Value (NAV). In a
ULIP, the amount of premium to be invested after deducting for all charges and
premium for risk cover are pooled together to form a fund. The value of fund at any
time is equal to the amount of units multiplied by value of unit at that time.2
With the entry of foreign insurance companies the international practices and
systems were also introduced in India. Development in technology also improves
quality of customer services. The impact of overall developments in insurance sector
since 1991 has been proved very encouraging. It was also apparent from the incidence
of Southeast Asian crises when India remained untouchable to these crises.
The existence of well-developed financial system decides economic development
of any country. The necessary financial inputs for production of goods and services
that in turn promote the well being and standard of living of the people of a country is
provides by financial system of the country. The major assets traded on the financial
system are money and monetary assets. The responsibility of the financial system is to
mobilize savings in the form of money and monetary assets and invest them in
productive ventures. A successful investor is not the one who makes huge profits but
one who studies the market, understands his risk taking ability, sets the clear cut
investment objectives, determines the expected rate of return and also decides the
time and period of investment.
In light of the above information present study was carried out to investigate the
impact of various factors such as Age, Marital status, Type of family, Educational
Qualification and Nature of employment of investors on their financial goal for opting
Unit Linked Insurance Plans.
2. REVIEW OF LITERATURE
The literature review was carried out to investigate the past research work related to
subject. In addition to this the methodologies adopted and inferences of the research
work were also studied. The research gaps were identified and study objectives were
set on the basis of review of literature.
Gupta (1991)3
reported that the portfolio manager needs to understand the psyche
of his client while designing his portfolio. He also argued that investors in India
regard equity, debentures and company deposits as being in more or less the same risk
category and consider including all mutual funds, including all equity funds, almost as
safe as bank deposits.
Das et al., (2008)4
examined Behavior of Retail Investors in Mutual Fund vs. Life
Insurance. 100 interviews were made from two metros of Orissa Viz.; Cuttack and
Bhubaneswar. This research fins that, although the investment patterns provide more
or less the same services, there exist differences depending on the education level of

Pawan Nagorao Bahekar and Dr. Prafulla W Sudame
investors. It was also found that male investors are more compared to female
investors. Maximum investors like to invest in life insurance among which LIC is no.
1 followed by mutual fund and government saving schemes. It also reveals that
Government servant invest more in life insurance.
Ahmad, (2008)5
evaluated service quality in Malaysia Insurance Industry to
evaluate customer’s general expectation and perception of insures in terms of service
offered at the insurance service counter. This paper also examines the relationship
between the demographic factors and SERVQUAL mean score. The result shows
huge gap for reliability, responsiveness and empathy in which reliability shows
highest gap between customer’s perception and expectation. Thus, results of this
study underscore the need for insurance provider to gear customer service and quality
improvement efforts towards component of reliability.
Akula and Kanchu (2011)6
conducted a study on growth of ULIP Policies in life
insurance sector of India by comparing traditional (Life Fund + Pension & General
Annuity + Group Fund) and ULIP Policies. The objective of the study was to observe
the evolution of ULIPs in India, the growth of ULIPs over traditional Policies, risk
factors involved in ULIPs over traditional policies and to suggest various measures to
develop and stabilize the growth of ULIPs. The period from 2007 to 2009 was
covered in the study. The study considered 5 companies to compare growth, namely,
LICI, HDFC Standard Life, ICICI Prudential Life, SBI Life and Bazaz Allianz Life. It
was revealed from the study that there was remarkable growth in ULIP compared to
traditional policies as the new private entrants targeted ULIPs for market penetration.
Serenmadevi et al., (2011)7
studied the insurance product pattern and consumer
preference for ULIP Life Insurance Product with reference to Delhi City to find out
how much the consumer in Delhi city prefer for ULIP Life Insurance. The collected
data were analyzed by using simple percentage analysis, weighted average method,
ranking method, Analysis of variance, chi-square, F-test and correlation and it is
found that most of the customer are satisfied with ULIP and enjoys an excellent
perception of brand value.
Prakash et al., (2011)8
the research describe Indians attitude towards service
quality for life insurance business presented through different demographical factors.
This research reveals that, type of customer personality, age, gender, levels of
education, and monthly income influence the attitude towards the service quality and
also provides the research implications useful for business transformation and further
development of research on service quality.
According to Mojekwu, (2011)9
, most life insurance policyholders complain of
adverse effect of inflation on the policy values at the time of payment on the
happening of the contingencies. This has resulted in a high rate of lapse, surrender and
conversion to paid-up status. Based on the findings, the study recommends that life
insurance companies should enlighten the public more on the benefits of life
insurance and evolve some incentives to avoid the negative impact of these modes of
decrement on life assurance portfolios.
Sumathy and Kumar (2011)10
explored customers’ awareness level of ULIP
schemes. Descriptive research includes surveys and fact find enquiries of different
kinds of peoples. The main purpose of this descriptive study is the description of the
state affairs that exist at present. The main characteristic of this method is that the
research has no control over the variables. The non probability purposive sampling
from the consumers of ULIP policies was used to collect. An exhaustive survey was
conducted and the primary data was collected. On those data the following tests were

Insurance Plans
made using the SPSS package. The simple percentage analysis, Chi-square and factor
analysis were done. The outcomes came to be the age groups having significant
association with tax benefits availed using ULIP. The qualification which has
significant association with compulsory investments and gaining investment
knowledge, as the respondents mostly belong to graduates segment, these people
expect these variables as a mandatory requirement for making ULIP choice and the
same variables got prominence through factor loading in factor analysis.
According to Rao and Rani (2013)11
the state of customer’s satisfaction depends
on a number of both psychological and physical variables which correlate with
satisfaction behaviors such as return and recommend rate. The level of satisfaction
can also vary depending on other factors the customer, such as other products against
which the customer can compare the organization's products. The research article
analyses the customer perception towards ING Life Insurance Unit Linked Plans in
Tiruvannamalai region and the usual measures of customer satisfaction involve a
survey with a set of statements using a Likert scale. The customer is asked to evaluate
each statement in terms of their perception and expectation of performance of the
United Linked Insurance Plans.
The foundation of life insurance is the recognition of the value of a human life and
the possibility of indemnification for the loss of that value. Mutual fund industry has
gained importance after liberalization policy of the Government, but the function of
Unit Trust of India (UTI) marked the evolution of the Indian mutual fund industry in
the year 1963. With the privatisation of the insurance sector, many companies
emerged with unit linked insurance plans (ULIP), but long before this UTI has come
into play with ULIP-1971 with an objective of returns through growth. ULIPs are
such schemes that provide a combination of benefits of life insurance and diversified
investment. With high competition existing among these companies and advancement
of information technology, customers are able to know information from all corners
and also have many choices to invest at their behest. Organisations have to move to
provide innovative services to attract the customers Rao and Gopi (2013)12
collected
data through questionnaire and also personal interview of the customers to know how
do they perceive UTI-ULIP. Chi-square has been applied to find the product
validation as a better option for investment there being many avenues for investment.
Concepts are described. Suggestions are made at the end for improving the perception
level of the customers, and changes that may be made to make unit linked insurance
plan a better alternative.
The study carried out by Gaikwad and Vibhute (2013)13
facilitate the insurance
companies to know the opinions of customers regarding insurance industry and
specifically opinions towards traditional and ULIP plans. Along with this, the
company and advisors would understand the exact demand of samples, the parameters
of customer satisfaction, factors customers consider while selecting the policy and
opinions on advisors advocacy by which company and advisors can design their sales
program, sales speech, local strategies and the like. A study was conducted among
policy holders in Kolhapur city, India. The researcher concluded that the LIC is the
major player amongst sample customers. Traditional plans are preferred more by
samples followed by ULIP and customer's preferences for selecting the insurance
company are inclined towards service quality, reputation, trustworthiness and future
plans/vision of a company.

3. METHODOLOGY
Descriptive research was used in the present study. The purposive sampling method
adopted for selecting the respondents. In that, the sample is chosen so that a particular
research purpose is served and is adequate for it. Total 550 respondents were selected
for collection of data related to study.
Primary & Secondary data was collected from various sources. Primary data was
collected by canvassing questionnaire to the selected ULIP plan holders in Vidarbha
region. The Secondary data was collected from Reports and other authentic materials
available at different offices, articles published in Newspapers, Magazines etc. In the
present study, Fixed Response (Qualitative) Rating scale/Continuum was used.
A pilot study was conducted to estimate the reliability and validity of the research
instrument. This exercise was carried out to validate and improve the research
instrument in terms of its format and layout, the wording of statements and also the
overall content of items.
Analysis of data was done with the help of suitable statistical tests. The Pearson’s
product moment correlation coefficient was used as inferential statistics test. The data
collected will be analyzed and interpreted using statistical package for social sciences
(SPSS).Statistical tools used namely, Simple percentage analysis, Chi-square test and
Factor analysis. The significance level was chosen to be 0.05 (or equivalently, 5%)
by keeping in view the consequences of such an error and to make the significance
level as small as possible in order to protect the null hypothesis and to prevent, as for
as possible, from inadvertently arriving at false conclusion.
 Data Analysis and Interpretation
Table 1a Correlation between marital status of policy holder and their primary financial goal
for opting ULIP plan
Marital Status
Primary financial goal for opting ULIP plans
TotalWealth
enhancement
Education
funding
Marriage of
children
Safety Others
Married
Count 114 111 93 54 8 380
% 20.7 20.2 16.9 9.8 1.5 69.1
Unmarried
Count 51 27 21 57 10 166
% 9.3 4.9 3.8 10.4 1.8 30.2
Others
Count - - - 4 - 4
% - - - 0.7 - 0.7
Total
Count 165 138 114 115 18 550
% 30.0 25.1 20.7 20.9 3.3 100.0
Table 1b
Chi-Square Test
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 22.669a
8 0.012
Likelihood Ratio 21.767 8 0.016
Linear-by-Linear Association 5.959 1 0.015
N of Valid Cases 183
a. 12 cells (50.0%) have expected count less than 5. The minimum expected
count is .04.

Insurance Plans
From the chi-square statistic (Table 1b), it was clear that there is a significant
relationship between marital status of policy holder and their primary financial goal
for opting ULIP plan (Chi-square= 22-669, df = 8, Asymp. Sig. = <0.05). Pearson chi-
square value of less than 0.05 for “Asymp Sig." indicates that the rows and columns
of the contingency have significant relationship. In general, this means that the marital
status of policy holders (married, unmarried and other) and their primary financial
goal for opting ULIP plan is significantly related.
Table 2a Correlation between age group of policy holder and their primary financial goal for
opting ULIP plans
Age
TotalWealth
enhancement
Education
funding
Marriage of
children
Safety Others
30 Yrs.
Count 48 27 21 57 12 165
% 8.7 4.9 3.8 10.4 2.2 30.0
30-40 Yrs
Count 84 63 42 39 6 234
% 15.3 11.5 7.6 7.1 1.1 42.5
41-50 Yrs.
Count 27 40 43 19 0 129
% 4.9 7.3 7.8 3.5 0.0 23.5
51-60 Yrs.
Count 6 8 8 0 0 22
% 1.1 1.5 1.5 0.0 0.0 4.0
Total
Count 165 138 114 115 18 550
% 30.0 25.1 20.7 20.9 3.3 100.0
Table 2b Chi-Square Tests
12 .015
Likelihood Ratio 30.414 12 .011
Linear-by-Linear Association 3.167 1 .075
a. 12 cells (50.0%) have expected count less than 5. The minimum expected count is
.04.
relationship between age group of policy holder and policy holder and their primary
financial goal for opting ULIP plans (Chi-square= 29.217, df = 12, Asymp. Sig. =
<0.05). Pearson chi-square value of less than 0.05 for “Asymp Sig." indicates that the
rows and columns of the contingency have significant relationship. In general, this
means that the age group of policy holders and policy holder and their primary
financial goal for opting ULIP plans are significantly related.

Table 3a Correlation between educational qualification of policy holder and their primary
financial goal for opting ULIP plan
Educational
Qualification
TotalWealth
enhancement
Education
funding
Marriage
of children
Safety Others
HSSC
Count 24 18 30 10 6 88
% 4.4 3.3 5.5 1.8 1.1 16.0
Graduate
Count 50 51 48 50 9 208
% 9.1 9.3 8.7 9.1 1.6 37.8
Post
Graduate
Count 79 48 15 34 0 176
% 14.4 8.7 2.7 6.2 0.0 32.0
Professional
Others
Count 12 21 21 21 3 78
% 2.2 3.8 3.8 3.8 0.5 14.2
Total
Count 165 138 114 115 18 550
% 30.0 25.1 20.7 20.9 3.3 100.0
Pearson Chi-Square 28.256a 12 .020
Linear-by-Linear Association .281 1 .596
a. 8 cells (33.3%) have expected count less than 5. The minimum expected count is .15.
 From the chi-square statistic (Table 3b), it was clear that there is a significant
relationship between educational qualification of policy holder and their primary
financial goal for opting ULIP plan (Chi-square= 28.256, df = 12, Asymp. Sig. =
<0.05). Pearson chi-square value of less than 0.05 for “Asymp Sig." indicates
that the rows and columns of the contingency have significant relationship. In
general, this means that the educational qualification of policy holder and their
primary financial goal for opting ULIP plan are significantly related.
Table 4a Correlation between nature of employment of policy holder and their primary
financial goal for opting ULIP plan
Nature of
employment
TotalWealth
enhancement
Education
funding
Marriage of
children
Safety Others
Govt.
Servant
Count 48 51 53 35 - 187
% 8.7 9.3 9.6 6.4 - 34.0
Private
Count 117 78 61 80 9 345
% 21.3 14.2 11.1 14.5 1.6 62.7
Self-
employed
Count - 6 - - 9 15
% - 1.1 - - 1.6 2.2
Others
Count - 3 - - - 3
% - 0.5 - - - 0.5
Total
Count 165 138 114 115 15 550
% 33.3 27.8 16.5 20.2 2.2 100

Insurance Plans
12 .018
Linear-by-Linear Association .053 1 .819
.02.
 From the chi-square statistic (Table 4b), it was clear that there is a significant
relationship between nature of employment of policy holder and their primary
financial goal for opting ULIP plans (Chi-square= 24.388, df = 12, Asymp. Sig. =
<0.05). Pearson chi-square value of less than 0.05 for “Asymp Sig." indicates
that the rows and columns of the contingency have significant relationship. In
general, this means that the nature of employment of policy holder and their
primary financial goal for opting ULIP plan are significantly related.
Table 5a Correlation between type of family of policy holder and their primary financial goal
for opting ULIP plan
Type of family
TotalWealth
enhancement
Education
funding
Marriage
of children
Safety Others
Joint
Count 132 81 69 79 16 377
% 24.0 14.7 12.5 14.4 2.9 68.5
Nuclear
Count 33 57 45 36 2 173
% 6.0 10.4 8.2 6.5 0.4 31.5
Total
Count 165 138 114 115 18 550
% 30.0 25.1 20.7 20.9 3.3 100.0
Table5b Chi-Square Tests
5 .008
Linear-by-Linear Association 3.198 1 .074
.21.
relationship between type of family of policy holder and their primary financial goal
for opting ULIP plan (Chi-square= 15.769, df = 5, Asymp. Sig. = <0.05). Pearson chi-
square value of less than 0.05 for “Asymp Sig." indicates that the rows and columns
of the contingency have significant relationship. In general, this means that type of
family of policy holder and their primary financial goal for opting ULIP plan are
significantly related.

4. CONCLUSION
Many people invest money in the ULIPs for different reasons, such as for
accumulating a substantial corpus for their future anticipated and unanticipated
demands. However, not all the customers can hold their investments intact all the time
and hence, there is flexibility in the ULIPs in the form of premature surrendering of
the policy, switching options, etc. It was apparent from the study results that there is
significant relation between Marital Status, Age, Educational Qualification, Nature of
employment and family type with Primary financial goal for opting ULIP plans.
5. IMPLICATIONS
 The role of advisors, fund managers in the performance of the ULIPs should be
studied with respect to private and government companies.
 The tendency of investors to switch between different options should be studied in
detail
 The influence of the Company’s brand image on the performance of the ULIPs
should be evaluated
 Future studies involving the premium paying options and growth of ULIPs should be
carried out.
 The future studies should be carried out with respect to yields related claims and
actual claims for different ULIPs.
 Similar studies should be carried out for specific type of ULIPs
REFERENCES
[1] Mitra, D. and Khan, PC. (2012). A Comparative Study of Traditional Policies and
ULIP Policies with reference to Life Insurance Companies in India, SIT Journal
of Management, 2(2):42-56
[2] Samajpati, U. (2012) Performance Appraisal Of Unit Linked Insurance Plans
(Ulips) In India : A Case Study, management Insight, 8(2):65-69
[3] Gupta L.C. (1991) Share Holders Survey: Geographic Distribution, Manas
Publications, New Delhi, P. 86
[4] Das, B. Mohanty, S. & Shil, NC. (2008), “Mutual Fund vs. Life Insurance:
Behavioral Analysis of Retail Investors”, International Journal of Business and
Management, Vol. 3, No. 10, pp 89-103.
[5] Affiaine Ahmad, (2008), “An Assessment on service Quality in Malaysia
insurance Industry”, Communications of the IBIMA, Volume 1, pp 13-26.
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Insurance Plans
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