The insurance sector is growing day by day in India but some people still feel that Life Insurance is not required for financially sound people. But, it is not the case. Some section of individuals merely takes Life insurance for its tax deduction benefits and low amount of premiums not thinking about their financial goals and family needs. Thus, life insurance is a risk cover that does not disturb the savings of the policyholder and provides financial solvency and protection to the dependents of the insured.
Thus, this research paper tries to find out the awareness of Life insurance among people, the primary objective of buying a life insurance policy, the amount of premium preferred by them and etc. We have surveyed the views and opinions of different people by using the questionnaire method.
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Introduction
In India, the insurance business is classified primarily as life insurance and general insurance. Life insurance is basically associated with the risk to human lives. Life insurance provides protection to a household against the premature death of its breadwinner or income-earning member.
Definition: According to J.H. Magee, “The life insurance business embodies an agreement in which broadly stated, the insurer undertakes to pay a stipulated sum upon the death of the insured, or at some designated time to a designated beneficiary.”
Therefore, life insurance or life assurance is a contract between the policy owner and insurer (insurance company) where the insurer agrees to pay a sum of money upon the occurrence of the individual’s or individual’s death. In return, the policyholder/owner of the policy agrees to pay a stipulated amount or premium at regular intervals for a long-term period or in lump sums.
The insurance sector was set up in the year 1999 which facilitated the entry of private players into the industry with an annual growth rate of 24.31% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. In the year 2011, major structural changes took place with the ending of the Government monopoly and the passage of the Insurance Regulatory & Development Authority bills, lifting entry transactions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.
Objectives of study
- To study the awareness of life insurance among people and their various premium payment requirements.
- To study the primary goal of purchasing a life insurance policy among individuals.
Review of literature
Study of “Awareness of Life Insurance among customers of DHFL Pramerica Co. Ltd” (2019) is a research paper by Dr. Rishikesh Kaakandikar and Ms. Priyanka Dongre which checks the attention concerning want of Life Insurance among the buyers of the above specified company’s life insurance policy. This analysis discovered that the customer’s area unit is aware of the want of insurance in their life and also the individual agents of DHFL Pramerica area unit are the key supply of information for the policyholders.
“An Empirical Analysis of Life Insurance Industry in India”, by Harpreet Singh Bedi and Dr. Preeti Singh is a research paper in which an attempt has been made to analyze the overall performance of the Life Insurance Industry between the pre and post-economic reform era. To measure the current status, the volume of competition, and challenges faced by the Life Insurance Corporation of India and to measure the effectiveness of the investment strategy of LIC over the period 1980 to 2009. The study reveals that there is tremendous growth in the performance of the Indian Life Insurance Industry and LIC due to the policy of LPG.
Scope of study
- A life insurance policy offers full protection against the risk of death and acts as a provision for financial safety for an individual or his nominee.
- Life insurance allows a person to pay premiums in easy installments per the convenience of customers.
- The amount paid as a Life insurance premium is subject to tax deduction subject to the prevailing income tax rates.
- It is a safe and profitable investment since it is governed by Insurance Regulatory and Development Authority (IRDA) which keeps a constant watch on the financial position of Life insurance companies.
Research Methodology
Sample size: Responses from 50 people starting from the age range of 15 years were collected.
Research design: Feedback from individuals was collected through a questionnaire method in order to understand whether their preferences related to a specific insurance company, the amount of premium they would like to pay annually, etc.
Hypothesis:
- H0: There is no significant awareness about Life insurance among people.
- H1: There is significant awareness about Life insurance among people.
Data analysis
1) Which company’s life insurance policy do you hold?
This graph shows that out of 50 respondents, 20 people prefer to buy a policy from LIC, 5 people from AXIS, 14 from ICICI, and 15 from Oriental Bank of Commerce.
2) Which type of life insurance policy would you like to take?
This pie chart clearly depicts that 24 people prefer to take term plan, 8 individuals would like to take endowment plan, 15 people prefer Money back plan, Whole life plan is preferred by 1 person and ULIP is preferred by 2 people.
3) For how many years would you be willing to pay a premium for a policy?
From this diagram, it can be understood that 26 people think 5-10 years premium payment as a suitable option, 9 people consider 10-15 years premium payment whereas 15 people prefer 15 years or more option.
4) What is the primary source of information to obtain knowledge related to a particular Insurance policy?
From this diagram, it is visible that 30 people prefer insurance agents to be safer and the primary option to obtain policy-related information, 10 people consider advertisements whereas 10 people consider other options.
5) Through which medium do you prefer to purchase a life insurance policy?
From this diagram, it is shown that 38 people think the offline method is a better alternative for purchasing a life insurance policy as compared to the online method.
6) What is your main objective in taking a life insurance policy?
From this diagram, it can be clearly observed that 30 people consider risk coverage as the primary objective of purchasing a life insurance policy, 15 people see it as a good Savings option and tax exemption is preferred by only 5 individuals.
7) The amount of premium which you intend to pay annually?
From this diagram, it can be seen that 33 people intend to pay an annual sum of premium less than Rs.5000, 11 people would intend to pay an amount between Rs.5000-10,000 and 6 people prefer to pay a sum of more than Rs.10,000.
Findings:
- Maximum individuals prefer to hold Life insurance from LIC.
- Maximum people prefer a term plan as the best scheme of the life insurance policy.
- Maximum people prefer to pay a premium of a policy for a period of 5-10 years.
- Maximum people consider insurance agents as the best option for obtaining policy-related information.
- Maximum people prefer the offline method to be the most convenient method of purchasing a life insurance policy.
- Maximum people consider risk coverage as the main objective of buying an insurance policy.
- Maximum people prefer to pay an annual premium of less than Rs.5000.
Suggestion
Life insurance companies must appoint trustworthy and honest insurance agents who can provide proper guidance to individuals about which policy to buy as per their financial or family-related goals. This would encourage more people to purchase a life insurance and help them know its benefits.
Advertisements must be published through newspapers, radio, all television channels, and the internet to make every economic class and rural and urban region people aware of how inevitable life insurance is for a person as well as his family members.
Conclusion
From this research project, we conclude that there is significant awareness about Life insurance among people. Thus, we accept the alternate hypothesis (H1).
Life insurance is a premier option which provides risk coverage without affecting our savings. Also, it offers multiple benefits like savings alternative in case the amount of life insurance is obtained during the maturity period.
Since the introduction of Life insurance in India, Insurance agents still prove to be a popular mode of seeking information related to policy details and explanation of its clauses.
References
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450163
- The research paper published in International Multidisciplinary E-Research Journal (Jan 2019) – Impact factor (SJIF)-6.261 on the topic “Study of Awareness of Life Insurance among Customers of DHFL Pramerica Company Ltd” written by Dr. Rishikesh Kaakandikar and Ms. Priyanka Dongre.
- An Overview of Insurance sector- a book by N. Lakshmi Kavitha and Lakshmi Chandrasekaran.
- https://www.iciciprulife.com/insurance-library/insurance-basics/benefits-of-life-insurance.html
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