Consumer Perception Regarding Life Insurance Policies: A Factor .

Volume 9 Issue 6, Dec. 2016 Diverse Investment Options-You can also use yourlife insurance Policy as a good investment tool. Thereare various kinds of insurance policies in which you canpark your surplus funds and can earn return either inlump sum or at regular intervals of time. For example,retirement plans, child insurance plans, whole lifeinsurance plans, Term life insurance plans etc. are allgood life insurance policies. Illnesses and Accidents- Life insurance policies arealways a very good protection option as well against thefinancial pressure that you might face during a seriousillness or accident. It helps you to get treatment from thebest hospitals without worrying about the financialburden. Usually all insurance policies should bepurchased when you are young and free of illnesses. For Tax Benefits- Life insurance policies are anexcellent instrument of saving tax too. Under Section80C of the IT Act, many of the insurance schemes inIndia including the life insurance schemes offer taxdeductions on Premium payments. Draw Loans Against Insurance - Besides using yourlife insurance Policy amount to repay your loans andexpenses you can also use your Policy to draw a loanagainst it. It could be used as a security in the banks orfinancial institution while taking loans. Retirement plan Term insurance plan Group plansNeed of the studyInsurance companies play an important role in the welfare ofhuman well-being by providing protection to millions ofpeople against life risks such as uncertain death or accident.Even the life insurance is fastest growing service sector inIndia after privatisation and increase in FDI. Thus it hasbecome essential to study the buying pattern of the lifeinsurance policies.ObjectivesObjectives provide the guide lines for which the researchwork is done. A study without an objective is of no use.Research work is done in order to get answers to certainquestions named as objectives of the study. The objectivesfor which this particular study is carried out are as following: To determine the awareness level of consumersregarding life insurance policies and the number ofconsumers who have actually invested in life insurancepolicies. To know the satisfaction level of consumers withrespect to private and public insurers.54 To examine the attributes that consumers prefer whilepurchasing a life insurance policy.Review of literature Sahu et al.(2009);conducted a survey on 150respondents to determine the attributes affecting buyingbehaviour of consumers , investment pattern in lifeinsurance services and compare the differences inconsumer perception of male and female consumers. Intheir study they found that there 6 factors which affectthe buying behaviour while purchasing life insurancepolicies namely consumer loyalty, service quality, easeof procedures, satisfaction level, company image andcompany client relationship. There is no differencebetween the perception of male and female preferences. Manuel (2013); he conducted the study to understandthe Consumer Perception about life insurance policiesin Kottayam City .For this study the researcher usedexploratory research design. This research wasrestricted to the consumers of Kottayam city. Thesample which was taken was of 50 respondentsbelonging to various age groups. The survey wasconducted to find out the attributes which affectdecision making of consumers of life insurance policieswhich are return on investment, company reputation,premium outflow, service quality and product quality.The majority of respondents belong to age group of 1928 years, male consumers captures 74% of the market,dominant income group was 5001- 10000 and LIC hadthe major stake. Yadav and Tiwari(2012);The study area is limited toJabalpur district, of Madhya Pradesh and sample size of150 policyholders is taken and the sample have beenselected through a stratified and purposive samplingmethod. The study has been conducted to find outfactors influencing customer investment decision,impact of various demographic factors, preferences ofcustomers while taking the decision, and ranking offactors responsible for the selection life insurance as aninvestment option. The study was conducted on 150respondents. in their study on factors affectingcustomer investment in life insurance policies andfound that age, gender, income level. Out of 150samples 54.6% of policy holders have invested in LICfollowed by SBI life insurance amongst private players.The features that policyholders consider while making apurchase can be ranked as follows: company reputation,money back guarantee, risk coverage, low premium andeasy access to agents as 1st, 2nd, 3rd, 4th and 5threspectively. Thus it could be concluded that goodwillof the company is the most influencing factor whilepolicy buying decision. It was found that majority ofrespondents preferred money back policy. Whilewww.pbr.co.in

Pacific Business Review Internationalstudying the reason for purchase of insurance policywas most (54.6%) of the respondent's have opted forLIC policies because of safety and rest of therespondent's opted for private players for higher returns.The study area is limited to Jabalpur district, ofMadhya Pradesh and sample size is 150 policyholdersof LIC and different private life insurers have beenselected through a stratified and purposive samplingmethod. Kaur and Negi (2010); conducted their study inChandigarh and by using factor analysis they foundcustomised and timely service, brand USP, considerateemployee, price immunity as major factors affecting thesatisfaction of customers. They even found thatmaximum life covered under insurance are of male thanfemale and satisfaction level among public and privatesector insurance companies is same. M.Epctimchin (2011); conducted a survey in Nigeria tofind out factors enhancing the purchasing of lifeinsurance and found that company loyalty is the majorfactor influencing purchasing decision and companyclient relationship as the last. These factors arebeneficial to company as well as consumer. Mahajan (2013); conducted a study on consumerdecision making process in life insurance services andfound that there are 5 stages i.e. need recognition,search of alternative, evaluation of alternative, purchasedecision and post purchase evaluation. Specialconsiderations pertaining to insurance industry areperceived risk, risk and standardisation and risk andinformation. She even formulated certain stages toimprove customer awareness about benefits of lifeinsurance products like focusing on marketingtechniques. Thus she concluded that the consumer'sperception towards Life Insurance Policies is positive.There is a positive mind sets developed for theirinvestment pattern, in insurance policies. Still someactions need to be for developing insurance market. Sandhu and Bala(2011);the sample was taken of 450respondents from different work places of 3 citiesJalandhar, Ludhiana and Amritsar but out of 450samples 337 respondents filled the questionnaire in allaspects. They conducted a study in three cities of Punjabto find out factors affecting service quality of LIC. Theyused the factor analysis technique and consequentlyfound 7 factors composed of proficiency, media andpresentations, physical and ethical excellence, servicedelivery process and purpose, security and dynamicoperation, credibility and functionality. Along withthese factors managerial implication like performanceof agents also affect customer satisfaction.www.pbr.co.in Singh et al. (2014); conducted a survey in Delhi NCRregion to find out service quality of life insurancecompanies and effect of demographic factors onconsumer perception .they conducted the survey on 139respondents and they found factors namely asresponsiveness and assurance factor, conveniencefactor, tangible factor and empathy factors. They evenfound that only age of respondent has significant impacton choice of insurance product. Whereas variousdemographic factors such as gender, education, andannual income did not have significant impact onchoice of insurance product. Alinvi and Babri (2007); the study was specificallyconducted on young consumers from 18-27 years .intheir article tried to find answer to question how couldinsurance company enhance their ability of constantchanges in customer preference in an increasinglycompetitive environment. In this theory they foundincome flow, age, family size as significantdeterminant, information about product and servicesalso affect consumer preference, options of productsand services i.e. customer choice along with time playimportant role. Through this study it was concluded thatprice is a decisive factor for young customers ofinsurance services. We also concluded that there existsunawareness among young people about the servicesprovided by insurance companies, as well as afraid ofbeing fooled or tricked by telemarketers representinginsurance companies. Thus they demand more ofinformation. While internet is their primary source ofawareness but they prefer personal contacts too whiletaking the decision. However, it was concluded thatmost respondents showed a tendency to change theirpreferences over their life-time, as their lifecircumstances would change. Ahmed,et al (2007);the secondary study was conductedbased on SERVQUAL MODEL in Bangladesh andfound that people tend to invest more in privateinsurance companies due to better quality of services.Among private local and foreign insurance clientsprefer foreign private insurance companies due toexperiences in operation and wide area coverage.Companies must invest on building their reputation inorder to reduce outflow of clients. They even found that25% of respondents have chosen their insurancecompany with influence of sales personnel. Rajavardhan and Jahangir (2015); the sample has beentaken from Nalgonda district with 120 respondents. Intheir article conducted a survey on rural market ofTelangana to find out socio demographic and economicvariables that have impact on decision of consumerperception. They found that gender and marital status55

Volume 9 Issue 6, Dec. 2016have very low impact on perception. While educationand income level have significant impact. Middleincome group are more engaged in insurance sector.Similarly an occupation also has significant impact oninsurance. Moreover still insurance is seen as tax savingand not an investment opportunity.people residing in urban areas invest more in LIC. Heeven found that maximum people opted for yearlypayment plans. Major portion of holders belongs toservice sector and average middle class people.Maximum people invested in LIC on basis of brandname and invest more in money back policies. Jain andSaini (2012); in their article has highlighted the Venkaiah and Sudhir (2013); conducted a survey to findrole of IRDA for life in insurance industry in India andhas concluded that social, cultural, political, personal,psychological and demographic factors influence theconsumer behaviour. This study reveals that thedemographical factor has the major impact on thepurchasing decision of consumer. The leadership doesnot lie in getting the maximum number of policies soldbut in understanding the demography of the customerand targeting them in their way. Finally, being theyconsidered the success of insurance marketingdependant on understanding the social and culturalneeds of the target population.out the performance of private insurance players andtook sample of 200 respondents. They found that veryfew respondents feel private companies to be better thanpublic. The services offered by private companies are asper expectation of customer and they feel no risk ininvesting in private companies. Respondents want morepolicies with tax benefits among private companies. Singh (2014); conducted a sample survey on 255respondents of Uttar Pradesh to analyse life insuranceconsumer behaviour. Main purpose for which the studywas conducted was to assess the socio-economic statusof respondents and to examine the impact of status oninsurance purchasing capacity. The study shows thatmaximum people invest for the purpose of tax rebatesand family safety. He found that major insuranceproducts be child plan and pension plan. He even foundthat maximum people like to get insurance productdirectly from insurance agents followed by banks,financial institutions, and brokers. It was found thatgovernment servicemen of 26-45 years of age buy moreinsurance products and middle income group 100000300000 people buy more insurance policies. Shamrao and Vibhute (2013); conducted a survey inKohlapur on 127 respondents to find out the preferenceof customers towards insurance policy, the satisfactionlevel towards ULIP plan and traditional plans and thefactors influencing the investment decision. It wasfound that LIC to be major insurance player andtraditional plans being more preferred than ULIP plans.Majority of holders think insurance to be purelyprotection option followed by tax savings and pensionscheme. Majority of holders take policies fromfinancial advisors and banks. Investor opinion ofinvestment also depend upon service quality,reputation, trust worthiness and future plans ofcompany. Kumar; the survey has been conducted by him on 200respondents in Dehradun only. In his survey he foundthat maximum investors are youth and there is genderbiasness in investment pattern. Married people and56Database and Research methodologyResearch methodology help us to know the researchmethods along the logic behind the methods we use in thecontext of our research study and explain why we are using aparticular method or technique.Research designIt is the comprehensive plan of the sequence of operationsthat a researcher intends to carry out to achieve the desiredresearch objective. It is a plan of action to be carried out inconnection with a proposed research work. The presentstudy needs to chalk out the consumer perception regardinglife insurance policies.Sampling methodConvenience sampling is used while selecting the samplefor the study. As the name suggests itself when populationelements are selected for inclusion in the sample based onthe ease of access, it can be called convenience sampling.Data designData design involves different aspects like the nature of dataused, data collection methods used, data sources and toolsused for analysis of data.Nature of dataPrimary data is used to find the answers to the objectives.Data collectionThe task of data collection begins after a research problemhas been defined and research design/plan chalked out. Inthis particular study primary data has been collected from100 respondents while keeping in mind the objectives of thestudy. The primary data was collected through a selfadministered questionnaire that contained questions relatingto the objectives of the study. The questionnaire containscertain question regarding awareness level and the attributesthat consumers consider while buying a life insurancepolicy.www.pbr.co.in

Pacific Business Review InternationalSample sizeIn this particular study a sample of 100 respondents is takento apply the various statistical tools.Statistical tools usedThe role of statistics in research is to function as a tool indesigning research, analysing its data and drawingconclusions there from and most research studies result in alarge volume of raw data which must be suitably reduced sothat the same can be understood. Thus it is clear that thescience of statistics cannot be ignored by any researchworker. The statistical tools used in this study are PercentageMethod and Factor Analysis are used.Factor analysisFactor analysis is a general name denoting a class ofprocedures primarily used for data reduction. It is by far themost often used multivariate technique of research studies,specially pertaining to social and behavioural sciences. It isa technique applicable when there is a systematicinterdependence among a set of variables and the researcheris interested in finding out some common factors out ofthose variables.But three variables has been dropped due to low factorloadings namely amount of premium being charged, itprovides effective and satisfactory services to its customersand the personal information of customer must not beleaked.Factor analysis is a general name denoting a class ofprocedures primarily used for data reduction andsummarization. The basic objective of Factor Analysis isdata reduction or simplification. It summarizes theinformation contained in a large number of variables into asmaller number of summary measures. A technique thatanalyses data on a relatively large set of variables andproduces a smaller set of factors which are used to representthe original variables as a smaller set of factors; so that theset of factor captures as much information as possible fromthe original set of data.Reliability TestReliability comes to the forefront when variables developedfrom summated scales are used as predictor components inobjective models. Since summated scales are an assembly ofinterrelated items designed to measure underlyingconstructs, it is very important to know whether the same setof items would depict the same responses if the samequestions are recast and re-administered to the samerespondent. Variables derived from test instruments aredeclared to be reliable only when they provide stable andreliable responses over a repeated administration of the test.Cronbach's alpha is the most common measure of internalconsistency ("reliability"). It is most commonly used whenyou have multiple Likert questions in a survey/questionnaire that form a scale and you wish to determine ifthe scale is reliable.Cronbach's alpha internal consistency:Empirical resultsá 0.9ExcellentExploratory Factor analysisThe factor analysis technique has been used in order to findout those attributes that affect the consumer perceptionregarding life insurance policies. A questionnaire has beenprepared for this purpose containing 20 variables that couldaffect the decision of a policy holder. Likert scale has beenused that shows a series of attitudes toward each variable,which are given numerical values ranging from StronglyAgree to Strongly Disagree. Ratings are on 5-point scale (5 strongly agree , 4 agree , 3 neutral , 2 disagree , 1 strongly disagree ).0.9 á 0.8Good0.8 á 0.7Acceptable0.7 á 0.6Questionable0.6 á 0.5Poor0.5 á UnacceptableTable no.11Reliability Statistic sCronbach's Alpha.81Since the value of cronbach alpha is .816 which is greaterthan .5 hence the data is reliable for research purpose.KMO and Bartlett's TestKaiser-Meyer-Olkin (KMO) measure of samplingadequacy: The Kaiser-Meyer-Olkin (KMO) measure ofwww.pbr.co.inN of Items6 17sampling adequacy is an index used to examine theappropriateness of factor analysis. High values (between0.6 and 1.0) indicate factor analysis is appropriate. Valuesbelow 0.6 imply that factor analysis may not be appropriate.Small values of the KMO statistic indicate that thecorrelations between pairs of variables cannot be explained57

Volume 9 Issue 6, Dec. 2016by other variables and that factor analysis may not beappropriate.Bartlett's test of sphericity. Bartlett's test of sphericity is atest statistic used to examine the hypothesis that thevariables are uncorrelated in the population. In other words,the population correlation matrix is an identity matrix; eachvariable correlates perfectly with itself (r 1) but has nocorrelation with the other variables (r 0). If this hypothesiscannot be rejected, then the appropriateness of factoranalysis should be questioned.Table no. 12KMO and Bartlett's TestKaiser- Meyer- Olkin Measure of Sampling Adequacy.723532.015d f136Sig.000.Approx. Chi - Squar eBartlett's Test of SphericityFrom the above given table we can conclude that the sampleis adequate as the KMO value of the sample is .723 which isbetween the prescribed limit i.e.6 to 1.0 and Bartlett's Testof Sphericity value is .000 it means null hypothesis isrejected as a result the data is significant. It implies that thereis relation between the populations.Rotated factorsIn rotating the factors, we would like each factor to havenonzero, or significant, loadings or coefficients for onlysome of the variables. Likewise, we would like eachvariable to have nonzero or significant loadings with only afew factors, if possible with only one. The rotation is calledorthogonal rotation if the axes are maintained at right angles.The most commonly used method for rotation is the varimaxprocedure. This is an orthogonal method of rotation thatminimizes the number of variables with high loadings on afactor, thereby enhancing the interpretability of the factors.Orthogonal rotation results in factors that areuncorrelated.Table No: 1358www.pbr.co.in

Pacific Business Review InternationalThe above table shows the factor loadings of all theattributes which indicate the consumers' perception aboutlife insurance policies. Factor loadings are simplecorrelations between the variables and the factors. It rangesfrom -1 to 1. A factor can then be interpreted in terms of thevariables that load high on it. High loadings provide betterinterpretation of factor in which it lies.Factor 1-Customised and Timely servicesthese three variables co-vary with each other. The eigenvalue of this factor is 1.727. This factor exhibits that thecustomers consider the goodwill of company is important(.831), Products being offered must be cost effective (.621)and Procedure of settlement of claim must be speedy (.521)as important attributes which are important while choosinglife insurance policy. Keeping in view the nature of thevariables on this factor, it can be named as Better CompanyReputation.In the above table all loadings of items in factor 1 aresignificantly high. Five variables with positive loadings areextracted on factor 1. The positive loadings indicate thatthese five variables co-vary with each other. The eigen valueof this factor is 4.772. This factor exhibits that the customersconsider providing approp

For example, Sahu et al.(2009);conducted a survey on 150 retirement plans, child insurance plans, whole life respondents to determine the attributes affecting buying insurance plans, Term life insurance plans etc. are all behaviour of consumers , investment pattern in life . Insurance companies play an important role in the welfare of 150 .