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TABLE OF CONTENT
(I)Executive Summary
1. Introduction
Overview of industry as a whole Profile of the company
SWOT Analysis of the organization
2. Research methodology
Objective & Scope of study
Type of Research and Research Design
Data Collection Method
3. Data Analysis
Method and Techniques of data analysis
Primary Data Analysis
Secondary Data Analysis
4. Findings and Suggestions.
Bibliography
Appendix
- Questionnaires
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EXECUTIVE SUMMARY
The objective of the Research project Empirical Study on Growth of Life Insurance
Industry in India were to find the Reasons for the growth of insurance market and identify
those reasons resulting in the lapse of the insurance policies. Further to find Reasons of the
lapsation of the policies we have fulfilled this objective with the help of the questionnaire and
data interpretation.
Based on the data lack of knowledge and agents non-response to the customers with respect
to mis-selling of insurance products without considering the requirement of the customers are
the main reasons for the lapsation of the policies. This analysis satisfies our last objective
where comparison of public and private was done by us to analyse on the basis of Number of
policies issued and premium collection.
Public players are issuing less number of policy then those of the private players whereas
they are collecting more premium then those of the private sector life insurance players.
The reason for which Public players are growing & also holding a major portion of the total
market is just because it is owned by the government of India, people rely & trust it.
The past studies & future projections reveals that the INDIAN LIFE INSURANCE SECTOR
has a growth potential of 30 % each year.
The main reasons of the lapse occurrence of the life insurance is because of the lack of
financial resources, agent did not turned up once after selling the product to customer and as
well the Company also did not reminded of the life insurance premium to be paid by the
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customer. The awareness regarding the consequences of lapse of life insurance products is
more in males then those of females.
Further also the customers are overcharged with the commission charges leading to the
dissatisfaction in them. There is inverse relationship between the performance of public &
private players of Life Insurance Industry in INDIA. Agents miss-selling attitude is leading
towards the increment in the lapsation of Life Insurance Industry / Product.
CHAPTER - 1
INTRODUCTION
Overview of industry as a whole
Profile of the company
SWOT Analysis of the organization
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INTRODUCTION
Life insurance is a contract for the payment of a sum of money to a person assured on
happening of the event ensured against. Usually the contracts provide for the payment of the
amount on a date of maturity or at a specified date at periodic intervals or at unfortunate
death, if it occurs earlier.
Life insurance is universally acknowledged to be an institution, which eliminates 'risk',
substituting certainty for uncertainty and comes to the timely aid of the family in the
unfortunate event of death of breadwinner. Life insurance is civilizations partial solution to
the problems that caused by death. In short, life insurance is concerned with two hazards that
stand across the life-path of every person:-
1. That of dying prematurely is leaving a dependent family to fend for itself
2. That of living till old age without visible means of support.
OVERVIEW OF INDUSTRY AS A WHOLE
Indias life insurance market has grown rapidly over the past six years, with new business
premiums growing at over 40% per year. The premium income of Indias life insurance
market is set to double by 2012 on better penetration and higher incomes. Insurance
penetration in India is currently about 4% of its GDP, much lower than the developed market
level of 6-9%. In several segments of the population, the penetration is lower than potential.
For example, in urban areas, the penetration of life insurance in the mass market is about
65%, and its considerably less in the low-income unbanked segment. In rural areas, life
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insurance penetration in the banked segment is estimated to be about 40%, while it is
marginal at best in the unbanked segment. The total premium could go up to $80-100 billion
by 2012 from the present $40 billion as higher per capita income increases per capita
insurance intensity. The average household premium will rise to Rs 3,000-4,100 from the
current Rs 1,300 as will penetration by the existing and new players. Indias ratio of life
insurance premium to its GDP is around 4 per cent against 6-9 per cent in the developed
world. It could rise to 5.1-6.2 by 2012 in tandem with the countrys demographic profile.
India has 17 life insurers and the state owned Life Insurance Corp. of India dominates the
industry with over 70 percent market share, though private players have been growing
aggressively. Considering the worlds largest population and an annual growth rate of nearly
7 per cent, India offers great opportunities for insurers. US based online insurance company
ebix.com plans to enter the Indian market following deregulation of its insurance sector.
Online insurer ebix.coms expansion into India is a major step for the company to become a
global supplier of internet-based insurance tools for consumers and insurance professionals.
Characteristics
Sharing of risks
Cooperative device
Evaluation of risk
Payment on happening of a special event
The amount of payment depends on the nature of losses incurred.
The success of insurance business depends on the large number of people insured
against similar risk.
Insurance is a plan, which spreads the risk and losses of few people among a large
number of people.
The insurance is a plan in which the insured transfers his risk on the insurer.
Insurance is a legal contract which is based upon certain principles of insurance
which includes utmost good faith, insurable interest, contribution, indemnity, causes
proxima, subrogation, etc.
The scope of insurance is much wider and extensive.
HISTORY
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The story of insurance is probably as old as the story of mankind. The same instinct that
prompts modern businessmen today to secure themselves against loss and disaster existed in
primitive men also. They too sought to avert the evil consequences of fire and flood and loss
of life and were willing to make some sort of sacrifice in order to achieve security. Though
the concept of insurance is largely a development of the recent past, particularly after the
industrial era past few centuries yet its beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the year 1818. Oriental Life
Insurance Company started by Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that period were brought up with
the purpose of looking after the needs of European community and Indian natives were not
being insured by these companies. Bombay Mutual Life Assurance Society heralded the birth
of first Indian life insurance company in the year 1870, and covered Indian lives at normal
rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came
into existence to carry the message of insurance and social security through insurance to
various sectors of society. Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance
companies. The Life Insurance Companies Act, 1912 made it necessary that the premium rate
tables and periodical valuations of companies should be certified by an actuary. But the Act
discriminated between foreign and Indian companies on many accounts, putting the Indian
companies as a disadvantage.
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PROFILE OF THE COMPANY
HISTORY
The origins of Metropolitan
Life Insurance
Company (MetLife) go
back to 1863, when a
group of New York City
businessmen raised $100,000
to found the National Union
Life and Limb
Insurance Company. The
new company insured Civil War sailors and soldiers against disabilities due to wartime
wounds, accidents, and sickness. In 1868, after several reorganizations and five difficult
years, the company decided to focus on the life insurance business. A new company was
chartered to sell "ordinary" insurance to the middle class.
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1868 March 25, one day after the Company opened its books, the first policy carrying the
name of the Metropolitan Life Insurance Company was issued. Dr. James R. Dow, a retired
physician from Brooklyn, NY, was named Metropolitan Lifes first President. He held this
position until 1871. The Companys office consisted of two and a half rooms; it was located
at 243 Broadway in Lower Manhattan. By the close of business in 1868, the Company had
issued 1,477 policies for $4,340,000.
METLIFE (INDIA)
MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc. and was
incorporated as a joint venture between MetLife International Holdings, Inc., The Jammu and
Kashmir Bank, M. Pallonji and Co. Private Limited and other private investors. MetLife is
one of the fastest growing life insurance companies in the country. It serves its customers by
offering a range of innovative products to individuals and group customers at more than 600
locations through its bank partners and company-owned offices. MetLife has more than
50,000 Financial Advisors, who help customers achieve peace of mind across the length and
breadth of the country.
MetLife, Inc., through its affiliates, reaches more than 70 million customers in the Americas,
Asia Pacific and Europe. Affiliated companies, outside of India, include the number one life
insurer in the United States (based on life insurance inforce), with over 140 years of
experience and relationships with more than 90 of the top one hundred FORTUNE 500
companies. The MetLife companies offer life insurance, annuities, automobile and home
insurance, retail banking and other financial services to individuals, as well as group
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insurance, reinsurance and retirement and savings products and services to corporations and
other institutions.
The MetLife companies offer life insurance, annuities, auto and home insurance, retail
banking and other financial services to individuals, as well as group insurance and retirement
& savings products and services to corporations and other institutions.
Vision and Mission
Build financial freedom for all through leadership in providing financial advice and building
long-term relationships through innovative protection, accumulation and retirement products,
robust underwriting processes and creating world-class customer service experience for our
customers. We want to provide customers in India with world-class solutions for financial
security, and in the process add significant value to our shareholders, associates and society.
Functions of insurance:
Primary functions:
1. Provide protection: - Insurance cannot check the happening of the risk, but can provide for
the losses of risk.
2. Collective bearing of risk: - Insurance is a device to share the financial losses of few
among many others.
3. Assessment of risk: - Insurance determines the probable volume of risk by evaluating
various factors that give rise to risk.
4. Provide certainty: - Insurance is a device, which helps to change from uncertainty to
certainty.
Secondary functions:
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1. Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable
device to prevent unfortunate consequences of risk by observing safety instructions.
2. Small capital to cover large risks: - Insurance relives the businessman from security
investment, by paying small amount of insurance against larger risks and uncertainty.
3. Contributes towards development of larger industries.
Other Function:
Means of savings and investment: Insurance companies are business houses. The product
they sell is financial protection. To succeed and survive, they must cover their costs, which
include payments to cover the losses of policyholders, as well as sales and administrative
expenses, taxes and dividends.
SWOT ANALYSIS
STRENGTHS
1. With over 139 years of experience MetLife have approximately US $ 3.3 trillion
of life insurance in force.
2. Brand Image, Business Experience and Innovative products...
3. Large number of young workforce .The 40K agents which are very selectively
chosen
4. Service quality which is the crux of their mission.
5. Has tie up with banks like Axis, J&K, Barclays, Karnataka Bank and
Dhanalakshmi bank.
6. Very less charge on ULIP plans as compare to other insurance players.
WEAKNESS
1. Many competitors in the market of same products by the title and difference in
premium and offerings.
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2. Very less network branches due to which its difficult for customer to make
payment easily.
3. Not focusing on consumer awareness mainly concentrating on personal selling.
4. More focusing in urban areas not touching rural area which has a very good
potential market for insurance sector.
5. Lacking in advertisement due to which they are not able to cover a large area or
large no of customer.
OPPORTUNITY
1. Huge market is literally untapped. Out of estimated 320 million insurable markets
only 20% of the population is insured.
2. Health insurance and pension schemes, an estimated market potential of
approximately $ 15 billion.
3. Nearly 70% of the Indian population is without Life, Health, and Non-Life
insurance.
4. Per Capita life insurance premium in India in 2004 was $16 as compared to the
world average of $ 292.
5. Strong economic growth with increase in affluence and rising risk awareness
leading to rapid growth in the Insurance sector.
THREATS
1. Players like Bajaj and Birla sun life offer same plans with low premiums.
2. Entry of many other private companies with equally strong experience and
financial strength of foreign partners making the competition difficult and
saturating the urban markets (example; idbi fortis insurance, Bharti axa
insurance
and more.)
3. Current govt. policies do not encourage gross domestic savings. If the tax liability
of the service class rises, the customer will have little money to invest.
4. Lic has woken up from sleep and is following competitive strategies. Its huge
surplus in life fund gives a capability to lodge price war.
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CHAPTER - 2
RESEARCH METHODOLOGY
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Objective & Scope of study
Managerial usefulness of study
Type of Research and Research Design
Data Collection Method
OBJECTIVES & SCOPE OF THE STUDY
OBJECTIVE:
The Notion behind carrying out this study is to gain insight in Life Insurance Industry.
The major objectives behind carrying out this study were:
1. To identify reasons resulting in lapse occurrence in the life insurance sector.
2. To examine the reasons resulting in growing market for life insurance industry.
3. To compare the performance of public vs. private sector on the basis of premium
collection and new policies issued.
SCOPE:
1. The scope of the study is confined to the public and the private players of life
insurance industry. The study is emphasizing on the growth of life insurance market.
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It will help in identifying the factors resulting in changes in the industry leading to
significant and continuous growth of life insurance industry.
MANAGERIAL USEFULLNESS OF THE STUDY:
The study would cater to the needs of the customer, company as well as the residents of the
society as to know the factors resulting in the success/ failure of the company in terms of the
accomplishment of the promises made to the customers, and in letting the general public of
society know whether the companies are performing on the standard established by them.
TYPE OF RESEARCH AND RESEARCH DESIGN
Research Methodology
The research is based upon descriptive research. Primary as well as Secondary sources of
data collection have been adopted for the study. The relevant and required data are collected
from the text books, national articles, RBI Bulletin (various issues) as well as annual reports
of IRDA.
Type of Research
The nature of data which are collected and used for this research article is primary and
secondary in nature. The research instruments used were personal interviews and response
sheets.
Research Design
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The research design which has been formed for this research is descriptive
research design.
DATA COLLECTION METHOD
Primary Data
We gave some respondents to fill up the response sheets and some others response sheets
were filled by asking questions by telephonic conversations.
Secondary Data
In our case secondary data were collected from:
Information Brochures.
On the job training
Pamphlets.
Textbooks.
National articles
Sampling Design
We will prefer non probability sampling technique for our research as the choice of the
companies is solely dependent on the reliability of the data source.
Sample Unit
For the purpose of primary data collection our sample unit comprises of the
individuals whose insurance policies have lapsed.
And for the purpose of secondary data our sample unit comprises of Public and
Private Players in the life insurance industry
Sample Size
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For the purpose of primary data collection, the sample size constitutes 200 respondents.We
distributed 200 questionnaires whereas we received back just 181 therefore after filtering
those entire questionnaire we just had 161 questionnaires available with us.
LIMITATIONS OF STUDY
The limitation or the problem we faced during the project are-
Restrictive analysis is conducted due to the shortage of the time allotted to the study
period.
Lack of experience may lead to some mistakes.
Response Error that can be committed by the biased respondent or in-accurate
responses by the respondents which may lead to misinterpretation of data.
Study confined to the state of Delhi in identifying reasons of lapse occurrence might
not give overall and accurate results that can lead to generalization for the whole
country.
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Chapter - 3
DATA ANALYSIS
ASSESSMENT OF VARIABLES CAUSING LAPSE OCCURRENCE
TABLE 3.1:-CATEGORISATION OF NUMBER OF RESPONDENTS ON THE
BASIS OF THEIR INCOME LEVEL
income 10,00,000
no. of
respondents
92 45 19 1 3
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INTERPRETATION:-According to the data it is analysed that the respondents who have
income between 5, 00,000-7, and 50,000 have more lapse cases. It amounts to 57% of the
total respondents. Very less people whose income is between 7, 50,000-10, 00,000 have lapse
of their policies i.e. 28%.This reflects that financial constraint cant not affect much there are
many other reason for lapsation of policies.
TABLE 3.2:- CATEGORISATION OF RESPONDENTS ON THE BASIS OF THEIR
OCCUPATION.
Occupation service business self employed Other
no. of
respondents
38 33 17 72
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INTERPRETATION:-According to the above data is analysed that service and business
class people have less policy lapse than people belonging to other class i.e. 72 respondents
out of 161 are from others group. Self-employed includes lesser people of lapsation of
policies. Lack of knowledge and awareness or lacks of time can one of the reasons for policy
lapse.
TABLE 3.3:- CATEGORISATION OF NUMBER OF RESPONDENTS ON THE
BASIS OF THEIR AGE.
Age 18-30 31-40 41-50 >50
no. of respondents 73 59 26 2
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INTERPRETATION:-From the data above it is analysed that most of the people are from
the age group 18-30 who have lapse insurance policy. Very few people take life insurance
policy at the age of 50 or above as there is a criterion for getting insured at an appropriate
age. 73 out of 161 respondents are from 1st category and only 2 are from 4th category.
TABLE 3.4:- CATEGORISATION OF NUMBER OF RESPONDENTS ON THE
BASIS OF THEIR GENDER.
From the data above it is analysed that out of 161 respondents 56% of the people are male
and 44% is female respondent i.e. 90 people are male which shows male plays a dominant
role in this and they affect the life insurance industry to great extent.
GRAPHICAL ANALYSIS OF QUESTIONNAIRE RESPONSES
Q1) with which company have you insured your life?
21
male 90
Female 70
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ULIP 31
INTERPRETATION: - According to the data analysed 28% of the respondents have taken
money back life insurance policy taking into consideration that they will get their money
back in future period.19% of the respondents go for term insurance and ULIP Plans as in
term insurance there is fixed period of policy after that period one does have to pay the
premium to the insurance company. There is less investment in endowment plans i.e. only
16% go for this plan. So we can say that people have their preferences according to their
needs and taste.
TABLE 3.5:- THE RELATIONSHIP BETWEEN GENDER & THE VARIABLES OF
QUESTION NO. 2
Term
insurance
MONEY
BACK LIFE
INSURANCE
ENDOWMENT
LIFE
INSURANCE
WHOLE
LIFE
INSURANCE
POLICY
UNIT
LINKED
INSURANCE
POLICY
gender Male 17 25 13 16 19
Female 14 20 12 13 12
Total 31 45 25 29 31
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INTERPRETATION:-The data above shows that higher degree of lapsation of policies is
among the males rather than females. As we can see in money back life insurance policy
there 25 male and 20 female who have lapsed policy. So we can say that males have
dominant role in identifying the main reasons of lapse of policies and the growth of insurance
industry.
TABLE 3.6:- THE RELATIONSHIP BETWEEN THE AGE AND THE VARIABLES
OF QUESTION NO .2
Term
insurance
MONEY
BACK LIFE
INSURANCE
ENDOWMENT
LIFE
INSURANCE
WHOLE
LIFE
INSURANCE
POLICY
UNIT
LINKED
INSURANCE
POLICYage 18-30 14 23 8 13 16
31-40 9 17 10 13 10
41-50 7 5 7 3 4
>50 1 0 0 0 1
Total 31 45 25 29 31
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INTERPRETATION: - This table shows the relationship between the age and the products
in consideration to the lapse of policy. From the data above we can analyse that respondents
from the age group between 18-30 have higher lapsation rate and more over money back life
insurance product has highest lapse rate. Ignoring the age group of 50 above age group
between 41-50 shows less lapsation of the policies it can be due to the reason of individuals
turning mature and think all premiums are paid then why to lapse policy or may be highly
satisfied.
Q3) on whose reference did you take the policy?
Relatives 35
Agents 69
On your own risk 47
Others 9
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INTERPRETATION: - From the data it is very well cleared that most of the people take
insurance policies on the faith and recommendation of the insurance agents i.e. 43% of the
respondent are from this category. Less importance is given to others as this decision
involves investment of money with risk which every individual can't take so only 6% of the
respondent has gone for this option.29% of the respondents are those whose themselves want
to go for insurance policies so they prefer their own judgement and analysis rather than others
opinion and out of the sample size 22% respondents are those who rely on the relatives and
take their suggestion for going on for any policy.
Q4) what is the tenure of the policy taken?
5 years 21
10 years 61
20 years 55
30 years 13
Above 30 years 10
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INTERPRETATION: - Most of the people have taken insurance policies for the period of
10-20 years so that their risk factor is covered up and they dont have to wait too long to the
policy amount on the future date. Out of 161 respondents 61 respondents have taken 10 years
policy and 55 have taken 20 years policy. This shows how much people are inclined towards
this period; very less people prefer tenure of 30 years or above 30 years like for 5 years plans
less people have preference.
Q5) which premium frequency option did you choose?
Yearly 54
Quarterly 44
Half yearly 55
Monthly 6
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INTERPRETATION: - From the data it is analysed that people prefer to pay premium half-
yearly and yearly rather than monthly. It shows that people don't prefer to pay premium out
of their monthly income rather wish to give premium out of their savings. Very few people
go for monthly premium payment i.e. only 6 people out of 160 people go for this.44 people
go for quarterly premium payment.
Q6) is the product offered to you in accordance with the promise made by the
agent/company?
Yes 101
No 59
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INTERPRETATION; - Most of the people are satisfied with the product offered to them by
the insurance companies. This shows that companies want to make clear dealing with their
customers on fairground whatever product offering is made its up to the mark with the
promise made by the company.101 out of 161 respondents are satisfied and 59 respondents
are unsatisfied it can be due to some reasons as considered inappropriate to the requirements
and actual promise made by the company. One of the reasons can be changing behaviour of
the customer.
Q7) how would you rate the solvency position of the company under which you are
insured?
Very low 4
Low 24
Neutral 63
High 57
Very high 12
INTERPRETATION: - From the data it is analysed that the respondents are satisfied with
the solvency position of the companies.63 respondents have neutral views regarding the
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position of the company with which they are insured.57 respondents give high rating to their
insurance company. Only 4 respondents are not satisfied with the solvency position of the
company. So companies should provide accurate data on the basis of which true position of
the company can be judged.
Q8) Why was a default in paying premium?
No reminder
given
agent did not
turn up
financial
problem
victim of mis-selling Others
36 36 49 35 5
INTERPRETATION:
Thus from the above diagram it can be clearly seen and analyzed that as per the response of
the 161 respondents the main reason that can be identified as the cause of default in making
premium comprises of financial problems i.e., 31% respondents were undergoing some kind
of personal financial crises, thereby having an effect that their policy lapsed. The second
reason seems to be that the agents fall into practice of mis-selling which is later on identified
by the customers and so they make a default in making premiums. Actually the other two
reasons have also received an equal number of responses i.e., no reminder was given and the
agent did not turn up.
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Q9) To what degree are the expenses/commission charges in accordance with the
disclosure made at the time of issuing the policy?
Very high 12
High 73
Moderate 55
Low 16
Very low 5
INTERPRETATION:
From the above diagram the inference can be easily drawn that out of 161 respondents whose
policy have lapsed, 45% rate that the accordance level between the commissions andexpenses charged and the disclosures made as high. Whereas 34% of them rate it as moderate
and 10% are of the view that the level is low, 8% are of the view that this level of accordance
is very high and last but not the least 3% feel that the degree of accordance level is very low.
TABLE 4.7:- THE RELATIONSHIP BETWEEN THE QUESTION1 & QUESTION 9.
Q1
LIC BIRL
A SUN
SBI
LIFE
MetLife OTHERS
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LIFE
Q9 VERY HIGH 3 2 2 5 0
HIGH 32 12 8 13 8
MODERATE 28 4 9 11 3LOW 4 3 2 3 4
VERY LOW 1 1 1 2 0
Total 68 22 22 34 15
INTERPRETATION:-
If we go by the above chart we see that very high solvency ratio is rated for Bajaj alliance bymaximum respondents. High rating is given to LIC by majority of respondents. Again
majority of respondents feel that LIC solvency position is moderate n this number is even
more than those rating it as high. Low rating is given maximum to other private companies.
Finally Vey low rating is again given to Bajaj alliance. The trend shows that respondents
have a mixed response but if we go by the rule of majority very high rating is given by them.
Q10) Are you aware of the consequences of policy lapse?
options No. of respondents
Yes 83
No 77
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INTERPRETATION:
The above graph clearly shows that maximum number i.e., 83 out of 161 of respondents is
aware of the consequences of lapsation of a policy. Otherwise this lead would lead to creation
of an alarming situation for the insurance companies and their agents as it is their obligation
to make all the clauses along with the consequences they might have to face in case they
default in paying the premium, the grace period which will be allotted or what all penalties
they would have to suffer in case of lapse of policy. Only 77 respondents are unaware of the
consequences which are also a significant number and cannot be ignored.
TABLE 4.8:- The relationship of the variables of question no. 10 with that of the
gender.
Q10YES NO 3
gender Male 53 37 0
Female 30 40 1
Total 83 77 1
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INTERPRETATION:
The chart clearly shows that male have more awareness regarding the consequences of lapse
occurrence as compared to males. This shows the need for the companies to concentrate on
the female market segment even so that both the groups are equally informed about ill effects
of policy lapse and the rate of lapse can be lowered.
Q 11) How long does it take to renew your lapsed policy?
Time taken No. of respondents
one month 30
2 months 71
3 months 32
more than 3
months
28
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INTERPRETATION:
From the above diagram the inference can be easily drawn that out of 161 respondents whose
policy have lapsed, 44% say that it takes 2 months for getting the lapsed policy renewed. 20%
of the respondents are of the opinion rather they have experienced a time frame of 3 months
for getting their lapsed policies renewed. Another 19% had the experience of being on a hold
for only 1 month and the remaining 17% had to wait for more than 3 months for the
procedure to get completed.
Q12) Did you take up another policy after your previous policy lapsed?
Option No. of respondents
yes 66
no 95
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INTERPRETATION:
The above pie chart gives us a clear idea that the maximum percentage of respondents did not
take up any new policy after their previous policy lapsed. This may be the reason because we
have earlier identified that the most likely reason of lapsation was the personal financial crisis
so the reason is obvious for not undergoing for another policy. Remaining 41% have gone up
for other policies after their previous policy lapsed.
Q13) is there any awareness activity being conducted by the insurance company for
your benefit?
Option No. of respondents
yes 113
no 48
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INTERPRETATION:
From the above pie chart the response is obvious that 70% respondents have favoured the
insurance companies by saying that yes the awareness activity is conducted by the
companies. Only 30% respondents are not having a positive feedback in this regard.
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CHAPTER 4
FINDINGS, CONCLUSION AND SUGGESTIONS
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FINDINGS
From the analysis we can conclude the following
Most of the customers are been sold the life insurance product which was either not
required by them or was not catering to their need.
Agents just because of their greediness to get more of commission have been cheating
over customer.
The mis-selling of insurance products has directed the customer perception of life
insurance towards a bit of negative way.
Maximum of the Life Insurance products are been sold with the recommendations ofthe agents.
Most of the people had personal financial problems because of which their life
insurance policy is lapsed therefore to increase the sale along with the spreading of
consumer awareness towards life insurance and its offerings; companies should also
focus on to educating the customer that how they can best manage their personal
finance.
INDIA is having a huge potential when talking of life insurance sector; its because of
the untapped areas in INDIA i.e. most of the rural areas are still unaware of theconcept of life insurance business.
Those people having income of more than RS. 7 lakh and above have no impact on
their financial position when their policy is lapsed whereas talking of retired or a
service class person is very much affected by such lapses .
Through the analysis its clear; that the males are more aware of the consequences of
the lapse policy then those of the females.
People falling under the age bracket of 18 30 & 31 40 years the maximum policy
which are lapsed are the money back life insurance policy.
The male customers have more of lapsed money back life insurance policy then that
of females.
Despite of the fact , that number of private players in the country the Indian Life
Insurance Industry is leaded by the sole Public company i.e. LIC .
Majority of the respondents are satisfied with the product which they are getting
however a good proportion of sample does not agree with it.
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Most of the customers are overcharged the interest / commission which leads to
customer dissatisfaction.
CONCLUSION
Insurance is a big industry and will certainly grow. The regulatory experience in
developed countries shows a trend towards a conglomerate line to the pillars approach.
In the recent years, the Life Insurance Industry of India witnessed a marvellous growth and
touched its historical height. So many factors have collectively contributed for this
remarkable achievement. In this tenure, the LIC of India introduced many phenomenal
business strategies by way of offering colourful schemes and products. The reason for these
kinds of extraordinary effect was only because of the stiff competition emerging by the
private insurance players. The private insurance companies are offering plenty of new
attractive schemes and products to get meaningful share in the insurance market. However,
the LIC of India has the powerful network and it is launching attractive advertisements in the
regular interval to create great awareness among the general public. Simultaneously, the
private life insurance companies are also taking much pain to cover-up the major populations
(inventors) under their boundary, for that they are sponsoring series of effective awareness
programmes through many attractive advertisements. This healthy competition motivated the
general public to go in favour of more investments in insurance. While comparing the
efficiency and progressiveness of life insurance business in pre and post LPG arena, the
Indian Life Insurance Industries are achieving a magnificent growth.
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RECOMMENDATIONS
Some of the key recommendations are suggested as follow
Companies should inform about the policies to customers from time to time whether it be
new policies or old ones.
Company should disclose all the facts regarding the policies at the time of providing the
policy.
Agents should disclose the primary policy in detail and should work in ethical
manner.
Companies should make customer aware of the policy changes.
Companies should provide online help to the customer so that it save their time and make
process faster.
Companies should go for awareness activities for the benefit of the customer like they
should go for awareness camps etc.
Companies should have more educational drives to educate or make customer up to date
of policies.
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Companies should give reminder to the customers regarding the due date of premium
payment.
Companies should not only focus only on the urban customers rather they should pay
attention to rural customers. They should educate more rural people so that they can take
policies which benefit and this will reduce lapsation rate also.
Companies should use channels of communications like radio to make people aware
rather than only going for television advertisements.
Companies should identify reasons why customers are going for their policy lapse.
Companies should maintain transparency in their operations so that customers developgood relationship with the insurance companies.
Agents should have more comprehensive knowledge of the policy they are selling so that
they provide customers with the product according to their requirement. They should visit
regularly to the customers to resolve any query if it exist.
Companies should give frequent reminders to customers and agents regarding fresh
notices, so that customers can be saved from being befooled.
Message alerts for the due date should be send to the customer
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APPENDIX:
QUESTIONNAIRE
Name:
Age: 18-30 31-40 41-50 >50
Gender: Male Female
Occupation: Service Business Self Employed Other
Income (per annum): < 2,50,000 2,50,000-5,00,000
5,00,000-7,50,000 7,50,000-10,00,000 > 10,00,000
Q1) with which company have you insured your life?
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LIC BIRLA SUN LIFE SBI LIFE
MetLife OTHERS...(please specify)
Q2) which type of policy have you taken?
Term insurance Money Back Life Insurance
Endowment Insurance Policy Whole Life Insurance Policy
Unit Linked Insurance Policy(ULIP)
Q3) On Whose recommendation did you take the policy?
Relatives Agents On your own wish
Others(please specify)
Q4) what is the tenure of the policy taken?
5 years 10 years 20 years 30 years above 30 years
Q5) which premium frequency option did you choose?
Yearly Quarterly Half yearly Monthly
Q6) is the product offered to you in accordance with the promise made by the
agent/company?
Yes No
Q7) how would you rate the solvency position of the company under which you are insured?
Very Low________low_______neutral_________high________Very High
1 2 3 4 5
Q8) Why was a default in paying premium?
No reminder was given Agent did not turn up
Due to some financial problem You found that you were a victim
of mis-selling
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Others..(please specify)
Q9) to what degree are the expenses/commission charges in accordance with the disclosure
made at the time of issuing the policy?
Very high High Moderate Low
Very low
Q10) Are you aware of the consequences of policy lapse?
Yes No
Q11) how long does it take to renew your lapsed policy?
One month Two months Three months
More than three months
Q12) did you take up another policy after your previous policy lapsed?
Yes No
Q13) is there any awareness activity being conducted by the insurance company for your
benefit?
Yes No
Q14) If No, then please specify as to what do you expect from the company in this regard?
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