CHAPTER—IV
UTILISATION OF LIC BY POLICYHOLDERS
4.1 Introduction
4.2 Utilisation of Products and Services of LIC of India
4.3 Componentwise Utilisation
4.4 Factors Responsible for the Utilisation of LIC of India
4.5 Summary
4.1 Introduction
The LIC is offering numerous types of policies to satisfy the needs of varied
types of customers. Savings, security, risk coverage, loan facility and tax relief are the
basic features of all the LIC policies. All types of insurance policies have both
insurance element and endowment element in different proportions. The life insurance
policies may be without profit (non—participating) and with profit (participating). The
plans generally available in the LIC include term life insurance, whole life insurance,
endowment type, combination of annuity and whole life type, children's assurance and
pension plans. Having different elements in different policies, the policyholders are
free to choose the best policies according to their requirements. It is known that no
single policy can be the best policy for all the policyholders, because different types of
insurance policies have different features due to variance in cost, elements of
investment and protection, requirements of the policyholders and benefits of the policy.
Hence, the level of utilization of the LIC policies differs from person to person.
In this chapter, an attempt has been made to study the extent of utilization of
products and services of the LIC of India by the policyholders in Kanyakumari District.
4.2 Utilisation of Products and Services of LIC of India
Different policyholders have been utilising the LIC in different ways.
The services offered by the LIC have been manifold which include different types of
policies with different assured sums, provision of loans against policies and the like.
The services cited above are not of comparable nature. Each differs from the other in a
way or other. Different policyholders utilise these services at different levels. It is not
right to generalise the utilization of all these services under a single name. Hence, the
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utilisation of the above mentioned services by the policy holders has been evaluated
individually.
4.2.1 Purposes of Utilisation of Life Policies in LIC
The researcher has identified ten factors which are responsible for the utilization
of life policies by the policyholders in Kanyakumari District. They include savings,
security, education of the ward, marriage of the ward, to meet medical expenses, to
reduce income tax burden, to avail pension benefits, to avail loan facilities, dependants'
welfare and to oblige the agent. Every policyholder utilises the services of the LIC for
any one of the above said purposes. The purposes of utilising the LIC policies have
been analysed with the help of Garrett's Ranking Technique. The percentage position
is determined with the help of the following formula.
Percentage position = 100 (R —0.5) ,Where,N
R = Rank assigned for the statements by the respondents
N = Number of statements ranked by the respondents
The mean scores and percentile ranks obtained for the identified purposes of
utilization based on Garrett's Ranking Technique are shown in the table 4.1
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Table 4.1
Percentile Ranks for the Factors Responsible for taking up Life Policies
Score
S. MeanPercentage
Factors Rank PositionNo. Score (Table 49) PRs
1. Savings 8.91 1 5.00 83 95.00
2. Security 8.46 2 15.00 70 85.00
3. Dependant's welfare 6.25 3 25.00 63 75.00
4. Education of ward 5.25 4 35.00 63 65.00
5. Avail loan facilities 4.91 5 45.00 63 55.00
6. Reduce income tax 4.77 6 55.00 63 45.00
burden
7. Oblige the agent 4.61 7 65.00 63 35.00
8. Marriage of ward 4.45 8 75.00 37 25.00
9. Avail pension facilities 3.88 9 85.00 30 15.00
10. Meet medical Expenses 3.51 10 95.00 19 5.00
PRs - Percentile Ranks
It could be inferred from the table 4.1 that the most important factor for taking
life insurance policies in the LIC by the policyholders in Kanyakumari District among
the ten factors identified is 'Savings' with 95 percentile ranks. The second and third
factors are 'Security' and 'Dependants' Welfare' with 85 and 75 percentile ranks
respectively.
4.3 Component-wise Utilisation
There is no standard yardstick available to measure the utilization of the LIC by
the policyholders. Hence, it has been attempted to evaluate the utilization of the LIC
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with the help of the following identified components which incidentally happen to be
the services of the LIC.
i. Types of policies taken
ii. Number of policies taken
iii. Sum assured
iv. Amount of housing loan availed
V. Amount of policy loan availed
vi. Purposes of utilization of LIC Bond
vii. Amount of annual premium paid
4.3.1 Types of Policies Taken
The LIC of India is offering many varieties of life policies rather than those
offered by the other private life insurers in India. Therefore, the policyholders are free
to choose the best policy suited to their requirements in the LIC. The extent of
utilization depends on the types of policy, which they prefer and choose. It has been
observed that the majority of the policyholders prefer to take the popular endowment
and money back policies in the LIC. The extent of utilization of various types of the
LIC policies by the sample respondents in Kanyakumari District is shown in the
table 4.2.
108
Table 4.2
Types of Policies Taken by the Respondents
S.No. Type of Policy Number ofPercentageRespondents
1. Endowment 474 76.45
2. Money Back 268 43.23
3. New Jana Raksha 42 6.77
4. New Jeevan Dhara / Suraksha 48 7.74
5. Jeevan Kishore 18 2.90
6. Jeevan Surabhi 48 7.74
7. JeevanShree 10 1.61
8. BimaKiran 30 4.84
9. Children's Money Back 14 2.26
10. Jeevan Mitra 20 3.23
11. JeevanAnand 15 2.42
12. Others 23 3.71
It could be seen from the table 4.2 that out of 620 respondents, the majority of
474 respondents (76.45 per cent) have purchased the popular Endowment Policies and
the second largest number of 268 (43.23 per cent) respondents have purchased Money
Back Policies. The other policies like New Jana Raksha, New Jeevan DharalSuraksha,
Jeevan Kishore, Bima Kiran, Jeevan Mitra and the like are purchased by the less
number of respondents. The basic reason for the largest purchase of Endowment policy
by the policyholders is the indirect influence from the agents for their higher rate of
commission on this policy. On the contrary, the major reason for the purchase of
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Money Back Policy in large numbers by the policyholders is the advantage of getting
interim payments for this policy at fixed time intervals even before the maturity of the
policy and it is more profitable to the policyholders when compared to the Endowment
Policies. The other policies are purchased by a very limited number of respondents for
the reason that many of the agents do not properly explain the policyholders about the
values and specialised benefits of such policies. Hence, the Development Officers of
the LIC should take initiative steps in this regard and educate and motivate the agents
to concentrate on the less sold LIC products.
4.3.2. Number of Policies Taken
The extent of utilisation of the services of the LIC can also be assessed from the
angle of number of policies purchased by the respondents in Kanyakumari District.
The policyholders will have repeated buying of life policies in the LIC only when they
are satisfied with the benefits accruing from such policies either through the
advertisements of the LIC or through the convincing talents of the LIC agents. It is
observed that the respondents have purchased a larger number of Endowment and
Money Back types. The table 4.3 shows the particulars about the number of policies
taken in each type by the respondents.
110
Table 4.3
Number of Policies Taken by Respondents in
Kanyakumari District
Number of
S.No. Types of Policy Policies PercentagePurchased
1. Endowment 712 54.43
2. Money Back 328 25.08
3. New Jana Raksha 42 3.21
4. New Jeevan Dharal Suraksha 48 3.67
5. Jeevan Kishore 18 1.48
6. Jeevan Surabhi 48 3.67
7. JeevanShree 10 0.76
8. Bima Kiran 30 2.29
9. Children's Money Back 14 1.07
10. Jeevan Mitra 20 1.53
11. JeevanAnand 15 1.15
12. Others 23 1.76
Total 1308 100.00
As seen from the table 4.3, it is clear that of the total number of policies (1308)
purchased by the sample respondents, 712 (54.43 per cent) policies are of Endowment
type, 328 (25.08 per cent) are of Money Back Policy, 42 (3.21 per cent) are of New
Jãna Raksha, 48 (3.67 per cent) each are of New Jeevan Dhara or Jeevan Surabhi and
less than 2 per cent of the respondents purchased other types of polices. It implies that
III
ie Endowment and Money Back types are the most popular policies among the
ol icyholders in Kanyakumari District.
The extent of utilization of the LIC can further be assessed from the viewpoint
f the number of policies taken by the respondents in Kanyakumari District by
omparing with the selected variables such as area of residence, age and nature of
)ccupation by the use of Chi - Square Test.
i. Area of Residence
The area of residence is considered as an important variable for assessing the
extent of utilization of the LIC products in terms of the number of policies taken by the
policyholders in Kanyakumari District. The observation is that the urban and semi -
urban people are preferring to invest in various attractive plans offered by the LIC.
Since the rural people are not aware of the benefits of varied types of the LIC plans,
they are not expected to invest in varieties of policies. The table 4.4 shows the
relationship between the area of residence of the respondents and the number of
policies taken by them in the study area.
Table 4.4
Area of Residence and Number of Policies Taken
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it could be realised from the table 4.4 that out of 288 respondents who have
±ased only one policy from the LIC, the majority of respondents 156 (54.17 per
t) belong to the rural areas. But in case of respondents who have purchased two or
e policies, out of 241 respondents, 131 (54.36 per cent) are from urban and semi-
an areas. Similarly, out of 91 respondents who have purchased four or more
[icies, 53(58.24 per cent) belong to urban and semi - urban areas. It indicates that
)st of the respondents belonging to urban and semi - urban areas preferred to buy
rieties of policies when compared to the rural respondents.
Age
Young people have no family commitments and hence, they spend lavishly
ithout even looking for the safety and security of their future. But the middle age and
Ld age people do always think of the safety and security of their families. It has been
oticed that the middle age and old age people have varieties of policies when
ompared to the young people. Thus, the age factor of the respondents has been
onsidered as an important variable for assessing the extent of utilization of the LIC in
erms of the number of policies. The table 4.5 shows the relationship between the age
Level of the respondents and the number of the LIC policies taken.
113
Table 4.5
Age Group and Number of Policies Taken
S. No Number of Age Group of RespondentsPolicies Total
Below 20 20 - 30 30 - 40 40-50Above
1. 1 8 86 88 70 36 288
(2.78) (29.86) (30.56) (24.30) (12.50) (100)
2. 2 and 3 20 85 94 42 241
- (8.30) (35.27) (39) (17.43) (100)
3. 4 and above 2 15 60 14 91
(2.20) - (16.48) (65.93) (15.39) (100)
10 106 188 224 92 620
Total(1.61) (17.10) (30.32) (36.13) (14.84) (100)
It is assessed from the table 4.5 that the respondents who are in the age group of
30 to 50, have purchased a large number of policies when compared to the respondents
of the other age group. Out of 241 respondents who have taken 2 or 3 policies, 85
(35.27 per cent) are in the age group of 30 to 40 years and 94 (39 per cent) are in the
age group of 40 to 50 years. Similarly, out of 91 respondents who have taken 4 and
more policies, the majority of 60 (65.93 per cent) are in the age group of 40 to 50 years.
iii. Nature of Occupation
Nature of occupation is considered as an important criterion for deciding the
extent of utilization of the LIC in terms of the number of policies purchased by the
respondents in Kanyakumari District. Generally, persons with better education have
occupied better positions in their jobs. They are easily able to grasp the best features of
various types of policies. Hence, they are interested in buying different types of
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policies from the LIC. But, the people with less qualification do not realise the
existence of various polices in the LIC. Consequently they utilise the LIC only to a
limited extent only by buying less number of policies. The table 4.6 gives the
relationship between the nature of occupation and the number of policies taken in the
LIC.
Table 4.6
Nature of Occupation and Number of Policies Taken
Number of Respondents Based on Nature of OccupationS. No. of I
No Policies Execu- Cleri- Teach- Assis- Techni- Busi- Agri-Others Total
tive cal ing tant cal ness culture
1. 1 4 23 82 9 22 22 36 90 288
(1.38) (7.99) (28.47) (3.13) (7.64) (7.64) (12.5) (31.25) (100)
2. 2 and 3 6 8 163 4 20 14 6 20 241
(2.49) (3.32) (67.63) (1.66) (8.30) (5.81) (2.49) (8.30) (100)
3.4and - 4 77 - - 4 2 4 91
above (439) (84.61) (4.40) (2.20) (4.40) (100)
10 35 322 13 42 40 44 114 620Total
(1.61) (5.65) (51.94) (2.10) (6.77) (6.45) (7.10) (18.39) (100)
It could be assessed from the table 4.6 that the teacher respondents have
purchased a large number of LIC policies when compared to the other respondents
engaged in various occupations. Out of 241 respondents who have purchased two or
three life insurance policies, the majority of the respondents numbering 163 (68.20 per
cent) are teachers. Similarly, out of 91 respondents who have purchased four and more
policies, 84.61 per cent, i.e., 77 respondents are teachers. In case of other categories of
occupation, only a very limited number of respondents have purchased life policies
more than one.
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Test of Significance
Analysis is made with the help of Chi—Square Test for ascertaining the
significant relationship between the identified variables and the extent of utilisation of
the LIC in terms of various utilisation components with the use of the following
formula.
x2 = (0 - E)2 /E with (r - 1) (c - 1) degrees of freedom where,
0 = Observed frequency
E = Expected frequency
r = Number of rows in the contingency table
C = Number of columns in the contingency table
Significant relationship is traced when the calculated Chi—Square Value is more
than the table value for the given degree of freedom at one per cent or five per cent
level
Chi-Square Test has been adopted to examine whether there is any influence of
the variables such as area of residence, age level and nature of occupation of the
respondents on the extent of utilization of the LIC in terms of the number of policies.
The table 4.7 shows the result of the consolidated Chi-Square Test results for these
identified variables.
Table 4.7
Result of the Chi-Square Test for the Identified Variables and Extent of
Utilisation in Terms of Number of Policies
S. VariablesChi-Square Table D.F
Level of RemarksValue Value Significance
1. Area of 30.9844 13.277 4 1% Significant
residence
2. Age 104.3543 20.090 8 1% Significant
3. Nature of 147.4419 29.141 14 1% Significant
occupation
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Since the Chi-Square Values with regard to the variables such as area of
residence, age, and nature of occupation are greater than the corresponding table values
for the given degree of freedom at one per cent level of significance as exhibited in the
table 4.7, it can be concluded that these identified variables highly influence the extent
of utilization of the LIC by the policyholders in Kanyakumari District in terms of the
number of the LIC policies.
4.3.3. Sum Assured
The extent of utilization of the products in the LIC can be assessed from the
angle of the sum assured in each type of policies by the respondents in Kanyakumari
District. It has been observed during the survey that the lower and middle income
groups prefer to buy Endowment and Money Back types with less sum assured and the
other types of policies with higher sum assured are purchased by the higher income
group. The table 4.8 shows the total and average sum assured in each type of policies
by the respondents in Kanyakumari District.
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Table 4.8
Total and Average Sum Assured in Each Type
S.
Total Sum No. ofAverage Sum
iNo
Type of Policy Assured (Rs. n PoliciesAssured per Policy
lakhs) (Rs. in Iakhs)
1. Endowment 626.66 712 0.88014
2. Money Back 239.41 328 0.72991
3. New Jana Raksha 15.64 42 0.37238
4. New Jeevan Dharal 49.61 48 1.03352
Suraksha
5. JeevanKishore 12.70 18 0.70556
6. Jeevan Surabhi 56.46 48 1.17625
7. Jeevan Shree 60.00 10 6.00000
8. BimaKiran 31.00 30 1.03333
9. E
Jeevans Money Back 18.02 14 1.28714
10.itra 24.40 20 1.22000
11. JeevanAnand 23.55 15 1.57000
12. Others 33.45 25 1.45434
F-F---Total 1190.90 1308
It could be assessed from the table 4.8 that the total sum assured is greater in
case of Endowment Policies (Rs. 626.66 lakhs) as they are purchased in large numbers
by the respondents in Kanyakumari District and it is very lower in case of Jeevan
Kishore type which is meant for children (Rs. 12.70 Iakhs). But the average sum
assured per policy is greater in case of Jeevan Shree type - VIP policy (Rs. 6 lakhs) and
lower in case of New Jana Raksha Policy (Rs. 0.37238 lakh). This policy is best suited
for people with irregular income and age proof of the policy holder is not insisted upon.
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The average sum assured per policy in case of Endowment type is Rs. 0.88014 lakh and
in case of Money Back policy is Rs. 0.72991 lakh. The average sum assured per policy
in case of all other types is more than one lakh rupees. The lower and middle income
groups prefer Endowment, Money Back, New Jana Raksha and Jeevan Kishore
Policies. But the higher income group prefers all types of policies without any
discrimination only for the benefit of tax relief.
The extent of utilization of the LIC in terms of the sum assured by the
policyholders in Kanyakumari District could be examined by relating the selected
variables such as status of tax assessee, education, annual income, employment and
marital status with the help of Chi-Square Test.
i. Status of Tax Assessee
It has been observed that the income tax assessees take more life insurance
policies in terms of the sum assured in order to get tax exemption as permitted by the
Income Tax Act 1961, when compared to the non-assessees. Savings and security are
the basic considerations for taking life insurance policies. In addition to these
considerations, tax assessees are entitled to get tax relief in making investments in the
LIC. So an attempt has been made to study the extent of utilization of the LIC by the
tax assessees. Out of 620 respondents, 296 respondents (47.74 per cent) are tax
assessecs. The table 4.9 shows the relationship between sum assured in the LIC and tax
assessee status of the respondents.
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Table 4.9
Status of Tax Assessee and Sum Assured
S. Sum Assured Number of Respondents
No. (Rs.) Tax Ass es Non - Assessees Total
1. Up to 50,000
2. 50,000 to 1,00,000
3. 1 1,00,000 to 2,00,000
4. 12,00,000 and above
Total
22 (9.73)
48(41.38)
75(68.81)
151 (89.35)
296 (47.74)
204 (90.27)
68 (58.62)
34(31.19)
18(10.65)
324 (52.26)
226 (100)
116 (100)
109 (100)
169 (100)
620
It is evident from the table 4.9 that income tax assessees have taken more
amount of policies in terms of the sum assured. But most of the non-assessees have
taken less sum assured policies. In case of respondents pertaining to the sum assured
up to Rs. 50,000, out of 226, 204 (90.27 per cent) are the non-assessees. But in case of
respondents with the sum assured between Rs. 1,00,000 and Rs. 2,00,000, out of 109
respondents, the majority of the respondents numbering 75 (68.81 per cent) are the
income tax assessees. Similarly, with regard to the respondents with the sum assured
above Rs. 2,00,000, out of 169 respondents, 151 (89.35 per cent) are the income tax
assessees.
ii. Education
Well educated persons can very easily grasp the advantage of making
investment in various types of life insurance policies. But, the less educated and
illiterate persons cannot be easily approached and convinced even by the thrive from
the LIC agents. As the education increases, the level of utilization of the LIC in terms
of the sum assured also increases. Thus, it has been observed that the respondents with
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higher educational qualification have purchased policies of higher sum assured and the
respondents with lower educational qualification have purchased policies of less sum
assured. Hence, level of education is considered as a factor having relationship with the
extent of utilization of the LIC in terms of the sum assured. The table 4.10 depicts the
relationship between the level of education of the respondents and the quantum of sum
assured in the LIC of India.
Table 4.10
Level of Education and Sum Assured
SumLevel of Education (No. of Respondents)
AssuredTotali
No. Post
Rs. School Diploma Graduation graduation
138(61.06) 16(7.08) 42(18.58) 30(13.27) 226(100)
2. 50,000
to 33(28.45) - 49(42.24) 34(29.31) 116(100)
1,00,000
3. 1,00,000
to 12(11.01) 20(18.35) 48(44.04) 29(26.60) 109(100)
2,00,000
12(7.10) 8(4.73) 72(42.60) 77(45.56) 169(100)and above
Total 195(31.45) 44(7.10) 211(30.03) 170(27.42) 620(100)
It is seen from the table 4.10 that out of 226 respondents who have taken life
policies up to Rs. 50,000, the majority of 138 (61.06 per cent) have school education.
In case of respondents from the sum assured group between Rs. 1,00,000 and Rs.
2,00,000, out of 109 respondents, 77 of them (70.64 per cent) are graduates or post
graduates. Similarly, out of 169 respondents from the group of the sum assured for
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more than Rs. 2,00,000, 72 (42.60 per cent) are graduates. Thus, it can be concluded
that the level of education and the quantum of sum assured in the LIC are intimately
interrelated.
iii. Annual Income
Annual income of the respondents is considered as an important criterion
having relationship with the extent of utilization of the LIC in terms of sum assured by
the policyholders in Kanyakumari District. Income is the deciding factor for the
quantum of any investment plan. When the annual income of the respondent is higher,
the disposable surplus income will also be higher and he/she is free to choose the best
from innumerable investment opportunities. Similarly, when they have surplus
disposable income, they purchase the LIC policies with very high sum assured. On that
line, it has been observed that the higher the income of the respondent, the higher will
be the sum assured in the LIC and vice versa. The table 4.11 shows the relationship
between the annual income of the respondents and the quantum of sum assured in the
LIC of India.
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Table 4.11
Annual Income and Sum Assured
Number of Respondents Based on Income (Rs.)Sum
S. Assured 50,000 1,00,000 1,50,000 Total
No. (Rs.)Up to to to to
2,00,000
50,000 and above
1,00,000 1,50,000 2,00,000
1.
Up to 94 78 28 10 16 226
50,000 (41.59) (34.51) (12.39) (4.42) (7.08) (100)
2. 50,000 10 30 22 20 116to 34(29.31)
1,00,000 (8.62) (25.86) (18.97) (17.24) (100)
3. 1,00,000 6 26 28 16 33 109to
2,00,000 (5.50) (23.85) (25.69) (14.68) (30.28) (100)
4. 2,00,000 12 12 26 119 169
and -
above (7.10) (7.10) (15.39) (70.41) (100)
110 146 90 72 202 620
Total(17.74) (23.55) (14.52) (11.61) (32.58) (100)
It is evident from the table 4.11 that the respondents with higher annual income
have utilised the LIC more by taking higher sum assured policies. On the contrary, the
respondents from the lower income group have utilised the LIC by taking less sum
assured policies. Out of 226 respondents of the income group of below Rs. 1,00,000 per
annum, 172 of them (76.10 per cent) have taken life policies in the LIC with the sum
assured up to Rs 50,000. But with regard to the respondents with a higher annual
income of above Rs. 2,00,000, out of 169, 119 of them (70.41 per cent) have purchased
the life insurance policies with a higher sum assured for more than Rs. 2,00,000.
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iv. Employment
Generally, employed persons have fixed and regular income and therefore, they
are supposed to make use of the best savings and investment opportunities effectively
on a large scale. But the unemployed persons cannot have an effective planning with
regard to their investments because of their irregular income. It has been observed that
the employed persons utilised the LIC to their maximum possible extent by purchasing
a higher sum assured policies than that of the unemployed persons. Hence, employment
of the respondents is considered as an important variable having relationship with the
extent of utilization of the LIC in terms of sum assured. The table 4.12 shows the
relationship between employment of the respondents and the sum assured in the LIC.
Table 4.12
Employment and Sum Assured
T STo.Ass
Sum No of Respondents Based on EmploymentNured
(Rs.) Private Government Unemployed Total
1. Up to 50,000 40(17.70) 58(25.66) 128 (56.64) 226 (100)
2. 50,000 to 34(29.31) 52 (44.83) 30 (25.86) 116 (100)
1,00,000
3. 1,00,000 to 22(20.18) 77(70.64) 10(9.17) 109 (100)
2,00,000
4. 2,00,000 and 38(22.49) 117 (69.23) 14(8.28) 169 (100)
above
Total 134 (21.61) 304 (49.03) 182(29.36) 620 (100)
It is evident from the table 4.12 that the employed persons both in Private and
Government services have utilised the LIC to the maximum extent by purchasing
higher sum assured policies. But the unemployed persons have utilised the LIC by
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purchasing lower sum assured policies Out of 226 respondents who have purchased
the life policies up to the sum assured of Rs. 50,000, 128 of them (56.64 per cent) are
unemployed. But out of 109 respondents who have purchased life policies for an
amount between Rs. 1,00,000 and Rs. 2,00,000, 99 of them (90.82 per cent) are
employees. Similarly, in case of respondents who have purchased life policies for Rs.
2,00,000 and above, out of 169, 155 of this category (91.72 per cent) are employees
both in private and Government sectors. Thus, it can be inferred that there is a close
link between employment of the respondents and the extent of sum assured in the LIC
policies.
V. Marital Status
Marriage is the turning point in the life of every one. In the Indian paternal
system of living, attachment and responsibility towards the family will arise only after
marriage. The safety and security of his/her family becomes the prime consideration.
Further, it has been observed that the married people utilise the LIC to their maximum
possible extent when compared to the unmarried people. Hence, the marital status is
also identified as an important variable having relationship with the extent of utilization
of the LIC in terms of the sum assured. The relationship between marital status and
sum assured is exhibited through the table 4.13.
Table 4.13
Marital Status and Sum Assured
125
TotalNumber of Respondents
S.No.
1.
2.
3.
4.
Sum Assured (Rs.)
Upto 50,000
50,000 to 1,00,000
1,00,000 to 2,00, 000
2,00,000 and above
Total
Married
160(70.80)
87(75)
103(94.50)
159(94.08)
509(82.10)
Unmarried
66(29.20)
29(25)
6(5.50)
10(5.92)
111(17.90)
226(100)
116(100)
109(100)
169(100)
620(100)
It is evident from the table 4.13 that the married people have utilised the LIC
more by purchasing all categories of sum assured policies on a large scale when
compared to the unmarried people. In case of respondents who have purchased the life
policies with sum assured between Rs. 1,00,000 and Rs. 2,00,000, out of 109
respondents, the majority of 103 (94.50 per cent) are married. Similarly, with regard to
the respondents who have purchased life policies for sum assured of Rs. 2,00,000 and
above, out of 169, 159 of them (94.08 per cent) are married.
Test of Significance
In order to determine whether there is any significant influence of the selected
variables such as status of tax assessee, education, annual income, employment and
marital status with the extent of utilization of the LIC in terms of the sum assured, Chi—
Square Test has been employed. The table 4.14 exhibits the consolidated results of
Chi— Square Test for these selected variables.
126
Table 4.14
Result of the Chi—Square Test for Selected Variables and Extent of Utilization of
LIC in Terms of Sum Assured
S.No. I Variable
Chi- Square Table Level ofValue Value DX
RemarksRemarks
1. I Status of taxassessee
2. Education
3. AnnualIncome
4. Employment
5.i Marital Status
269.3902 I 11.341 1 3
200.6426 I 21.666 1 9
302.4569 I 26.217 1 12
153 .4457
51.5292
1% Significant
1% Significant
1% Significant
Significant
Significant
16.812
1%
11.341
1%
It is evident from the table 4.14 that the calculated Chi—Square Values for all
the selected variables are more than the table values at one per cent level of
significance for the given degrees of freedom. Hence, it can be concluded that the
variables such as status of tax assessee, education, annual income, employment and
marital status of the respondents highly influence the extent of utilization of the LIC in
terms of the sum assured.
4.3.4 Housing Loan
The extent of utilization of the services of the LIC could be realised from the
angle of making use of the housing loan facility offered to the policyholders by the LIC
Housing Finance Ltd. (LICHFL), a subsidiary of the Life Insurance Corporation of
India. Loan schemes offered by the LICHFL are usually backed up with the life
insurance cover as a collateral security. Griha Prakash, Griha Tara, Griha Jyothi, Griha
Shobha (for NRIs), Griha Lakshmi and Griha Sudar are the six different types of
127
housing loan schemes available in the LICHFL. The minimum amount of loan
sanctioned by the LICHFL is Rs.25,000 (for rural areas Rs.10,000) and the maximum
amount is rupees one crore. Loans are available for the purchase of vacant plots, new
or old house I flat construction, renovation, repairs and extension. The loan amount is
75 per cent to 85 per cent of cost of the property. Normally, the LICHFL takes about
40 per cent to 45 per cent of the net income per annum of the applicant. Housing loan
schemes are also encouraged by the Government of India by giving tax exemption on
housing loan interest up to Rs. 1,50,000 under section 24(2) and on the principal
amount repaid, a rebate at the rate of 20 per cent not exceeding Rs. 20,000 under
section 80C of the Income Tax Act 1961. Thus many more organizations have entered
into the field of housing loan business. Hence, an attempt has been made to study the
extent of utilization of the LIC housing loan by the policyholders in Kanyakumari
District. Out of 620 respondents, 100 respondents (16.13 per cent) alone have availed
housing loan offered by the LIC Housing Finance Ltd. The table 4.15 shows the
classification of respondents based on the level of utilization of housing loan from the
LICHFL.
Table 4.15
Classification Based on Utilization of Housing Loan
Amount of Housing Loan Number of PercentageS.No. (Rs.) Respondents
1. Up to 1,00,000 15 15.00
2. 1,00,000 to 2,00,000 24 24.00
3. 2,00,000 to 5,00,000 43 43.00
4. 5,00,000 and above 18 18.00
Total 100 100.00
128
It could be assessed from the table 4.15 that out of the 100 respondents who
have utilized the housing loan from the LICHFL, 15 per cent of the policyholders have
availed the housing loan upto Rs.1,00,000, 24 per cent have availed the loan between
Rs. 1,00,000 and Rs.2,00,000, 43 per cent have availed between Rs.2,00,000 and Rs.
5,00,000 and the remaining 18 per cent of the respondents have availed above
Rs.5,00,000. The limited participation in the loan facility of the LICHFL is due to the
fact that many other housing financial institutions including commercial banks are
actively competing in this field. It has been observed that in one occasion, many of the
LIC respondents have switched over from LIC housing loan to other housing loan
providers who offered more attractive schemes than those offered by the LICHFL.
Factors Responsible for Utilization of Housing Loan
The utilisation of the LICHFL loan has been influenced by many variables.
In observation it has been identified that 15 variables are having their role in the
utilisation of housing loan from the LICHFL. They are,
1. Shorter period of sanction and disbursement.
2. Sufficient amount of loan granted.
3. Liberal legal formalities.
4. Easy repayment of instalments.
5. Less rate of interest on housing loan.
6. Encouragement to early settlement of loan.
7. Sanctioning of loan in instalments.
8. Strict adherence to procedures in sanctioning loan.
9. Income tax exemption.
10. Simple and easy security.
129
11. Absence of bribing.
12. Publishing the names and photos of defaulters in the dailies.
13. Less penalty for delay in repayment of instalment.
14. Reasonable monthly instalment.
15. Agents' assistance in getting the loan.
In order to evaluate the factors responsible for the utilization of the housing loan
offered by the LICHFL and to identify whether they are positively or negatively
influencing the policyholders to the utilization, Factor Analysis is employed. In Factor
Analysis, each variable is assigned with a factor loading. The correlation co- efficient
between a variable and the underlying factor is known as factor loading. The rotated
factor matrix of the identified 15 variables is calculated to show the inter - relationship
among the variables and their influence on the housing loan. The factor analysis model
in matrix notation is given as:
X = Af+e
Where X = [x,+X2+x- ---------------- x]
f = [f1+f2+f- ------------------- fm]
e [e1+e2+e- ---------------- e]
m = Number of factors
p = Number of variables.
On applying the rotated factor matrix, the identified 15 variables fall under the
following five headings known to be factors.
Fl- Liberal System
i) Shorter period of sanction and disbursement.
ii) Sufficient amount of loan granted.
iii) Liberal legal formalities.
130
iv) Easy repayment of instalments.
v) Less rate of interest on housing loan.
F2 - Effective Utilization
i) Encouragement to early settlement of loan.
ii) Sanctioning of Loan in instalments.
iii) Strict adherence to procedures in sanctioning loan.
iv) Income tax exemption.
F3 - Easy Accessibility
i) Simple and easy security for the loan.
ii) Absence of bribing.
iii) Publishing the names and photos of defaulters in the dailies.
F4 - Reasonability in Repayments
i) Less penalty for delay in repayment of instalment.
ii) Reasonable monthly instalment.
F5 - Agent's Assistance
Agents' assistance in getting the loan.
The table 4.16 portrays the rotated factor matrix for the 15 selected variables
with regard to the utilization of the housing loan by the policyholders in Kanyakumari
District.
131Table 4.16
Rotated Factor Matrix - Variables of Housing Loan
S. Variable Fl F2 F3 F4 F5 112
1. The period for sanction and 0.806 -0.112 0.309 0.044 0.058 0.762disbursement is shorter
2. The amount of loan granted 0.712 0.145 0.130 -0.344 -0.102 0.673is quite sufficient
3. Liberal legal formalities 0.711 -0.133 0.0114 0.064 0.344 0.6464. Easy repayment of 0.698 0.221 0.098 -0.204 -0.056 0.588
instalments
5. The rate of interest on 0.606 0.391 -0.056 0.290 -0.234 0.662housing loan iscomparatively less
6. Early settlement of loan is 0.230 0.769 0.120 -0.139 -0.058 0.681encouraged
7. Loan is sanctioned in -0.154 0.729 0.096 0.341 -0.167 0.709instalments
8. Each instalment is -0.263 0.558 0.525 0.080 -0.239 0.720sanctioned after adhering tostrict procedures
9. It is beneficial for income 0.369 0.526 -0.087 0.287 0.091 0.511tax exemption
10. Security demanded for the 0.235 0.006 0.812 0.031 0.009 0.715loan is not burdensome
FO.40311. Absence of bribing 0.226 0.240 0.722 0.278 0.71412. Publishing the names and 0.059 -0.099 0.550-0.547 0.778
photos of defaulters in thedailies is not advisable ______________
13. Less penalty for delay in 0.043 0.135 -0.059 0.865 0.066 0.778repayment of instalment
14. EMI is reasonable in -0.316 0.133 0.113 0.610 -0.349 0.625LIC HFL _
15. Agents are assisting much in 0.013 -0.181 0.157 0.004 0.875 0.824getting the loan
Percentage of explained 20.067 14.009 13.039 11.762 10.346 69.223varianceCumulative percentage of 20.067 34.076 47.115 58.877 69.223 69.223
--explained variance _______
132
The table 4.16 reveals that the first factor Fl-Liberal system accounts for a
variation of 20.07 per cent in the total variable set. It includes shorter period of
sanction and disbursement, sufficient amount of loan granted, liberal legal formalities,
easy repayment of instalments and low rate of interest on housing loan. There is a
positive correlation between these five variables and the utilization of housing loan. It
gives the result that these five variables influence the policyholders positively towards
the utilization of housing loan of the LIC.
The second factor F2-Encouraging Effective Utilization, accounts for a
variation of 14.01 per cent in the total variable set. This factor includes encouragement
to early settlement of loan, sanctioning of loan in instalments, sanctioning of each
instalment of the loan after adhering to strict procedures and the benefits due to income
tax exemption. All the four factors are showing a positive correlation with the
utilization of housing loan. Thus, these factors also influence the policyholders towards
the utilization of the LIC housing loan.
Similarly, the third factor 173- Easy Accessibility accounts for a variation of
13.04 per cent in the total variable set. It includes the variables such as easy and simple
security for the loan, absence of bribing and publishing the names and photos of
defaulters in the dailies which is not advisable. There is a positive correlation between
these three variables and the utilization of the LIC housing loan. Today, almost all the
lending agencies are having the practice of publishing the names of the defaulters
through the press media after exhausting all other means of collecting the instalments.
Hence, this variable has been loaded with a small value (0.550). The result of positive
correlation implies that these three variables influence the policyholders for the
utilization of the housing loan from the LICHFL.
133
The fourth factor F4 - Reasonability in Repayment, accounts for a variation of
11.06 per cent in the total variable set. This factor contains the variables such as less
penalty for delay in repayment of instalment and reasonable equated monthly
instalment (EM!) in LICHFL. There is a positive correlation between these two
variables and the utilization of housing loan from the LICHFL. It implies that these
two variables influence the policyholders positively in the utilization of the LIC
housing loan.
The last factor F5 - Agent's Assistance, shows a variation of 10.35 per cent in
the total variable set. It includes only one variable, that is, the agents are assisting
much in getting the loan which is loaded with a higher positive value of 0.875. It
shows that there is a positive correlation between this variable and the utilization of
housing loan. The result implies that this factor also influences the policyholders in
Kanyakumari District for the utilization of housing loan from the LICHFL.
4.3.5 Policy Loan
The extent of utilization of the LIC could also be assessed from the point of
view of making use of the policy loan facility offered by the LIC of India by the
policyholders in Kanyakumari District. The policy loan has been offered by the LIC in
order to satisfy the urgent financial needs of the policyholders. They are eligible to
take loan to the extent of 85 per cent of the surrender value of their policies by pledging
the policy bond. At present, the LIC is charging 9 per cent rate of interest on policy
loan, payable half yearly. A policyholder can repay the loan amount either in part or in
full any time during the term of the policy. If loan is not repaid during the tenure of the
policy or early claim, the amount of loan plus interest calculated on compound rate
basis are deducted from the claim amount and the balance is repaid. Out of 620
134
respondents, only 158 respondents (25.48 per cent) have availed of policy loan facility.
The table 4.17 depicts how far the policy loan in LIC has been utilised by the
policyholders in Kanyakumari District.
Table 4.17
Utilization of Policy Loan by Policyholders
S. No. Amount of Policy Loan (Rs.)Number of Percentage
Respondents
1. Upto 10,000 43 27.22
2. 10,000 to 25,000 60 37.97
3. 25,000 to 50,000 38 24.05
4. 50,000 to 75,000 3 1.90
5. 75,000 and above 14 8.86
Total 158 100.00
The table 4.17 reveals that out of 158 respondents who have availed the policy
loan from the LIC, 43 of them (27.22 per cent) have availed the loan up to Rs. 10,000,
60 of them (37.97 per cent) have availed the loan between Rs. 10,000 and Rs. 25,000,
38 of them (24.05 per cent) have availed of the loan between Rs. 25,000 and Rs. 50,000
and 17 of them (10.76 per cent) have availed the loan above Rs. 50,000. It indicates
that the policyholders are seeking policy loan from the LIC for meeting out their
emergency needs of smaller amounts. The reasons for such utilization are many. Some
of the factors, which influence the utilization of policy loan, are:
i) Liberal procedures
ii) Reasonable rate of interest
iii) Quick sanctioning of loan
iv) Assistance of the agent in getting the loan
135
v) Encouragement to settle the loan
vi) Periodical information about the outstanding balance
vii) Compulsion free repayment
viii) Absence of bribing
ix) Easy clearance of loan
x) Better branch office service
Garrett's Ranking Technique has been employed to assess the important factors
responsible for the utilization of policy loan by the policyholders in Kanyakumari
District.
Factors Responsible for the Utilization of Policy Loan
The identified ten factors have been put to testing under Garrett's Ranking
Technique for assessing the important factors responsible for the utilization of policy
loan in the LIC by the sample policyholders in Kanyakumari District. The mean scores
and the percentile ranks obtained for the responses from the sample policyholders
towards the factors responsible for the utilization of policy loan in the LIC are depicted
in the table 4.18.
136
Table 4.18
Percentile Ranks for the Responses on the Policy Loan
S.Percentage Score
Factors Rank PositionNo. (Table 49) PRs
1. Liberal procedures 1 5.00 83 95.00
2. Quick sanctioning 2 15.00 70 85.00
3. Absence of bribing 3 25.00 63 75.00
4. Branch office service is better 4 35.00 63 65.00
5. Agent's prompt and quick 5 45.00 63 55.00assistance
6. Reasonable rate of interest 6 55.00 63 45.00
7. No compulsion to repay the 7 65.00 63 35.00loan
8. Encouraging to settle the loan 8 75.00 37 25at the earliest
9. Informing about the out- 9 85.00 30 15.00standing balance periodically
10. Loan is sanctioned on all 10 95.00 19 5.00types of policies
The table 4.18 vividly reveals that 'liberal procedures' being practiced by the
LIC of India in sanctioning the policy loan is ranking first in the opinion of the sample
policyholders in Kanyakumari District with 95 percentile ranks. Quick sanctioning and
absence of bribing are the second and third ranking factors with 85 and 75 percentile
ranks respectively with regard to the utilization of policy loan in the LIC as perceived
by the sample policyholders in Kanyakumari District. All the other factors are
comparatively ranked to be the least important ones.
137
4.3.6 Utilization of LIC Bond
The LIC bond is an authentic document justifying the originality of the policy
taken by the policyholder, which is being used by him for various purposes in addition
to make the claim from the LIC. Out of 620 respondents, only 402 respondents (64.84
per cent) used the LIC bonds for various purposes. The table 4.19 shows the
classification of the respondents on the basis of the purposes for which the bond has
been used.
Table 4.19
Purpose of Using LIC Bond
S.No. PurposeNumber of Percentage
Respondents
1. Security for education loan 50 12.44
2. Evidence for age proof 42 10.45
3. Security for housing loan 100 24.88
K4Seccuurriftyy
Set for loan from banks 32 7.96
for policy loan from LIC 158 39.30
6. As address evidence 6 1.49
7. Any other 14 3.48
Total 402 100.00
The table 4.19 exhibits that out of 402 respondents who have utilised the LIC
bond for various purposes, 50 (12.44 per cent) have used it as a security for education
loan, 42 (10.45 per cent) as evidence for age proof, 100 (24.88 per cent) as security for
housing loan from LICHFL, 32 (7.96 per cent) as security for loan from banks, 158
(39.30 per cent) as security for policy loan from LIC, only 6 (1.49 per cent) as address
evidence and the remaining 14 (3.48 per cent) have used the bond for some other
purposes.
138
4.3.7 Utilisation of LIC in Terms of Annual Premium
The assessment with regard to the extent of utilization of the LIC by the
policyholders in Kanyakumari District is also made by relating the annual income of
the respondents with the amount of life insurance premium paid.
It has been observed that the higher the annual income of the respondent, the
higher is the annual life insurance premium paid and vice versa. Hence, annual income
of the respondents is considered as the most important variable having relationship with
the extent of utilization of LIC by the respondents in Kanyakumari District in terms of
the amount of annual premium paid. The table 4.20 exhibits the relationship between
the annual income of the respondents and the annual premium paid for the utilization of
LIC products.
Table 4.20
Annual Income and Annual Premium Paid
No of Respondents Based on Annual Income (Rs.)Annual
S Total1,00,000 1,50,000 2,00,000No. Premium
(Rs.) Up to 50,000 to to to and50,000 1,00,000
1,50,000 2,00,000 Above
1. 56 42 16 4 10 128Up to 2000
(43.75) (32.81) (12.5) (3.13) (7.81) (100)
2. 2000 to 42 50 28 10 14 144
5000 (29.17) (34.72) (19.44) (6.95) (9.72) (100)
3. 5000 to 10 36 24 28 42 140
10,000 (7.15) (25.71) (17.14) (20) (30) (100)
4. 10,000 and 2 18 22 30 136 208
above (0.96) (8.65) (10.58) (14.42) (65.39) (100)
110 146 90 72 202 620Total
(17.74) (23.55) (14.52) (11.61) (32.58) (100)
139
It could be seen from the table 4.20 that the respondents with higher annual
income paid more amount of premium and utilised the LIC products to the maximum
extent possible. Out of 208 respondents who paid annual premium to LIC of Rs.
10,000 and more, the majority of 136 (65.39 per cent) had animal income of more than
Rs. 2,00,000. But in the case of respondents who paid annual premium up to Rs.2,000,
out of 128, the majority of 98 (76.56 per cent) had annual income up to Rs.1,00,000
only.
Test of Significance
The Chi—Square Test has been employed to evaluate whether there is any
significant relationship between the annual income of the respondents and the amount
of premium paid for the utilization of LIC products. The table 4.21 exhibits the
consolidated result from the Chi—Square Test.
Table 4.21
Result of the Chi- Square Test for Annual Income and Amount of Premium Paid
Chi - Table Level ofVariable Square Value
D.F SignificanceRemarks
Value
Annual 275.8211 26.217 12 1% SignificantIncome
Since the Chi—Square Value (275.8211) is more than the table value (26.217)
for the degree of freedom of 12 at one per cent level of significance, as exhibited in
table 4.2 1, it can be concluded that there is a significant relationship between the annual
income of the respondents and the amount of premium paid for the utilization of the
LIC products.
I 4Q
4.4 Factors Responsible for the Utilization of LIC of India
This part deals with the various factors which are responsible for the
inclination of the policyholders for buying the products and utilising the varied services
of the LIC of India. It is observed that there are five groups of factors comprising of 35
individual variables responsible for differing utilization of the LIC services. Since
each variable has influenced the utilization of the LIC at different levels, each
respondent is expected to give his rank to each variable. In such cases of ranking,
Garrett's Ranking Principle is the most fitting tool for further analysis. Hence, it has
been used.
Ranking of Variables Responsible for Utilisation of LIC
Garrett's Ranking Principle has been applied to rank the variables, which have
greater impact on the utilization of the LIC of India. The variables responsible for the
utilization of the LIC of India have been ranked in the order of merit. The most
influencing variable is being marked 1 and the least influential variable being ranked
last in each group. By means of percentage position formula, [I00(R-0.5)/N] and
Garrett's Ranking Table, it is possible to convert any set of ranks into 'scores', if data
are assumed of normal distribution.
The variables responsible for the utilization of the LIC of India by the
policyholders are identified and their responses are obtained for thirty five statements.
The statements with reference to the variables responsible for the utilization of the LIC
of India are listed. The scores (Garrett's scores) obtained by the respondents for each
statement are averaged. The average score obtained for each statement is shown in the
table 4.22.
141
Table 4.22
Average Score for the Factors Responsible for the Utilization of LIC of India
S.No. Statement Mean Score
1. Annual surplus income of the policyholders from main 0.78occupation
2. Annual surplus income of other family members 0.35
3. Additional income from secondary occupation 0.21
4. Annual income from investment 0.20
5. Remedy for income tax 0.58
6. Amount of family expenditure 0.57
7. Amount of assets and liabilities 0.61
8. Size of the family 0.74
9. Better educational qualification 0.80
10. Nearness to agents 0.69
11. Age of the policyholders 0.71
12. Number of male children 0.25
13. Number of female children 0.22
14. Annual savings 0.76
15. Annual medical expenses 0.27
16. Period of service in employment/business 0.73
17. Need for housing loan 0.29
18. Need for policy loan 0.50
19. Number of accidents faced 0.15
20. Number of educated family members 0.48
21. Amount of initial premium paid by the agent 0.27
22. Number of instalments of premium paid by the agent 0.10
23. Amount spent on charitable activities 0.25
24. Aim for educating the ward 0.59
25. To meet out the marriage expenses of the ward 0.51
26. Planning to meet out old age problems 0.86
27. Generation of assets in future 0.75
28. Service from LIC agents 0.58
29. Life security 0.95
30. LIC being a Government undertaking 0.96
31. Greater choice as variety of the LIC policies 0.85
32. Popularity of LIC 0.91
33. Liquidity character of the investment 0.61
34. Non-Compulsion to repay the policy loan 0.51
35. 0.98Safer investment
142
It is inferred from the table 4.22 that the average score is very high for the
following statements.
i) Safer investment (0.98)
ii) LIC being a Government undertaking (0.96)
iii) Life security (0.95)
iv) Popularity of LIC (0.91)
V) Plan to meet out old age problems (0.86)
vi) Greater choice as variety of the LIC policies (0.85)
vii) Better educational qualification (0.80)
viii) Annual surplus income of the policyholder from main occupation (0.78)
ix) Annual savings (0.76)
X) Generation of assets in future (0.75)
The average score is very low for the following statements.
i) Number of instalments of premium paid by agent (0.10)
ii) Number of accidents faced (0.15)
iii) Annual income from investment (0.20)
iv) Additional income from secondary occupation (0.21)
V) Number of female children (0.22)
vi) Number of male children (0.25)
vii) Amount spent on charitable activities (0.25).
On observing 35 variables, it is found out that there are certain similarities
among some variables. The variables, which have some relevance with one another,
are categorised into a separate group. Thus, all the 35 variables are categorised into
five major groups as mentioned below.
143
I. Income based variables.
II. Shifting of burden variables.
III. Domestic variables.
IV. Convenience variables.
V. Service oriented variables.
A detailed discussion on the five groups and the most influential variable under
each group has been analysed with the help of Garrett's Ranking Technique. The
discussion on each specific statement (variable) on groupwise is given below.
Group I - Income Based Variables
The basic requirement for purchasing the products of the LIC is the income
position of the people. To become a policyholder of the LIC of India, the income,
particularly the net disposable income is the significant factor. The first group
responsible for the utilization of the LIC of India includes safer investment, annual
surplus income of the policyholders from main occupation, annual savings, generation
of assets, liquidity character of investment, annual surplus income of other family
members, additional income from secondary occupation and annual income from
investment. The percentile ranks for the first group are shown in the table 4.23.
144
Table 4.23
Percentile Ranks for Factors Responsible for the Utilization of LIC of India -
Group - I - Income
S. MeanPercentage Score
Statement Rank PositionNo. Scores (Table 49) PRs
1. Safer investment 0.98 1 6.25 81 93.75
2. Income from main 0.78 2 18.75 68 81.25occupation
3. Annual savings 0.76 3 31.25 60 68.75
4. Generation of Assets 0.75 4 43.75 53 56.25
5. Liquidity character of 0.61 5 56.25 47 43.75
investment
6. Income of other family 0.35 6 68.75 40 31.25
members
7. Income from 0.21 7 81.25 33 18.75
secondary occupation
8. Income from 0.20 8 93.75 21 6.25
investment
PRs - Percentile Ranks
It is inferred from the table 4.23 that the most influential variable perceived by
the sample policyholders in the first group is safer investment. The second and third
prominent variables are annual surplus income of the policyholder from main
occupation and annual savings respectively.
145
Group - II: Shifting of Burden Variables
Shifting of burden is the other major variable responsible for the utilization of
the LIC of India by the policyholders. The second group of variables includes better
educational qualification, size of the family, amount of assets and liabilities, remedy for
income tax, need for policy loan, need for housing loan, the plan to meet out old age
needs, the expenses on education of the ward, family expenditure, marriage expenses of
the ward and heavy annual medical expenses. These variables directly influence the
utilization of the LIC of India. The percentile ranks for the statements included in
Group - II are shown in the table 4.24 given below:
Table 4.24
Percentile Ranks for Factors Responsible for the Utilization of LIC of India -
Group - II - Shifting of Burden
Percentage ScoreS. Mean ______
Statement Rank PositionNo. Scores (Table 49) Scale
(100)PRs
1. Plan to meet out old age needs 0.86 1 4.55 84 95.45
2. Better educational qualification 0.80 2 13.64 72 86.36
3. Size of the family 0.74 3 22.73 65 77.27
4. Amount of assets and liabilities 0.61 4 3.82 59 68.18
5. Aim for educating the ward 0.59 5 40.91 59 59.09
6. Remedy for Income Tax 0.58 6 50.00 50 50.00
7. To meet out family expenditure 0.57 7 59.09 50 49.91
8. To meet out the marriage 0.51 8 68.18 41 31.82expenses of the ward
9. Need for policy loan 0.50 9 77.27 35 22.73
10. Need for housing loan 0.29 10 86.36 29 13.64
11. To meet out heavy annual 0.27 11 95.45 18 4.55medical expenses I
PRs - Percentile Ranks
146
It could be seen from the table 4.24 that the plan to meet out old age needs has
assumed the first rank with 95.45 percentile ranks in the group of shifting of burden.
The other variables perceived as important under the group of shifting of burden for the
utilization of products and services of the LIC of India are better educational
qualification and size of the family with the second and third ranks respectively.
Group - III- Domestic Variables
The domestic variables are also responsible for the utilization of the LIC of
India by the policyholders. These variables highly influence the utilization of life
insurance products and services of the LIC by the policyholders to a remarkable extent
in India. The domestic variables include the period of service in employment or
business, age of the policyholder, number of educated family members, number of male
or female children and number of accidents faced. The percentile ranks for the
statements included in the group III are shown in the table 4.25 given below.
Table 4.25
Percentile Ranks for Factors Responsible for the Utilization of LIC-
Group Ill - Domestic
S. MeanPercentage Score
Statement Rank PositionNo. Scores (Table 49) Scale (100) PRs
1. Period of service in 0.73 1 8.33 77 91.67
employment / business
2. Age of the policyholders 0.71 2 25.00 63 75.00
3. Educated family members 0.48 3 41.67 54 58.33
4. Number of male children 0.25 4 58.33 46 41.67
5. Number of female 0.22 5 75.00 37 25
children
6. Number of accidents faced 0.15 6 91.67 23 8.33
PRs - Percentile Ranks
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It is evident from the table4.25 that the most influential variable perceived by
the sample policyholders of the LIC of India is the lengthy period of service in
employment or business with 91.67 percentile ranks. The variables ranked second and
third respectively under the group of domestic variables are less age of the
policyholders and more number of educated family members.
Group IV - Convenience Variables
The impact of liberalisation, privatisation and globalisation (LPG) policy of the
Government poses break-neck challenges to the insurance sector, particularly to the
LIC of India. The convenience of customers plays a significant role in selecting the
insurance company to invest in this LPG era. The fourth group of convenience
variables includes nearness to agent, the amount of initial premium paid by the agent,
number of instalments of premium paid by the agent and the amount spent on charitable
activities. These variables have much impact on the utilization of the products and
services of the LIC of India. The percentile ranks for the statements included in the
group IV are shown in the table 4.26 given below.
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Table 4.26
Percentile Ranks for Factors Responsible for the Utilization of
LIC of India - Group [V - Convenience
Percentage I Score
S. StatementMean Rank Position
No. Scores(Table 49) Scale PRs
1. Nearness to agent 0.69 1 12.50 73 87.50
2. Initial premium paid by agent 0.27 2 37.50 56 62.50
3. Amount spent on charitable 0.25 3 62.50 44 37.50
activities
4. More number of instalments Of 0.10 4 87.50 28 12.50
premium paid by agent
PRs - Percentile Ranks
It is inferred from the table 4.26 that the major variable ranking first in the
group IV, which has influenced the utilization of the products and services of the LIC
of India with 87.50 percentile ranks is nearness to agent. The second and third ranking
variables perceived by the respondents are the amount of initial premium paid by agent
himself and the amount spent on charitable activities respectively.
Group V - Service Oriented Variables
Service oriented variables are significantly responsible for the utilization of the
products and services of the LIC of India by the policyholders. When better services
are offered by the competitive institutions, the attraction towards such institutions
would be greater when compared to the institutions, which offer less services. The
service oriented variables include life security, greater choice as variety of the LIC
policies, the LIC being a Government undertaking, popularity of the LIC, services from
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the LIC agents and non-compulsion to repay the policy loan. The percentile ranks for
the statements included in the Group V are shown in the table 4.27 as below
Table 4.27
Percentile Ranks for Factors Responsible for the Utilization of
LIC of India - Group V - Service
Score
S. MeanPercentage
No.Statement Scores Rank
Position(Table 49) Scale PRs
(100)
1. LIC being a Government
0.96 1 8.33 77 91.67undertaking
2. Life security 0.95 2 25.00 63 75.00
3. Popularity ofLiC 0.91 3 41.67 54 58.33
4. Greater choice as variety
0.85 4 58.33 46 41.47of LIC policies
5. Service from agents 0.58 5 75.00 37 25.00
6. Non-compulsion to
0.51 6 91.67 23 8.33repay the policy loan
PRs - Percentile Ranks
It could be assessed from the table 4.27 that the variable 'the LIC being a
Government undertaking' is the major reason for the utilisation of the products and
services of the LIC by the sample policyholders under the group of service variables.
The offer of life security and the popularity of the LIC in providing services are the
second and third important variables responsible for the utilisation of the LIC of India
in the service group.
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4.5 Summary
In this chapter, an analysis has been made to assess the extent of utilization of
the LIC of India by the policyholders in Kanyakumari District. The major purposes of
utilization of the LIC such as savings, security and dependants' welfare have been
assessed with the help of percentile ranks. The components such as type of policy
taken, number of policies taken, sum assured, amount of housing loan availed, amount
of policy loan availed, utilization of the LIC bond and the amount of premium paid
have been used for assessing the extent of utilisation of the LIC. A remarkable
significant relationship was identified between the utilisation components such as sum
assured, number of policies and the amount of premium paid and the selected variables
through Chi—Square Test. Factor Analysis has been employed for evaluating the
factors responsible for the utilisation of housing loan. Garrett's Ranking Technique has
been adopted for assessing the variables responsible for the utilization of the products
and services of the LIC and the policy loan in the LIC. The overall results of the
analysis reveal that the policyholders in Kanyakumari District have made an effective
utilization of the LIC under various focal points. Further, the LIC authorities are
required to offer more attractive schemes than those offered by the private insurers to
continue the effective utilization of the LIC in this competitive era.
