APROJECT REPORT

ONCONSUMER AWARNESS AND

PERCEPTIONALES ABOUT INSURANCE

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREEOF

BACHELOR OF BUSINESS ADMINISTRATION(SESSION 2014-15)

SUBMITTED TO: SUBMITTED BY:MISS NISHA GUPTA SIMRAN , B.B.A. III YEAR

CLASS ROLL No 7854. UNIVERSITY ROLL No..

I.B. (P.G.) COLLEGEAFFILIATED BY KURUKSHETRA UNIVERSISTY, KURUKSHETRA

DECLARATION

I SIMRAN student of B.B.A. III year in I.B.(P.G.) College, Panipat hereby declare that the project report entitled “CONSUMER AWARNESS AND PERCEPTIONALES ABOUT INSURANCE” submitted for the degree of B.B.A. III year is my original work and the project report has not formed the basis for the award of any diploma, degree, associate ship, fellowship or similar other titles. It has not been submitted to any other university or institution for the award of any degree or diploma.

(PRINCIPAL SIGNATURE) SIMRAN

ACKNOWLEDGEMENT

Survey is an excellent tool for learning and exploration. No classroom routine

can substitute which is possible while working in real situations. Application of

theoretical knowledge to practical situations is the bonanzas of this survey.

Without a proper combination of inspection and perspiration, it’s not easy to

achieve anything. There is always a sense of gratitude, which we express to

others for the help and the needy services they render during the different

phases of our lives. I too would like to do it as I really wish to express my

gratitude toward all those who have been helpful to me directly or indirectly

during the development of this project.

I would like to thank my professor MISS.NISHA GUPTA who was always

there to help and guide me when I needed help. Her perceptive criticism kept

me working to make this project more full proof. I am thankful to her for his

encouraging and valuable support. Working under her was an extremely

knowledgeable and enriching experience for me. I am very thankful to her for

all the value addition and enhancement done to me.

No words can adequately express my overriding debt of gratitude to my parents

whose support helps me in all the way. Above all I shall thank my friends who

constantly encouraged and blessed me so as to enable me to do this work

successfully.

SIMRAN

TO WHOM SO EVER IT MAY CONCERN

Certified that the project on “CONSUMER AWARNESS AND PERCEPTIONALES ABOUT INSURANCE has been completed by SIMRAN student of B.B.A .III year ,S.D.(P.G.) College ,Panipat under my guidance . She has submitted the report in the partial fulfillment of the requirement for the degree bachelor of business administration from Kurukshetra University, Kurukshetra

It is his original research and I recommend that this should be sent for evaluation

TABLE OF CONTENTS

1.Introduction

Introduction of insurance sector

Objective of the study

New guide lines for ULIPS

Basic terminology of insurance

Consideration in choosing a policy

How to buy life insurance

Significance of study

Review of literature

Conceptualization

2. Research Methodology:

Research Design

Sample Design

Sample Procedure

Data Collection

3. Objective Wise Analysis:

4. Macro analysis

5. Findings and conclusions

6. Annexure:

BIBLIOGRAPHY

QUESTIONAIRES

.

1.1 Company Profile

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance –

Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading private sector financial

services companies, and ranks among the top 3 private sector financial services and banking

companies, in terms of net worth. Reliance Capital has interests in asset management and mutual

funds, stock broking, life and general insurance, proprietary investments, private equity and other

activities in financial services.

Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with

the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934.

Reliance Capital sees immense potential in the rapidly growing financial services sector in India

and aims to become a dominant player in this industry and offer fully integrated financial

services.

Vision Empowering everyone live their dreams.

MissionCreate unmatched value for everyone through dependable, effective, transparent and profitable

life insurance and pension plans.

Our Goal Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:

Emerge as transnational Life Insurer of global scale and standard.

Create best value for Customers, Shareholders and all Stake holders.

Achieve impeccable reputation and credentials through best business practices.

1.2 Abstract

India is a country where the average selling of Life insurance policies is still lower than

many Western and Asian countries, with the second largest population in world the Indian

insurance market is looking very prospective to many multinational and Indian insurance

companies for expanding their business and market share. Before the opening of Indian market

for Multinational Insurance Companies, Life Insurance Corporation (LIC) was the only

company which dealt in Life Insurance and after opening of this sector to other private

companies, all the world leaders of life insurance have started their operation in India. With

their world market experience and network, these companies have offered many good schemes

to lure all type of Indian consumers but unfortunately failed to get the major share of market.

Still the LIC is the biggest player in the life insurance market with approx 65% market share. But

why Indian consumers do not trust on many companies and why the major population of India

does not have any life insurance policy or what are the factors plays major role in buying

behaviour of consumers towards life insurance policies.

1.3 Introduction

Life is full of risk and uncertainties. Since we are the social human being we have certain

responsibilities too. Indian consumers have big influence of emotions and rationality on their

buying decisions. They believe in future rather than the present and desire to have a better and

secured future, in this direction life insurance services have its own value in terms of minimizing

risk and uncertainties. Indian economy is developing and having huge middle class societal status

and salaried persons. Their money value for current needs and future desires here the

pendulum moves to another side which generate the reasons behind holding a policy. Here the

attempt has been made in this research paper to study the buying behaviour of consumers

towards life insurance services. Life insurance is one of the best known insurance products

today. People buy these products as investment tools and also as protection for themselves and

their families. All the insurance companies the world over are looking at attracting the eye

balls of customer and positioning their solutions innovatively to cater to niche and specific

markets. One of the most critical aspects both from the view point of the customer and the

insurer is getting important and relevant leads that can be beneficial for both.

1.3.1 Origin of Insurance

Almost 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the

caravan trade by giving loans that had to be later repaid with interest when the goods arrived

safely. In 2100 BC, the Code of Hammurabi granted legal status to the practice that,

perhaps, was how insurance made its beginning. Life insurance had its origins in ancient

Rome, where citizens formed burial clubs that would meet the funeral expenses of its members

as well as help survivors by making some payments. As European civilization progressed, its

social institutions and welfare practices also got more and more refined. With the discovery of

new lands, sea routes and the consequent growth in trade, Medieval guilds took it upon

themselves to protect their member traders from loss on account of fire, shipwrecks and the like.

Since most of the trade took place by sea, there was also the fear of pirates. So these guilds even

offered ransom for members held captive by pirates. Burial expenses and support in times of

sickness and poverty were other services offered. Essentially, all these revolved around the

concept of insurance or risk coverage. That's how old these concepts are, really.

In 1347, in Genoa, European maritime nations entered into the earliest known insurance contract

and decided to accept marine insurance as a practice.

The first step

Insurance as we know it today owes its existence to 17th century England. In fact, it began

taking shape in 1688 at a rather interesting place called Lloyd's Coffee House in

London, where merchants, ship-owners and underwriters met to discuss and transact business.

By the end of the 18th century, Lloyd's had brewed enough business to become one of the first

modern insurance companies.

Enter companies

The first stock companies to get into the business of insurance were chartered in England in

1720. The year 1735 saw the birth of the first insurance company in the American

colonies in Charleston, SC. In 1759, the Presbyterian Synod of Philadelphia sponsored the first

life insurance corporation in America for the benefit of ministers and their dependents. However,

it was after 1840 that life insurance really took off in a big way. The trigger: reducing opposition

from religious groups.

The growing years

The 19th century saw huge developments in the field of insurance, with newer products

being devised to meet the growing needs of urbanization and industrialization. In 1835, the

infamous New York fire drew people's attention to the need to provide for sudden and large

losses. Two years later, Massachusetts became the first state to require companies by law to

maintain such reserves. The great Chicago fire of 1871 further emphasized how fires can

cause huge losses in densely populated modern cities. The practice of reinsurance, wherein the

risks are spread among several companies, was devised specifically for such situations. There

were more offshoots of the process of industrialization. In 1897, the British government

passed the Workmen's Compensation Act, which made it mandatory for a company to

insure its employees against industrial accidents. With the advent of the automobile, public

liability insurance, which first made its appearance in the 1880s, gained importance and

acceptance.

In the 19th century, many societies were founded to insure the life and health of their members,

while fraternal orders provided low-cost, members-only insurance.

Even today, such fraternal orders continue to provide insurance coverage to members as do most

labour organizations. Many employers sponsor group insurance policies for their

employees, providing not just life insurance, but sickness and accident benefits and old-

age pensions. Employees contribute a certain percentage of the premium for these policies.

In India

Insurance in India can be traced back to the Vedas. For instance, Yogakshema, the name of Life

Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term

suggests that a form of "community insurance" was prevalent around 1000 BC and practised by

the Aryans. Burial societies of the kind found in ancient Rome were formed in the Buddhist

period to help families build houses, protect widows and children.

Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870.

Other companies like Oriental, Bharat and Empire of India were also set up in the 1870- 90s. It

was during the Swadeshi movement in the early 20th century that insurance witnessed a big boom

in India with several more companies being set up.

As these companies grew, the government began to exercise control on them. The Insurance Act

was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into

investments, expenditure and management of these companies' funds. By the mid- 1950s, there

were around 170 insurance companies and 80 provident fund societies in the country's

life insurance scene. However, in the absence of regulatory systems, scams and irregularities

were almost a way of life at most of these companies.

As a result, the government decided nationalise the life assurance business in India. The Life

Insurance Corporation of India was set up in 1956 to take over around 250 life companies. For

years thereafter, insurance remained a monopoly of the public sector. It was only after seven

years of deliberation and debate – after the RN Malhotra Committee report of 1994 became

the first serious document calling for the re-opening up of the insurance sector to private

players that the sector was finally opened up to private players in 2001.

The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up

in 2000, has extensive powers to oversee the insurance business and regulate in a manner that

will safeguard the interests of the insured.

1.3.2 Meaning of Insurance:

Insurance may be described as a social device to reduce or eliminate risk of loss to life

and property. Insurance is a collective bearing of risk. Insurance spreads the risks and losses of

few people among a large number of people as people prefer small fixed liability instead

of big uncertain and changing liability. Insurance is a scheme of economic cooperation by

which members of the community share the unavoidable risks.

Insurance can be defined as a legal contract between two parties whereby one party called

Insurer undertakes to pay a fixed amount of money on the happening of a particular event,

which may be certain or uncertain. The other party called Insure or Insurant pays in

exchange a fixed sum known as premium. The insurer and the insurant are also known as

Assurer or Underwriter and Assurant, respectively. The document which embodies the contract

is called the policy.

1.3.3 Types of insurance contract

Life insurance

General insurance

1.3.3.1 Life InsuranceLife insurance is a contract for payment of money to the person assured (or to the person entitled

to receive the same) on the occurrence of an event insured against.

Usually the contract provides for –

Payment of an amount may be on the date of maturity or at specified periodic intervals or after

death, if it occurs earlier.

Periodical payment of insurance premium can be done by the assured to the corporation who

provides the insurance.

Who can buy a life insurance policy?Any person above 18 years of age and who is eligible to enter into a valid contract. Subject to

certain conditions, a policy can be taken on the life of a spouse or children.

What is a Whole Life Policy?When most people think of life insurance, they think of a traditional whole life policy. These are

the simplest policies to understand: You pay a fixed premium every year based on your age

and other factors, you earn interest on the policy's cash value as the years roll by, and

your beneficiaries get a fixed benefit after you die.

The policy takes you into old age for the same premium you started out with. Whole life

insurance policies are valuable because they provide permanent protection and accumulate cash

values that can be used for emergencies or to meet specific objectives. The surrender value gives

you an extra source of retirement money if you need it.

What is an Endowment Policy?Unlike whole life, an endowment life insurance policy is designed primarily to provide a

living benefit and only secondarily to provide life insurance protection. Therefore, it is more

of an investment than a whole life policy. Endowment life insurance pays the face value of the

policy either at the insured's death or at a certain age or after a number of years of premium

payment.

Endowment life insurance is a method of accumulating capital for a specific purpose

and protecting this savings program against the saver's premature death. Many

investors use endowment life insurance to fund anticipated financial needs, such as

college education or retirement. Premium for an endowment life policy is much higher

than those for a whole life policy.

What is a Money Back Policy?This is basically an endowment policy for which a part of the sum assured is paid to

the policyholder in the form of survival benefits, at fixed intervals, before the maturity date.

The risk cover on the life continues for the full sum assured even after payment of survival

benefits and bonus is also calculated on the full sum assured. If the policyholder survives till

the end of the policy term, the survival benefits are deducted from the maturity value.

Why does one need Life Insurance?Life insurance is designed to protect you and your family against financial uncertainties

that may result due to unfortunate demise or illness. You can also view it as a comprehensive

financial instrument – as a part of your financial planning offering you savings &

investment facilities along with cover against financial loss. By choosing the right policy as

per your needs i.e. customized solutions, you will be able to plan for a secure future for yourself

and your loved ones.

Choosing the right planIdentifying the right plan basis your needs is the first crucial step towards insurance planning. At

RLIC we help customer by identifying their various needs and offering plans that are customized

for you. You may also choose a plan by identifying the life stage you are at.

The following needs of a person can be fulfilled by insurance:

Protection

Need for a sound income protection in case of your unfortunate demise.

Investment

Need to ensure long-term real growth of your money.

Saving

Save for the milestones and protect your savings too.

Pension

Need to save for a comfortable life post retirement.

Once customers have analyzed their needs as per above classification, customers need to

then ascertain important factors such as type of cover, insurance amount as per one's

income, life stage and dependents

Objectives of Life Insurance1. To spread life insurance and provide life insurance protection to the masses at reasonable

cost.

2. To mobilize peoples savings through insurance-linked savings schemes.

3. To invest the funds to serve the best interests of both the policy holders and the nation.

4. To conduct business with maximum economy, always remembering that the money

belongs to the policy holders.

5. To act as trustees of the policy holders and protect their individual and collective

interests.

6. To innovate and adapt to meet the changing life insurance needs of the community.

1.3.3.2 General InsuranceGeneral (non-life) insurance provides a short-term coverage, usually for a period of one year.

General insurers transact fire insurance, motor insurance, marine insurance, and miscellaneous

insurance business. Among these categories fire and motor insurance business are predominant.

Motor vehicle insurance is compulsory in India and the motor insurance industry.

Moreover, motor insurance due to third party liability claims has substantially contributed to

underwriting losses.

General Insurance Products

Fire Insurance:Fire Insurance is a comprehensive policy which covers loss on account of fire, earth quake, riots,

floods, strikes, and malicious intent. It can be taken only by the owner of the premises to be

insured.

Motor Insurance: This covers:

In motor insurance, the rates were revised. Upwards twice, once in 1982 and then in1990 as the

high cost of repairs coupled with third party claims had adversely affect the insured loss ratio.

Motor insurance is mandatory leading to good amount of premium collection but it is not being

fancied upon as it could lead to litigation problem.

Marine Cargo Insurance: This covers:

a. Cargo in Transit.

b. Cargo Declaration policy.

It includes insurance of Marine Hull Insurance Inland Vessels, Ocean going Vessels, fishing

and scaling vessels, freight at risk, construction of ships, voyage insurance of various

vessels, ship breaking insurance, oil and energy in respect of onshore and offshore risks,

including construction risk.

1.3.4 Objective of Insurance Policy1. Life Insurance policy for the rural areas and the socially and economically

backward classes with a view to reach all insurable persons in the country and

providing them adequate financial cover of reasonable cost.

2. Conduct business with utmost economy and with the full realization that the money to the

public.

3. Meet the various life insurance need of the community that would arise in the changing

social and economical environment.

4. Maximize mobilization of peoples’ saving by making insurance – linked securing

adequately attractive.

5. Involve all people working in the corporation to the best of their capability in furthering

the interests of the insurance public by providing efficient service with courtesy.

6. Bear in mind, the investment of funds, the primary obligation to its policy holders,

whose money it holder in trust, without losing sight of the interest of the community as

a whole; the fund is to be deployed to the best advantage of the investors as the

community as whole, keeping in view national as well as the community attractive return.

1.3.5 Benefits to Insurance Policy Holder

(1) Tax Benefits:

Relief in income tax is available for amount paid by way of premium for life

insurance.Investment qualifying for rebate viz. insurance premia, premium paid toward annuity

plans for life insurance are specified under section 88(2) of the income tax Act.

(2) Safety:

In life insurance, on death, the full sum assured is payable (with bonuses wherever applicable)

whereas in other saving scheme, only the amount (saved with interest) is payable.

(3) Liquidity:

Loans can be raised on sole security of the policy which has acquired a paid-up value. Besides, a

Life Insurance policy is also generally accepted as security for even a commercial loan/housing

loan.

(4) Aid to Thrift:

Life Insurance encourages ‘thrift’ Long term saving can be made in a relatively painless

manner because of ‘easy instalment facility’ (Premium can be made through monthly,

quarterly, half-yearly or yearly instalment). The Salary Saving Scheme, popularly known

as SSS provide a convenient method if paying premium each month through deduction

from one’s salary. The Salary Saving Scheme can be introduced in an institution of

establishment subject to specified terms and condition.

(5) Money at the time of Requirements:

A suitable insurance plan or a combination of different plans can be taken to meet specific needs

that are likely to arise in future such as children’s education, start in-life or marriage provision or

even periodical needs for cash ones a predetermined stretch of time. Alternatively, policy money

can be so arranged to be used for other investments subject to certain conditions, loans are

granted to policy holders for house or for purchase of flats.

(6) Insurance affords peace of mind:

The security is the prime motivating factor. The security ends the tension and finally leads to

peace to mind.

(7) Insurance Eliminate Dependency

At the death of husband or the father or any lead person, the family would suffer a lot.

The insurance is here to assist then like to provide adequate amount at the time of

suffering. The economic dependency if the family is reduced.

(8) Insurance encourages savings:

In most of the life policies, element of saving is predominant, this policies combine of

programme of Insurance and saving. Saving with insurance has certain extra advantage.

(9) Economic Growth of the country:

For the growth of the country insurance provides string hand and mid to protect against loss of

death. From the insurance government get more financial resource and utilize strengthen

the economic condition of the country.

INTRODUCTION

CONSUMER AWARENESS

THE PROCESS of development along with the expanding globalization and liberalization process has increased the number of consumer related issues. Consumer protection has earned an important place in the political, economic and social agendas of many nations. In India, the Government has taken many steps including legislative, to protect consumers.

However, this is largely unknown to many citizens irrespective of whether they are educated or uneducated. With an enormous population along with high levels of poverty, unemployment and poor literacy levels, consumer awareness continues to remain low. Education is a life long process of constantly acquiring relevant information, knowledge and skills. Consumer education is an important part of this process and is a basic consumer right that must be introduced at the school level. Consumers by definition include all citizens who are, by and large the biggest group, who are affected by almost all government, public or private decisions. The most important step in consumer education is awareness of consumer rights. However, consumer education is incomplete without the responsibilities and duties of consumers, and this influences individual behaviour to a great extent. With the increasing changes in economic conditions, the children especially are becoming young consumers at an early age. Children must learn to obtain information about goods and services, understand the psychology of selling and advertising, learn to shop wisely and distinguish between wants and needs. They must also understand the alternatives of conserving and saving rather than buying and consuming.

Children are spending more of their leisure time watching television at the cost of other pursuits such as reading or sports. With the introduction of a number of specialised satellite channels, television enjoys a large viewership base consisting of children. Exposure to the marketplace as young shoppers has made most children aware of the different kinds of products that are available. Advertisements are no doubt an important source of information as they help to inform consumers about the availability of different products before making their choice. A majority of the advertisements are aimed at young children today, especially those covering food products, beverages and cosmetics (especially toothpaste/fairness creams). Advertising influences the food preferences and eating habits of children to a large extent.

Unfortunately, many advertisements make false promises, are highly exaggerated and give incomplete descriptions of products. The media, schools and parents along with consumer groups need to help children develop the ability to understand the purpose of advertising. There is so much more information available to children that they must perceive the importance of distinguishing between different sources of information.

The consumption patterns are changing fast and children today are very clear on their choices regarding food, clothing, cosmetics or accessories. Parents are increasingly permitting their

children to take decisions when shopping. It then becomes very important for children to check details (for example, labels) before buying products. Children can be taught to shop wisely and a few simple precautions will ensure that they choose the right product at the right price. It is but natural that parents wish the best for their children, and strive hard to fulfil their demands. But this is not always a good idea as it affects both the parents and children in a negative way in the long run.

Consumer education also involves environmental education as it deals with the importance of conserving (natural resources) and sustaining (recycling and reusing) the environment, including the direct health effects of environmental pollution and toxic products on consumers.

Schools must incorporate consumer education into school curricula as it is important to impart the practical skills and critical ability needed to cope with social and economic changes.

Anyone who consumes goods is a consumer. Consumers get exploited in the market. They respond to advertisements and buy goods. Generally advertisements do not give all the information that a consumer needs t know or wants to know about a product.

DefinitionConsumer awareness is making the consumer aware of His/Her rights.Consumer awareness it a marketing term. It means that consumers note or are aware of products or services, its characteristics and the other marketing P's (place to buy, price, and promotion).

Usually commercials and ads increase consumer awareness, as well as "word of mouth" (a comment from someone you know about a product or service).

1 Need :we need it so we will not be misled by producers,it explains if what we buy is worth to our money..and not harmful to us and to environment .

Many people are ignorant of their rights to get protected against the exploitation by so many others. So when there is a forum for such redress of grievances there seems to be no such exploitation by many; and becomes a rare one. So in order to get a clear picture of the level of exploitation of consumers, the awareness is required.

2. Role of producersproper labeling, full information, health warnings, handling information, expiration date, etc. keep to requirements, norms, standards label products according requirements, providing true facts They have to produce and deliver the goods/services of right quality at right price at right time at right place at right quantity with right face

If they are providing a service they should carry it out with due skill and care. They must also make sure that any materials they provide as part of this service are fit for the purpose. It is also illegal for a supplier to cut off, or threaten to cut off, supply to a reseller (wholesale or retail)

because they have been discounting goods or advertising discounts below prices set by the supplier.

Some of the common methods of exploitation are

1. Under weight and under measurements –not measured or weighed correctly2. Substandard Quality –defective home appliances and medicines beyond expiry date3. High prices—charging above the retail price4. Duplicate Articles—selling fake items in the name of the original5. Adulteration and Impurity—is done to get higher profits6. Lack of safety Devices—absence of inbuilt safe guards in appliances7. Artificial Scarcity—hoarding and black marketing8. False and Incomplete Information—misleading information on quality, durability, and

safety.9. Unsatisfactory after sales Service—high cost items like electronics and cars require

constant and regular service.10. Rough behavior and Undue conditions—harassment in getting LPG connection or a

telephone connection..

Factors causing exploitation of Consumers.

1. Limited Information—providing full and correct information will help in the choice2. Limited Supplies—when goods and services are in short supply then price shoots up3. Limited Competition.—single producer may manipulate the market in terms of price and

stocks.4. Low Literacy.—illiteracy leads to exploitation. Hence Consumer Awareness is essential.

Rise of consumer AwarenessKautilya was one of the earliest to write in his Arthashastra about the need for Consumer awareness and protection. With the growth of private sector there is a greater need for discipline and regulation of the market. Consumers must be aware of the sale and purchase of goods, the health and security aspects also. Ensuring the safety of food items sold in the market is essential these days.

 Legal measures for consumer safety and consumer awareness must be uniform, and transparent in terms of prices, quality of goods, and stocks. Consumers must have the tools to combat malpractices and protect their rights.

Rights and Duties of Consumers As codified under the Indian Laws the Consumers have the following

Rights

1. Right to Safety—to protect against hazardous goods2. Right to be Informed—about price, quality, purity3. Right to Choose—access to a variety of goods and services at competitive prices.4. Right to be Heard—consumers interest and welfare must be taken care of5. Right to seek Redressal—protection against unfair trade practicesand settling genuine

grievances.6. Right to Consumer Education.—Kowledge about goods and issues related to consumers.

 

Duties

1. Get a bill for every important purchase and also the Warranty card2. Check the ISI mark or Agmark on the goods3. Form consumer awareness groups4. Make a complaint on genuine grievances.5. Consumers must know to exercise their rights. 

Consumer protection Measure1. Legislation concerning Consumer Rights.

 The Consumer Protection Act 1986 provides for consumer disputes redressal at the state and national level. With the help of this law the agencies can solve grievances in a speedy, simple and inexpensive manner. A separate department of consumer affairs was set up at the state and central government. A three tier system of consumer courts at the National, State and District levels were set up. These agencies have done good work by handling lakhs of cases.

  2. Public Distribution System .

 To protect the poor from price rise and black marketing the government food security to the poor by supplying essentials through the ration or Fair price shops.

 3. Standardisation of Products.

 These are done to assure the quality of products. The ISI stamp on goods is placed by the Bureau of Indian standards. This caters to industrial and consumer goods. These goods can be trusted to confirm to specific standards. Agmark is meant for Agricultural products.

At the International level the International Organization for Standardization (ISO) located in Geneva sets common standards. The FAO and WHO provide food standards.

4.   Legal formalities for filing a complaint .

The complaint can be written on plain paper. The supporting documents like the warranty card must be attached. A lawyer is not required. We can argue our case.

INTRODUCTION TO INSURANCE

Introduction:-

The basic customer need met by life insurance policies are protection and savings. Policies that

provide protection benefit are designed to protect the policy holder or his dependents from the

financial consequences of unwelcome events such as death or long term sickness

/disability .policies that are designed as saving contracts allow the policy holder to build up funds

to meet specific investment objectives such as income in retirement or repayment of loan.

Types of policies

The common type of life insurance policies are:

endowment assurance

money back plan

whole life assurance

unit linked plan

term assurance

immediate annuity

deferred annuity

riders

Endowment assurance

There are basically two variants of this policy

a. nonparticipating endowment assurance

b. participating endowment assurance

Non participating endowment assurance:

This policy offers a guaranteed amount of money [sum assured] at the Maturity date of

the policy in exchange of for a single premium at the start of the policy or a series of

regular premiums through out the term of the policy If the policy holder dies before the

maturity date the usually the same sum assured is paid on death.

Participating endowment assurance:

The structure if this policy is same to that of the nonparticipating policy except that initial

sum assured under the policy is expected to be enhanced by payment of bonuses to the

policy holder In the Indian context bonuses usually take the form of additions to the

initial sum assured and become payable in the event of the occurrence of the insured

event, i.e. survival up to maturity date or earlier death.

Money back plan:

This is very popular savings cum protection policy because it provides lump sump at

periodic intervals .for exp given an initial sum assured of Rs. 1000 and a term of 20

years, the policy may provide part payment of the sum assured as follows:-

20% at the end of 5 years

20% at the end of 10 years

20% at the end of 15 years

40% at the end of 20 years

Continuing with this exp if the guaranteed annual addition is say rs.100 per 1000 sum

assured, then policy holder gets 400 of the initial sum assured plus guaranteed addition of

2000[100x20] at the end of 20 year term .the money back policy illustrated above is non

participating policy.

Whole life assurance:

Basically it provides long term financial protection to the dependents. It is particularly useful

as a means of protecting some of the expected wealth transfer that a parent would be aiming

to make to his/her children when he/she died. Such policy can also be tax efficient way of

transferring wealth at any age depending on legislation.

Unit linked plan:

A unit linked plan is also a investment oriented product. As compared to other investment

plan, the investment portion of the unit linked plan functions like a mutual fund, it is invested

in a portfolio of debt & equity instruments, in conformity with the announced investment

policy, and hence it grows or erodes inline with the performance of that portfolio. Of course

through out the period of investment the policyholder enjoys an insurance cover as

stipulated.

Term assurance:-

This is a pure protection policy, which provides the benefit on the death of as individual

with in a specified term.

A popular variant of the term policy is the decreasing term assurance policy under which the

sum assured decreases over the term of the policy. This type of policy can be used to meet

two specific needs firstly; it can be used to repay the balance outstanding under a loan in the

event the death of the policyholder. Secondly it can be used to provide an income for the

family of the deceased from the time of the death up to the end of the policy term.

Immediate annuity:

This type of policy meets the policyholders need for a regular income, for exp after his or her

retirement. The policy can also be structured to provide an income for a limited period, for

exp to pay the school fee of the policy holder’s children

Deferred annuity:

A deferred annuity enables the policyholder to build up a pension that becomes payable

on his/her retirement from gainful employment. At the vesting date of annuity the

alternative of lump sump may be offered in lieu of part or all of the pensions.

Riders:

Riders are add-on to the insurance policies described above. This add-on’s can be

purchased with the base policy on the payment of a small additional payment. The commonly

offered riders in Indian context are:

Accidental death benefit

Critical illness rider

Waiver of premium rider

Term rider

OBJECTIVE OF THE STUDY: -

The project consumer awareness towards insurance products is undertaken to achieve the following objectives:

1. To create the awareness of insurance products in people.

2. To give buying tips to make their insurance prosper.

3. To know the investor perception towards investment in insurance Fund as compare with other investment tools.

Historical perspective

Early Period:-

Insurance is some from is as old as historical society. So called Bottomry, contracts

were known to merchants of Babylon as early as 4000-3000 BC. Bottomry was also

practiced by the Hindus in 600 BC and was well understood in ancient Greece as the 4th

century BC. Under a bottomry contact, loans were granted to merchants with the provision

that if the shipment was lost at the loan did not have to repay. The interest on the loan

covered the insurance risk. Ancient Roman law recognized the bottomry contract in which an

article of agreement was drawn up and funds were deposited with a money changer. Marine

insurance become highly development in the 15th century. In Rome there were also burial

societies that paid funeral costs of their member out of monthly dues. The insurance contact

also development early. It was known in ancient Greece and among other maritime nations in

commercial contact with Greece.

MEDIEVAL PERIOD:

Life insurance in its present from came to India from the United Kingdom with the

establishment of British firm, oriental life insurance company, in Calcutta in1818. This was

following but the formation of Bombay life insurance company in1823, the madras equitable

life insurance company in 1829, and the oriental govt. life insurance company in 1874, the

first general insurance company, the triton insurance.

Company limited was established in Calcutta in 1850. The Indian mercantile insurance

company ltd. which was set up in Bombay in 1907 was the first Indian company to transact

all classes of general insurance business. Even though the first life insurance company was

established in 1818, there was no excusive legislation to govern the activities of all insurance

companies.

In 1912, the Indian life insurance company act was enacted to control the operation of life

insurance companies. Thus act was modeled on assurance company act, 1909 of UK. In 1928

the Indian insurance company act was passed. This act amended the 1912 act and provided

for collection of statistics concerning insurance business other than life business. it also

covered the foreign companies operating in India.

MODERN ERA:

In April 1945, a committee under the chairmanship of sir cowasji jehangir was appointed to

enquire in to the undesirable developments in the management of insurance companies and

recommended suitable measures. on the basis of recommendations of this committee, a bill

was introduced in 1950 and passed in the same year as the insurance [Amendment act 1950],

the life insurance corporation of India came in to being on September 1st 1956 with the

compliance of life insurance corporation of India act 1956, the general insurance business

nationalization act 1972 was passed an general insurance business was nationalized with

effect from January 1, 1973.

On April 7, 1993 the government appointed as a sequel a committee headed by shri R.N

malhotra to examine the reforms required in the insurance sector. The committee in its report

submitted on January 7, 1994 recommended among other things, the opening up of insurance

sector to player other than the state owned ones. The service standards of Indian insurance

majors, an extend insurance coverage to larger section of the Indian population. These

recommendations were accepted by the government and insurance regulatory and

development authority act 1999

Consequent amendments to the insurance act 1938, life insurance corporation act 1956 and

the general insurance business act 1972 were passed in the year 2000, paving the way for the

opening of the insurance sector. Subsequently, the IRDA brought out many REGULATIONS

FOR CONDUCT OF BUSINESS IN India an opened the window for accepting the

application for licensing of insurance companies with effect from augest, 16, 2000.

Insurance regulatory environment:

After fighting an intense political battle for more than six years, insurance regulatory and

development authority act saw the light of the day at the fag end of 1999, by the en of 2000,

the insurance regulatory and development authority [IRDA] which was given the statuary

power by the IRDA act, acted relentlessly to establish the rule of the law in the newly opened

up domestic insurance industry. the authority has already enunciated regulations on all the

vital operational areas including registration of Indian insurance companies, obligations of

insurance to rural social sector regulations, general insurance and general insurance

reinsurance regulations actuarial report and abstract regulation licensing of insurance agents

regulations insurance advertisement and disclosure regulation, investment regulation and

accounting standard regulation.

Entry of foreign companies:

With the passage of insurance regulatory and development act [IRDA] through Indian parliament

in late 1999, investment in this sector has been opened up to foreign investors. The following are

the salient features of the new foreign investment policy in this sector according to the present

investment policies.

It requires the Indian promoter to invest either wholly in an insurance venture or team up

with a foreign insurer, with a capital of 26 percent of equity for the foreign partner.

The Indian promoter is permitted to invest only after 10 years the Indian public, through a

public of ring of shares, at which the equity structure will provide for equal participation

between the India and foreign partner with a share of 26 percent each in the share capital.

Foreign insurance companies will not have to go to foreign investment promotion board

[FIPB] to get their proposals cleared .clearance from the insurance regulatory and

development authority [IRDA] is adequate. After the IRDA approval, the reserve bank of

India is to be informed.

A capital of 26 percent foreign capital is meant to ensure that the financial interest substantially

vests with the Indian promoter. However this will also permit the foreign co promoter a definite

say in direction and management of the company. [By Indian company law, 26 percent is the

minimum equity to move a resolution or veto a resolution in board of director meeting].

Procedure for registration

A company desirous of entering the insurance sector in India has to make a requisition for

registration addressed to the IRDA; the company has to apply to the IRDA for grant of a

certificate of registration. The application should clearly indicate the category of business.

life insurance business consisting of linked business ,non-linked business or both

general insurance business including health insurance business[or health cover]

Requirements for application for requisition:

A certified copy of the memorandum of association an article of association, where the

application is a company an incorporated under company act 1956.

A statement of the class of insurance business proposed to be carried on.

A statement indicating the sources that will contribute the share capital require under

section 6 of the act.

Requirements for the application for registration

Evidence of having 100 crores or more paid up equity share capital in case the

registration for the grant of certificate is for life insurance business or general insurance

business.

Evidence of having Rs. 20 crores or more paid up equity share capital in case the

application for the grant of certificate is for re-insurance business.

Registration fee:

A fee of Rs 50 thousand for each class of business has to be made by the

application in favour of the insurance regulatory and development authority payable at

New Delhi.

An application granted a certificate of registration has to commence business, for

which he has been not be able to commence the business with in specific period of 12

months it can seek an extension by a proper written application to the authority.

The authority beyond 24 months grants no extension of time from the date of

grant of registration.

Some of the foreign companies have started business in India and other are in

process of launching their products. reliance, Sundaram, alliance, ICICI PRU, HDFC

STANDARD LIFE , max new York, BIRLA SUNLIFE, ING VYASA, OM KOTAK

MAHINDRA,TATA-AIG for life and non-life, IFFCO TOKYO marine for non life have

already receive their license from the IRDA to start their business.

PRODUCTS:

LIFE INSURANCE CORPORATION

New bima nivesh single premium

Bhavishya jeevan

Double endowment

Endowment assurance

Fixed term assurance

Jeevan griha[double cover]

Jeevan griha[triple cover]

Jeevan shree

Jeevan mitra[double cover]

Jeevan mitra[triple cover]

New Jan raksha

Unit linked insurance plan

ICICI Prudential life insurance

Save ‘n’ protect

Single premium bond

MAX NEWYORK life insurance

Life gain plus

Stepping stones

BIRLASUN LIFE insurance

flexi save plus endowment plan

flexi cash flow

b. PLAN FOR CHILDREN:

LIFE INSURANCE CORPORATION

Children’s money back assurance plan

Jeevan baalya

Jeevan kishore

Jeevan sukanya[for girl child]

Bal vidhya

Komal jeevan

c. WHOLE LIFE POLICIES:

LIFE INSURANCE CORPORATION:

Convertible whole life plan

Joint life plan

Whole life limited payment plan

MAX NEWYORK life insurance

Dread disease rider

Personal accident benefit rider

D. MONEY BACK POLICIES

LIFE INSURANCE CORPORATION

Jeevan chhaya

Jeevan sachay

Jeevan surbhi

Money back policy

ICICI Prudential life insurance

Cash back

Hdfc standard life insurance

E. PENSION PLANS

LIFE INSURANCE CORPORATION

Jeevan suraksha

Market plus

Future plus

F. TERM POLICIES

LIFE INSURANCE CORPORATION

Bima kiran

Bima sandesh

Convertible term assurance plan

Temporary assurance plan

ICICI Prudential life insurance

Life guard

Max newyork life insurance

Five year term renewable and convertible

F. SPECIAL NEED POLICIES

LIFE INSURANCE CORPORATION

NEW BIMA NIVESH-SINGLE PREMIUM INVESTMENT OPTION

POLICIES AT A GLANCE

LIC FUTURE PLUS [UNIT LINKED DEFFERED PENSION PLAN]

FEATURES:

1. MINIMUM AMOUNT 5000/-INCREASING THERE AFTER IN THE MULTIPLES

OF 1000

2. FUNDS AVAILABLE:

a. bond fund

b. income fund

c. balanced fund

d. growth fund

3. IN CASE OF DEATH NOMINEE WILL GET SUM ASSURED+ UNIT VALUE PRICE

IN THE FORM OF REGULAR PENSION

LIC JEEVAN PLUS

FEATURES:

1. MINIMUM AGE OF ENTRY 18 YEARS COMPLETED

2. RIDERS AVAILABLE

3. DOBLE BENEFIT[ EATH BENIFIT + MATURITY BENIFIT]

4. ANY TIME PREMIUM PAYMENT OPTION

5. PARTIAL SURRENER OPTION

MAX NEWYORK LIFEMAKER

FEATURES:

1. MINIMUM INVETMENT 15000

2. ANY TIME PREMIUM PAYMENT OPTION[ AS PER MARKET CONDITION]

3. GURANTEED BONUS

4. AUTO COVER

5. OPTION OF TOPUP EPOSIT AND WITHDRAWL

6. EXAMPTION IN TAX 80-C

7. SWITCHING FACILITY IN

A. LIQUID FUNDS

B. BALANCED FUNDS

C. SECURED FUND GROWTH FUND

BAJAJ ALLIANZ CASH GAIN

FEATURES:

15 DAYS FREE LOOK PERIOD

PREMIUM DISCOUNT FOR WOMEN

PREMIUM PAYMENT MODE THROUGH SALRY

CASH BENIFIT

ADDITIONAL BENIFITS

A. FAMILY INCOME BENEFIT

B. CRITICAL ILLNESS RIDER

C. ACCIENT DEATH BENIFIT

D. HOSPITAL CAH

E. MAHILA GAIN RIDER BENIFIT

OUTLOOK REPORT

BAJAJ ALLIANZ FUNDS LAUNCHED INJULY 2004 ARE THE TOP MARKET

PERFORMERS EXIBITING AN ANNUALIZED RETURN SICE INCEPTION ON 48

PERCEN ON ITS EQUITY PLUS OPTION AND 32 PERCENT ON EQUITY INDEX FUND.

NEW GUIDELINES OF ULIP

First three premiums should be paid on due date, in case if premium is not paid on due

date insurance cover is lapsed only invested amount is paid there after.

After completion of 3 years any time premium facility is available

Exemption of 2 year is given for non payment of premium after three consecutive years

to maintain insurance cover.

Top up amount will be 25 percent of the premium till paid

3 year lock in period for with drawl of top up amount

BASIC TERMINOLOGY OF INSURANCE

Many people go about buying insurance without being aware of basic

terminology being used and the product being offered. It is not possible to touch

upon all products offered by different insurance companies worldwide as there is

too much variety and as many local products tailored to specific needs. Here I,  

touch upon the basic insurance terms and what they mean, so that the person

buying the insurance product is aware of what he is going in for and the

implications there of.

The person buying the policy is not necessarily the beneficiary. He is the policy

holder and is insured.

The insurance company selling the policy is the insurer. The person who will get

the money when and if the policy holder dies is the Beneficiary. The beneficiary

is nominated in the policy by the policy holder or insured person.  So the

beneficiary is the Nominee.

The premium is the amount of money you pay to the insurer to buy a policy. It

can be a Single Premium Policy (premium paid only once) or an Annual Premium

Policy (premium is paid annually for a fixed tenure).  

The Term of the policy is the number of years you bought the policy for. It is the

number of years that the policy will run.

There are primarily two kinds of policies (with minor variations built in,

depending upon a country's laws and product innovations):

Term Insurance provides protection in case of death of the policy holder. It is

normally the cheapest type of insurance available and provides money (the sum

assured) to the beneficiary (nominee) in case of death of the insured within a

specified term (period) of the policy. If the insured dies beyond the term period

specified in the policy, the beneficiary gets nothing.   

In Endowment Insurance, a saving element is added. It provides protection for

life and also gives a basic sum assured to the insured if he outlives the policy

tenure. The sum assured is paid to nominee in case of death, or if there is no

death, within the term of the policy, the insured gets a payment at the end of the

policy term. So it combines savings with protection. These policies are normally

with a heavier premium and may have multiple variations with companies

innovating to attract new customers with multiple variable products within the

ambit of an endowment policy.

Before we proceed further, we must understand that the Sum assured is the

guaranteed amount of payment specified by the insurer (insurance company) in

case of death or in case you outlive the policy ( in case of endowment policies).

This may also be known as Coverage.

Maturity Value is the amount of money the insurance company is bound to pay

you and is an addition of the Sum Assured and any declared Bonuses.

Bonus is the amount the insurer agrees to pay in addition to the sum assured. It

may be a Reversionary bonus and is added to the policy throughout the term of

the policy. It may not be payable immediately but will be given to beneficiary in

case of death or the insured in case, maturity amount is payable.

This bonus can either be a with-profit bonus or a guaranteed bonus.

This means this bonus may be tied with the profits of the insurance company

(discretionary in nature) or it may be a fixed guaranteed value.

A Rider is an optional feature that can be added on to a basic policy. You

may want to buy a rider for say critical illnesses or accidents etc. The insurer will

normally charge an additional premium value for every rider you add on.  

An Annuity is regular payments and insurance company may guarantee at some

future date. It is normally an instrument of retirement planning and may be a

monthly / quarterly or annual return depending upon the terms of the policy. 

You may want to discontinue your policy after a specific time on account of

various factors. The amount of money the insurance company pays you when you

surrender this policy before its maturity value is the Surrender Value. Normally

the insurance company will try to limit the payment under this process and the

insured is likely to lose out on bonuses and other accrued additions.

The Paid up Value of the policy is a different concept to the surrender value. If

you stop paying the premium after a number of years before the full payment term

of the policy, the policy is adjusted downwards for the Paid up Value. It will now

run normally without additional payments till maturity but the value of the sum

assured will have been adjusted downwards.

Survival Benefit is the amount of money that will be paid if you survive

(live for) specified terms under the policy. You could be paid money if you

survive for say five years, ten years and so on, till the maturity of the policy. The

sum assured is paid to the beneficiary incase of death, irrespective of any survival

benefits paid.

Consideration in choosing a policy

Bear in mind the following considerations in choosing a policy:

Review your own insurance need and circumstances. Choose the kind of policy that has

benefits that most closely fit your needs. a life insurance agent or a financial advisor can

help you in this task

Be sure that you can handle premium payments. Can you afford the initial premium? If

the premium increases later and you still need insurance, can you still afford it?

Don’t buy life insurance unless you intend to stick with your plan. it may be very costly if

you quit during the early years of your policy terms

If you are thinking of surrending your insurance policy or replacing it with a new one,

you should carefully assess the surrender value and the rights and the benefits of the new

policy.

How to Buy Life Insurance

Buying life insurance is an easy way to protect your family after you're gone. If you know what

to look for, you can get great coverage at a price you can afford.

Why buy life insurance?

Topping the list of reasons to buy life insurance is the financial protection life insurance offers. If

you're single and just starting out, you may not need life insurance. But as you take on more

responsibilities and your family grows your need for life insurance increases. The proceeds from

a life insurance policy can replace the income lost to your family upon your death. You might

also want to buy life insurance to pay off debts and expenses, leave money to charity, and cover

final and estate expenses.

Choose term or cash value

There are two basic types of life insurance: term life insurance, which provides life insurance

coverage for a specified period of time (the term), and cash value (permanent) life insurance,

which combines a death benefit with a cash value component. Cash value insurance offers

lifetime protection, while term insurance may be the most affordable option if you're buying life

insurance mainly for the financial protection it offers, and your need for life insurance is

temporary (until your children leave the nest, for instance). Some term policies (called

"convertible") will permit you to exchange the term life insurance policy for a permanent one at

some point.

Decide how much coverage you'll need

The amount of life insurance protection you should buy depends on how much income your

survivors will need, how much you own and owe, and the amount of other life insurance

available to you. If you're married, both you and your spouse should consider buying life

insurance. One of the easiest ways to estimate how much life insurance protection you should

buy is to use a life insurance needs calculator.

Pick a number between 1 and 30

Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing

a term that matches your need for life insurance protection. For instance, if your main reason for

buying life insurance is to protect your 7-year-old twins until they're out of college, you'll want

to buy a policy with a term of at least 15 years.

How much will it cost?

How much you pay for life insurance will depend on a number of risk factors, including your

age, your health, whether you use tobacco, your family health history, and the type and amount

of life insurance you're buying. Keep in mind that the premium you're quoted initially will

increase later. For instance, when you buy term life insurance, rates are guaranteed only until the

end of the term (annually for annual renewable term or at the end of a specified number of years

for level term). While most life insurance policies can be renewed at the end of the term, you'll

pay a higher premium for coverage.

Shop around

When comparing quotes for life insurance, make sure that the insurance coverage you're

comparing is similar. And remember, any policy that you buy is only as good as the company

that issues it. Find out what rating the company has received from major ratings services, such as

A. M. Best or Standard & Poor's. These companies evaluate an insurer's financial condition and

claims-paying ability. The company giving you a quote should provide you with this

information. You can also contact your state's department of insurance to find out more about an

insurer's record.

Submit an application

Once you're ready to purchase a life insurance policy, you'll fill out a life insurance application

that contains questions about your current and past health history and lifestyle. You'll generally

be required to take a medical exam, arranged and paid for by the insurance company. The

answers you give on your application, along with the results from the medical exam and your

past health history, will help the insurance company determine whether to offer you a policy, and

if so, at what price.

Learn the lingo

Maybe a life insurance contract isn't as exciting as a best-selling novel, but read it anyway.

Policy provisions, the amount of benefits, the premium, and other charges you'll pay will be

listed along with other important information such as the beneficiaries you've named and the

premium guarantee period. Make sure you understand everything in the policy. Under the laws

of your state, you may have a "free look" period (typically at least 10 days) during which time

you can cancel the policy without penalty.

FUTURE TRENDS:

More expectations from the new players:

Though LIC and GIC were the only insurance companies in India, the penetration level of these

companies have not been very high.

1. Per capita premium in India is quite low compare to developed economies. Per capita

insurance premium in India in 1999, US$823 for Hong Kong and US$144 for Malaysia.

2. while insurance premium as a percentage of GDP was 14% for japan,13% for south

Africa 12% for korea,9% for UK and France, it was only around 2% in India[compared

to world average of 7.8% in 1999]

3. While the insurance premium as a percentage of GDS gross domestic saving was 52% for

UK, 35% for other European and American countries, it was only 9% India in 1999.

4. The share of India in the world market in terms of gross insurance premium is again very

small. for instance while Japan has 31%,european union 35%,south Africa 2.3%,canada

1.7% share of the global insurance premium, it is only 0.3% for India.

hence the opening up of the insurance sector to private insurance has put a great

responsibility on them to ensure fast growth of insurance so that India can come up to the

level of developed countries of the world in offering the insurance cover to citizens.

Those reflect that there is a big scope for new players in the liberalized insurance sector.

GROWING NEED FOR INSURANCE

In India insurance is traditionally considered an instrument of savings. The potential of

insurance products as risk compensators has always been underemphasized. Consider these

findings of an LIC survey as many as percent of insurance buyers consider insurance product

avenues for compulsory savings. Only 26% see insurance as old age pension, while just 18%

consider it as provision for risk and uncertainties. This trend might be in change soon.” customer

prefers to have more options. They want not just basic products but investment base insurance

products, pension products, and health care products as well”

Innovative products as well defined target:

Insurance products have a correlation to both lifestyle and level of economic activity. it would be

folly to assume that products, which are marketing success in the west, will be equally success in

India today LIC has more than 60 products and GIC has more than 180 products offer in the

market but many of them are outdated and may not be best suited to the needs of the modern day

consumers. Old as well as new insurance will have to offer innovative products to the

consumers.

1. Being agriculture based economy; there are immense opportunities for the new

entrants to provide the liability and risk associated in this sector like weather

insurance, rain fall insurance, cyclone insurance, crop insurance etc.

2. Housing finance, auto finance, credit cards and consumer loans all offer an

opportunity for insurance companies to introduce new products like creditor

insurance etc.

3. The lack of comprehensive social security system combine with a willingness to

save means that India demand for pension products will be large.

4. Service sector is taking a large and growing share of India’s GDP this offers

immense opportunities for expansion opportunities.

There are other segments such as natural disaster insurance or insurance against

terrorism that may provide potential opportunities.

Insurance companies create products and go out to find customers. They do not create

products that the market went factors such as increasing life expectancy, is integration

of the traditional joint family system and the rising cost of healthcare are bound to

make the market claimer for the variety of insurance products. For exp tata AIG

general insurance has launched business guard policies for shopkeepers. Business

guard policy offers a package of insurance that would cover earthquake fire loss of

rent burglary and personal accident cover. There are two versions of the policy-jyoti

and sanjeevni while jyoti targets small shopkeepers with a maximum sum assured of

Rs. 10 lakh sanjeevni is meant for big shopkeepers with a significantly higher sum

insured.

Multiple distribution channels:

distribution will be a key determinant of success for all insurance companies

regardless of age or ownership. if insures are to take advantage of India’s large

population an reach a profitable mass of customers, new distribution avenues and

alliances will be imperative, though face to face selling will dominate but foreign

players with the domestic partner’s strong

Values can test the unconventional distribution channel like brokers corporate

agencies, financial intermediaries, bank assurance, affinity group and direct

marketing through telesales financial intermediaries. Some channels will be cheaper

than others; hence there will be competition among the channels. The new insurance

can leverage by multiple distribution channels.

Training for agents:

Under the new IRDA regulations and application for agent seeking license for the

first time has to under go a minimum of one hundred hours practical training in life

insurance. The objective of the training is to develop technical skills and selling skills

among insurance agents. It will help them to bring professionalism in their profession.

Earlier customer interest was not the prime focus as both the company [LIC&GIC]

has enjoyed a monopoly or a sellers market. In the new environment however, the

focus of every company would be to attract and retain more customers. Training in

customer focus and selling skills will also be important. These HR challenges will be

more peculiar in public sector companies.

Leadership of life insurance corporation:

Today LIC has around 7, 00,000 agents in the country, and has also create an enviable

brand name, particularly among the rural population of the country. It has around

US$40billion as its life fund and is a strong player in the financial sector. However,

on the qualitative side, it has very little to take pride in and therein lies the potential

for foreign players in Indian insurance sector. in future the LIC urban market share

will be effected by new entrants but LIC can compensate with strong brand equity in

rural area because it would not be easy for them to gain trust of the rural masses.

Application of IT:

Entry of new private players will also bring in updated technology, efficient

management system and a healthy business culture. the new players with state of art

technology under their belt will be in advantageous position.

Expected profit period:

The new insurance will have to invest a minimum capital of Rs 100crore. The normal

gestation period is of five years. The generation of profit starts normally in sixth year.

Hence the new insurer will have to be ready for locking up their capital for at least 5

years before earning profits.

Untapped potential:

There is no doubt that the potential market for buyers of insurance is significant in India and

offers a great scope of growth. Though a vast population waits to be served a well-defined

strategy to reach out to this population is a must. Much of the demand may not be accessible

because of poor distribution, large distance or high cost relative to returns. Solutions to such

problems must come out clearly from the strategy. Rather than adopting a myopic. Strategy of

targeting the business of existing companies, the new entrants should spell out a strategy to

expand its market.

Most of the Indian corporation planning to enter insurance has no prior experience in the

insurance business. But they can bring to the table valuable insights into the psyche of the typical

Indian consumer. Their knowledge of the distribution channel, a key ingredient for the successful

delivery of insurance products, is a substantial value addition to the relationship.

Low premium by better asset management:

Inefficient asset management and low investment yield are responsible for high premium

charged by Indian insurance companies; private companies would be more proactive in

managing their investment in spite of the restriction on investment by IRDA.

Role of regulator:

Private insurance industry is in very nascent stage. It requires some extra care. Therefore IRDA

has twin roles regulations as well as development. it is said that no game is possible without rules

but too many rules spoil the game. Hence the regulator has to ensure a balance in the enactment

of the regulations.

Indian psyche ground reality will dominate:

Although foreign players may be tempted to keep their operation in the big cities for the creamy

layer of the society the real market lies in rural India which accounts for the lions share of LIC’S

present business. The foreign players must learn to adapt to Indian realities. The well publicized

failures of world famous consumer goods companies like Electrolux, whirl-pool, Reebok, Nike

etc. to gauge the Indian psyche and sentiment demonstrate the concept. They failed in the areas

of realistic pricing product promotion and reaching to the consumer. The foreign companies need

to know the “ground realities”. Other companies such as Mc Donald have modified the business

strategy, keeping in view the eating habits, culture and psyche of the local customer.

Private insurance can bring a paradigm shift in insuranceSector if they resolve:-

To conduct business according to honesty and fairness and to render that services to its

customers which, in the same circumstances it would applied to or demand for it self.

To provide competent and customer focused sale and service.

To engage in active and fair competition

To provide advertising and sales material those are clear as to purpose and honest and fair

as to content.

To provide for fair and expeditious handling of customer complaints and disputes.

To maintain a system of supervision and review that is reasonably design to achieve

complaints with these principles of ethical market conduct.

SIGNIFICANCE OF THE PROBLEM:

In our worldly life, wherever there is uncertainty, there is an involvement of risk. The

instant for security against such risk is one of the basic motivating forces for determining

human attitudes. As a sequel to this quest for security, the concepts of insurance have been

born. The urge to provide insurance or projection against the loss of life and property must

have prompted people to make some sort of sacrifice willingly in order to achieve security

through collective cooperation. In this sense, the story of insurance is probably as old as the

story of mankind. Thus the urge of security and protection against risk in a man lead to the

concept of insurance.

It was in the 12th century in which the idea of insurance was first conceptualize. At the

time it was used more as a tool for protection against financial loss of sea fearer in foreign

trade. Since then this concept has undergone several changes. It is basically the unforeseen

contingencies of human life that has given a totally new look to the insurance industry.

Gradually as competition increased the benefits given by the industry to its customers

improved by leaps and bound. It was the breakup of the traditional extended family system

that provided a natural umbrella to each an every member of the family, which give the

insurance institution an impetus to excel.

Journey of insurance business in India is very long. There was mushroom growth of

insurance company during the period. In spite of mushrooming of many insurance companies

percapita insurance India was merely Rs. 8 in 1944 as against rs.600 in US and UK

respectively. Even this limited growth is marked by many malpractices, deficiencies and

frequent liquidations of insurance companies shaking public confidence and depriving

policyholders of their saving and security. it is reported that in those days insurance and

banking was in the control of big industry houses in resulting in interlocking of funds

between bank and insurance companies. These irregularities are mainly of two types. Firstly

malpractices that had crept into management of insurance company especially during 1940s

such as acquisition of insurance

company by financeries and use of life insurance funds to serve other enterprises in which

the financiers was interested or for speculation ,

Payment of large emolument to nominees of the controlling interests and interlocking of

funds between banks and insurance company. Secondly factors which have operated for year

towards disruption of Indian insurance such as excessive costs, rebating and unsatisfactory

standards of management of business.

Life insurance Corporation in the year 1956 dominated personal insurance sector. General

insurance sector still was in private hands. It was mainly confined to small entrepreneurs and

ancillary units attached to big industrial plants. With the growth in the process of

industrialization in India, because of three wars in decade [1962, 1965, 1971] focus of central

government shifted from industrial sector to defense sector.

The shift caused economic slowdown which resulted in fund shortage faced by industrial

units. All these development has a bad impact on the general insurance sector.

Taking into the account the bad health of private operators and vast funds mobilization

potential in this sector, government of India nationalized the general insurance sector with

effect from 1st January 1973. It formed four subsidries [new India insurance company ltd., the

oriental insurance company ltd., the united India insurance company lt., the national

insurance company ltd.

The privatization of insurance and constitution of insurance regulatory and development

authority [IRDA] envisages improving the performance of the state insurance sector in the

country by increasing benefits from the competition in terms 0f lower cost and increased

level of consumer satisfaction.

POSITIVE CHALLENGES BROUGHT BY PRIVATIZATION:

The health insurance market is pegged at Rs. 500 crores. The recent enter private insurance is

expected to bring about a total transformation in the exist system of providing health

insurance.

wide variety of health products

Cost reduction.

Medical plans as per the individual needs and at the rates suited.

lower premium

improvement in the health care system

FACTORS COTRIBUTING TO THE GROWTH WERE:

1. MONOPOLY : - the insurance sector till now enjoyed monopoly so it has total

control over the business.

2. SOCIAL FACTORS : - collapse of joint Hindu family system an advent of

nuclear family system because of better career opportunities at places far away

from native places as result of increasing industrialization caused greater social

security. So more and more people were motivated towards insurance.

3. ECONOMIC FACTORS : - more jobs and better opportunities because of

industrialization improved the standard of living. New products and services

change in the life style of people. So they opted for insurance of recovering the

risk of theft and other mishappening.

Besides other factors like more tension in challenging jobs, tax benefits associated with

insurance instruments greater life expectancy, increased risk to the life of a person because of

rapid changes in the environment also resulted in more persons going for insurance.

PERFORMANCE OF LIC:-

LIC has been growing at annual rate of 15 to 20 % consistently for the last several years.

The claim settlement ratio of LIC is at the order of 97% the malhotra committee report,

which looked in to the performance of this sector, found a fairly high degree of consumer

satisfaction. govt of India invested by way of equity Rs. 5 crores in LIC 1972. Without

additional need for investment in equity LIC has generated enormous surplus and has been

paying large dividends and corporate taxes to the govt. year after year.

The govt. was of the order of Rs. 197.97 crores after paying corporate taxes of Rs. 563.03

crores. Policy holders have in general received good return on their investment. This is

confirmed by increase in bonus rates, which have gone up from Rs. 12.80 per thousand to Rs.

102 per thousand for whole life policies in period 1997-98.

Information given about LIC clearly shows the excellent growth rate of LIC. Today LIC

has become the leading investment institution of India. In order to reach to people in every

part of country it has developed as vast service network, comprising of 7 zonal offices, 100

divisional offices, and 2048 branches which together employ 124000 persons and 651000

agents. Besides LIC contributed in social welfare projects like water through life funds, book

value of socially invested increased from Rs. 1218.52 crores in 1974-75 to Rs. 88831 crores

in 1998-99 showing an annual growth of 35.82%.

REVIEW OF LITERATURE:-

The union govt. introduced the insurance [amendment] bill 2001 during the monthly

concluded monsoon session of parliament. The draft bill proposes entry of operative in

insurance sector, appointment of brokers as intermediaries, and merchant for insurance

through credit cards. The bill seeks to permit co-operative concerns to enter the underwriter

business by setting up a separate society. It also permits to issue cooperative societies to enter

the distribution business. It recognizes as intermediaries in the insurance business and

enables them to receive brokerage fee. at present cooperative societies can only enter the

insurance sector by parliament they setup and underwriter company under cooperative act.

INSURANCE IN INDIA: SOME BURNING ISSUES:

Liberalization of Indian insurance sector has been the subject of much debate for some

years. The policy makers wanted competition, development and growth of this insurance

sector which is essential for channels the investment into infrastructure sector. At the other

end the policy has the fear the insurance premium which are substantial, would but of the

country, and wanted to have cautious approach for participation in the sector. Though some

changes and some active clauses as regards to the foreign participants were included.

Whether the insurer is old or new, private or public, expanding the market will present

multitude of challenges and opportunities that insurance sector will have still remain under

the realms of the possibilities and speculation. What is the likely impact of opening up

India’s insurance sector?

CONCEPTUALIZATION:-

Insurance is an arrangement to deal with unpleasant contingencies. It is contractual arrangement

which partial or total protection against adverse, typically financial outcomes. While there are

many outcomes of risks which are insurable, there are many more against which there can be no

insurance. Broadly insurance contracts can be divided into life and nonlife insurance. Life

insurance in particulars provides protection to the house holds against the rise of premature death

of its income earning member. In traditional; societies such as India, the joint family system

itself provided an insurance umbrella and successor to surviving family members. in modern

times such arrangements are now increasingly made to the market mechanism by buying

insurance. Thus, individual pay a price called premium to the insurance company for such a

contractual arrangement, and the insurance company in turn provides compensation if specified

event occurs or any mishappening.

By making such contractual agreement with a large number of individuals and organizations the

insurance company can spread the risk. This gives insurance its social characteristics, in sense

that it entails pooling of individual risks.

Life insurance in modern times also provide protection against other life relate risks such as risk

of longevity [i.e. risk or outliving other source of income] and risk of disease an richness [health

insurance].

RESARCH DESIGN:

Research design stands for advance planning of methods to be adopted for

collecting the relevant data and the techniques to be used in their analysis

keeping in the view the objective of research and the availability of time and money.

Research design in fact has a great bearing on reliability of results arrived at.

The research study carried out is descriptive and diagnostic in nature.

Descriptive research includes surveys and fact finding and enquiries of different

kinds. The major purpose of these types of research is description of states of affairs

as it exists at present. The main characteristic of this method is that the

researcher has no control over the variables; he can only report what has

happened or what is happening.

In this research we seek to measures items like:

Preference of people among various investment options and insurance

policies.

Awareness of insurance among general public

Behavior pattern of investors.

.

SAMPLE DESIGN

After research design is made, next step is to design a sample and the

sample will made after considering the objectives of research and budgetary

constraints.

SAMPLE PROCEDURE

The sample size taken in this research is 50. In our research we have used

probability sampling. Probability sampling are those based on random sampling,

systematic sampling, stratified sampling, area sampling. In our research we have

used stratified sampling. In the study the population from which the sample to be

drawn does not constitute a homogenous group. So, we apply stratified

sampling so as to obtain representative sample. Under this technique, the

population is stratified in to different sub population known as strata and sample

items are selected from each stratum. In our research study, we divide the

population in to 4 strata’s:-

Lawyers in the city

Doctors in the city

Professors in the city

Teachers in the city

Businessman in the city

We have divided our population in to 4 strata’s because these 4 group have

different investment portfolio, awareness of financial activities Is also different.

Their behavior pattern was also different. Some were risk averter and some risk

gamblers. Items selected from each stratum is based on random sampling. So, firstly

we divide the population in to different strata’s and then select the items randomly. It

is known as stratified random sampling.

DATA COLLECTION

The data is of two types:-

Primary data

Secondary data

Primary data are those which are collected afresh And for the first time and

thus happens to be original In character . Secondary data are those which have

already been Collected by some one else and which have been Passed through

the statistical process. In our research we have used both types of data

COLLECTION OF PRIMARY DATA

We have collected primary data using:-

Questionnaires

Telephonic conversation

COLLECTION OF SECONDARY DATA

In our research we are using various sources for Collection of published and

unpublished data with the help of fact sheets of various companies, annual reports, news

bulletins, and information brouchers, web sites.

AGE WISE CLASSIFICATION

particulars no. of respondents percentage

up to 30 19 38

31-40 13 26

41-50 25 30

above 50 3 6

total 50 100

The following graph depicts that 64% of the respondents below age 40 and only 6% of the

respondents are of age 50. It indicates that young people are more aware and conscious toward

insurance policies. Category.

EDUCATION LEVEL

particulars no. of respondents percentage

10th level 10 20

12th level 13 26

graduates 25 50

postgraduates 12 24

total 50 100

The following graph depicts that 20% of the respondents have education till 10th and 26% of the

respondents are 12th pass 50% respondents are graduates,24% are post graduates It indicates that

graduates are much conscious than under graduates.

OCCUPATION

PARTICULARS NO OF RESPONDENTS PERCENTAGE

GOVT 14 28

PRIVATE 21 42

PROFFESIONALS 9 18

SELF EMPLOYED 6 12

TOTAL 50 100

The following figure shows that 42%of the respondents are private employees, 28% are govt.

employees, 18% are professionals and 12% are self employee it means employees are more

aware towards insurance policies.

MARITAL STATUS

PARTICULARS NO.OF RESPONENTS PERCENTAGE

married 33 66

single 17 34

TOTAL 50 100

It is observed that from the above table that 33 respondents are married 17 respondents are single

married persons are more aware of insurance.

NO. OF DEPENDENTS

PARTICULARS NO.OF RESPONENTS PERCENTAGE

1 16 32

2 8 16

MORE THAN 2 26 52

TOTAL 50 100

It is observed that from the above table that 26 respondents have more than 2 dependents, 8

respondents have 2 dependents and 16 have 1 dependents

ANNUAL INCOME

PARTICULARS NO OF RESPONDENTS PERCENTAGE

BELOW 50000 9 18

50001-100000 17 34

100001-150000 11 22

ABOVE150000 13 26

TOTAL 50 100

The following graph depicts that 34% of the respondents are in the income level of 50001-

100000 ,26% respondents has got above 100000 income,22% of respondents comes in net annual

income and rest 18% comes under below 50000 category.

INVESTMENT AVENUE

PARTICULARS NO OF RESPONDENTS PERCENTAGE

INSURANCE 12 24

MUTUAL FUNDS 18 36

BANKS 10 20

SHARE MARKET 10 20

TOTAL 50 100

The following graph depicts that 36% of the respondents are interested in mutual funds, 24%

respondents are interested in investing in insurance 20% are interested in banks an rest of the

20% are interested in share market

REASON TO TAKE POLICY

PARTICULARS NO.OF RESPONDENTS PERCENTAGE

TO COVER RISK 15 30

TO AVOID TAX 8 16

INVESTMENT 17 34

GOOD RETURN 10 20

TOTAL 50 100

It is observed that from the above table that 15 respondents take insurance policy to secure their

future, 8 respondents take insurance to avoid tax and 17 take insurance for investment purpose,

10 respondents observe that it gives good return.

POLICY CHOICE

PARTICULARS NO OF RESPONDENTS PERCENTAGE

TERM PLAN 18 36

MONEY BACK 12 24

RIDERS 10 20

ENDOWMENT PLAN 10 20

TOTAL 50 100

The following figure shows investor attitude towards the policy 18 respondents wants to take

term plan 12 respondents wants to take money back 10 respondents wants to take riders,

consumer is much crazy in taking term policy.

AWARENESS THROUGH

PARTICULARS NO OF RESPONDENTS PERCENTAGE

FRIENDS 12 24

AGENTS 18 36

ADVERTISEMENT 10 20

OTHER 10 20

TOTAL 50 100

The following graph depicts that 36% of the respondents get knowledge through agents in

mutual funds, 24% respondents get knowledge through friends, and 20% get knowledge from

advertisement and other sources

MACRO ANAYLYSIS

This project is a study related to marketing of insurance in Rohtak assessing the marketing

opportunities. After the survey conducted in Rohtak, it was found that LIC is the backbone of the

insurance sector and no.1 position with respect to its competitors. LIC is the only an only one

company that consists of no. of policy avenues of all age group, but now a days other private

companies are capturing the market.

In the end I would like to say that LIC is the heart of insurance sector in terms of its old age

brand popularity in insurance sector. New private players are coming in the market but still LIC

has got its brand popularity that’s why it is the choice of a novice and experienced investor.

FINDINGS:

BASED ON MY ANALYSIS OF DATA COLLECTED DURING MY RESEARCH WORKS

ON” CONSUMER AWARENESS TOWARDS INSURANCE PROUCTS” I HAVE GOT THE

FOLLOWING FINDINGS:

64% of the respondents belongs to the age group of 40 years

88% of the respondents have their education level up to collage.

majority of the respondents i.e. 42%belongs to private jobs

66% of the respondents are in married category

52% of the respondents have more than two members as dependents.

Maximum respondents have income level Rs. 50001-100000

covering risk is the major reason to take insurance

Majority of the investors want to take term plans.

most of the respondents come to know about new companies through agents

premium offered is the main reason to choose a new company

LIMITATION OF THE STUDY

However I have tried my best in collecting the relevant information yet there are always

present some limitations under which researcher has to work. Here following are some

limitations under which I had to work to as shown below:

1. Limited time: There was limited time in which this project has to be completed.

Therefore it was a major limitation of the study.

2. Limited Area : The area covered in this project was only Rohtak, not whole

Haryana.

3. Few interaction: There was little interaction with the people as we were only limited

with in area.

4 Communication Problem : The accurate decision can not be taken by the information

collected; people were relucate while giving their personal information

6 Dynamic nature of the environment, what is true and relevant today may not be true and

relevant tomorrow.

CONCLUSION:

An attempt is made by the respondents to identify the level o awareness among the respondents

towards the new policies offered by companies.

From the study it is observed that because of new companies various schemes and low premium

the investor has a forced attraction to invest in the new companies. The new companies as

well existing company should develop a suitable strategy to attract and retain their customers.

These companies can protect not only the investor’s interest but also the interest of the company

at large.

SUGGESTIONS:

1. THEIR SHOULD BE TRANSPARENCY IN CONTEXT OF CHARGES TAKEN BY

INSURANCE COMPANIES

2. ALLOCATION OF UNITS SHOULD BE CLEARLY STATED IN CASE OF ULIPS

3. IT IS ADVISABLE FOR THE AGENTS THAT THEY SHOULD MAKE REGULAR

FOLLOW UP WITH THE INSURER.

BIBLIOGRAPHY:

Kothari, C.R 2003[research methodology, 2nd edition]

Indian journal of industrial relations vol-37 number 3, january2004 by r. Anand sen gupta,

Ashish sen gupta.

Indian journal of marketing vol-xxxii, no 8, august 2003

Karvy finapollis June, july2006

www.insurancemagic.com

www.investor.com/scripts/insucareer.asp

www.moneyguru.com

www.delhischools.com/career/insurance.htm

Questionnaire

1. What is your age?

a. up to 30 b. 31-40

c. 41-50 d. above 50

2. What is your qualification?

a. 10th b. 12th

c. graduate d. post graduate

3. What is your occupation?

a. private job b. govt. job

c.professional d. self employed

4. What is your marital status?

a. married b. single

5. How many dependents do you have?

a. One b. two

c. more than two

6. What is your annual income?

a. below 50000 b. 50001-100000

C.100001-150000 d. above 150000

7. Where do you invest your money?

a. insurance b. mutual fund

c. bank d. stock market

8. Reason to take insurance policy?

a. safety b. tax saving

c. investment d. good return

9. Policy would u like to prefer?

a. term plan b. endowment plan

c. riders d. money back

10. What are your sources of awareness?

a. advertisement b. friends

c. agents d. others