A

PROJECT REPORT
ON

CONSUMER AWARNESS AND

PERCEPTIONALES ABOUT INSURANCE

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREE

OF
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.) COLLEGE

AFFILIATED 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, its 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 Indias 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.

Mission
Create 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 oldage 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 20 th 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 Insurance

Life 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

investors use endowment life

program
insurance

against

the

saver's

premature

death. Many

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 plan

Identifying 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 Insurance

1. 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 Insurance

General (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 Policy

1. 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
adequately attractive.

insurance linked securing

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
ones 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 childrens 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.
Definition
Consumer 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 producers
proper 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.
2.
3.
4.
5.
6.
7.
8.

Under weight and under measurements not measured or weighed correctly

Substandard Quality defective home appliances and medicines beyond expiry date
High pricescharging above the retail price
Duplicate Articlesselling fake items in the name of the original
Adulteration and Impurityis done to get higher profits
Lack of safety Devicesabsence of inbuilt safe guards in appliances
Artificial Scarcityhoarding and black marketing
False and Incomplete Informationmisleading information on quality, durability, and
safety.
9. Unsatisfactory after sales Servicehigh cost items like electronics and cars require
constant and regular service.
10. Rough behavior and Undue conditionsharassment in getting LPG connection or a
telephone connection..
Factors causing exploitation of Consumers.
1. Limited Informationproviding full and correct information will help in the choice
2. Limited Supplieswhen goods and services are in short supply then price shoots up
3. 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 Awareness

Kautilya 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.
2.
3.
4.
5.

Right to Safetyto protect against hazardous goods

Right to be Informedabout price, quality, purity
Right to Chooseaccess to a variety of goods and services at competitive prices.
Right to be Heardconsumers interest and welfare must be taken care of
Right to seek Redressalprotection against unfair trade practicesand settling genuine
grievances.
6. Right to Consumer Education.Kowledge about goods and issues related to consumers.

Duties
1.
2.
3.
4.
5.

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

Consumer protection Measure

1. 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 holders 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-ons 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
Childrens 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?
Dont 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 Indias 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 Indias 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 partners 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 LICS
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 insurance

Sector 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 12 th 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
Indias 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
collecting

design
the

stands
relevant

for advance planning

data

of

methods to

be adopted

for

and the techniques to be used in their analysis

keeping in the view the objective

Research
The

design

research

Descriptive

of

in fact has
study

research

carried

research

it

exists

out

researcher

is

includes surveys and

at

present.

has no control

availability of time and money.

great bearing on reliability

kinds. The major purpose of these types

as

and the

descriptive
fact

of

results arrived

at.

and diagnostic

in

nature.

and enquiries

of

different

finding

of research is description of states of

affairs

The main characteristic of this method is that the

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

Behavior pattern of investors.

general public

SAMPLE DESIGN
After
sample

research
will

design
made

is

after

constraints.

SAMPLE PROCEDURE

made, next

step

is to design a sample and

considering the objectives

of

research

and

the

budgetary

The sample size taken in

probability

sampling.

systematic sampling,
used

this research is 50. In

Probability sampling
stratified

are

our research we

have

those based on random

sampling, area sampling.

In

used

sampling,

our research we have

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

drawn

does

sampling

so

population

is

not constitute
as

to

a
obtain

homogenous

group.

representative

So,

sample.

we

apply

stratified

Under this technique,

the

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 stratas:-

We

Lawyers in the city

Doctors in the city

Professors in the city

Teachers in the city

Businessman in the city

have divided our

different

investment

population

in

to

portfolio, awareness

4 stratas because these

of

financial

activities

Their behavior pattern was also different. Some were risk averter
gamblers.

Items

group

Is also
and

have
different.

some

risk

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

we divide the population in to different stratas 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

thus happens to be original In

already been Collected by
the

statistical

process. In

character . Secondary

some
our

are collected afresh And for the first time and

one else and

data

which

are
have

those

which have

been Passed

through

research we have used both types of data

COLLECTION OF PRIMARY DATA

We have

collected primary

Questionnaires

Telephonic conversation

data using:-

COLLECTION OF SECONDARY DATA

In

our

research

unpublished

we are

using various sources for Collection

of published and

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

bulletins, and information brouchers, web sites.

AGE WISE CLASSIFICATION

particulars
up to 30
31-40
41-50
above 50
total

no. of respondents
19
13
25
3
50

percentage
38
26
30
6
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
12th level
graduates
postgraduates
total

10
13
25
12
50

20
26
50
24
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
GOVT
PRIVATE
PROFFESIONALS

NO OF RESPONDENTS
14
21
9

PERCENTAGE
28
42
18

SELF EMPLOYED
TOTAL

6
50

12
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
married
single
TOTAL

NO.OF RESPONENTS
33
17
50

PERCENTAGE
66
34
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
1
2
MORE THAN 2
TOTAL

NO.OF RESPONENTS
16
8
26
50

PERCENTAGE
32
16
52
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
BELOW 50000
50001-100000
100001-150000
ABOVE150000
TOTAL

NO OF RESPONDENTS
9
17
11
13
50

PERCENTAGE
18
34
22
26
100

The following graph depicts that 34% of the respondents are in the income level of 50001100000 ,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
INSURANCE
MUTUAL FUNDS
BANKS
SHARE MARKET
TOTAL

NO OF RESPONDENTS
12
18
10
10
50

PERCENTAGE
24
36
20
20
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
TO COVER RISK
TO AVOID TAX
INVESTMENT

NO.OF RESPONDENTS
15
8
17

PERCENTAGE
30
16
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
TERM PLAN
MONEY BACK
RIDERS
ENDOWMENT PLAN
TOTAL

NO OF RESPONDENTS
18
12
10
10
50

PERCENTAGE
36
24
20
20
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
FRIENDS
AGENTS
ADVERTISEMENT
OTHER
TOTAL

NO OF RESPONDENTS
12
18
10
10
50

PERCENTAGE
24
36
20
20
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 thats 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 investors 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