Altius Shodh Journal of Management and Commerce

ISSN 2348 8891

A STUDY OF FACTORS AFFECTING CUSTOMERS INVESTMENT

TOWARDS LIFE INSURANCE POLICIES
*Dr. Indira Thakur, ** Ms. Aparna Nigam
*Professor, Shri Atal Bihari Vajpayee Government Arts and Commerce College, Indore
** Research Scholar, DAVV, Indore.

Abstract
Life insurance is the most important type of insurance which provides earnings replacement and financial
protection to a person and his family in case of risks or accident. Life insurance through contractual obligation
helps individuals and also encourages savings among people.
Insurance companies play a vital role in the social welfare or creation of social security of human society by
providing insurance to millions of people against life risks such as uncertain death or physical disability during
contractual period.
The present study is done with an objective to consider some vital factors which influence customers policy
buying decision and also analyze the preferences of customers while life policy investment decision-making.
The data has been collected from both primary as well as secondary sources.
Researcher has taken few hypothesis based on demographic and insurance based preference factors.
The paper concludes with that demographic factors of the people play a major and pivotal role in deciding the
purchase of life insurance policies.
Keywords: Life Insurance Policies, Brand Image, Investment.

Introduction:
Life insurance is the most important type of insurance which
provides earnings replacement and financial protection to
a person and his family in case of risks or accident. Life
insurance through contractual obligation helps individuals
and also encourages savings among people.
Insurance companies play a vital role in the social welfare
or creation of social security of human society by providing
insurance to millions of people against life risks such as
uncertain death or physical disability during contractual
period.
Considering the importance of social security, and increasing
life style expenditure as well as concept of life value,
insurance is gaining acceptance from compulsory to
necessary.

Literature Review:
Heena Kothari (2014) concluded in her study that Service
Benefits, Awareness, Risk & Returns, Tax Benefit, Influence
in a priority list for buying any life insurance policy and the
most influential factor is Service benefits which include
prompt services, security and safety and extra added
benefits. The study was conducted with the help of Factor
Analysis with a sample size of 100 respondents of Indore
District.

Keerthi, R.Vijayalakshmi (2009) in their study concluded

that the policy holders expectations are well met in the
case of certain factors reacting to service quality. In the
case of other variables, there exists a significant gap which
means that policy holders have experienced low levels of
service as against their expectations. If all the players in
the life insurance industry focus on the effective delivery of
services, they can win the hearts of customers and anticipate
their increased market share.
Girish Kumar (2008) well explained the importance of
quality services and its significance in raising customer
satisfaction level with the help of SERVQUAL model.
Sunayna Khurana (2008) in his article revealed that the
insurance sector plays a very important role in the
development of any economy. It is necessary for the
economic and overall development of any country. In
growing economies, finance and insurance sector are
playing a very important role and indirectly contributing to
service tax pie as well. Being accepted as a preferred
instrument for social security more job opportunities are
available in these sectors.

Objective:
1.

To explore the various factors influencing customer

investment decision in life insurance.

2.

To s tudy a nd a na ly ze the impact of vario us

demographic factors on customers life insurance
investment decision.

Altius Shodh Journal of Management and Commerce

3.

To identify the major criteria for buying insurance.

Hypothesis:
1.

There is no correlation between Brand Name and

buying decision for Insurance Policy.

2.

There is no correlation among income, age and type

of Insurance Policy selection.

Research Methodology:
The study aims to find out the dominant factors influencing
customers life insurance buying decision and their
preferences at the time of policy buying decision. In order
to
conduct
this
study,
1 00
policyholders
specificallyGovernment College Professorshave been
surveyed for a period of thirteen months from 1 March 2014
to 31 March 2015 and questionnaire method was used for
data collection.

ISSN 2348 8891

CALCULATION OF COEFFICIENT CORRELATION
BETWEEN INCOMES OF RESPONDENTS & LIFE
INSURANCE INVESTMENT DECISION
Yearly Income Respondents (X) Responses (Y) dx = X - A (dx) x (dx) dy = Y - B (dy) x (dy) (dx) x (dy)
35

10

-23.33

544.44

3.67

13.44

5 10

45

11.67

136.11

-0.33

0.11

-3.89

10 15

45

11.67

136.11

-3.33

11.11

-38.89

33.33

5.33

816.67

24.67

-128.33

Correlation = -0.90 i.e. high degree of negative correlation.

High degree of negative correlation suggests that as the
level of income grows in case of Government College
Professors, naturally which comes with age and promotion
basis and as in the early age the same is fulfilled there is a
clear deviation from need for looking towards insurance
policies.
CUSTOMERS PREFERENCE TO VARIOUS INSURANCE
PROVIDERS
Company Respondents

LIC

48

48

The data was collected through well drafted questionnaire

prepared and testified through Factor Analysis, Correlation
methods for drawing out meaningful conclusions.

ICICI

12

12

HDFC

15

15

Data Analysis and Interpretation:

BIRLA

14

14

SBI

11

11

Gender and Age Classification of Sample

Gender
50

50

Female

50

50

100

100

Total

CUSTOMERS PREFERENCE TO VARIOUS INSURANCE

POLICIES

Respondents Percentage
Age
25 35

35

35

35 45

35

35

45 55

30

30

100

100

Total

Respondents

Endow ment

30

30

Term Plans

65

65

ULIP

BROAD PARAMETERS FOR BUYING INSURANCE

CALCULATION OF COEFFICIENT CORRELATION

BETWEEN AGES OF RESPONDENTS & LIFE INSURANCE
INVESTMENT DECISION
Respondents (X) Responses (Y) dx = X - A (dx) x (dx) dy = Y - B (dy) x (dy) (dx) x (dy)

30 - 40

10

-23.33

544.44

3.67

13.44

-85.56

40 - 50

45

11.67

136.11

-0.33

0.11

-3.89

45

11.67

136.11

-3.33

11.11

-38.89

33.33

5.33

816.67

24.67

-128.33

50 - 60

Company

100

The sample is distributed and collected evenly throughout

the sample universe for the sake of unbiased view.

Age

100

LIC still enjoys high brand pursuance being understood as

Government supported rest of the companies enjoy the
parent or sponsors brand image which indeed in case of
LIC plays a vital role except others.

Respondents Percentage

Male

-85.56

Correlation = -0.90 i.e. high degree of negative correlation.

High degree of negative correlation suggests that in case
of Government College Professors, as the individual grows
in age and in the early age insurance need is fulfilled there
is a clear deviation from need for looking towards insurance
policies.

Brand Name
Product
Features
Service
Quality

Respondents

30

30

65

65

100

MICRO FACTORS FOR BUYING INSURANCE

Respondents

Lower Premium

35

35

Risk Cover

65

65

100

Altius Shodh Journal of Management and Commerce

ISSN 2348 8891

Findings and Conclusion:

References:

Researchers have tried to sketch the behavioral pattern of

retail investors towards important opportunities i.e. life
insurance. A couple of hypothesis in this regard have been
selected and tested to reach to conclusions. The research
concludes with some important findings that will be valuable
for both the investors and the companies having such
investment opportunities.

1.

Kothari, H., Agrawal, R., & Sharma, M. S. A study on

factors affecting individual's investment towards life
insurance policies.

2.

There is a high degree of awareness amongst

educated people especially Government College
Professors.

Yadav, M. B., & Tiwari, D. A. (2012). A Study on Factors

Affecting Customers Investment Towards Life
Insurance Policies. International Journal of Marketing,
Financial Services and Management Research, 1(7),
106-123.

3.

Sridevi, P. A study of buying behaviour of consumers

towards life insurance policies in Perambalur district.

2.

Term insurance need to inch up as compared to

endowment as still the same holds a big pie.

4.

3.

LIC of India still enjoys the brand preference and

affecting to a greater extent the decision making
process of buying insurance.

Shrivastava, A. P. G., Mahajan, D., Vyas, R., Mathur,

A. P. S., Sharma, A. P. N., Vijayvargiya, A. P. R.
Agrawal, A. P. R. Altius Journal of Management &
Commerce.

5.

4.

Risk cover plays a dominant role in buying a insurance

which shows the quality of awareness amongst
respondents as well as commonality of tax benefit
feature within all policies.

Zietz, E. N. (2003). An examination of the demand for

life insurance. Risk Management and Insurance
Review, 6(2), 159-191.

1.