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Volume-6, Issue-3, May-June 2016

International Journal of Engineering and Management Research
Page Number: 644-651

A Study on Consumer Behaviour on Life Insurance Products - With

Reference to Private Bank Employees in Chennai
R. Uppily
Deputy Vice President – TPP & CFD Operations, IndusInd Bank, Meenakshi Building, New No.141, Old No.57- B,
Kodambakkam High Road, T.Nagar, INDIA

ABSTRACT Intangibility, Inconsistency, Inseparability makes the

The demand for insurance products is increasing purchase of services more complex when compared to
due to the growth of household savings, purchasing power, purchase of physical product. Gone are the days where
the middle class and the country’s working population. customer purchased a product or service because of only
Consumer behaviour with respect to life insurance one factor called brand loyalty. Consumers these days
products is changing rapidly. With opening up of the
analyse the features and utility before making a buying
insurance sector in 2000, consumers have options to select
rather than buying products launched by a single company. decision.
Factors such as stability of Insurance Company, product Factors influencing consumer behaviour in general
features, service capabilities, and claim settlement timelines The following four factors, cultural, social,
play a very crucial role in deciding whether to buy or not personal and psychological factor play a very important
from a particular insurance company. This study tries to role in influencing consumer decisions while buying a
analyse the consumer behaviour of private bank employees product or service. The weightage of influence depends
with respect to purchase of Life insurance product. This on the item that they are going to purchase and
study is based on the primary data collected from 54 individual preferences. Whether buying a product or
employees of private banks through a well structured
service, these factors play a vital role for and facilitates
questionnaire. The data has been analysed using
percentage analysis and cross tabulation. The study tries to decision making.
analyse the type of policy preferred by the respondent,
which insurance company they prefer, feature of Insurance
policy that attracted their purchase, benefit for which they
have purchased, satisfaction level on the life insurance
policy purchased, difficulties encountered in decision
making while buying a life insurance policy. The study also
analyses the relationship between Age and type of policy
preferred and also relationship between demographic
factors and other variables.

Keywords--- Life insurance, demographic factors, bank

employees, consumer behaviour
I. INTRODUCTION
Consumer behaviour can be defined as: “The
study of individuals, groups, or organizations and the
processes they use to select, secure, use and dispose of
products, services, experiences, or ideas to satisfy needs
and the impacts that these processes have on the
consumer and society.” (Hawkins et al., 2001:7.)
Consumer behaviour is the study of when, why,
how, and where people do or do not buy a product.
Behaviour of consumer differs between a purchase of a
physical product and a service related product.
Indian Life insurance industry
Opening up of insurance sector has facilitated
private players to enter the insurance industry with or
without foreign tie up. Consumers did not have options
to select till 2000 as they had only one company to buy
life insurance. Now they have the option to select the life
insurance company of their choice based on the product
feature, service etc.
The consumers behaviour has changed as a
result of the growing income, growth in size of the
spending classes and increased purchasing power. The
expectations of the consumers and their buying
behaviour have changed a lot. Consumers now expect
the most of the following items listed below from the life
insurance companies

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a. Product innovation
b. Product differentiation
c. Better Customer service
d. Faster claim processing
e. Technology innovations
f. Wide distribution reach
When it comes to life insurance people buy it
for a long term, since it is going to be a long term
association people think more before they buy and
expect better relationship with the company throughout
their tenure of association
II. REVIEW OF LITERATURE
Truett and Truett (1990) studied the impact of
education on insurance. He found out that an increase in
the number of educated people in a country may be
associated directly with a greater recognition of various
types of products offered by life insurance companies,
leading to higher levels of demand.
Enz (2000) studied the effect of income on insurance
and found out that at higher levels of income insurance,
consumption becomes less sensitive to income growth as
insurance product saturation is reached. The main reason
for this phenomenon is that at high- income levels,
consumers become so wealthy that they can afford to
retain risk and start saving.
Esho et al. (2002) studied the effect of cultural factors
on life insurance. He concluded that the demand for
insurance is unaffected by cultural factors.
Prakash Vel et al. (2005) in their research article
entitled, “An Exploratory Study on the Role Played by
Product, Service and Behavioural Factors in the
Purchase of Life Insurance Policies in the Klang Valley,
Malaysia”, observe that timely service, good response by
the agents and employees to the customers and insurers
concentration on the policyholders grievance improves
the level of customer satisfaction
Tajudeen, Ayantunji and Dallah (2009) believed that
people with education have more positive attitude
toward insurance than people who less education ones.
Besides that, they also find out the respondents who
have highest positive attitude towards insurance is the
people in age group between 56 and 65 years than other
age groups this is due to the people in this age group are
at the end of the active life and they are more aware of
their retirement life. They also found that high household
income groups have highest positive attitude toward
insurance than the low household incomes groups, in
fact, the wealthy household comparatively feel protected
commonly in Nigerian economic environment. From the
other point of view, the low household income groups
are less authorized and usually they feel that the
insurance is further than their reach.
Kirubashini, B., “Life Insurance Policy Holdings-A
Study on Influencing Factors”, Published Thesis,
December 1991 The study attempts to know the level of
awareness, preference and influencing factor pertaining
to policy holdings and to test the relationship between
the influencing factors and policy holdings. The
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majorities of the respondents are aware of the
endowment assurance policy and considered to rank it as
number one. The study also revealed that there was a
significant relationship between personal factors and
policy holdings.
Praveen Sanu, Gaurav Jaiswal and Vijay Kumar
Panday (2009) “A Study of Buying Behaviour of
Consumers towards LIC”, Prestige Institute of
Management, Gwalior, Vol. 3, Issue ¾, P. 1.in their
article, “A Study of Buying Behaviour of Consumers
towards Life Insurance Company”, Prestige institute of
Management and Research, Gwalior, revealed that in
present Indian market, the investment habits of Indian
consumers are changing veryfrequently. The individuals
have their own perception towards various types
ofinvestment plans.
III. OBJECTIVES OF THE STUDY
From the above literature review, it can be
observed that the Consumer Behaviour study on Life
insurance with reference to private bank employees in
particular was not done earlier. Hence an attempt has
been made in this to study and analyze the same with the
following objectives:
1. To study the profile of the respondents
2. To study the type of policy that they prefer
3. To study the most preferred Life insurance
company
4. To analyse the feature of Insurance policy that
attracted their purchase
5. To analyse the benefit for which they have
purchased a life insurance policy
6. To analyse the satisfaction level on the life
insurance policy purchased
7. To study the difficulties encountered in
decision making while buying a life insurance
policy
8. To analyse the relationship between Age and
type of policy
9. To analyse the relationship between Month
income and type of policy
10. To study the relationship between Age and
channel for buying life insurance
11. To study the relationship between Qualification
and benefit perceived
12. To analyse the relationship between Monthly
income and premium payment term
IV. RESEARCH METHODOLOGY
Research methodology is characterised by
procedures and methods for arriving at results and
findings and tools for prooving or disproving such
knowledge (Nachamiaset al., 1996; Saunderset al.,
2007).A research can be conducted by systematic
collection and analyzing the data. For this study survey
method was adopted for collecting the primary data. A
well-structured questionnaire was used for collecting the
data. The primary data was collected from 54 employees
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of a private bank in Chennai. The secondary data was
collected from internet websites, journals, newspapers,
magazines, etc. The collected data were analyzed with
Percentage and Cross tabulation
V. RESULTS AND DISCUSSION
Demographic profile of the respondents
Table-1, gives the summary of the demographic
characteristics of the respondents. Analyzing the
demographic variables in the Table-1, it may be
observed that 85 % of the respondents are male and
nearly 50% of the respondents fall in the category of 31-
45 years and 22% of the respondents are in 21-30 years
category. Around 77% of the respondents are married.
Out of the total respondents, 40% are post graduates and
29 % of the respondents and professionally qualified.
Nearly 51% of the respondents fall under the category of
monthly income greater than Rs. 60000/-.

Table 1 – Demographic profile of respondents

Period of policy holding, Feature attracting
purchase, Important benefit perceived, Medium of
policy buying, satisfaction of policy purchased,
Service quality, Influence on purchase decision &
Type of policy preferred by the respondents.
Type of policy preferred in Table -2 indicates
that 38% of the respondents prefer money back plan and
28% prefer term plan. 42% of the respondents consider
large risk coverage as the important feature attracting
them to purchase life insurance policy. 66% of the
respondents feel cover for future uncertainty as
important benefit in buying a policy. 64% have bought
their policy vide agent channel. 44% of the respondents
are satisfied with the policy purchased by them. Annual
premium is preferred by 48% of the respondents. 48% of
the respondents are satisfied with the service quality of
the insurance company. Policy purchase decision is not
influenced by any one is the feedback from 40% of the
respondents.

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Table 2 –Type of policy, Feature attracting policy purchase, Benefit perceived, Satisfaction of policy purchased,
Service quality Medium of policy buying preferred by the respondents

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Table 3 – Ranking of insurance companies

Ranking of Life Insurance companies
During the study, the respondents were asked to
rank the Life insurance companies based on their
experience in a scale from 1 to 10. The data obtained is
presented in Table - 3. Now, for analyzing the data,
ranking is done on the basis of weighted scores (Table-
4). Scoring is done as per the following scale: Rank 1 –
10 weights, Rank 2 – 9 weights, Rank 3 – 8 weights,
Rank 4 – 7 weights, Rank 5 – 6 weights, Rank 6 – 5
weights, Rank 7 – 4 weights, Rank 8 – 3 weights, Rank 9
– 2 weights and Rank 10 – 1 weights.

Table 4 – Ranking of insurance companies based on Weighted Averages

Interpretation: It is revealed from the Table 4 that LIC
has a weighted score of 505 and a mean value of 9.35
and it is ranked as 1st by the respondents. It is followed
by SBI and then by HDFC. The least rated is Reliance
and Max life with a weighted average score of 188 and a
mean of 3.48.
Ranking of difficulty encountered in buying a Life
insurance policy on various factors
During the study, the respondents were asked to
rank 4 factor like (Type of insurance, sum assured,
Understanding policy detail and selecting the life
insurance companies) the difficulty they encountered in
these factors were ranked in a a 5 point scale. The data
obtained is presented in Table - 5. Now, for analyzing
the data, ranking is done on the basis of weighted scores
(Table-6). Scoring is done as per the following scale:
Rank 1 – 5 weights, Rank 2 – 4 weights, Rank 3 – 3
weights, Rank 4 – 2 weights, Rank 5 – 1 weights, Rank 6
– 5 weights, Rank 7 – 4 weights, Rank 8 – 3 weights,
Rank 9 – 2 weights and Rank 10 – 1 weights.

Table 5 – Ranking of Factors based on difficulty encountered

Interpretation: It is revealed from the Table 6 that insurance and then by Life insurance company. The least
Understanding the Policy detail / benefit has a weighted rated is sum assured with a weighted average score of
score of 505 and a mean value of 3.26 and it is ranked as 127 and a mean of 2.35.
1st by the respondents. It is followed by Type of

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Table – 6 – Ranking based on Weighted averages

VI. ANALYSIS OF DATA THROUGH CROSS TABULATION

Table – 7 - Age and Type of Policy

Interpretation: From Table 7 following things can be plan with 19 respondents preferring money back plan
inferred, Age group between 31-45 years prefer term followed by 14 respondents of different age group
plan most than the others. Overall the preference of all preferring Term Plan.
the age group put together is more towards money back

Table – 8 - Monthly Income and Type of Policy

Interpretation: From Table 8 following things can be Income group put together is more towards money back
inferred, Income group above Rs.60000 prefer money plan with 19 respondents preferring money back plan
back plan most than the others. Overall preference of all followed by 14 respondents preferring Term Plan.

Table – 9 -Age and Channel for buying Life Insurance Policy

Interpretation: From Table 9 following things can be channel for buying life insurance policy. Online and
inferred, 32 respondents belonging to different age bank channel has equal preference.
groups have selected Agents are the most preferred

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Table – 10 -Qualification and Benefit perceived

Interpretation: From Table 10 following things can be policy. 8 respondents having different qualifications feel
inferred, 33 respondents having different that Child benefit is the important benefit derived from
qualificationsfeel that cover for future uncertainty is the buying a life insurance policy.
main benefit perceived from buying a Life insurance

Table – 11 -Monthly Income and premium payment term

Interpretation: From Table 11 depicts that Annual
mode is the most preferred premium payment term and
24 respondents are in favour of the same.
VII. FINDINGS
7. Nearly 44% of the respondents are satisfied
with the policy purchased by them.
8. LIC is ranked as most preferred life insurance
company and reliance, max life is the least
preferred insurance company

1. Out of the total respondents 85 % of the
respondents are male and nearly 50% of the
respondents fall in the category of 31-45 years
and 22% of the respondents are in 21-30 years
category.
2. Out of the respondents 77% of the respondents
are married and 40% are post graduates and 29
% of the respondents and professionally
qualified.
3. Nearly 51% of the respondents fall under the
category of monthly income greater than Rs.
60000/-.
4. Nearly 38% of the respondents prefer money
back plan and 28% prefer term plan.
5. Out of the total respondents 42% of the
respondents consider large risk coverage as the
important feature attracting them to purchase
life insurance policy. 66% of the respondents
feel cover for future uncertainty as important
benefit in buying a policy.
6. Nearly 64% have bought their policy vide agent
channel.
9. While buying a policy most of the respondents
have encountered difficulty in understanding
the policy details and benefits
10. Age group between 31-45 years mostly prefer
term plan, Income group above Rs.60000 prefer
money back plan.
VIII. CONCLUSION
Life insurance industry in India is still at very
low penetration levels. The reason being lack of
awareness and no product innovation. Today Life
insurance is not bought by individuals and they are sold.
Life insurance companies must change this approach
and must start attracting public. Consumer expectations
are not met by the insurance companies and they are
being sold with products which they don’t require. This
type of mis selling has lead to low persistency levels and
customer grievances. It is always better to understand
the requirements of the customer and sell products or
services which they require

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