1

CHAPTER 2

LITERATURE REVIEW AND CONCEPT OF

WORKING DEFINITIONS

2.1 INTRODUCTION

A review of related literature helps the researcher to gain a

thorough knowledge about the area of study and enables him to get a clear
picture about all aspects of the research area. Various studies carried out
elsewhere by other researchers on the related aspects could also be reviewed
and the researcher will understand all the dimensions of the study undertaken.
It would help in filling the gap in a particular research area and would also
help the researcher to explore the possibilities of research on the related
aspects of the subject.

The study on ULIP is relatively a new research area where the

availability is low. This chapter appraises the various pragmatic and
conceptual studies available on insurance sector in general and ULIP in
particular. The reviews related to ULIP are analyzed and presented into three
parts based on the objectives of the study. The first part deals with review of
literature related to the performance of investors towards various ULIPs,
second part deals with the various factors influencing the investors on the
purchase decision on ULIP and the third part describes the contribution of
ULIP on business performance of Life insurance companies.
2.2 LITERATURE REVIEW

2.2.1 Reviews related to factors influencing the purchase of ULIPs

Kalyani (2006) in her article “ULIPs: A Right Turn for the

Investor” associated the ULIP with traditional insurance policies. She
revealed that in a ULIP, the market risk of the investment portion of the
policy is fully borne by investors, as the rewards accrue to them. In a
traditional policy, the investor is shielded from these vacillations, and the
proceeds of the policy are clearly known from initiation. She further stated
that for the past few years, unit linked insurance policies (ULIPs) are popular
in the market, and the sale volumes of ULIPs have been intense. Sales of
ULIPs grew tenfold from Rs 1,579.42 in the year 2003-04 to Rs 16,060.67 in
2005-06. She concluded that in a traditional policy, the investor is protected
from such adverse changes in the market; the risk is that he/she may assume
that the same is true with regard to ULIPs too.

Khurana & Sunayna (2008) in their research ,”Investor Preferences

in Life Insurance Industry in India” had made an attempt to identify investor
preferences regarding plans and company, their purpose of buying insurance
policies, their satisfaction level and their future plans for the new insurance
policy. Data were collected from Hisar city in Haryana through structured
questionnaire from 200 investors. The sample is collected on the basis of the
Convenience Sampling method. For analyzing, Percentage, frequency and
cross tabulation methods have been used.

Chandra Prasad et al. (2009) in their article, “Unit Linked Insurance

Plans - The Taster's Perceptions on The Mixed Bag of Fruits” stated that the
unit liked insurance policy is a unique, multiple benefits plan which
combines the basic benefit of life insurance, tax benefits, accident insurance
cover and growth prospects. He further stated that it is a life insurance
solution that provides for the benefits of protection and flexibility in
investment. They concluded that the ULIPs have gained high acceptance due
to attractive feature offers to its investors.

Sanjay Mathew (2010) stated that the top up premium in ULIP is the
amount that a policy owner invests in a ULIP over and above the regular
premium. The primary aim is to enjoy the benefit of lower Premium
Allocation Charge. He further stated that so far top up premiums have been a
great selling point for ULIPs. He pointed out that due to the introduction of
new guidelines, the insurance sector will become more transparent and liable
to the insured. This turn will encourage more people to opt for ULIP products.
There are many life insurance companies in India. These life insurance
companies provide different types of Life Insurance policies. He concluded
that in financial investment planning most people prefer ULIP plans and the
ULIP plans are better because it combines regular insurance policy with child
education, pension plan & other benefits.

Kanika & Sangeeta (2012) in their article, ‘”Investment Patterns of

Individual Stock Investors: An Empirical Analysis of Punjab” made an
exploratory attempt to analyze investment pattern of individual stock
investors of Punjab. For the purpose, the preferences for various financial
products, factors influencing such preferences, time spent on monitoring
investments and the sources of information searched by them before investing
were examined. The relationship between democratic variables and impact on
the choice of various investment avenues were also inspected. The primary
data were collected from 250 individual stock investors in Punjab. The
research findings specified that Bank fixed deposits have been found as first
preference followed by gold as the second preference and then stocks as the
third preference. The results of the factor analysis revealed that the four
factors, such as, projected benefits, personal financial need, taxation benefits
and security needs highly influenced the investment decision of the investor.
Investment advisors’ and family-members’ recommendations are their most
preferred sources of information.

Rao & Gopi (2013) in their research, “Investor Perception towards

Unit Linked Insurance Plan a Select Study on UTI Mutual Fund” had made an
attempt to analyze the investor’s opinion on UTI-ULIP. The primary data
were collected through questionnaire and also personal interview from the
investors to know how they perceive UTI-ULIP. The chi-square test had been
applied to find the product validation as a better option for investment there
being many avenues for investment. They opined that ULIPs are such
schemes that provide a combination of benefits of life insurance and
diversified investment. They further stated that with high competition,
existing companies and advancement of information technology, investors are
able to know information from all corners and also have many choices to
invest at their behest. They recommended that the companies have to provide
innovative services to attract the investors.

Monika Bhatia & Narinderkour (2015) conducted a Study on Attitude

and Perception of Millennium City Investors for ULIPs. According to them,
Indian population and growing per capita income are the main driving factors
which indicated that there is a huge business opportunity available for the
insurance companies in India. They quoted that according to the annual report
of Insurance Regulatory and Development Authority of India 2013-14, 80%
of the population in India is without life Insurance policies. They indicated
that in the present times the most preferred insurance plans are Unit Linked
Insurance Plans. ULIP is a life insurance policy which gives dual benefit,
namely risk cover with investment. Flexibility transparency, liquidity and
fund option have made the ULIPs an attractive and high acceptance product.
This study is conducted with an objective to explore and analyze the impact
of various demographic variables on investors’ attitude towards ULIP’s and
also to study and rank the factors responsible for the selection of ULIP’s as an
investment option.

2.2.2 Reviews related to factors influencing the preference of ULIPs

Hebbaret al. (2010) made an attempt to analyze the ULIP with

traditional insurance plans. The results indicated that over half of the
respondents are young people in the age group of 18-40. Males dominate in
having life insurance policies. The majority of people having life insurance
are employed. The most preferred plan is the unit linked plan because of its
high returns. The awareness level of the ULIP investor is much higher than
that of the TLIP.

Brand image helps in the assortment of an insurance policy.

Advertisement is not sufficient. More returns are the major factor in the
selection of any plan. Information about companies and policies come mainly
from advisors. They also highlighted that 56% of the people stay in villages
and many private insurers do not venture into those areas where there is a big
opportunity available. Promotion of advertisement and calls for awareness of
ULIP plans may be planned, because they give superior returns. They
concluded that the company could increase its sales force managers so that
they can approach more people and sell more policies.

NeelamSaini (2011) identified the major problem faced by the

investor is that the plans of different insurers are not even comparable up to a
greater extent due to different formats of brochures and material therein. The
investors found the plan documents to be difficult, besides the fact that the
plans of different companies were not even akin. The author concluded that
Unit Linked Insurance Plans (ULIPs) are the creation of the innovative minds
of the insurers in the post reform period. The plan renders benefits at the same
time viz investment and safety cover to the insured. The maximum business
of all the life insurers is coming out of the sales of these products now a day.
He suggested that the regulators should see to it that more slide should be
brought out as far as the different types of expenses relating to the plans are
concerned in the interest of the investors.

Manvendra Pratap Singh et al. (2011) identified the contemporary

issues and challenges in the marketing of life insurance services in India.
They listed some of the important contemporary issues in life Insurance
business for which all insurance companies have to pay more attention and
adequate measures to overcome. According to them, the contemporary issues
are pension plans, alternative channels, product positioning, investor
education, product line, information technology, rural marketing and investor
service. The challenge thus facing life insurance industry is the need for
diversification of insurance products better tailored and suited to meet the
needs. Package products like ULIPS have proven to be inadequate risk covers
for the insured, significantly affect life insurance business. This may become
a major threat in future for the growth of the life insurance industry. They
concluded that the orderly growth of life insurance business is conducive to
the growth of our nation.

Sumathy & Kumar (2011) made their study on the various factors
affecting the investment decision of investors on ULIP. They found that the
age groups having significant association with tax benefits availed using
ULIP and the rate of returns. The results specified that most of the investors
were youth and so their preference is quiet clear on their required elements
on tax benefits and good rates of return. Further, the results indicated that the
qualification which has significant association with compulsory
investments and gaining investment knowledge, as the respondents
mostly belong to graduates segment. These people expect variables as an
obligatory requirement for making ULIP choice. Most of the respondents
belong to private company occupations and hence the variable tax
benefits really influence the investor in preferring ULIP. Also the rate of
return variables loaded in factor analysis determines their preference. They
concluded that the factors like Tax benefits, Transmission, Switching of
Options within the fund, Risk coverage and Life Coverage played a
prominent role in bringing investor preference towards ULIP.

Sanjay Kanti Das (2012) suggested that the investors should be made
aware of their rights and obligations. Investors should know the essential
aspects of sales talk, insurance policy, claim form and claims process etc.
Investor awareness campaign should be encouraged to improve financial
literacy/ insurance literacy levels by conducting workshops, distributing
leaflets and distributing literature etc. in both urban and rural areas. Life
insurance companies should comply with the advertisement code prescribed
by the ASCI (advertisement Standard Council of India) to ensure that
misleading advertisement is not issued. He further stated that Life insurers
should streamline their grievance redress machinery for efficient and effective
service. In addition to their own committee members, life insurance
companies should draw more representations from industry, insurance agents,
women’s organization and other interest groups. Insurance companies adhere
to fair trade practices and transparent disclosure norms while addressing the
investors or the prospects. He concluded that the institutions like universities
and colleges should be encouraged to spread insurance awareness and educate
the students/ investors on their rights and obligations.

Kamaludeen & Thamodaran (2014) conducted a study on Investors

Behavior on ULIPs Market (Unit Linked Insurance Plans). According to
them, the Unit Linked Insurance Plans is one of the hybrid financial products
that offer life insurance as well as an investment component like a mutual
fund. Part of the premium that is paid goes towards the sum assured and the
balance will be invested in whichever investment the policy holder desires,
based on the risk taking ability. Their study is conducted with an objective to
study the factors that influence investment behavior of the respondent in the
selected study area. 450 sample respondents from different insurance
companies were selected using simple random sampling.

Dharmendra Mistry & Gurmeet Singh (2015) conducted a study on the

Determinants of Insurance Product Performance in India. The main objective
of the study is to examine the determinants of the maturity benefits of
insurance products in India, using the data for the period of 5 years i.e. 2008
to 2012. The analysis covered ten Insurance Companies and their three
categories of products i.e. ULIP endowment plans, ULIP wealth plans and
ULIP child plans. The study used time series data analysis technique to study
the relationship between the maturity benefits of ULIP products and variables,
namely allocation, mortality, policy, administration and fund management
charges. In order to examine and analyze the relationship between the
dependent variables of maturity benefit of ULIP insurance products with
independent variables, multiple linear regression analysis is used. The results
of the study indicated that the risk coverage, benefits, price/premium and
associated services form the key components of core features of an insurance
product. They suggested that the product design teams need to configure
innovative combinations of these components to address specific segments’
needs. They concluded that investors may decide the suitable insurance products
in which they should invest to fulfill their financial needs.

Shanmugasundaram & Selvarathinam (2015) conducted a study on

influence of liquidity factors towards ULIP. The study is conducted with the
objective of studying the liquidity aspects that create satisfaction towards
ULIPs. Descriptive research design is adopted. Data is collected from 1200
respondents from Tamil Nadu using Proportionate stratified sampling.
Structured questionnaire is used as an instrument to collect the data. They
conducted factor analysis for the statements which described the liquidity of
the ULIPs and extracted 4 factors from 14 factors. Multiple regressions were
done to check the influence of liquidity factors of ULIP on satisfaction of
investors. The study concluded that liquidity lead by matching of NAV with
repurchase values; Cumbersome Liquidation procedures; and ULIPs
providing high level of liquidity are important in creating satisfaction towards
the liquidity of ULIPS.

2.2.3 Reviews related to the contribution of ULIP on Business

performance of Life insurance companies.

Krishnamurthy et al. (2005) in their article, “Insurance Industry in

India: Structure, Performance, and Future Challenges” stated that the
companies like Birla Sunlife Life Insurance Co. Ltd., and ICICI Prudential
Life Insurance Co. Ltd., have secured a big portion of their new business
quality from the ULIPs. They further stated that the mandate progression in
the market has been unusually the high content of unit-linked products in the
overall performance. The success of ULIP even in mini-metro cities and
relatively smaller markets is the reassertion of the fact that markets are
systematic in terms of insurance awareness and education. They concluded
that the net asset value (NAV) performance on ULIPs will determine the
demand patterns and the investment strategy will remain at the core of
successful insurance business.

Ramesh Bhatet al. (2005) made an attempt to scrutinize the

insurance industry in India in terms of Structure, Performance, and Future
Challenges. According to them, in insurance industry, the process of reforms
is initiated a few years ago and has some achievements to its credit. It has
enhanced competition, provided a choice to the investors, generated
innovative ways and means to carry out insurance activities, amended the
efficacy level of the industry, increased the coverage of insurance in terms of
density and penetration, obligated the insurers to provide for the needs of
social and rural sectors. The steps are to be taken to increase the awareness
about the necessity of insurance to the public.

Kumar (2008) in his article, “The Paradox of ULIPs” compared the

ULIPs with mutual funds. He stated that the ULIPs have both characteristics
of insurance and mutual funds. Significantly, the ULIPs mutual fund aspect is
regulated by the government under a very different set of rules compared to
the real mutual funds. He revealed that the agent's commissions of the Mutual
funds deduct not more than 2.5 per cent. If investors don’t use an agent and
this deduction is 0 per cent (by law) and go directly to the funding company.
In ULIPs, commission varies according to the agent’s, but in the first year, it
could be anywhere between 25 per cent and in some cases, 75 per cent. He
further stated that the ULIPs are successful because the ultra-high
commissions and charges make insurance agents far more antagonistic
salesmen than those of any other financial products.

Dhirendra Kumar (2008) stated that the India's insurance industry

has taken, in the last few years, a huge regulatory failure on part of the
government. This industry is opened up to foreign capital and provided with a
relatively lenient regulatory framework so that it could bring insurance to
India's under-insured masses. Instead, it has ended up focusing its energies
(and capital) on selling expensive and opaque mutual funds that are dressed
up as insurance. It is tragic that there is no move even to distinguish that this
problem exists. Now, even higher foreign ownership is on its way, allegedly
because more capital is needed to ULIP the under-ULIP masses even harder.
 Ramakrishnan (2010) stated that the Unit-linked insurance is
introduced in the 1950s in the U.K. —by unit trusts and not by the life
insurance industry. Between 1990 and 1999, with a high level of insurance
penetration, a new premium income under life insurance (both linked and
non-linked) grew at an average rate of 17 per cent, an impressive performance
in a country. The heavy inflow of fund is due to high average growth rate of
43 per cent. The contribution of unit-linked policies during this period to this
surge in stock indices and explosive growth of the life insurance market
cannot be denied. But it is wrong to presume that ULIP funds can perpetually
sustain such high growth.

The average life time of a unit-linked policy is well below 50 per

cent of that of a traditional policy and the surrender rates under this class of
insurance are always very high. Consequently, we can see deterioration in
renewal premium income. Though new premium income may continue to
show impressive growth, total premium income will not and, as a result, the
impact on stock indices will tend to weaken. He concluded that the mutual
fund industry can provide an alternative to the life insurance industry in the
ULIP market.

Chakravarthi (2010) stated that India has seen a tremendous growth

on the unit linked front over the recent years. The growth has been fuelled by
the thriving stock markets & lower interest rates. Before the introduction of
the unit linked product, the investors who are interested in investing in stock
markets either had to purchase the stocks on their own in the
primary/secondary or invest in mutual funds. After the introduction of the unit
linked product, the policy holder has an option to invest in the stock market
via purchase of a unit linked life insurance policy in addition to the life
insurance cover.
 Sonikachaudhary & PritiKiran (2011) stated that life insurance
industry expanded tremendously from 2000 onwards in terms of number of
offices, number of agents, new business policies and premium income etc.
Further, they stated that many new products (like ULIPs, pension plans etc.)
were provided by the life insurers to suit the requirements of various
investors. According to them, private life insurers used the new business
channels of marketing to a great extent when compared with LIC. They
concluded that the investment pattern of LIC and private insurers also showed
some differences. Affluence ratio of private life insurers is much better than
LIC in spite of big losses suffered by them. They concluded that the causation
ratio of private insurers is higher than LIC and servicing of death claims is
better in case of LIC, compared to the private life insurers.

Delnaaz & Parvez (2011) in their study recommended that the

insurance company should target pensioners & housewives as they constitute
only 10 per cent in the selection of ULIPs. The company can arrange a
seminar for the existing clients, informing them about the progress made by
the company, and also give some lessons on understanding the basics of
finance. Finally they suggested that the amount of premium should be reduced
in order to cater to the lower income groups. On maturity, the policy holder
should receive the fund value or the Sum Assured, Whichever is higher,
Reduction in the charges and Commission structure to be revised. A Pure
traditional plan along with the ULIPs is to be given. The charges on surrender
or partial withdrawal are to be removed. The number of Switch options to be
increased. ULIPs for meeting short term investment goals to be designed.

Knut & Svein (2011) stated that the key feature of unit-linked plan
is the uncertain value of the future insurance benefit. By issuing unit-linked
insurances that guarantees the policy-holder a minimum benefit and the
insurance company is exposed to financial risk. They further stated that the
value of the insurance benefit is assumed to be a function of a particular
stochastic process. They used the financial theory of arbitrage pricing and
martingale theory to calculate single premiums for different policies. They
formulated the risk-minimizing trading strategies describing how the issuing
company can reduce financial risk.

The report of the City of London Economic Development (2011)

stated that the insurance and pension sectors in India are underdeveloped, but
there is a huge potential for growth. It explained that the insurance sector in
India has grown rapidly during the past decade. Its assets as a share of GDP
increased from 9.6 per cent in 2001 to 16.1 per cent in 2010, driven by an
expansion of life insurance, which dominates the market due to the entry of
private and foreign firms into the insurance sector. The past decade has
witnessed the rise of new insurance products (such as ULIP), and innovation
in their marketing and distribution. The growth of unit linked insurance
products has made up nearly 30 per cent of the life-insurance market in the
financial year ending in March 2010. It concluded that the potential for
growth in India is therefore huge, especially because India’s household
savings rate is high, at 24 per cent, and because 50 per cent of household
savings are kept in non-financial assets.

Sharon Huang (2012) in her article, “Chinese Dragon vs. Indian Tiger:
Developments in variable annuities” compared the growth and performance
of ULIPs in China and India. She stated that the first unit-linked product in
China is launched by Ping, An Insurance Company in October 1999. In
China, ULIP product has attracted many investors’ by its transparency,
flexibility and most importantly the potential to earn market upside. The sales
volume picked up rapidly from 1999 to 2000. In India, the Indian life insurers
introduced the highest NAV plans against the backdrop of the sudden decline
of ULIP’s share in their first-year and total premiums.
 She further stated that the slowdown of the ULIPs further dragged
down the total life insurance premium growth rate from 29 percent in 2007-08
to 10 percent in 2008-09. She concluded that the Indian insurance companies
came up with a new type of ULIP, which is called the highest NAV plans. It
is to appeal to those cautious investors who would like to have some form of
capital protection and at the same time do not want to lose the occasion to
participate in the growth of the stock market.

Anand Gupta (2012) carried out a research to identify whether

ULIP can be termed as an insurance product, or still it is very much an
investment product despite the regulatory changes. In order to check whether
current ULIP products are insurance products or investment products’ he
framed the insignificant hypothesis that ‘The ULIPs after the issues of IRDA
guidelines in September 2010 are very much insurance products’ i.e., the
difference between Mortality adjusted rate of return and unadjusted rate of
return is significant and reasonable.” The analysis is done by using a
discounted cash flow model that gives the adjusted and unadjusted rate of
return for a policy over the policy period. The analysis is done using ULIP
plans of ten companies in the life insurance business. The top companies were
decided, based on the market share Figures available on the IRDA website.
The findings indicated that different types of ULIP policies give different
rates of return and that mortality does have an effect on the rates of return. In
majority of the ULIP products, primary insurance content is still relatively
lower when compared to the investment content.

Debabrata Mitraand Chandra Khan (2012) in his article “A

Comparative Study of Traditional Policies and ULIP Policies with reference
to Life Insurance Companies in India” compared the traditional policies with
ULIP policies catered by the life insurance companies in India in this era of
globalization. The results indicated that the public sector company (LIC) is
doing more business on traditional policies whereas the private sector
companies are counting on the ULIP policies. They concluded that the ULIP
products are more risky compared to the traditional policies. There has been a
growth in ULIP in a limited period of time. The private life insurance
companies are showing higher growth in ULIP policies compared to the
traditional policies.

Arnika Srivastava (2012) et al. in their study stated that Indian

insurance industry has modified itself with the passage of time and by
introducing customized products based on investors’ need, through innovative
distribution channels. The Indian life insurance industry has searched its path
to grow. They further described that the changing government policy and
guideline of the regulatory authority, IRDA have also played a very vital role
in the growth of the sector. They concluded that move from non-linked to unit
liked insurance policies is one of the major positive changes in the Indian life
insurance sector and opening of the sector for private insurers broke the
monopoly of LIC and brought in a tough competition among the players.
They suggested that the life insurers should conduct more extensive market
research before introducing insurance products, targeted at specific segments
of the population so that insurance can become more meaningful and
affordable.

Udayan (2012) in his article,” Performance Appraisal of Unit

Linked Insurance Plans (ULIPS) In India : A Case Study” evaluated the
performance of the selected endowment plans of the three insurance
companies namely ICICI Prudential, Bajaj Allianz and ING Vysya Life
Insurance with regards to Unit Linked Endowment Plans.

The research findings indicated that all the three companies ULIP
schemes and market has given positive returns during the period. He further
reported that among all the schemes of all three companies scheme the ING
Vysya is the best performer as its return is the highest during the period.
However, Bajaj Allianz return is less risky compared to the others and is the
best in terms of minimization of risk. He concluded that the performance of
ULIPs of all the three companies is better than that of the market and all the
three have outpaced the market. Among the three companies, ING Vysya is
the best performer as per all the three measures.

Navneet Seth (2012) in his article “Factors Behind Rise and Fall in
the Sales of Unit Linked Insurance Plans in India” stated that the insurance
sector in Indian is very large and has the presence of great number of
companies. He further stated that the foreign companies entered by making
joint ventures with Indian firms like ICICI- Prudential Life, HDFC Standard
Life, TATA-AIA etc. These joint ventures companies had introduced the new
insurance product namely Unit Linked Insurance Plan (ULIP) in which the
capital of the investors is invested in the Stock Market.

In the initial period, all the companies were making good business
because people liked the new product. But after a gap of about 7-8 years when
the actual returns were coming, investors ignored the ULIP’s as the returns
were not accordingly as promised by the Insurance companies.

Nagarajanet al. (2013) in their study, “A Study On Performance

Of Unit-Linked Insurance Plans (ULIP) Offered By Indian Private Insurance
Companies” analyzed the performance of ULIP product offered by the
company against the competition. The researchers selected five leading Life
insurance companies (ICICI Prudential Life Limited, Reliance Life Limited,
SBI Life Limited, Met life Limited and Bajaj Allianz Life Limited) for the
study. The research findings explained that the Reliance Health + Wealth Plan
is performing better than SBI, ICICI and Bajaj Allianz, but below the
performance of PNB Met Smart One. They stated that the products offered by
PNB MetLife and Reliance Life Insurance are not affected by the Market
Conditions, and are performing consistently. They concluded that the MetLife
provides good returns to investors compared to other products. Reliance life
insurance is ranked second

Bhagabat & Rakesh (2014) in their article, “Emerging Trends in

Insurance - A Study in Indian Insurance Industry” discussed the growth of
insurance industry in India. They divided the growth of Indian life insurance
sector into two main periods such as one from 2001 to 2010 and other from
2012 to onwards. They reported that the first 10 years witnessed high growth
with compound annual growth rate of approximately 3.1% I new business
premium. Most of the players were in good condition due to the emergence of
unit linked insurance plans. From the year 2010 onwards, the compound
annual growth rate is around 2%. The Stiff competition is one of the reasons
for the stagnation in growth during the year of 2012. They concluded that
Life insurance industry in India needs a special care compared to other
business. This industry is going to face more challenges due to change in
market and employment and also has good business potential.

RiteshDwivedi & AnandBatra (2014) had conducted a study on

Comparative Analysis of Unit Linked Insurance Products of Different
Companies. A ULIP is a capital market linked product which combines the
benefits of both insurance and investment. This study has been conducted to
analyze HDFC Life ULIP products and compare them with other competitors
like Bajaj Allianz, Reliance Life, and ICICI Prudential. In this study,
responses were taken from the people who know about ULIPs offered by
different companies. This study has recorded the responses of 120
respondents. The study has done a market analysis of ULIP product of HDFC
Life with other competitors’ (Bajaj Allianz, Reliance Life, and ICICI
Prudential). The findings of the study from different quarters showed that
HDFC Life is rated the best company because of its consistency, whereas
ICICI Prudential had maximum market share and satisfied investors. ICICI
Prudential is also seen to be generating business through word of mouth,
because its advertisement efficiency is low. In the context of investor
satisfaction, HDFC Life is found to be occupying the second place.

Prasad Bhanage & JyotiBhanage (2015) had done an analysis of

ULIPs of Selected Private Insurance Firms. According to them, India’s
insurance industry has moved into competitive and existing times with the
arrival of private players in the market. Private insurance companies are
gearing up to woo the investors. The study is conducted with an objective to
study the detailed analysis of ULIP products of different private insurance
sectors and to identify how the ULIP product of reliance life insurance is
better than others. Also to compare ULIP plan with different financial
products and to analyze and study ULIP plans to find out their benefits.

The Confederation of Indian Industry (CII) Report on “Indian

insurance Sector - Building Growth & Building Value (2015) stated that the
revised ULIP guidelines in 2010 and multiple restrictions on corporate
agents and brokers, resulted in the stagnation of new business premiums
since the Financial Year 2011. As a result, new business premium collections
dropped. With unit-linked products (ULIPs) losing favor among both
distributors and investors post Financial Year 2011, and private players forced
to reorganize their operations to better manage costs, the private players
market share shrunk to 25 per cent in the Financial Year 2014, with LIC
regaining some of its lost turf. It concluded that the life insurance sector is
expected to grow by around 6 per cent till 2018.
2.3 RESEARCH GAP AND CONCLUSION

The foregoing research survey indicated that only limited studies

were carried out in India to analyze the investors’ perception on ULIP
products. From the review of literature it is found that few studies were
focused on analyzing the relationship between the independent variables like
demographic factors such as age, income, education , occupation, family size,
family type, level of awareness, time spend on search of information and
monitoring the investments, expected level of risk and the dependent
variables such as purpose of investment, purchasing decision of investor,
types of plans, number of policies, amount of insurance, tenure of policy,
selection of companies benefits expected and features of ULIP and etc.,
Among the available literature, no more studies were concentrated on
analyzing on the Perception of ULIP investors and Marketers, Business
strategies of the selected Private life insurance companies. Hence the
researcher has made an attempt to fulfill the research gap through the present
research.