A

RESEARCH REPORT

ON

Customer preference towards child education plan of Life Insurance Corporation of India

Submitted in partial fulfilment for the award of the degree

Master of Business Administration

Chhattisgarh Swami Vivekananda Technical University, Bhilai

Submitted by-

Lomash singh

MBA – Semester III

(Session 2010-2011)

Approved By-Mr. Saket Jeswani

HOD- MBA

Guided By-Mr. Mahendra Ikhar

Lecturer

Shri Shankaracharya Institute of Technology and Management

Junwani, Bhilai (C.G.) - 490020

DECLARATION

I the undersigned solemnly declare that the report of the thesis work entitled Consumer

preferences towards LIC child education plan based on my own work carried out during the course

of my study under the supervision of Mr. Mahendra sir

I assert that the statements made and conclusions drawn are an outcome of my research

work. I further declare that to the best of my knowledge and belief the report does not contain any

part of any work which has been submitted for the award of MBA degree or any other

degree/diploma/certificate in this University or any other University of India or abroad.

Lomash singh

Enrollment No: AE7159

[Type text] Page 2

CERTIFICATE

This is to certify that the work incorporated in the thesis consumer preference towards children education plan offered by life insurance corporation of India is a record of research work

carried out by lomash singh bearing Enrollment No.: <> under my guidance and supervision for the

part fulfillment for the award of MBA Degree of Chhattisgarh Swami Vivekananda Technical

University, Bhilai (C.G.), India.

To the best of my knowledge and belief the thesis

i) Embodies the work of the candidate him/herself,

ii) Has duly been completed,

iii) Is up to the desired standard both in respect of contents and language for external viva.

Mr. Mahendra Ikhar Lecturer

[Type text] Page 3

ACKNOWLEDGEMENT

I express my sincere thanks to Mr. Mahendra (Lecturer) without whose support this project would

have not become possible. Her valuable guidance and critical comments helped in successful

completion of this project.

Lastly; I am thankful to my parents for their blessings and support and almighty who is always

there with me.

Lomash singh

[Type text] Page 4

CHAPTER 1

INTRODUCTION

Customer perceptions are dynamic. First of all, with the developing relationship between

customer and company, his perceptions of the company and its products or services will

change. The more experience the customer accumulates, the more his perceptions will shift

from fact-based judgments to a more general meaning the whole relationship gains for him.

Over time, he puts a stronger focus on the consequence of the product or service

consumption. Moreover, if the customers’ circumstances change, their needs and preferences

often change too. In the external environment, the offerings of competitors, with which a

customer compares a product or service will change, thus altering his perception of the best

offer around. Another point is that the public opinion towards certain issues can change.

If life insurance buying is approached in the proper manner it can be very beneficial to yourself and

your family. You need to take the time to give some thought to a subject that can be very

unpleasant. I guess that is why most people don't think about it, or at best think about it only after

they have had a brush with death, or when a life insurance professional brings up the subject.

Sometimes these people wait until it is too late to do something about such a critical matter.  They

find themselves uninsurable when they discover they have some critical illness. People should give

life insurance buying serious thought at least once per year as ones situation may change and you

find that your need for life insurance may change as a result.

It is the duties of the parents to look after their children well and care for them. As there are many

debates going on about “do the children need LIC policy?”, many do not bother about the

importance of such insurance plans for children. In many of the cases, the policies taken for the

child's welfare has remained a great gift to them.

[Type text] Page 5

The policies may help them in their education or in their future. Sometimes the money obtained by

the policies becomes the foundation of the successful life of the children. The Life Insurance

Corporation has taken all these into considerations and has created many policies for the children.

The parents are very caring about their children and I have seen people who take up the insurance

policies for their new born babies. This will really help in the near future of the child for any

purpose. The parents consider this as a stable coverage for their children.

Some of the best benefits of the child insurance policies are that the amount can help for the

college education of the child, there is a accrued cash benefit, offers premium stay, there is a

permanent protection that is offered, etc.

Some of the popular insurance plans in LIC for the benefit of the children are jeevan anurag, komal jeevan, jeevan kishore, jeevan chhaya, etc. the basic benefit is the policy holder is paid

some percent of the basic at the beginning of each year during the policy time. He is also paid

some percent when the policy matures. All these plans also have the benefit of paying the basic

amount, when the insured person dies, that is paid during the signing of the insurance.

Take up a policy and start saving for your children’s education!

CONTRIBUTION

Participate in Gross domestic product

According to the chairman of Life Insurance Corporation of India (LIC), the company has set target for the collection of a total premium income of Rs.176,000 crore in the current fiscal (2009-10). "We are expecting to collect around Rs.176,000 crore by the end of March this year and hope to increase it by 18 percent next fiscal (2010-11)," LIC chairman T.S. Vijayan told reporters. The LIC's premium income was Rs.153,000 crore in the previous fiscal (2008-09). Vijayan was talking about the investment plans at the foundation stone ceremony of a company housing complex in Kolkata. He also said that the company would invest around Rs.200,000 crore of investment in the current fiscal "We expect it to grow by 20 percent next fiscal (2010-11)," Vijayan said. It is said that the company's income from its real estate business has been around Rs.200-300 crore in this fiscal. Finance Minister Pranab Mukherjee said, "Of the total GDP (gross domestic product) of the country, 4 percent is contributed by LIC." Mukherjee said every year the LIC contributes a large dividend to the country's treasury. "We have given a dividend of Rs.929 crore to the government this year," Vijayan said. [Type text] Page 6

EXECUTIVE SUMMARY

As the study of the customer preference towards the insurance sector plays a vital role

in understanding the contribution of insurance industry.

I want to study the customer perception & preferences for the various facilities

provided by the insurance policies.

A comparison between private insurance industries will help in assessing the

expectation of the customers about the services provided by them.

Study of this project has been done in Bhilai. Project began with a pilot survey

in the region of CIVIC CENTER BHILAI based upon the performance in pilot survey we did some

changes in the questionnaire and than I did my research in Bhilai-Durg .My questionnaire

was designed based on the funnel approach.

The following data analysis tools are used for the primary data, which was collected

using questionnaire.

• Percentage method.

This analysis will provide public as well as private insurance players to improve their

quality standards and also to provide better facilities to the customers.

[Type text] Page 7

CHAPTER 2

COMPANY PROFILE

The Oriental Life Insurance Company, the first corporate entity in India offering life insurance

coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Europeans in

India were its primary target market, and it charged Indians heftier premiums. The Bombay Mutual

Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance

companies established in the pre- The Life Insurance Corporation of India (LIC) (Hindi: भारतीय जीवन बीमा निनगम) is the largest life insurance company in India, and also the country's largest

investor.; it is fully owned by the Government of India. It also funds close to 24.6% of the Indian

Government's expenses. It has assets estimated of Rs. 8 trillion (US$ 178.4 billion). It was founded

in 1956.

Headquartered in Mumbai, which is considered the financial capital of India, the Life Insurance

Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different

parts of India, at least 2048 branches located in different cities and towns of India along with

satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million

agents for soliciting life insurance business from the public.

History

Independence era included

Bharat Insurance Company (1896)

United India (1906)

National Indian (1906)

National Insurance (1906)

Co-operative Assurance (1906)

Hindustan Co-operatives (1907)

Indian Mercantile

General Assurance

Swadeshi Life (later Bombay Life)

[Type text] Page 8

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's First

War of Independence, adverse effects of the World War I and World War II on the economy of

India, and in between them the period of world wide economic crises triggered by the Great

depression. The first half of the 20th century also saw a heightened struggle for India's

independence. The aggregate effect of these events led to a high rate of bankruptcies and

liquidation of life insurance companies in India. This had adversely affected the faith of the general

public in the utility of obtaining life cover.

The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the first

regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of

1928 authorized the government to obtain statistical information from companies operating in both

life and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter state

control over an industry that had seen several financially unsound ventures fail. A bill was also

introduced in the Legislative Assembly in 1944 to nationalize the insurance industry.

With the change in the India's economic philosophy from the early 1990s, and the subsequent

relaxation of state control over several sectors of the economy, the monopolistic position of the Life

Insurance Corporation of India was diluted, and it has had to compete with a number of other

corporate entities, Indian as well as transnational Life Insurance brands. However, it still manages

to be the largest player in the Indian market, with the lion's share of 55%.

The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the

Subsidiaries

LIC owns the following subsidiaries:

Life Insurance Corporation of India International: This is a joint venture offshore

company promoted by LIC which commenced operations in July, 1989 with the objectives of

offering US$ denominated policies to cater to the insurance needs of NRIs and providing

insurance services to holders of LIC policies currently residing in the Gulf. LIC International

operates in all GCC countries.

People

LIC is one of the largest employers in India. The organization is headed by 4 officers, namely the

Chairman and three Managing Directors. The top brass is appointed by the Government of India

after an intensive selection procedure. Though the company was accused to go by mere seniority

[Type text] Page 9

in number of years for the selection of the senior management, this has changed as seen in the

case of Thomas Matthew and A. Dasgupta (Managing Directors).

The Chairman assumes authority of the CEO and chairs the board while the Managing

Directors are allotted the three main categories of the organization's functioning.

The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major IT

infrastructure turnaround that the organization has witnessed and for its advanced EDMS

structure.

D.K. Mehrotra manages the Marketing Units of LIC, which also happens to be one of the

largest spenders on advertising in India.

Thomas Mathew manages the close to $187 billion investment portfolio of the company,

which is the largest investor in the country.

A. Dasgupta manages the engineering and other functions, many of which are very

advanced in the Indian corporate scenario.

Objectives of LIC of India

Spread and provide life insurance to the masses at a reasonable cost.

Spread Life Insurance widely and in particular to the rural areas and to the socially and

economically backward classes with a view to reaching all insurable persons in the country

and providing them adequate financial cover against death at a reasonable cost.

Maximize mobilization of people's savings by making insurance-linked savings adequately

attractive.

Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose

money it holds in trust, without losing sight of the interest of the community as a whole; the

funds to be deployed to the best advantage of the investors as well as the community as a

whole, keeping in view national priorities and obligations of attractive return.

Conduct business with utmost economy and with the full realization that the moneys belong

to the policyholders.

Act as trustees of the insured public in their individual and collective capacities.

Meet the various life insurance needs of the community that would arise in the changing

social and economic environment.

Involve all people working in the Corporation to the best of their capability in furthering the

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

Promote amongst all agents and employees of the Corporation a sense of participation, pride

and job satisfaction through discharge of their duties with dedication towards achievement of

Corporate Objective.

[Type text] Page 10

Jeevan Anurag

BenefitsLIC’s Jeevan ANURAG is a with profits plan specifically designed to take care of the

educational needs of children. The plan can be taken by a parent on his or her own life.

Benefits under the plan are payable at prespecified durations irrespective of whether the Life

Assured survives to the end of the policy term or dies during the term of the policy. In

addition, this plan also provides for an immediate payment of Basic Sum Assured amount on

death of the Life Assured during the term of the policy. 

Assured BenefitPayment of 20% of the Basic Sum Assured at the start of every year during last 3 policy

years before maturity. At maturity, 40% of the Basic Sum Assured along with reversionary

bonuses declared from time to time on full Sum Assured for the full term and the Terminal

bonus, if any shall be payable. For example, if term of the policy is 20 years, 20% of the Sum

assured will be payable at the end of the 17th,18th, 19th year and 40% of the Sum Assured

along with the reversionary bonuses and the terminal bonus, if any, at the end of the 20th

year. 

Death BenefitPayment of an amount equal to Sum Assured under the basic plan immediately on the death

of the life assured.

Jeevan Chhaya

FeaturesIdeal for parents having less than a year old child. Makes provision for education/ marriage of

the child. Extra benefit of waiver of premium in case of death of the policy holder. 

Suitable For:Couples having a less than one year child (not an adopted child) can avail themselves of this

plan, in order to ensure that an adequate financial provision is made for the higher education

of the child. The child should not have completed one year of age on the date of Registration

of the proposal. Either father or mother or each one of them individually can take policies

under this plan under Non-medical Scheme. This plan is also allowed to others subject to

medical examination. 

[Type text] Page 11

Special Features:This policy is given under non-medical scheme up to sum assured of Rs.1 lakh, if the

prospect is having a child of less than one year of age as on date of registering the proposal.

This non-medical is exclusive for other policies.

Jeevan Kishore Features

High bonus from day one. Child becomes owner of the policy automatically at the age of 18

years. Risk commences after 2 years of policy or on completion of 7 years of age, whichever

is later. No medical examination of the child if age is less than 10 years. 

Suitable For:Parents of children who wants to provide a lump sum amount at a particular age of the child.

The amount can be used for any particular need of the child like marriage or start in life. 

Special Features:This policy is issued with profit, but bonus for waiting period will vest immediately on the

Policy anniversary from which risk is covered or at the end of 5 years from commencement of

the policy whichever is later, provided the policy is in force. No medical examination will be

necessary if the age of the child is less than 10 years last birthday. Else medical examination

is necessary.

Komal Jeevan Benefits

In the ever demanding and competitive environment , it is essential to provide the best

education to your children which can be very expensive. Fortunately, the sooner you start

investing for their education , the more flexibility you'll have and will enable your children to

achieve proficiency in their career endeavors. This would make the children proud of their

parent's effort and call them The Best Parents. LIC now introduces a new plan to take care of

these needs – A Komal Jeevan Plan with payment of premium ceasing on policy anniversary

immediately after the child attains 18 years of age. The plan, besides offering risk cover ,

also offers payment of Sum Assured in installments at age 18,20,22,24 and Guaranteed and

Loyalty additions, if any, at the age 26. 

Policy As A Gift:The close relations such as grandparents, elder brothers or sisters, uncles both from paternal

[Type text] Page 12

or maternal side can gift 'single premium policy' for love and affection under this plan. in such

cases also, the policies will be proposed by father, mother or legal guardian. 

Current Market Share of LIFE INSURANCE COMPANIES

LIC still remains the largest life insurance company accounting for 64% market share. Mainly

owing to entry of private players with innovative products and better sales force.

LIC's market share 74.18%

[Type text] Page 13

CHAPTER 3

LITERATURE REVIEW

Brief History of the Insurance Sector in India

Insurance sector in India is one of the booming sectors of the economy and is growing at the

rate of 15-20 per cent annum. Together with banking services, it contributes to about 7 per

cent to the country's GDP. Insurance is a federal subject in India and Insurance industry in

India is governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and

General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and

Development Authority (IRDA) Act, 1999 and other related Acts.

The origin of life insurance in India can be traced back to 1818 with the establishment of the

Oriental Life Insurance Company in Calcutta. It was conceived as a means to provide for

English Widows. In those days a higher premium was charged for Indian lives than the non-

Indian lives as Indian lives were considered riskier for coverage. The Bombay Mutual Life

Insurance Society that started its business in 1870 was the first company to charge same

premium for both Indian and non-Indian lives. In 1912, insurance regulation formally began

with the passing of Life Insurance Companies Act and the Provident Fund Act.

Insurance sector in India grew at a faster pace after independence. In 1956, Government of

India brought together 245 Indian and foreign insurers and provident societies under one

nationalized monopoly corporation and formed Life Insurance Corporation (LIC) by an Act

of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5 crore.

[Type text] Page 14

CHAPTER 4

RESEARCH METHODOLOGY

OBJECTIVES OF STUDY

To know market position of life insurance corporation of India plan market.

To know consumer behaviour for purchase of child education plan.

The methodology section will consist of three sections.

Section A. The first section will describe the objectives of the study.Section B. The second section will discuss about the research plan and sampling plan used in the study.

The following table can be taken as a guideline for preparing this section.

RESEARCH PLAN

Research Design: Descriptive

Research Method Used Survey

Research Technique Used Questionnaire

Data Collection From Bhilai

Sampling Plan Simple Random

No. of samples collected 50

The research should also present why he has chosen the design he has chosen. And he should also write about something about the design / method / technique and sampling plan to support his study. In any case the researcher should not write what he has not done in the study.

[Type text] Page 15

Section C will contain the demographic characteristics of the respondents. A sample is shown below:

Measure Item Number of Respondents

Age

0-20 0

20-30 16

30-50 34

Income

< 1 Lakh 3

1-3 Lakhs 28

3-5 Lakhs 19

Total 50

Test adopted : Z– test Z– test is based on the normal probability distribution and is used for judging the

significance of several statically measures, particularly the mean. The relevant test statistic Z , is worked out

and compared with its probable value at a specified level of significance when the sample size is more than

30 and it is used for judging the significance of the measure concerned. This is most frequently used test in

research studies.

Formula of “Z” test

where , X=mean μ=¿ Mean of PopulationS.D. = Standard deviationn = No . of attributes

[Type text] Page 16

z = x−μσ /√n

CHAPTER 5

Data Tabulation, Analysis and Results

Table for calculation of value of Z :Sl. No. xi Xi -x ¿1 22 2 4

2 20 0 0

3 21 1 1

4 23 3 9

5 29 9 81

6 33 13 169

7 14 -6 36

8 14 -6 36

9 18 -2 4

10 17 -3 9

11 14 -6 36

12 13 -7 49

TOTAL 238 434

n = 50 , μ=¿ 22 x=¿ 238/12 = 19.83 = 20 (approx.) S.D .=√ ¿ = √434 /11 = √39.45 = 6.281 = 6.28

Z = x−μσ /√ n

=20−22

6.28/√12

=−2

6.28/3.46

= −2

1.815 = │ 1.10│ = 1.10[Type text] Page 17

At 5% level of significance Critical value ( Z α ) = 0.3749

Hо : The Null Hypothesis is that Customers are satisfied with Child Education Plan , and

H : The Alternative Hypothesis is that Customers are not satisfied with Child Education Plan .

So we have calculated the value of Z-test ,

Here the Critical value is less than the Calculated value (i . e. , Critical value is 0.3749 and

Calculated value is 1.10 )

So , the Null Hypothesis is rejected and Alternative Hypothesis is accepted .

The conclusion is that the Customers are not satisfied with Child Education Plan .

4.1 DATA ANALYSIS & INTERPRETATION :-

1. Which child plan you have taken ?

options RespondentsJeevan Chhaya 13Jeevan Kishore 10Jeevan anurag 22Komal Jeevan 5

26%

20%44%

10%

Jeevan Chhaya Jeevan Kishore Jeevan anurag Komal Jeevan

[Type text] Page 18

CHAPTER 6

FINDING OF THE STUDY

INTERPRETATION :- According to the survey , it is analysed that 10 % of the respondents are interested for Komal Jeevan plan, where as 26 % for Jeevan Chaaya plan. The majority of the respondents have selected Jeevan Anurag plan & 20 % are with Jeevan kishore plan.

The buying of Life insurance policies is dependent on income.

• There is no impact of age on the rationale behind holding life insurance policy.

• Unit linked life insurance policy is preferred the most.

• Among 50 respondents maximum no. of policy holders are having sum total of

amount of insurance policy premium as 2-3.99 lac.

[Type text] Page 19

CHAPTER 7

Recommendations of the study

Life insurance companies should be more reliable and stable towards their investors

by providing better facilities.

• Life insurance companies should give emphasis on their after-sale-service.

• The promotional activities of insurance companies should be good.

• Life insurance companies should provide the necessary information and the

importance of life insurance to the customers.

• They should adopt better marketing techniques to increase awareness among the

customers.

Influencing Advertisements should be adopted to attract more & more consumers .

• Policy features should be improved / changed for satisfying the loyal Customers .

• Improvement in service image of the product .

• Introduce some other features in the plan for increasing the number of customers .

• Last but not the least , It should be more return / tax rebate conscious .

• Improvement in premium ,tax benefit ,documentation

[Type text] Page 20

Chapter 8:

Limitations of the study

Sample size is small ; It is not possible to cover all the consumers in Bhilai & Durg.

Availability of less time duration .

Biased feedback by the Consumers ; as Human Perception differs from person to person.

Some people hesitate to express their actual views regarding the product due to some

personal reasons .

Some of the difficulties and limitations faced by me during my research work, which are as

follows:

• Lack of awareness among the people

• Bad image of the people towards Insurance sector

• Lack of awareness about the earning opportunity in the Insurance sector

• The sample size chosen for the questionnaire was only 150 and that may not

represent the true picture of the consumer perception about the Life Insurance sector.

• Customers do not like their money locked up for many years.

• Many people do not agree to fill the questionnaire because of lack of time

[Type text] Page 21

Chapter 9:

Conclusions of the study

So , it can be concluded that the consumers are not much satisfied with the Child Education Plan of “LIC” & the Advertising efforts of the Company are not much influencing to the Consumers and there need to be an improvement /change for satisfying the consumers of LIC , which will result in an increased Goodwill , Brand Image , Sales & Profit as well .

BIBLIOGRAPHY:-

C. R. Kothari (Research Methodology ) , Second Edition , Chapter 9 – Testing of hypothesis – I

(Parametric or Standard Tesys of Hypothesis ), page no. 184 to 197 .

C. R. Kothari (Research Methodology ) ,New age International Publishers , Second Edition ,

Chapter 1– Research Methodology : An Introduction, page no. 2 to 5 .

P . N .Arora & S . Arora ( Statistics) ( C . A. Foundation course ) , S . Chand & Co . Ltd., First

Edition , Chapter 10 – Tests of Significance , Page No . 362 to 408 .

www.lic.com/history.html [Type text] Page 22

www.Wikipedia.encyclopedia.com/lichtml

www.licindia.com/pepsi.html

Questionnaire

I am a student of MBA II Semester of SSITM Bhilai. As a part of my course curriculum I am

conducting a survey on Customer preferences toward purchase of child education plan offered

by Life Insurance Corporation. I would be grateful to you for providing your genuine responses.

1. Which Child plan you have taken?

a) Jeevan chaya

b) Jeevan kishor

c) Jeevan anurag

d) Komal jeevan

2. How much the following Factors are important for you while selecting a Child plan?

Factors

Stro

ngly

Dis

Dis

agre

e

Ave

rage

agre

e

Stro

ngly

agre

e1 2 3 4 5

1 Premium

2 Rate of return

3 Documentation

4 Duration

5 Growth rate

6 Tax Benefits

7 Brand name

3. Are you willing to take any new insurance plan of LIC in near future?

Yes No

4. Please provide the following details which would help in supporting our research. The information will be kept strictly confidential and for the purpose of analysis only. Please tick the appropriate option.

a

)Name b) Age <20 20-29 30-39 ≥40

c) Gende Mal Femal d) Annual <1 Lakh 1-2.99 Lakhs 3-4.99 ≥5 [Type text] Page 23

r e e Income Lakhs Lakhs

e

)Profession

Studen

tHousewife

Employe

d

Self-

EmployedOther

[Type text] Page 24

[Type text] Page 25

ANNEXURE V: RESEARCH METHODOLOGY

The methodology section will consist of three sections.

Section C. The first section will describe the objectives of the study.Section D. The second section will discuss about the research plan and sampling plan used in the study.

The following table can be taken as a guideline for preparing this section.

RESEARCH PLAN

Research Design: Descriptive

Research Method Used Survey

Research Technique Used Questionnaire

Data Collection From Bhilai

Sampling Plan Simple Random

No. of samples collected 50

The research should also present why he has chosen the design he has chosen. And he should also write about something about the design / method / technique and sampling plan to support his study. In any case the researcher should not write what he has not done in the study.

Section E. Section C will contain the demographic characteristics of the respondents. A sample is shown below:

Measure Item Number of Respondents

Age

0-20 0

20-30 16

30-50 34

Income

< 1 Lakh 3

1-3 Lakhs 28

3-5 Lakhs 19

Total 50

[Type text] Page 26

[Type text] Page 27