Factors Influencing Policyholders Decision On Purchasing Life Insurance Products With Reference to Public and Private Life Insurance Companies in Perambalur District.
Dr. R.Rajendran*, P. BALAMURUGAN**
*Assistant Professor (SG), Department of Business Administration, Annamalai University, Annamalai Nagar, Chidambaram, Tamilnadu, INDIA.
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** Assistant Professor, Roever Institute of Management, Perambalur,
Tamilnadu, INDIA.
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Introduction:
1. Introduction:
Two decades after liberalization, privatization and globalization, the nature of competition between public and private life insurance companies has changed and intensified. Mainly due to the change in perception. In this scenario, to remain successful in the life insurance industry, both for public and private life insurance companies, it is important to understand the policyholders’ perception and response to their product or service profile, in order to identify the strength and weakness among their product or service profile and to take measures accordingly. Thus, research like this shall be helpful to both policyholders and life insurance companies.
1.1. Statement of Problem:
We the consumers are well known and practiced on the influences of several factors that is both demographic and non – demographic factors playing a vital role on the purchase decision of the consumer. The demographic variables can be otherwise known as personal profile of the buyers and the personal profile is influencing the purchase decision of the buyers undoubtedly, however, apart from the above said factors (Personal Profile) the product/service profile is also playing a significant role in the purchase decision of the buyer. As far as this research is concerned the researcher is interested to experiment the influence of product / service profile on the purchase decision of the life insurance policyholders while buying the insurance products. The product / service profile such as policy features, flexibility in premium payment, aggressiveness of distribution channel, promotional measures, trust on company and sales personnel, Employee behavior, claim settlement and infrastructure facility of insurance companies are severely hitting the policyholders purchasing decision. Looking into the current scenario of this insurance industry, most of the general public are interesting towards insuring them and genuinely majority having moderate social, economical background, however, their insurance decision is mostly influenced by the above said product/ service profile. So the study is interested to test the influence of the above said factors in the purchase of insurance products. Hence the researcher has enough justification and ample scope to conduct the research in the title of “Factors influencing policyholders’ decision on purchasing life insurance products with reference to public and private life insurance companies in perambalur district”.
1.2. Significance of the Study:
The research paper attempts to identify and prioritize the various factors related to product, price, place, promotion, people, process and physical evidence that are influencing policyholders’ purchase decision on life insurance.
2. Review of Literature:
C. Kalpana Naidu et all (2015) analyzes the factors that influence policyholders; decision making: In order to understand which factor is more influence the policy holders towards insurance, the mean score is used. The analysis shows that in both public and private life insurance companies mean score is higher in case of security. While selecting the life insurance policy, security is a major factor considered by policyholders in both public and private life insurance companies.
Dr.N.Kannan et all (2014), identified the factors influencing the selection of an insurance company for purchasing the policy. Findings discovered that Product features, accessibility, low premium amount, advertising, proper redressal of complaints and better claim settlement are some of the factors that drastically influences the choice of a company.
Ms. Babita yadav (2012) list out the factors influencing purchase decisions of life insurance consumers. “The features of the policy that attracted policyholders can be ranked as follows: company reputation, money back guarantee, risk coverage, low premium and easy access to agents as 1st, 2nd, 3rd, 4th and 5th respectively. Thus, it can be inferred that the goodwill of the company is the most influencing factor while policy buying decision”
Abdalelah S. Saaty (2011) from his article titled “Factors Critical in Marketing Strategies of Insurance Companies in Saudi Arabia” found out the factors that motivate the people to purchase insurance in order, apart from legal compulsion, they are the fast claim settlement, simplified contract, easy procedures, high risk coverage and low premium.
Dr. Praveen Sahu (2009) et all, in their article “A Study Of Buying Behaviour Of Consumers Towards Life Insurance Policies” concluded the factors that are most important in consumer buying behavior, they are Consumer Loyalty, Service Quality, Ease of Procedures, Satisfaction Level, Company Image, and Company-Client Relationship.
Athma. P and kumar. R (2007) in the research paper titled “an explorative study of life insurance purchase decision making: influence of product and non-product factors". Based on the survey analysis; urban market is more influenced with product based factors like risk coverage, tax benefits, return, etc. Whereas rural population is influenced by non-product related factors such as: credibility of the agent, company’s reputation, trust, customer services. Company goodwill and money back guarantee attracts many people for life insurance.
Rajesh et all (2005) has identified product benefits, competitive premiums, product differentiation through promotion and claim settlement, to be the key success factors of the insurance sector. According to them, claim settlement is the major factor for the success of the Life Insurance Corporation. They have also felt that its claim settlement operations are fair and transparent. The Corporation has been prompt in settling the claims due to excellent corporate image in the insurance sector.
Bejon Misra, CEO, VOICE, says that, The policyholders of the LIC in urban areas are highly satisfied about the process strategies of the LIC. At the same time, the urban customers are having a better brand image of the LIC in their mind and brand trust on the LIC. While the brand image and brand loyalty factors decide the brand trust on the LIC, Brand trust influences the Brand equity. Therefore, it can be seen that Brand image, Brand trust and Brand loyalty factors are powerful determinants of the customer Brand equity of the LIC.
2. Research Methodology
This research title “Factors Influencing Policyholders Decision On Purchasing Life Insurance Products With Reference to Public and Private Life Insurance Companies in Perambalur District” is descriptive in nature. Well structured questionnaire used as a data collection tool. Researcher employs simple random sampling to select 100 respondents both from public and private life insurance companies. This research uses both primary and secondary data. Here, the researcher employs weighted ranking methods to analyse and prioritize the to the factors that influence purchasing decision of both public and private life insurance companies.
3.1. Objectives of the study:
v To analyze the factors influencing policyholders’ decision on purchasing life insurance products of public life insurance companies in perambalur district.
v To analyze the factors influencing policyholders’ decision on purchasing life insurance products of private life insurance companies in perambalur district.
3.3. Tools Used
To rank the factors in order of influence on purchasing decision, weighted ranking method has used.
Factors Influencing Policyholders’ Decision on Purchasing Products of Public Life Insurance Company in order of their weighted score
Table No:4.1
S.No / Factors / Rank 1 / Rank 2 / Rank 3 / Rank 4 / Rank 5 / Rank 6 / Rank 7 / Rank 8 / Rank 9 / Weighted Score
1 / Trust on Insurance Company / 378 / 176 / 49 / 36 / 35 / 32 / 18 / 4 / 0 / 728
2 / Trust on Insurance Agent / 234 / 248 / 70 / 66 / 10 / 28 / 24 / 4 / 3 / 687
3 / Policy Feature / 90 / 104 / 231 / 96 / 75 / 16 / 18 / 0 / 3 / 633
4 / Excellent claim settlement / 108 / 88 / 105 / 156 / 25 / 24 / 15 / 10 / 15 / 546
5 / Insurance Company Employee Behaviour / 27 / 40 / 63 / 96 / 145 / 72 / 18 / 14 / 7 / 482
6 / Premium Charged & Flexibiltiy In Premium Payment / 18 / 72 / 77 / 12 / 105 / 84 / 69 / 8 / 7 / 452
7 / Extensive distribution channel / 45 / 32 / 28 / 30 / 35 / 80 / 93 / 26 / 11 / 380
8 / Advertisement & Promotional / 0 / 16 / 35 / 84 / 45 / 40 / 24 / 68 / 18 / 330
9 / Excellent infrastructure / 0 / 24 / 42 / 24 / 25 / 24 / 21 / 66 / 36 / 262
Result and Discussion:
From the extensive literature review, 9 factors are identified as factors influencing policyholders’ decision on purchasing of life insurance products. An attempt made in this research to rank those 9 factors in order of influence policyholders decision on purchasing life insurance products, from 1 to 9. To do this, the following methodology was adopted.
Once the frequencies of factors influencing policyholders’ decision on purchasing were placed in a cell. Weights were assigned according to rank. First rank was given a weight of 9, and second rank was given the weight of 8 and so on. Then each cell multiplied with the respective weights, row total were obtained and termed as weighted score. Now factors could be termed most, moderate and least influencing factors from their weighted score. The table 4.1 shows the factors pertain to public life insurance company in order of their influence on purchasing.
Trust on insurance company with the weighted score (728) is given a first rank among 9 factors that influence policyholders’ decision on purchase public life products. This result is in line with the Athma.P. et all (2007) and Bejon Misra. LIC of India with decent performance and strong presence in insurance business over a last six decades has earned trust among policyholders. Policyholders trust life insurance corporation of India over generations from their personal or family experiences. Even now people feel life insurance means LIC of India it is such an extent LIC of India has influenced its policyholders. Thus it is undoubtedly most influencing policyholders’ decision on purchase public life products.
Trust on Insurance agent with the weighted score (687) is given a second rank among 9 factors that influence policyholders purchase decision on products of public life insurance company. And further agent relationship is more than merely selling insurance policies. Agents with his wide range of services in three stages (Pre purchase, while policy is alive and at the maturity/ claim). The agent suggests the policy that suits policyholder, helps in Life insurance document fill up, helps in getting policy document, collects and pays premium in occasions, agent even helps financially in premium payment, helps policyholders in availing loan facility, helps in maturity and claim settlement. Thus agent travels close with policyholders in all stages of policy thus he built a strong trust among policyholder. Further agents generally built a relationship that can extend even beyond the typical customer-agent relationship, known personally to policyholders is an added advantage. In addition to this trust on LIC of India, due to its good image helps the agent earn trust among policyholders. It influences most the policyholders to purchase products of public life insurance companies.
In majority of previous researches like that of Kalpana et all (2005), Dr.N.Kannan et all (2004), Athna.P et all (2007) and Rajesh et all (2005) product/ policy features were given top rank, in this research policy feature with the weighted score (633) given third rank among 9 that factors that influence policyholders purchase decision on products of public life insurance company. LIC of India pioneer in the industry has introduced many successful products. With different types of products like term, whole life, endowment, money back and ULIP, LIC of India gives plenty of options to policyholders and agents to choose and suggest the best products that suits needs of policyholders
Excellent claim settlement with the weighted score (546) is given a fourth rank among 9 that factors that influence policyholders purchase decision on products of public life insurance company. Nowadays people purchase Life Insurance both as a risk mitigation and saving tool, however in both cases, the success of insurance policies and insurance companies depend on company’s ability to settle claims efficiently. LIC of India has been settling policyholders’ claim exceptionally well. We could say LIC of India has set a benchmark in claim settlement that every other insurance companies strive hard to achieve. Moreover policyholders might have experienced this in their family’s previous policies. Thus claim settlement influence most the policyholders to purchase products of public life insurance company.
Insurance company’s employee behavior with the weighted score (482) is given a fifth rank among 9 that factors that influence policyholders purchase decision on products of public life insurance company. Next to insurance agent, employees of LIC of India are treating policyholders well. They tend to be kind and responsive to all queries of policyholders, which gives a pleasant experience to policyholders in insurance office premise. It influences policyholders to purchase products of LIC of India.
The premium charged and flexibility of premium payment with the weighted score (452) placed a sixth rank among among 9 that factors that influence policyholders purchase decision on products of public life insurance company. LIC of India puts serious effort in premium fixation. Majority of purchase takes place on the basis of policyholders’ ability to pay the premium and not on the basis of comparing policy premium with other insurance companies. Thus they are not giving much effort to arrive purchase decision on the basis of premium. And the flexibility of premium payment is the option of altering policy’s premium payment period and the amount insured. Some policyholders might wish to alter their policy premium payment period and amount insured in accordance with financial affinity. According to policyholders, premium charged and flexibility of payment of premium plays moderate role in purchasing policy.