International Journal of Research in Advent Technology, Vol.7, No.

3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

Life insurance market in rural India

Mrs. S. Anu Radha
Assist. Prof.Department Of Management, Kadayanallur.

Abstract:The researcher analyses the topic life insurance market in rural India. There are 57 insurance companies
which 24 insurance business and 33 non-life insurers. The purpose of insurance is death benefit, Disability
protection, Retirement planning and Cash Accumulation features. The objectives of this study is to understand the
rural market and need of the rural customers buying the insurance product and to examine the preference of the
policy holders towards various types of policies of insurance. Percentages are one of the simplest and useful
statistical device used for the interpretation of collected data in the research, business and economic statistics.
Insurance, apart from acting as important financial instrument for risk cover, is also a major instrument for
mobilization of long-term savings. At present, the Indian rural market with its vast and strong customer power is
tempting the insurance companies to enter into the rural market, because the rural segments contribute more profit
than urban segments. Bringing in this small change can change the face of insurance penetration of the incumbent
insurance industry and would also help in upliftment of rural people as well as society at large.

Keywords : Insurance, planning, company and financial.

1. INTRODUCTION 3. LIFE INSURANCE MARKET IN

The insurance production industry of India RURAL INDIA
consists of 57 insurance companies of which 24 are According to a report, „Insurance in Next 2
in life insurance business and 33 are non-life insurers. Years‟, by The Associated Chambers of Commerce
Among the life insurers, Life Insurance Corporation and Industry of India (ASSOCHAM), in May 2008,
is the singular public sector company. Apart from the insurance sector size was estimated at US$ 12.8
that, among the non-life insurers there are six billion, and it is likely to improve by an
general area sector insurers. Adding to these, there is unprecedented growth of 200 per cent, touching US$
sole national re-insurer, namely, General Insurance 51.2 billion by 2009-10. Rural India may offer a
Corporation of India (GIC Re). Other pole owners in business opportunity worth US$ 23 billion for the
Indian Insurance market include agents (individual insurance companies if the segment can be wooed
and corporate), financial expert, topo graphers and with innovative saving schemes at affordable
third party administrators servicing health promotion premiums. Presently, only 8 to 10 per cent of rural
claims. Indian households are covered by life insurance. The
remaining 90 per cent offer a huge potential for
2. PURPOSE OF LIFE INSURANCE insurance companies. India‟s untapped rural market
Life insurance is far more than just a holds tremendous growth opportunities for life
decision of how much to buy. Cash value life insurance industry with business worth US$ 231.67
insurance can strengthen your financial foundation million for insurance firms.
and protect your goals. Depending on your financial
situation, life insurance can be used for a variety of 4. STATEMENT OF THE PROBLEM
purposes, such as : In India, more than 75% of the total
Death Benefit - ensures that those who are most population lives in the rural areas. Insurance plays a
important to you will be taken care of in the event of vital role in the development of national economy. It
your death. act as a protecting shield for both the companies as
Disability protection – ensures that your premiums well as the general public and it protects them from
will be paid and your insurance will remain in force huge loss due to national calamities such as fire,
if you are disabled and unable to work. flood etc and loss of life due to accident. Individuals
Retirement planning – funds accumulate on a are forced to take policies not only for the life of
highly effective tax - sheltered basis to provide for individuals but also for the welfare of their families.
future retirement needs. Before 2000, there is only LIC of India but at present
Cash Accumulation features - money for future there are many private foreign Insurance companies
emergencies or opportunities can accumulate in your in India. The competition between the insurance
policy. companies is vigorous. Now a day‟s lots of foreign

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 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

insurance companies are forward to render the The study is descriptive in nature. The main
services in rural India. According to the study, on purpose of descriptive research is to describe the state
Life insurance in rural sector by the policy holders affair, as it exists at the present. The first step is
and financial advisors with reference to sample selection, for which the respondents were
Ambasamudram taluk is inevitable. consumers in Ambasamudram taluk. The total
consumers were 180. The same numbers of
5. REVIEW OF LITERATURE questionnaires were distributed, but only 168 fully-
Amitabh Verma (2008) opines that high completed questionnaires were received. Results are
business retention ratios indicate the health of a based on these 168 respondents. The consumers are
company. He further adds that insurers should adopt selected by the Purposive sampling method.
dynamic methods of ensuring that a customer does
not go out of their reach. Studies have been carried 8. DATA COLLECTION
out on the profile of the policyholder, nature of For the present study, a structured
policies, modes of payment, channels and servicing questionnaire method was used for collecting primary
to understand the data. The questionnaire consists of multiple choice
Causes of lapsation; and thereby introduce measures questions. The main source of secondary data has
to achieve better persistency. The customer may lose been IRDA journals, ICFAI Journal of services
interest in the product/policy leading to lapsation. For marketing, Websites of insurance companies.
instance, adverse market consumer‟s perception of 9. TOOLS USED FOR THE STUDY AND
the unit linked policies and may lead to lapsation as a PERCENTAGE ANALYSIS
resultant loss of interest.
Banerjee T. K (2004) revealed that though The data thus collected was tabulated,
the Government has tried to promote insurance interpreted and analyzed with a view to make the
business in rural India through Public Sector study meaningful. In a present study, percentage
Insurance Companies for nearly two decades there analysis is used. It can be used, if the researcher
still remains a vast untapped potential considering wants to calculate the percentage of various complex
that 74.3 percent of the total population lives in rural variables. Percentage represents the number of parts
India. At present in rural areas insurance cover is of 100. It can be calculated as under.
low, and there are few insurance covers, available on
affordable terms, for rural producers and consumers.
The insurance industry has been opened up, with a
restriction of 26% on foreign ownership to Indian
insurers. 10. SCOPE OF THE STUDY
The present study aims at highlighting the
6. OBJECTIVES OF THE STUDY customer perception and purchase decision of a life
 To understand the rural market and need of insurance product. It also aims at evaluating the
the rural customers buying the insurance performance of the policy holders by the insurance
product. companies in rural sector. The study has to be
 To examine the preference of the policy undertaken from point of view of sample consumers
holders towards various types of policies of belonging to ambasamudram taluk. The study
insurance. basically focused on the regarding Life insurance that
 To give findings suggestion and conclusion. how much the consumers are aware about these
investment avenues, the rate of satisfaction regarding
7. RESEARCH METHODOLOGY the returns they are getting.

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 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

Demographic Profile of the Respondents

Table 1: Demographic Profile of the respondents
Sex No. of .Respondents Percentage
Male 96 57.20
Female 72 42.80
Total 168 100.00
Age
Below 30 54 32.14
31-40 52 30.95
Above 41 62 36.90
Total 168 100.00
Occupation
Services 14 8.33
Business 32 19.04
Professional 25 14.88
Agriculture 40 23.80
Others 57 33.92
Totals 168 100.00
Education level
High school 57 33.92
Bachelor‟s Degree/Diploma 41 24.50
Master‟s Degree 13 7.73
Others 57 33.92
Total 168 100.00
Monthly Income(in Rs)
Below 10,000 120 71.42
10,001-15,000 22 13.09
Above 15,001 26 15.47
Total 168 100.00
Earning person in a Family
Single 30 17.85
Two 83 49.40
More than Two 55 32.73
Total 168 100.00
Source : Primary Data

and remaining 52(30.95%) of respondents are 31-40

From the table 1 a major proportion age group, which depicts the distribution of
(57.20%) is of male respondents, while (42.80% ) respondents on the basis of occupation shows
are female, The maximum percentage of policy that(33.92%) respondents belong to Daily wages or
holders in the rural area belongs to the age group of Beedi rollers or Drivers Or Students followed by
above 41(36.90%) followed by below 30(32.14%) Agriculture(23.80) and (8.33%) of respondents

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 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

belong to service category which is lowest in rural policy holders belong to the middle class and 15.47%
areas, it is clear that the majority(67.84%) of belong to the highest income group, around 49.40%
respondents in rural areas had their education up to of the respondents were two earning people in their
school level 41 respondents(24.50%) had their families an of the same profile and 32.73% of the
education up to Bachelor‟s Degree and remaining respondents are more than two persons, merely
respondents(7.73%) are master degree, shows that 17.85% of the respondents are single person earnings
the sample is dominated by the respondents falling in in the family.
the lowest income category 71.42%. Merely 13.09%
Table 2:Factors Influencing the Buyer Behaviour
Name of Factor No. of .Respondents Percentage
Advertisement 26 15.47
Employees of Insurance company 23 13.69
Financial advisors 81 48.21
Others 38 22.61
Total 168 100.00
Source : Primary Data

Table 2 shows that about 48.21% of respondents have Advertisement and only 13.69% of respondents by
been influenced by financial advisors 22.61% by employees of insurance companies.
friends and family members, by 15.47%

Table 3: Type of Policy Taken

Name of policy No. of .Respondents Percentage
Child policy 3 1.78
Endowment policy 58 34.52
Money back 34 20.23
ULIP 15 8.92
New Jana Raksha 53 31.54
Jeevan Anand 3 1.72
Pension plan 2 1.19
Total 168 100.00
Source : Primary Data

From table 3, it is clear that 34.52% of respondents Child policy, 1.72% Jeevan anand, 1.19% Pension
have taken the Endowment policy, 31.54% New jana Plan. Hence Endowment policy is the most popular
Raksha, 20.23% Money back, 8.92% ULIP, 1.78% among the rural areas.

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 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

Table 4 : Preference of After sales services

Notifications No. of .Respondents Percentage

New Products Information 39 23.21

Renewal of Premium 98 58.33
Switching of funds 7 4.16
Fund Statements 24 14.28

Total 168 100.00

Source : Primary Data

From Table 7 it is seen that the most important product information followed by 14.28% of
service is to get the remainder of the dates for respondents on fund statement. Merely 4.16% of
premium payment (58.33%), 23.21% prefer new respondents on switching of funds to new products.

Table 5 : Preferred Mode of Communication

Communication Modes No. of .Respondents Percentage

SMS 19 11.30
Phone Calls 48 28.57
E-mails 12 7.14
Letters in Self-addressed Envelope 89 52.97
Company‟s Representatives 0 0.00
Total 168 100.00
Source : Primary Data

From Table 5 reveals that 52.71% of respondents mode of communication.

prefer Letters in a self-addressed envelope to be the 12. SUGGESTION
most preferred mode of communication, this is The role of Life Insurance Corporation in
followed by Phone calls 28.57% of respondents and India
SMS 11.30% of respondents. Only 7.14% of The impact of life insurance corporation in
respondents preferred E-mails. rural areas.
11. FINDINGS The role of insurance business risk in Tamil
The major proportion (57.20%) is of male Nadu.
respondents. A study on insurance company in the
48.21% of respondents have been influenced economic development.
by financial advisors. 13. CONCLUSIONS
Endowment policy is the most popular Insurance, apart from acting as important
among the rural areas. financial instrument for risk cover, is also a major
Tthe most important service is to get the instrument for mobilization of long-term savings. At
remainder of the dates for premium payment present, the Indian rural market with its vast and
(58.33%). strong customer power is tempting the insurance
52.71% of respondents prefer Letters in a companies to enter into the rural market, because the
self-addressed envelope to be the most preferred rural segments contribute more profit than urban

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 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

segments. Many insurance companies are entering

into the rural market to make competitive advantages
in the
Globalized India. In the globalized scenario, IRDA
will have to play a decisive role towards meeting the
special needs and challenges of the insurance sector.
Affordable price is to be offered to these people
which are customized according to their need. The
potential of rural market is still untapped due to poor
distribution, large distances and high costs involved.

REFERENCE
[1] . Amitabh Verma (2008), “Retention of Life
Insurance Business Need For
Improvement”, IRDA Journal, Vol. 6, No.
8, August, pp. 23-26.
[2] 2. Annual Reports of IRDA, (2009-2010),
IRDA, Hyderabad, India.
[3] . Annual Reports of LICI, (Various Years),
Life Insurance Corporation of India,
Mumbai.
[4] . ASSOCHAM, (2008), “Globalization,
Growth and People”, New Delhi
[5] Banerjee T. K (2004), “Insurance
Regulations in India and Future Directions”,
The journal of Insurance Institute of India,
Vol.xxx, July, pp.8-13.
[6] .Debabrata Mitra and Amlan Ghosh (2009),
“Rural Life Insurance in Post Reform Era in
India: Growth and oppurtunities”,
International Journal of Rural Development
and Management Studies, Vol.3, No.2,
December, pp.241-155.
[7] .Jain A..K (2004), “Risk management VIS-
A-VIS Insurance Education”, The journal of
Insurance Institute of India, Vol.xxx, July,
pp.52-61, 67-71.

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