A STUDY OF CONSUMER BUYING BEHAVIOUR

TOWARDS LIFE INSURANCE POLICIES IN PUNJAB

STATE
Sachin Dev1, Dr. Manish Bansal2
1
Research Scholar at I.K.Gujral Punjab Technical University, Jalandhar
2
Dean Academic, Research and Plannings, MIMIT, Malout

ABSTRACT
This research paper makes an effort to study consumer buying behaviour with respect to life insurance policies.
Three major districts of Punjab (Amritsar, Jalandhar and Patiala) from Majha, Doaba and Malwa regions were
taken for sampling. Due to the amount of opportunities and large accessibility with the impact of developments
taking place especially with reference to infrastructure; these are the commercial districts of Punjab state.
These have been chosen for the purpose of research study in the Punjab state. The research study was
conducted based on a field survey through structured questionnaire method. A structured questionnaire was
designed and the responses were collected from 150 respondents (50 respondents from each district) by using
convenient sampling technique. This research paper presents insights about the number of consumers opting for
life insurance plans, awareness among respondents towards life insurance policies and investment behaviour
and pattern in buying decisions in life insurance with reference to education.
Keywords-Buying Behaviour, Life Insurance, Buying Decisions.

I. INTRODUCTION
India is a country which is known for its unity in diversity. It is second in the world in terms of population. But
when it comes to life insurance, it still ranks much lower compared to Western and other Asian countries.
As per Webster dictionary; life insurance is providing for payment of a stipulated sum to a
designated beneficiary upon death of the insured. According to Business Dictionary, two major purposes are
served by Insurance:
(1) To substitute for the insured’s incomes if he or she dies, and
(2) To qualify the insured for favorable tax treatment.
Life insurance broadly covers the financial loss incurred to the family due to the death of the Insured. The
insurance company compensates the insured’s family by paying the sum assured. Life insurance is also
considered as insurance cum investment plan, in which the policy is for a stipulated period of time. The maturity
is calculated at the death of the insured or the completion of stipulated period of time, whichever is earlier.
Therefore, the insured has the possibility of enjoying the sum assured by him or her.

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II. LITERATURE REVIEW
Khan, M.K. (1978) discusses the opportunities available which provide wonderful careers in life
insurance sector. The paper talks about the skills required for a career in life insurance sector. Life insurance
sector doesn’t come along with restrictions and barriers. It provides lots of flexibility for the people who want to
build their careers in the sector. In fact the avenue also creates and develops the overall personality of an
individual. There is a long lasting relationship of life insurance agent with his/her clients and also there is no
substitute for service rendered.
Shesha Ayyar, V. (1986) opines in the article entitled “Product Development” about various issues and
challenges which are related with regard to developing new polices. The author discusses the need for building
and developing new schemes and various concerns which can pose problems for the insurance sector. The
insights present details about the growing requirement regarding ancillary benefits such as benefits for
hospitalization or disablement etc.
A project report was being prepared by The Insurance Institute of India on “Marketing of Life
Insurance” (1987). The purpose of undertaking the project was to evaluate various aspects with respect to
insurance such as extent of life insurance coverage, awareness of the people towards life insurance plans and
policies, beliefs and attitudes in life insurance, changing perceptions towards insurance, identification sense of
employees with Life Insurance Company. The findings of the report included that LIC is a better investment
avenue for the investors as compared to bank deposits. Also in terms of reliability, the sense of reliability is
more with LIC as compared to other investment options.
Venkatesh, N.C. (1987) focuses on the area entitled “On the Trail of Better Service” where the author presents
the great need and significance of healthier and individual servicing to the consumers and has accentuated the
substance of gratifying the policyholders. The department of insurance continuously works to satisfy and adhere
to the growing requirements of the policy holders with the objective of serving them better.
Thanjavur (1987) worked upon field visit and exploratory study to gather data on “Customer Satisfaction”. The
purpose of the analysis was to provide insights about the different factors which affect the level of customer
satisfaction. The findings included the level of consumer satisfaction regarding the services, such as follow ups,
timely fulfillment of responsibilities etc.
Ward and Zurbruegg (2002) examined the impact of legal and political factors, which are significant in Asian
countries. In the Asian countries there is lots of improvement as compared to OECD countries.
S.Raju and M. Gurupandi (2009), opine that the attitude of the policy holders and their socio economic
background creates a significant influence. The study showcased the opinions and attitudes of the policy holders
towards the services of LIC.
Shivanand .H.Lengti (2009), discuss about the insurance investors who have the option to choose all other
aspects of insurance from insurance authority such as insurance ombudsman and insurance counsel to take their
disputes further.
Siddiqui et al. (2010) tried hard to build up a suitable and consistent tool to compute customer perceived
service quality in life-insurance sector. The objectives of the study were, first to investigate service quality
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structure for life insurance and then relative importance of these service quality dimensions from customers’
perspective, so as to ensure optimal deployment of resources among these dimensions, and thereby best value to
the customers. Further, the study tried to measure as to how well services were being delivered i.e. up-to what
level performances were meeting the expectations.

III. STATEMENT OF PROBLEM

Abraham Maslow’s need hierarchy theory lists safety and security as an important need.
Buying behaviour is influenced by wide range of factors such as need, love, affection,
urgency, pride, envy etc. these factors are emotions based and an important emotional and
rational factors influencing buying behaviour also are safety and security. To build a sense of
safety and security for family, and to secure their future financial needs, the life insurance
policies have been designed. As the slogan of LIC very truly conveys, “Jindagi ke saath bhi,
jindagi ke baad bhi”

IV. NEED OF THE STUDY

Investment behaviour differs from one to another. Especially when it comes to insurance, there is a large
difference and influence of factors which also govern buying behaviour. Even most of the earning persons are
not aware about right insurance plans for themselves. As we know that financial security of our family is very
important but even then people afraid from life insurance agents and avoid purchasing life insurance policies.
Some persons buy insurance plans for tax saving purpose only. So an effort is made to attempt and explore
through a descriptive research to find out buying behaviour of consumers towards life insurance policies in
Punjab state with special reference to Amritsar, Jalandhar and Patiala districts.

V. RESEARCH OBJECTIVES:
1. To explore the level of awareness and likability towards different life insurance policies
2. To understand and evaluate investment behaviour and patterns in the buying decisions in life insurance with
reference to education

VI. RESEARCH METHODOLOGY

A proper research methodology is adopted in order to achieve the set objectives and relevant
Information is collected.
6.1. Sampling Design: Convenience Sampling Technique was used.
6.2. Sample Size: Sample size of 150 respondents was taken (50 respondents from each district).
6.3. Nature and Sources of Data: The data was collected by using the following
Sources:

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a) Primary data
Primary data was collected through a structured questionnaire with personal interview.
b) Secondary data
Secondary data was collected through some relevant journals, newspaper articles, books, magazines,
governmental documents and internet etc.
6.3. Tools for Data Collection
The data collection was by done using structured questionnaires. The researcher used structured questionnaires
filled by the respondents of Amritsar, Jalandhar and Patiala districts of Punjab state.

VII. DATA ANALYSIS AND INTERPRETATION

Data analysis tools included those tools which provide a better analysis of the data and thus provide a clear
direction to the research to reach at valid interpretations and conclusions. It is analyzed by using various
statistical tools as mentioned below:
Table 1.1: The number of insured and uninsured under different policies
No. of respondents having insurance No. of respondents not having insurance
coverage coverage
46 104

Interpretation:
Only 30.66% of the population is covered under schemes of life insurance. 46 respondents out of total 150
respondents have taken life insurance policies, whereas still 104 respondents are not covered by any of the life
insurance plans which is 69.33% of total population.

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Table 1.2: The number of respondents aware about terms & conditions under different
life insurance policies

Awareness Lack of Awareness

(No. of respondents) (No. of respondents)

26 124

Interpretation:
26 respondents out of total 150 respondents are aware and familiar about the terms and conditions under
different life insurance policies. Whereas 124 respondents are not aware and familiar with the terms and
conditions of life insurance policies, i.e. only 17.33% of the respondents are aware about the terms and
conditions out of total respondents.
Table 1.3: With reference to education: type of Life Insurance policies like to be purchased
Null hypothesis (H0): There is no relationship between investment behaviour and buying decisions in life
insurance with respect to education.
Alternative hypothesis (H1): There is a relationship between investment behaviour and buying decisions in life
insurance with respect to education.

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Education/Qualification Type of policy you like the most Total
Moderate Secured and
Secured and Returns High
Low Returns with Returns with
with Low risk Moderate High Risk
Risk

Below 34 4 2 40
Graduation
Graduation 7 12 39 58
Post Graduation/ 10 23 19 52
Professional
Total 51 39 60 150

Interpretation:
Calculated value of Chi-square test = 76.285
Degree of Freedom = 4
Tabulated value of chi-square at 5% level of significance = 9.49
The calculated value is greater than the tabulated value, therefore null hypothesis are rejected.
 Alternative hypothesis (H1) is accepted.
Therefore we can say that there is a relationship between investment behaviour and buying decisions in life
insurance with respect to education.

VIII. FINDINGS
The findings of the study revealed that:
 There is very less number of the population is covered under schemes of life insurance.
 There is unawareness on bigger scale regarding terms & conditions of different life insurance policies
among respondents.
 There is a relationship between investment behaviour and buying decisions in life insurance with
respect to education.

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IX. RECOMMENDATIONS
In the Punjab state a large part of insurance related opportunities is untapped. Therefore, rendering an ocean of
opportunities existing in this area as only 30.66% of the total respondents are opting for insurance provide a
wonderful avenue for the insurance companies in Punjab state to tap this untapped market. The market seems
very opportunistic for the insurance companies to cover the rest 69.33% of the market. Also in future the
government’s easy access of international insurance companies through the FDIs will create more options to
explore.

X. SCOPE FOR FUTURE RESEARCH

This research study has a big scope for further research as it was done in reference to awareness level and
likability among respondents regarding life insurance policies as well as the relationship between buying
decisions and education has been explored. The researcher had not touched other demographic variables such as
age, gender, income, occupation and family size etc. So, further research can be done to explore the relationship
among buying decisions and other demographic variables in reference to life insurance.

XI. CONCLUSION
In this research study, the research has explored that majority of the population of Punjab state is not covered
under any life insurance policy. People are still avoiding purchasing life insurance policies. Even the level of
awareness regarding different life insurance policies is very low among the respondents. Majority of the
population is not aware and familiar with the terms and conditions of different life insurance plans. It is also
explored that education plays a vital role in purchasing of life insurance policies. It is scientifically proved that
there is a relationship between buying decisions and education. There is a very large part of the market is still
untapped in insurance industry in Punjab. Scope for insurance industry in Punjab is very wide.

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