© 2023 IJRTI | Volume 8, Issue 12 | ISSN: 2456-3315

FACTORS AFFECTING THE INVESTMENT

DECISIONS OF LIC POLICYHOLDERS IN
COIMBATORE
1
Dr.T.Kavipriya & 2Ms. Shalini. S
1
Assistant Professor, Department of Commerce, PSG College of Arts & Science, Coimbatore
2
Ph.D Research Scholar, Department of Commerce, PSG College of Arts & Science, Coimbatore

ABSTRACT: Wide spread of awareness on the term LIC is very particular and especially to the rural as they backward in
certain reasons, to socially responsible ones and economically backward classes on a view to reach them by insuring them
with a mind of spreading awareness by securing life of each people at a financially stabled coverage against death at an
affordable cost. Insurance’s main goal is to minimize the possibilities of uncertainty and managing loss of accidents. It is the
process of substituting the premium payment which is of small concern to a known fee for the professional insurer in
exchange medium of assumption of risking low, payment under promise event of loss. Customers are gaining their form of
savings in investing and they are being held at the position of securing themselves in making their form of investment
decision on any insurance.

Keywords: LIC, investment, economy, awareness, risk, security

INTRODUCTION
The oldest and fastest-growing state-owned insurance provider in India is the Life Insurance Corporation of India (LIC).
Since its inception in 1956, LIC has been a key player in the nation's insurance market, providing millions of policyholders the
choice of a broad range of life insurance products. For individuals and their families all over India, LIC has become a pillar of
financial stability owing to its enormous range of branches and agents. Recognized for its trustworthiness and authority, LIC has
made a major contribution to the social welfare and economic development of the whole nation. The company's role as one of the
leaders in the field of insurance has been strengthened by its commitment to catering to all of the requirements of its policyholders.

REVIEW OF LITERATURE
Yash Sharma & Kausik Mukherjee (2016), analyzed the factors which are affecting investor’s decision due to which investors
incline towards insurance schemes. To suggest for the increase of the trend of taking life insurance by maximum people. Further,
there is a lot of scope of growth of investment in the life insurance policy, but insurance companies are required to increase
advertisement and more awareness is required to bespread among the people.
Ravi Kumar Tati, Ernest Beryl B Baltazar (2018), identified that there is any association between annual income of investors and
factors influencing consumer choice of investment in life insurance. The study concluded that there is no such association. Themajor
influencing factors in choosing an insurance company in the future are supposed to be investor relationships, company image and
at lower premium.
Prakruthi M.V (2020), examined the objectives are to distribute Health Insurance in rural areas and backward economic and
economic sectors with the aim of reaching out to all the most vulnerablepeople in the country and providing them with adequate
mortality if it is costly, increase the promotion of personal savings by making insurance-related savings more attractive. The study
also aimed to know the schemes, policies, and their impact on the learning environment. The success of LIC Life Business is
assessed by various parameters such as new business growth, business performance, business product benefits etc.
D. Sneha (2021) understood and compared the rural and urban policy holder’s perceptions towards Life insurance in Warangal
division. The insurance market in India is highly concentrated with the Life Insurance Corporation of India (LIC) havingmore than
70% of the market share. High levels of financial illiteracy lead to significant information asymmetry in the market. There is a need
for greater education and awareness programs for consumers in this rapidly growing industry.

Manish Dadhich (2022) determined by an old age method of sharing risk through economic cooperation led to the development of
the concept of insurance. Life insurance is universally acknowledged as an institution that eliminates risk, substituting certainty for
uncertainty and comes to the timely aidof the family in unfortunate events. The insurance industry is the backbone of the economy
and plays a dynamic role in providing one of the most vital services needed for the nation's rapid growth. In India, the insurance
sector was nationalized with an objective to reach every sphere of this country.

STATEMENT OF THE PROBLEM

Investment design of Life insurance corporation (LIC) is crucial for the development of economy. LIC is the largest
insurance provider and has wide range of investments in the form of long- term and short-term investments. Decisions taken for
making investment are complex and vital in nature, as they come with significant effect on the financial outcomes of individuals
and business. The study states and identifies the various factor influencing LIC’s investment decisions and the effectiveness of
its investment policies. It helps in understanding the factors driving LIC’s investment decisions, the risk which is associated

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with the investments and its optimizing returns.

OBJECTIVES OF THE STUDY
Following are the objectives of the study
 To identify the purpose of investment in LIC by the customers.
 To determine various factors influencing customer’s investment decision on LIC.
 To investigate the insurance policies that is preferred by the customers.
 To analyze the investment patterns formatted in LIC policies.

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problems. This method comprises the following
research design; sampling method; sampling size; collection of data methods; analysis tools; and limitation of the study.
Sampling Method Convenient sampling technique
Sampling size 200 respondents
Area of the study Coimbatore city
Methods of Data Collection Both Primary and Secondary Data
Tool for Analysis  Percentage Analysis
 Weighted Average Score
 Rank Analysis

Limitations of the Study The study has been conducted from 200
respondents in Coimbatore city, however adequate
care has been taken in collecting the unbiased data.

ANALYSIS AND INTERPRETATAIONS

Table 1 – Demographic Profile
Particulars No. of respondents Percentage
Gender of the respondents
Male 105 52.5%
Female 95 47.5%
Age of the respondents
Below30 years 125 62.5%
31-40 years 41 20.5%
41-50 years 30 15%
Above 51 years 04 2%
Educational level of the respondents
No formal education 07 3.5%
SSLC/HSC 23 11.5%
Diploma 19 9.5%
UG/PG 130 65%
Professional 21 10.5%
Occupation of the respondents
Self employed 44 22%
Private Employee 68 34%

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Government employee 51 25.5%

Others 37 18.5%
Income of the respondents
Below Rs.2,00,000 32 16%

Rs.2,00,001-Rs.4,00,000 70 35%

Rs.4,00,001-Rs.6,00,000 57 28.5%

AboveRs.6,00,001 41 20.5%

Marital status of the respondent

Married 81 40.5%
Unmarried 119 59.5%
Type of the family of the respondent
Joint family 57 28.5%
Nuclear family 143 71.5%
No of Family members of the respondent

Below 2 members 11 5.5%

2-4 members 114 57%

4-6 members 51 25.5%
Above 6 members 24 12%
No of Earning Members in family
1 39 19.5%
2 103 51.5%
3 45 22.5%
Above 3 13 6.5%
Annual savings in the family
Below Rs. 20,000 32 16%
Rs. 20,001 – 40,000 75 37.5%
Rs. 40,001 – 50,000 56 28%
Above Rs. 50,000 37 18.5%
Residential Status
Urban 91 45.5%
Semi- urban 87 43.5%
Rural 22 11%
Source: Primary Data

From the above table highlighted that 52.5% of the respondents are male. 62.5% of the respondents belong to the age group of below
30 years. 65% of the respondents are qualified with UG/PG levelof education. 34% of the respondents are private employees. 59.5%
of the respondents are unmarried. 71.5% of the respondents are living in nuclear family. 57% of the respondents have 2 - 4 members
in their family. 35% of the respondents have an annual income between Rs.2,00,001-Rs.4,00,000. 51.5% of the respondents have 2
earning members in their family. 37.5%) of the respondents save an amount between Rs.20,001– 40,000. 45.5% of the respondents
are living in Urban areas.

Table 2 – Type of Investment pattern preferred other than Insurance

Respondents
S. No Type of LIC Policy

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Purchased Yes % No %

1 Bank Fixed Deposit 137 68.5 63 31.5

2 Chit Funds 79 39.5 121 60.5

3 Post office savings 110 55 90 45

4 Land 136 68 64 32

5 Gold 141 70.5 59 29.5

Source: Primary data

Table 2 shows that out of the total respondents taken for the study, 141 (70.5%) respondents prefer to invest in gold,
137 (68.5%) respondents prefer to invest in bank fixed deposits, 136 (68%) respondents prefer to invest in land, 121 (60.5%)
respondents do not prefer to invest in chit funds and 110 (55%) respondents prefer to invest in post office savings.

Table 3 – The Primary Reason of the respondents for purchasing an LIC policy
Respondents
S. No Primary Reasons
Number Percentage (%)

1 Tax Benefits 34 17

2 Investment Opportunities 61 30.5

3 Insurance Coverage 77 38.5

4 Retirement Planning 28 14

Total 200 100

Source: Primary Data

Table 3 reveals that out of the total respondents taken for the study, 77(38.5%) respondents prefer to buy an insurance
policy for coverage, 61 (30.5%) respondents prefer to buy an insurance policy for investment opportunities, 34 (17%)
respondents prefer to buy an insurance policy for tax benefits and 28 (14%) respondents prefer to buy an insurance policy for
the purpose of retirement plans.
Table 4 – Source of Influence of the respondents
Respondents
S. No Source of Influence
Number Percentage(%)

1 Media 20 10

2 Insurance Agents 58 29

3 Government 38 19

4 Friends, family & colleagues 84 42

Total 200 100

Source: Primary Data

Table 4 depicts that out of the total respondents taken for the study, 84 (42%) respondents were influenced by friends,
family & colleagues, 58 (29%) respondents were influenced by insurance agents, 38 (19%) respondents were influenced by
government and 20(10%) respondents were influenced by the media to get an insurance policy.
Table 5 -Number of Years with LIC by the Respondents

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Respondents
S. No No. of Years
Number Percentage (%)

1 Lessthan1year 40 20

2 1– 3years 98 49

3 3– 5years 50 25

4 More than 5 years 12 06

Total 200 100

Source: Primary Data

Table 5 shows that out of the total respondents taken for the study, 98(49%) respondents have been policyholders with LIC
for 1–5years, 50(25%) respondents for 5–10 years, 40(20%) respondents have been policyholders with LIC for a period less than 1
year and 12 (6%) respondents have been policyholders with LIC for more than 10 years.

Table 6 - Factors influence to purchase an LIC Policy

Respondents

S. Factors Level P-1 P-2 P-3 P-4 P-5 P-6 P-7 Total Score Rank
No
Score 7 6 5 4 3 2 1

Level 66 31 50 19 6 17 11 200
Risk 5.49 I
1
Score 462 186 250 76 18 34 11 1099

Level 24 64 45 29 22 12 4 200
2 Bonus 4.87 II

Score 168 372 225 116 66 24 4 975

Level 23 35 69 39 18 11 5 200
Premium 4.76 III
3
Score 161 210 345 156 54 22 5 953

Level 26 35 40 48 25 12 14 200
Savings 4.48 V
4
Score 182 210 200 192 75 24 14 897

Level 25 29 51 38 34 13 10 200
Tax 4.47 VI
5 benefits
Score 175 174 255 152 102 26 10 894

Level 23 43 46 28 24 29 7 200
Maturity
6 4.49 IV
Value
Score 161 258 230 112 72 58 7 898

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Loan Level 30 24 50 21 27 22 26 200

7 facility 4.19 VII

Score 210 144 250 84 81 44 26 839

Source: Primary Data

Table 6 highlighted that the majority of the respondents indicate that, risk is the main factor influencing consumers
towards LIC policies. This ranks first according to the score obtained (Score=5.49). Bonus of LIC policies is the second most
influencing factor, according to the scores obtained (Score=4.87). Premium of LIC policies is the third most influencing factor,
according to the scores obtained (Score=4.76). Maturity value of LIC policies is the fourth most influencing factor, according to
the scores obtained (Score= 4.49). Savings of LIC policies is the fifth most influencing factor, according to the scores obtained
(Score=4.48).Tax benefits of LIC policies is the sixth most influencing factor, according to the scores obtained (Score =4.47).
Loan facility of LIC policies is the least influencing factor, according to the scores obtained (Score=4.19).

Table 8 - Type of LIC Policy Purchased by the respondents

Respondents
S. No Type of LIC Policy Purchased
Yes % No %

1 Endowment Policy 119 59.5 81 40.5

2 Term Policy 94 47 106 53

3 Money- back Policy 114 57 86 43

4 Unit Linked Insurance Policy 74 37 126 63

Source: Primary Data
Table 7 shows that out of the total respondents taken for study, 119 (59.5%) respondents have purchased endowment policy,
114 (57%) respondents have chosen moneyback policies, 94 (47%) respondents have opted for term policies and 74 (37%) respondents
have invested to unit linked insurance policies.

Table 8 - Type of plan preferred by the respondents

Respondents
S. No Type of Plans
Number Percentage (%)

1 Low risk with secured and lowreturns

55 27.5

2 Moderate risk with moderatereturns

113 56.5

3 High risk with high returns 32 16

Total 200 100

Source: Primary Data

Table 8 shows that out of the total respondents taken for the study, 113 (56.5%) respondents prefer to take moderate risk
plans with moderate returns, 55 (27.5%) respondents prefer to take low risk plans with low returns and 32 (16%) respondents prefer
to take high riskplans with high returns.

Table 9 - LIC Policies compared with Private Insurance Companies

Respondents
S. No Level

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Number Percentage (%)

1 Strongly Agree 32 16

2 Agree 70 35

3 Neutral 66 33

4 Disagree 28 14

5 Strongly Disagree 04 02

Total 200 100

Source: Primary Data

Table 9 reveals that out of the total respondents taken for the study, 70 (35%)respondents have agreed that LIC policies
are more attractive than policies of private insurancecompanies, 66 (33%) have neutral opinion, 32 (16%) respondents have strongly
agreed, 28 (14%) respondents have disagreed and 4 (2%) respondents have strongly disagreed.
Table 10 - Kind of issues faced during claim settlement process by the respondents

Kind of issues faced duringClaim Respondents

S. No
Settlement Process
Number Percentage (%)

1 Delay in claim settlement 22 21

2 Insufficient claim settlement 17 16

3 Claim rejection 61 58

4 Others 5 5

Total 105 100

Source: Primary Data

Table 10 depicts that out of the 105 respondents taken for the study, 61 (58%) respondents face issues of claim rejection,
22 (21%) respondents face issues of delay in claim settlement, 17 (16%) respondents face issues of insufficient claim settlement
and 5 (5%) respondents face other issues.
Table 11 - Level of Satisfaction of LIC Policies by the respondents
S. Parameters Respondents Total Score Rank
No

Level P-1 P-2 P-3 P-4 P-5

Score 5 4 3 2 1
1. Risk Level 65 49 63 13 10 200 3.73 III
Score 325 196 189 26 10 746
2. Bonus Level 20 99 54 17 10 200 3.51 IV
Score 100 396 162 34 10 702
3. Premium Level 24 57 81 26 12 200 4.13 I
Score 120 399 243 52 12 826
4. Savings Level 31 67 58 31 13 200 3.36 V
Score 155 268 174 62 13 672
5. Tax benefits Level 24 57 68 27 24 200 3.85 II
Score 120 228 204 194 24 770
6. Maturity Value Level 25 67 56 32 20 200 3.22 VI
Score 125 268 168 64 20 645
7. Loan facility Level 30 44 83 25 18 200 3.21 VII
Score 150 176 249 50 18 643

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Source: Primary Data

Table 11 depicts that the majority of the respondents indicate that premium is the main parameter for the level of satisfaction
in LIC policies. This ranks first according to the score obtained (Score = 4.13). Tax Benefits of LIC policies is the second most
satisfied factor. This ranks second according to the scores obtained (Score = 3.85). Risk of LIC policies is the third most satisfied
factor. This ranks third according to thescores obtained (Score = 3.73). Bonus of LIC policies is the fourth most satisfied factor. This
ranks fourth according tothe scores obtained (Score = 3.51). Savings of LIC policies is the fifth most satisfied factor. This ranks fifth
according to the scores obtained (Score = 3.36). Maturity Value of LIC policies is the sixth most satisfied factor. This ranks sixth
according to the scores obtained (Score = 3.22). Loan facility of LIC policies is the least satisfied factor. This ranks seventh according
to the scores obtained (Score = 3.21).
FINDINGS
 Majority (52.5%) 105 respondents are male
 Majority (62.5%) are below 30 years of age
 Majority (65%) of the respondents are qualified with UG/PG level of education
 Most (22.5%) of the respondents are private employees
 Most (35%) of the respondents have annual income between Rs.2,00,001 - Rs.4,00,000
 Majority (59.5%) respondents are unmarried
 Majority (71.5%) respondents are of nuclear family
 Majority (57%) of the respondents have 2 - 4 members in the family
 Majority (51.5%) of the respondents have 2 earning members in their family
 Most (37.5%) of the respondents save in the range of Rs.20,001 – 40,000
 Most (45.5%) of the respondents are living in Urban areas
 Majority (70.5%) of the respondents prefer to invest in gold
 Most (38.5%) of the respondents have purchased insurance policy for the purpose of insurance coverage
 Most (42%) of the respondents were influenced by friends, family and colleagues to get an insurance policy
 Most (39%) of the respondents have a policy duration of 1-3 years
 Majority of the respondents have given top preference to risk as the High influencing factor among others in buying LIC
policy
 Majority (59.5%) of the respondents have purchased endowment policy
 Majority (56.5%) of the respondents prefer moderate risk plans
 Most (35%) of the respondents agree that LIC policies are more attractive than policies of private insurance companies
 Majority (58%) respondents face issues of claim rejection
 Premium is the highest level of satisfaction in LIC policies.

CONCLUSION

Life insurance is an important form of insurance and essential for every individual. Indiais a developing country where
income levels of the people are increasing with increased opportunity. Customers are the real pillars of success of life insurance
business and thus it is necessary to keep their policyholders satisfied and retain them as long as possible. The study reveals that risk
is the main factor influencing the customer towards LIC policy. The study alsofound that majority of the customers feel investment
as tax saving option. The study concluded that major influencing factors in choosing an insurance company in the future are
supposed tobe company image and lower premium.

REFERENCES
 Manish Dadhich (2022), “An Empirical Study of Investment Pattern of Indian Insurance Companies: A Case Study of Public
and Private Insurance Companies”. Journal of Information and Library Network, Vol 2, No.3, Pg no. 658 – 670.
 D.Sneha (2021), “Factors Affecting Consumer Investment towards Life Insurance Policy”, International Journal in
Commerce, IT and Social Sciences, Vol 7, No. 1, Pg no.2394 – 5702.
 Prakruthi M.V (2020), “The Performance of Life Insurance Corporation of India a Macro Study”. Journal of Information and
Library Network, Vol.5, No. 2, Pg no.342 – 460.
 Ravaliya Shital Khimabhai (2020), “An analytical study of performance of various plans of public and private life insurance
companies in India”. Journal of Information and Library Network, Vol. 4, No. 5, Pg no. 246 – 460.
 Nikita Kumari, Mohammed Yameen (2019), “Measurement of Efficiency of Life Insurance Corporation of India”.
International Journal of Applied Financial Management Perspectives, Vol. 3, No. 3, Pg no.1182 – 1190.

WEBSITES:
1. https://www.licindia.in
2. https://www.coverfox.com/life-insurance/life-insurance-companies/lic-of-india/
3. https://www.vedantu.com/commerce/life-insurance-corporation-of-india-lic
4. https://www.policybazaar.com/lic-of-india/articles/lic-policy-list/

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5. https://www.policybazaar.com/insurance-companies/lic-of-india/#types-of-lic-plans
6. https://www.apaservices.org/practice/business/finances/insurance-denial

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