SUITABILITY OF LIFE INSURANCE PRODUCTS FOR DIFFERENT RISK GROUPS IN INDIA

Life Insurance products are bought lesser in India exclusively by rural population. General Insurance is often bought because there are compulsions under the law or from the financiers asking for insurance as collateral security. In the case of life insurance there is very little compulsion. This research study attempts to explore the reasons for the low penetration of life insurance in rural areas/markets and among socially & economically backward classes. It’s a descriptive research which tells about the best possible insurance deal suitable to rural areas, socio-economic backward classes, children, business people etc., by comparing the insurance products offered by the Indian insurers. The data for the study has been collected from secondary sources. The study also shows that the risk of death is ignored by the rural people even though there is more probability of such misfortune for people living in rural areas. The rural people believe that they will live a long and healthy life. The major factors that affect the life insurance penetrations in the rural areas are premium charged for the policy, income earned by the people, poor educational status, socio-economic backwardness etc. Further, life insurance products are sought primarily as savings instruments rather than life risk coverage entity. People have a culture of high propensity to save. The rural customer considers safety of the invested funds as the most important issue when purchasing the life insurance products and the claim settlement and assistance in policy management in other issues that affect the decision of purchase. The obvious reason is rural customer has limited income which is hard earned and hence less money available for investment in life risk coverage area. The study reveals that there should be variation in pricing of premiums that is necessary to sell products in rural areas. The other reasons are non-availability of customized/need-based insurance products for different risk groups mentioned above, low customer awareness and need of improved distribution networks that have personal touch with the customers