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AGEME WISDOM f The
21st Kaustubh Arvind Sontakke Kruttika Kaustubh Sontakke Aditya Arvind Sontakke
The "Managemen century"isth research worl personal iti e: managemei management a wide SC( coverage of' management insurance, 1 capital mark management, Theb purposes of different stuc for the reseal reference m: review. It community material. It students of reference C' studies as preparation. the book is su an attempt provide appi various issue!
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Management Wisdom of the 21" Century
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11 Impact of Demographics' on Choice of Insurance as Investment CA (Dr.) Vrushnli B. Shah* Dr. Sarang S. Blzola**
Introduction Investment scenario in India has undergone a sea change with entry of private players in Insurance Sector, advent of Information Technology, wide use of internet, increase in investor awareness with positive steps in statutes and on line trading in Capital Markets. Insurance is perceived as need and investment as well in Indian Scenario. Seventy eight per cent of the households are aware of life insurance, only 24 per cent households own a life insurance policy. The ownership is 38 per cent among urban households but a low 19 per cent among rural households (Rajesh Shukla, 2010). Investments like Provident Fund and Insurance are obligatory in nature. Investment in other avenues is chosen by investor to satisfy obligations. Safety, Return, Convenience, Trustworthiness are some important criterion considered by investors. * Assistant Professor, Karrnaveer Bhaurao Patil IMSR, Satara ** Associate Professor, Karrnaveer Bhaurao Patil IMSR, Satara
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Review of Literature A review of research work done on investment reveals that researchers have tried to reveal preference towards various investment avenues. Impact of demographics on choice of investment has been studied revolving around . specific investment instruments are also noticed. The synthesis of such review of research work performed earlier is presented herewith. It can be inferred that indian investors opt for traditional investment avenues. With respect to demographics and investment, on five point scale (Singh, 2006) found that Shares and such avenues carrying risk are less preferred. (Verma, 2008) found that Real Estate, Mutual Funds, Insurance and Bank FD are preferred choices for investment ranging rank from one to four. Equity Shares occupy 5th position and next consequent places are occupied by PPF, Post Office, Bullions, Bonds, SC and Commodities. Sample investors prefer Bank Deposits followed by PF, insurance and MF is at rank 4th (Rajeswari T.R., 2001). With respect to age of investors, it was observed that people in the age group of 25-35 years have no health insurance and health insurance increases as age increases (Ashok Shanubhogue, 2010). Occupation has an impact on investment as professionals prefer MF and insurance (Verma, 2008), Gender also influences investment decisions as male prefer real estate, PPF, equity shares, female prefer bank FD, insurance and bullions female found denying in investment in risk avenues (Verma, 2008). Gender differences are located in Mutual Fund, Real Estate, Bullion, Bank Fixed Deposits and Insurance (Verma, 2008) Insurance specific studies reveal that besides post office, insurance is another investment avenue prefereed by massess. Due to deep and speedy penetration of Life Insurance Corporation of India to rural area with special schemes like Bima Gram and patronage of Government of India. LIC policies also enjoy income tax benefit as
110
Management
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per section 80C. Insurance has fetched attention of few researchers. Life insurance policy is generally acquired with few intentions viz. personal life risk cover, life risk cover for the family members, cover the risk of lender, as an investment, child's marriage or education, income short fall during ageing, reduce tax burden and to cover .health needs. Gender differences are insignificant on the life risk cover for the family members, insurance policy as an investment and reduction of tax burden but the factors viz. personal life risk coverage, coverage of the risk of lender, son's/daughters marriage or education, income short fall during the ageing and to cover the health needs are pegged with gender differences during the acquisition of policies. Similarly the risk of lender and reduction of tax burden are significantly different among the policy holders with reference to their qualifications. Amongst the factors of acquisition of policy the policy as an investment is the only factor having significant difference among the occupation of the policy holders and the other factors are insignificantly different. The coverage of health need and life risk cover for the family members are insignificantly different among the income group of policy holder but rest of them are significantly different due to the amount of their salaries (M. P. Pandi Kumar, 2010). Competitiveness of insurance sector has increased with its progress and entry of private players. ULIP is the new version of insurance investment avenue coupled with mutual fund. The major purpose of insurance is 'insurance for further risk'. Money back policy is most known policy followed by unit linked policy, whole life policy, endowment policy and term policy. Fund options feature in ULIP is the most attractive feature followed by flexibility, transparency, liquidity and option for riders (J. Chandra Prasad, 2009). Almost all players in Insurance sector are known by samples most favoured company is LIC followed by ICICI, Bajaj and HDPC. LIC holds 85% of market and rCICr has coverd 48% of market share
Impact of I amongsts f Method following rela tionshi gender, ed and the ir viz. persOl members, or daughl during ag needs. Th The p used Fact of variabl The facto orientatio performs liquidity savings, coverage post retir that the are corn Ofter an indi: depende a hOUSE planninj ResearcJ The inferen purpor insuran dernogr avenue Stw rural a
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amongsts private companies (Ashok Shanubhogue, 2010). Methodological analysis for study of insurance reveals following (M. P. Pandi Kumar, 2010) brings out the relationship between demographic variables viz. age, gender, educational qualification, occupation and income and the intentions to acquire the Life Insurance Policy viz. personal life risk cover, life risk cover for the family members, cover the risk of lender, as an investment, son's or daughter's marriage or education, income short fall during ageing, red uce tax burden and to cover health needs. The relation is tested using Chi Square. The perceptual study of Unit linked Insurance Plans used Factor Analysis to find correlation between choices of variables influencing the purchasing decision of UUPs. The factors used are reliability of the insurer, customer orientation of the product, professional management, past performance of the product, motivation by agents, liquidity, transparency, flexibility, fund options, tax savings, option for riders, capital appreciation, insurance coverage, service quality of the insurer, market returns, post retirement and employment opportunity. Study found that the variables affecting the choice of UUP products are correlated (]. Chandra Prasad, 2009). Often the investments which suffice security needs of an individual would be chosen by individuals like dependent obligations of education and marriage, buying a house property, obtaining an insurance cover and planning for retirement. Research Methodology The study has used diagnostic research design and inferential approach to collect primary data. Study purports objectives i.e. to study preference towards insurance as investment avenue, and, to find impact of . demographics on choice of insurance as an investment avenue. Study is undertaken in Satara District, both urban and rural areas are covered. Data regarding investment status
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