Customer Preferences for Life Insurance Policies:A Study Using Conjoint Analysis

Abstract

Life insurance is one of the popular financial services in India as life insurance premium, is used for income tax deduction under instruments under 80 CC of the Income Tax Act by tax assesses. Life insurance is one of the largest and fastest growing service industries in India. New products like ULIP (Unit Linked Insurance Polices) and use of internet technology and reintermediation have changed the dynamics of the life insurance industry. Life insurance accounted for 19.0% of the total household financial assets in India of INR 12, 356 billion in the financial year 2014-15. To boost the household savings, government has hiked the exemption limit by individuals in financial instruments from Rs. 1 lakh to Rs. 1.5 lakh. Post-liberalization of life insurance industry, old and well established public sector giant Life Insurance Corporation of India (LIC) is the market leader. There are numerous studies done to assess demographic variables association with the life insurance purchase but studies associated with policy preferences using multivariate analysis have been sparse. The current study makes modest attempts to fill the gap by assessing the life insurance policy preferences towards LIC using conjoint analysis based on decompositional approach and discusses the managerial implications.