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ndia.The tax policy of the government is particular relevant for life insurance which is a long-term contract and inculcates among the policyholders the habit of saving. Taxation of returns on investment influences, investment decisions and high rates of taxation will discourage the desire to save.

ECONOMICAL FACTORS

Interest rate at bank and interest rate of P.F variation very much affect to insurance industry, because people always attract by higher return. Therefore, they do not prefer lower return policy. Unemployment also affects insurance industry, becausethe unemployment people will not have earning, so saving also affect to life insurance sector Life insurance industry will directly affected by Earthquake, Monsoon, and Natural calamity. Because of these events turns into lots of death, so the life insurance companies have to pay claim against policy. Infant mortality rate and maternity mortality rate are also affecting to life insurance. Typical Indian want luxurious product against low income, so that they prefer installment or annuity (EMI), so that they may not have extra saving to invest in life insurance.

Increased Economical Activity

Although economic activity has slowed down since 1996, sooner or later there will Be an upswing. The increase in the growth rate in various sectors accompanied by The growth in trade in the context of fulfilling of commitments to the WTO will signal a growth in the demand for insurance covers of new types.

Interest Rates

During the last years the government has rationalized interest rate creates better business opportunities for the life insurance sector because the substitute products are graded lower by the customers. On the other hand the value of the holdings of the insurance companies will increase.

Inflation rate

Inflation can also be one of the causes to change the scenario of the insurance sector. High inflation for instance, would tend to reduce the insurance business, particularly life, because the real value of the money paid back to the policyholder

SOCIO-CULTURAL FACTORS

The basic social factors that affect the life insurance sector are as under

Population

Life style

Educational level

Level of earning

Societal benefits

These are the major social factors, which affect the life insurance sector

Population

Growth in the population is a major factor pushing up the demand. It is also going to exert a special influence on the life insurance market in other ways. Apart from exerting pressure on demand for goods and services, and through that, ill effects of uncontrolled growth of population also could spur the growth of demand.

Life style

The peculiar lifestyle of a country or an age also influences the insurance business. Change therein produces different demands for life insurance.

Level of education

India is one of the developing countries: the level of education is very low here. The literacy rate is very poor. More than 50% of the population is still uneducated or more or less not educated. Thus the people are not able to understand the concept of the life insurance. Among the educated people the quality of the education is still a big question mark. Thus the