ELEMENTS OF LIFE INSURANCE MARKETING MIX

The definition cited above clearly indicate the four components of marketing mix. In the case of life insurance marketing of services requires an expanded marketing mix comprising (1) the product, (2) price (premium), (3) physical distribution / place, (4) promotion , and (5) policy servicing. These elements should be taken as instruments by the life insurance management when formulating life insurance marketing marketing plans.

The marketing mix is a dynamic concept, it keeps on changing with changing marketing conditions and environmental factors. The following chart depicts the life insurance marketing mix of a business enterprise. The four ingredients of the marketing mix are discussed briefly as under :

1. Product (Scheme) : It is the first element, product is the sum total of physical, social and psychological benefits. Managing the product component involves product planning and development. The life insurance marketers must define their market in terms of product function. What the customer expects from the product. It may offer a single product of several products. Life insurance as product has also to be designed, keeping in view these basic requisites, in case of life insurance the needs are in the form of two broad economic contingencies viz., death of the breadwinner and the subsequent financial insecurity of his dependents, and secondly, longer life insurance is sold as plan of LIC of Nepal developed term assurance and whole life policies and for the second category various pension plans and annuities. Apart from whole life insurance, endowment insurance and money bank plans, LIC has several products specially suited for children, exclusively for women, the handicapped, senior citizens, to cover occurrence of terminal diseases, term assurance and pension plans. There are also group insurance schemes that can be taken by employer for their employees. The LIC also administers schemes for people who are below or just above the poverty line.
2. Price (Premium) : The price is another powerful element in the life insurance marketing mix and vitally affect the volume of sales. Price is the valuation placed upon the product by the offerer. In the case of life insurance, premium is the price which the person seeking insurance pays to LIC for purchase in the life insurance policy. The management must take decisions regarding pricing (premium), investment return, level of premium, node of premium, commission, insured sum, life to be covered, interest on loan, price strategy, under writing and price related situations. It deals with price competition.
3. Physical Distribution / Place : Marketing channel policy is another integral part of the life insurance marketing mix. Physical distribution is the delivery of insurance products at the right time and at the right place. In the case of life insurance, it is the combination of decisions regarding channels of distribution, Agents, Development Officers, Brokers, Branch Office, Retail financial service distributors, alliances with banks, tie-ups with non-governmental organization, corporate agencies, Bank assurance, e-trade, proper infrastructure and training facilities, technical and material know - how on part of instructor etc. At present the strength of LIC's distribution channel comprising over 6.10 lakhs active agents and over 19,000 Development officers appears to be phenomenal. This is indeed a great advantage to cover the vast Nepali population, diverse in nature and spread, for which a strong marketing network is imperative. The net work duly supported by 2100 servicing branches.
4. Promotion : The business enterprise should inform the customers about its products and persuade them to buy. It covers methods of communicating with consumers through personal selling, advertising, publicity, sales promotion, social contracts, public relations, exhibition and demonstration used in promotion. For promoting life insurance business sales promotion activities are carried out by the agent, development officers and branch offices. Calendars, diaries, bags etc are also given to policy holders as a token of gifts. All these activities increase the volume of sales by expanding as well as retaining the market share for the insurance products.

5. Policy Servicing : Customer satisfaction predominates the success of an enterprise. In the service industry where intangibles are marketed, the importance of customer satisfaction is all the more significant. Service is said to be the sharpest edge of any marketing strategy. Sales and services are the two powerful wings of life insurance industry. Prompt and effective service boosts the morale of the sales force to present a bold form and hold their prospects. Service encompasses the service rendered to clients before the insurance contract, during the policy term and after sales (policy becoming a claim).