Mutual Fund vs. Life Insurance: Behavioral Analysis of Retail Investors

Abstract

During the post 1990 period, service sector in most of the Asian economies witnessed growth fueled by significantchanges in their financial sector. India is now being ranked as one of the fastest growing economy of the world. Duringlast one decade or so, role of Indian insurance and mutual fund industry as a significant financial service in financialmarket has really been noteworthy. In fact since 1992, a number of research studies have underlined the importance ofthese two in the Indian capital market environment as important investment vehicles. But the existing ‘BehavioralFinance’ studies on factors influencing selection of mutual fund and life insurance schemes are very few and very littleinformation is available about investor perceptions, preferences, attitudes and behavior. Yet again, perhaps no effortsare made to analyze and compare the selection behavior of Indian retail investors towards mutual funds and lifeinsurances particularly in post-liberalization period. With this background this paper makes an earnest attempt to studythe behavior of the investors in the selection of these two investment vehicles in an Indian perspective by making acomparative study.