Buying a life insurance cover is easy, finding a sincere agent is not easy. It doesn't make your job easier that a Supreme Court verdict held that the Life Insurance Corporation of India (LIC) cannot be held accountable for its agents' actions.
Fact is, you have to depend on your agent & he identifies the right policy for you, collects the premium cheques from you when they are due, and is your insurance newscaster. In short, he is more often than not the sole link between you and the Insurance company.
There are more than 10 lakh + of them to choose from and the idea is to identify the con artists and put them at an arm's length before they get you. Their disqualification by the tens of thousands every year tells a sordid story of the ways of Insurance agents.
An unscrupulous agent could sell you the wrong policy, or lie that he got you a loaded premium or encash the premium cheque in his favour, or be untraceable when needed.
LIC won't share the blame. At the most, it will terminate the services of the agent. And he will join the ranks of more than 1 lakh agents the Corporation debars every year. The main reasons are failure to meet business quotas and alleged malpractices.
In 1995-96, LIC terminated the services of 1.17 lakh agents. But the termination will not solve your problem. It will only aggravate it, for you have to find a new agent, get hold of old records, tally the numbers and recalculate premiums.
How do you avoid these problems? By sitting him down and asking a few simple questions. How he answers them should decide whether he gets your business.
Are you from the neighborhood?
An agent knocks at the door. After the initial courtesies, ask him whether he lives in the same area as you do. That will help you verify his antecedents, contacts and standing in the profession. You could compare notes with other people in the neighbourhood and be forewarned against erratic, irresponsible agents.
However, there is a problem with over familiar agents. Don't buy insurance because you have to oblige someone. It's your money-and your life.
Are you real?
No metaphysical twist there. Just ask him if he is a professional agent-a full-timer, in other words. There are many amateurs, part-timers and proxies masquerading as authorized agents in the business, hoping to make some money on the side.
Many have less than a year's experience. Any matriculate can be an agent, and Life Insurance Companies outdated yearly business quota system encourages unprofessional oddballs into the business. Buy policies only from professional agents.
What if the agent says he is a full-timer and you are still not convinced?
In that case, ask when he is available for his clients. If it is before or after normal office hours, you can be sure he is a part-timer. Non-availability during these hours is fine only if he gives a branch number where he can be contacted during the day. Be particular to check that he is not acting on somebody's behalf.
How many years have you been in the profession?
If the answer to the last question was in the affirmative, ask him how long he has been an agent. A matriculate could get in and out of the profession inside a year. Or work for five years to qualify for renewal commissions. Sources say only about 9 per cent of LIC agents have 10 years' experience. Remember, your policy term will be longer than that.
Do you have an office?
Never mind if he works out of a room in his flat or a coop in some dilapidated building. If he has an address he calls office, he means business. If it is "at this number between 10 am and 2 pm, and after 6 pm at my residence", he is not the guy you want.
Which branch do you work for? Who is your development officer?
You know that agents work for development officers attached to a particular LIC branch. Take down the name and telephone number of the officer, and make a call to double check.
You can even visit the branch and chat up the officer on your plan to buy a life cover-and learn more about LIC and its products from him. Also, you know where to make a complaint (branch manager is the first stop), if you have any in future.
Can I have the names of a few clients?
So far so good. Time to ask for references: names and phone numbers of a few clients. Make a few calls now to casually enquire how thorough and prompt this agent this. If it turns out that most complain about him, you know what to do.
Do you have experience of claim settlement?
A 'claim' occurs either on maturity of the policy or on the policy-holder's death. Almost all the insurance companies are fairly prompt in discharging maturity claims.
To ensure prompt disbursal of maturity claims, your agent must remember exactly when it is due, and make a few queries at the branch at the right time. However, successful death claims are the true measure of an agent's resourcefulness and ingenuity in arguing cases.
This is because Life Insurance Companies uses its discretion in passing these claims-and rejects many every year.
Why did you choose this policy for me?
Okay, you have settled for him/her and worked out the insurance sum amicably. Now, he/she will advise you on the policy that best suits your needs. Ask why he/she advises one, or rejects another. Helps if you know a bit about insurance policies and how they work, but if your agent is good, you wouldn't need to.
Life Insurance Companies does not print prospectuses with full details, so make an effort to understand the product you are buying. You could also ask for a written proposal or printed illustration and cross-check with another agent.
Could the premium be lower?
The rebate you are entitled to depend on your age, health, the policy term and the sum assured. Did he/she ask you about your medical condition of present & past?
If he/she hasn't, chances are there that premium amount may be inaccurate.
Alternatively, he might have randomly provided for illnesses and disabilities where none exist, in which case you would be paying more than required. Insure yourself against such possibilities by verifying with other agents, or in a branch office.
If the policy includes an accident cover, the premium would on an average go up by Re 1 per Rs 1,000 of the assured sum. On a big policy, this would be a substantial difference. If you are paying it, make sure the policy you have bought includes accident cover.
If your agent offers to collect the premium cheque (it is not his duty), make sure the cheque is made in favour of Life Insurance Company, and the policy number is written overleaf. Never pay cash. Check your bank statement to see how promptly he deposits the cheque. Always, as a rule, insist on receipts.
Don’t buy insurance from the first agent you meet
Insurance is not a vacuum cleaner you buy soon after a demonstration. Also, it is not just a one-time purchase. You constantly need to evaluate your risk and enhance your cover. The first agent is just a stepping stone; acquaint you with the basics before settling for just a Rs. 50,000/- (average policy in India) and feel secure.
Don’t follow the crowd
Bought a plan because that is the only one my agent suggested, my friend also has the same one:
Your friend having a plan doesn’t mean you should go for a similar one. Always ask your agent questions. Don’t let him dump policies that would give him the highest commission. You should get a cover that suits your risk profile.
I just bought a cover two years ago:
The issue is not the periodicity of purchase, but adequate cover that really matters. Got a promotion or increment lately, got married, or got a kid? Each of these occasion calls for reviews your risk profile and new additions. A good agent would be invaluable help here.
Term plans, not for me:
Ignoring term plans for endowment plans is a common mistake. True, they will not give you a fancy addition on maturity, but are cheaper and yield substantially on death.
To put it differently, you like endowment plans for saving part of it; for the same reason they are costly. What if you can’t afford them? You are definitely better off with a term plan rather than being underinsured.
Preferring a moneyback plan without noticing the higher premium: regular payments of survival benefit sure do look attractive, but they are costliest among insurance policies. You can’t justify the higher premium if you are not specific about utilizing the money.
Lastly I must say sincerely try avoid buying your insurance policy from any corporate agent. They always sell the policy with their own recipe.
There is a high risk of getting any after sell support which is very much important ingredient in life insurance industry world wide.
Fact is, you have to depend on your agent & he identifies the right policy for you, collects the premium cheques from you when they are due, and is your insurance newscaster. In short, he is more often than not the sole link between you and the Insurance company.
There are more than 10 lakh + of them to choose from and the idea is to identify the con artists and put them at an arm's length before they get you. Their disqualification by the tens of thousands every year tells a sordid story of the ways of Insurance agents.
An unscrupulous agent could sell you the wrong policy, or lie that he got you a loaded premium or encash the premium cheque in his favour, or be untraceable when needed.
LIC won't share the blame. At the most, it will terminate the services of the agent. And he will join the ranks of more than 1 lakh agents the Corporation debars every year. The main reasons are failure to meet business quotas and alleged malpractices.
In 1995-96, LIC terminated the services of 1.17 lakh agents. But the termination will not solve your problem. It will only aggravate it, for you have to find a new agent, get hold of old records, tally the numbers and recalculate premiums.
How do you avoid these problems? By sitting him down and asking a few simple questions. How he answers them should decide whether he gets your business.
Are you from the neighborhood?
An agent knocks at the door. After the initial courtesies, ask him whether he lives in the same area as you do. That will help you verify his antecedents, contacts and standing in the profession. You could compare notes with other people in the neighbourhood and be forewarned against erratic, irresponsible agents.
However, there is a problem with over familiar agents. Don't buy insurance because you have to oblige someone. It's your money-and your life.
Are you real?
No metaphysical twist there. Just ask him if he is a professional agent-a full-timer, in other words. There are many amateurs, part-timers and proxies masquerading as authorized agents in the business, hoping to make some money on the side.
Many have less than a year's experience. Any matriculate can be an agent, and Life Insurance Companies outdated yearly business quota system encourages unprofessional oddballs into the business. Buy policies only from professional agents.
What if the agent says he is a full-timer and you are still not convinced?
In that case, ask when he is available for his clients. If it is before or after normal office hours, you can be sure he is a part-timer. Non-availability during these hours is fine only if he gives a branch number where he can be contacted during the day. Be particular to check that he is not acting on somebody's behalf.
How many years have you been in the profession?
If the answer to the last question was in the affirmative, ask him how long he has been an agent. A matriculate could get in and out of the profession inside a year. Or work for five years to qualify for renewal commissions. Sources say only about 9 per cent of LIC agents have 10 years' experience. Remember, your policy term will be longer than that.
Do you have an office?
Never mind if he works out of a room in his flat or a coop in some dilapidated building. If he has an address he calls office, he means business. If it is "at this number between 10 am and 2 pm, and after 6 pm at my residence", he is not the guy you want.
Which branch do you work for? Who is your development officer?
You know that agents work for development officers attached to a particular LIC branch. Take down the name and telephone number of the officer, and make a call to double check.
You can even visit the branch and chat up the officer on your plan to buy a life cover-and learn more about LIC and its products from him. Also, you know where to make a complaint (branch manager is the first stop), if you have any in future.
Can I have the names of a few clients?
So far so good. Time to ask for references: names and phone numbers of a few clients. Make a few calls now to casually enquire how thorough and prompt this agent this. If it turns out that most complain about him, you know what to do.
Do you have experience of claim settlement?
A 'claim' occurs either on maturity of the policy or on the policy-holder's death. Almost all the insurance companies are fairly prompt in discharging maturity claims.
To ensure prompt disbursal of maturity claims, your agent must remember exactly when it is due, and make a few queries at the branch at the right time. However, successful death claims are the true measure of an agent's resourcefulness and ingenuity in arguing cases.
This is because Life Insurance Companies uses its discretion in passing these claims-and rejects many every year.
Why did you choose this policy for me?
Okay, you have settled for him/her and worked out the insurance sum amicably. Now, he/she will advise you on the policy that best suits your needs. Ask why he/she advises one, or rejects another. Helps if you know a bit about insurance policies and how they work, but if your agent is good, you wouldn't need to.
Life Insurance Companies does not print prospectuses with full details, so make an effort to understand the product you are buying. You could also ask for a written proposal or printed illustration and cross-check with another agent.
Could the premium be lower?
The rebate you are entitled to depend on your age, health, the policy term and the sum assured. Did he/she ask you about your medical condition of present & past?
If he/she hasn't, chances are there that premium amount may be inaccurate.
Alternatively, he might have randomly provided for illnesses and disabilities where none exist, in which case you would be paying more than required. Insure yourself against such possibilities by verifying with other agents, or in a branch office.
If the policy includes an accident cover, the premium would on an average go up by Re 1 per Rs 1,000 of the assured sum. On a big policy, this would be a substantial difference. If you are paying it, make sure the policy you have bought includes accident cover.
If your agent offers to collect the premium cheque (it is not his duty), make sure the cheque is made in favour of Life Insurance Company, and the policy number is written overleaf. Never pay cash. Check your bank statement to see how promptly he deposits the cheque. Always, as a rule, insist on receipts.
Don’t buy insurance from the first agent you meet
Insurance is not a vacuum cleaner you buy soon after a demonstration. Also, it is not just a one-time purchase. You constantly need to evaluate your risk and enhance your cover. The first agent is just a stepping stone; acquaint you with the basics before settling for just a Rs. 50,000/- (average policy in India) and feel secure.
Don’t follow the crowd
Bought a plan because that is the only one my agent suggested, my friend also has the same one:
Your friend having a plan doesn’t mean you should go for a similar one. Always ask your agent questions. Don’t let him dump policies that would give him the highest commission. You should get a cover that suits your risk profile.
I just bought a cover two years ago:
The issue is not the periodicity of purchase, but adequate cover that really matters. Got a promotion or increment lately, got married, or got a kid? Each of these occasion calls for reviews your risk profile and new additions. A good agent would be invaluable help here.
Term plans, not for me:
Ignoring term plans for endowment plans is a common mistake. True, they will not give you a fancy addition on maturity, but are cheaper and yield substantially on death.
To put it differently, you like endowment plans for saving part of it; for the same reason they are costly. What if you can’t afford them? You are definitely better off with a term plan rather than being underinsured.
Preferring a moneyback plan without noticing the higher premium: regular payments of survival benefit sure do look attractive, but they are costliest among insurance policies. You can’t justify the higher premium if you are not specific about utilizing the money.
Lastly I must say sincerely try avoid buying your insurance policy from any corporate agent. They always sell the policy with their own recipe.
There is a high risk of getting any after sell support which is very much important ingredient in life insurance industry world wide.
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