Insurance Agents have been part of our financial society as these were the starters and when it came to investments they had an edge over FD & post office Agents. These were trained people and under the Insurance Company, they were responsible for covering life & health risk. I am sure you have dealt with them or have seen your parents speaking very high of them. They sold what and how they were told, but scene changed and from based selling the financial planning took prominence.
But, many of the insurance agents did not change. They did not change their business according to needs and hence the business tactics they employ has become their mistakes.
The premium numbers and life covered has gone up but agent number has gone down because they have not adopted the new practices and concepts and still push investors. They can be easily recognized by these mistakes:
- They hide Term Plans like a secret
Many of these insurance agents still do not advocate or explain merits of term plans. Their main aim is to sell whole life, endowment or money back policy knowingly that the client is underinsured and needs a large cover.
Many of them even bad mouth term plans claiming them “no return policy” or money wastage. They don’t understand that insurance first job is to cover the risk to the extent of person’s future responsibility. But since term policies pay less, they are not sold. Also when a person buys a term plan generally his insurance needs end there, so agent’s repeat business is hampered. So he tries to keep his sales channel open by selling wrong policies.
- They claim and act as financial planners
They start advising the client on his financial planning and other investments with the limited knowledge they have. Financial planning is comprehensive and larger subject and insurance is just a part of it. But these unqualified agents try to do everything- Investment Planning, Retirement Planning, Tax Planning, Inheritance everything. There one medicine for all ailment is – Insurance only.
- They make tall claims on returns
Everyone knows that conventional policy return will not be more than 6% but still, they make huge promises using the bonus concept. They claim that insurance company will share the profits of the company by declaring many bonuses and more free money will enhance returns like loyalty bonus and revisionary bonus. Please understand that when the returns are calculated the bonuses are included and still the returns are less than 6%!
- They sell comb to bald
They will sell pension plans to a 59 Years old, they will sell insurance for the child. They have to sell the policy so they do not see the requirement. Their pitch changes with every new launch as they believe round holes can be filled with square pegs and vice versa.
- Brokerage is what they sell
Although illegal, but few agents best pitch is sharing the first premium or part of it. They are not sharing your burden of premium, they are distributing whole or part of their commission/brokerage. If you ask an insurance agent, he will say “customer demands it”. When you ask a customer he will say “agent introduced the concept”. But where is the insurance in all of it? You are buying a rotten policy who pays good to the agent and he is willing to share a bit.
- Not independent
Often agents act on behalf of one or two companies and trying to find a solution among them. There are so many policies and solutions and what client needs a fair comparison and knowledge to choose a best risk coverage solution. Agents do have a mechanism to free themselves and research on what they are selling, but they choose to ignore this part. They act like “agents” to the company, whose product they are selling instead of being “agents to investors”.
Insurance is one of the beautiful concepts in the world of uncertainty. But it has become a bad word, because of the practices and misdeeds of people who are selling it.
We all know how banks push insurance just to make money. The result- now customer goes to the bank with closed ears as they know they can be lured into buying something they will regret.
All we can do is to BE AWARE and BEWARE.
Share your 2 cents on this topic and how you deal with your insurance agent.
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