Term Insurance Plans are the most important and perhaps the only life insurance policy that you will need, but it is very likely that your agent has never even spoken to you about it. In case he/she has indeed recommended and made you buy term insurance plans, you are lucky because you have a really good agent – someone who understands and recommends the most important financial product you should buy.
Why do Life Insurance agents in India not recommend term insurance plans?You must surely know the reasons.
Good life insurance agents are those who probe, question, check your needs and then suggest which plans to buy, and certainly term insurance plans to start with if you don’t have one already. But most agents today will tell you that you should buy a policy because “it is the best policy in the market, launched recently by their company and it will give you very good returns”. And unfortunately, we end up believing them and buying the plan because it is difficult to refuse a friend or acquaintance.
Think. Should you do this? Why should you buy from the agent when all you are getting is bad advice? Why should such a person benefit through proceeds of the policy sale at YOUR cost?
So here’s why the agent will not suggest term insurance plans to you.
Reason 1. “Both premium and commission are very low”
Term insurance plans are very cheap compared to other life insurance plans. This is because they cover only death risk and there are no returns. So when the premium is low, the commission which is a percentage of premium, is low too. And why will the agent sell you an insurance product if he does not make good money? In an agent’s words – “I cannot make enough money to cover my travel cost to the customer’s house!” 🙂
Reason 2. “Agents don’t know too much about term insurance plans”
Most life insurance agents are not aware of the benefits of term insurance plans. Don’t be surprised. In fact it is a “chicken and egg” story here.
When commission is low, why take the effort to understand about term insurance. And if the agent does not know about term insurance, how can he/she sell it? In the end, you, the buyer has to bear the brunt of the agent’s callous approach and lack of knowledge.
Reason 3. “Most life insurance companies don’t train their agents adequately”
In spite of the fact that term insurance products are generally profitable to the life insurance companies in India, most companies do not give priority to agents on the training for selling term insurance plans. Their focus is mainly on investment products which have high premiums and which can earn the agent higher commissions which sustains his/her agency business. That’s how the whole cycle seems to be working.
Reason 4. “A product without any returns is something customers don’t want to buy as well”
I have seen many customers not expressing great interest the moment you tell them that term insurance plans have no returns even after paying premiums. It is difficult to make customers understand that this product covers only the risk of death, and which is important for them. Oh, so I have to die to get the benefit? is what many customers surprisingly ask. And the agents don’t find it worth their time or effort to explain why it is still important to the customer. Sad, isn’t it? 🙁
Reason 5. “Most customers don’t ask for it”
Customers in India are unfortunately not even aware of term insurance plans and their benefits. So while the agent does not recommend, the customers themselves end up NOT ASKING for term insurance plans – one more reason the agent is not bothered to find our more about them.
India now has many online term insurance plans available. Go ahead and search for it, compare them and buy online on your own making sure that you yourself fill up the application form. It is worth it!