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!
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No surprises. I have been duped too… This is a must-read article for those who have lot of a relatives and ‘friends’ who are selling insurance!!!!
Wonderfully written. I liked the image that is used on the top – says it all – the agents are just trying to fill their own pockets!!! please write more articles on health insurance also. thx.
very honest and very true. i had similar experience with my agent also, now i decided i will not buy from such kind of agents. they are caring about their own money and not about our hardearn money.
very honest and very true. i had similar experience with my agent also, now i decided i will not buy from such kind of agents. they are caring about their own money and not about our hardearn money.
Absolutely correct, Vishal. Commission seems to be driving some agents to not look at customer needs at all. We are happy that you are now alert and will not fall prey. Do spread the message.
Absolutely correct, Vishal. Commission seems to be driving some agents to not look at customer needs at all. We are happy that you are now alert and will not fall prey. Do spread the message.
In a recent meeting with my agent, I asked him to suggest good term insurance. He was reluctant and saying ideally I don’t need a term insurance considering the general experience that the chances of death are rare, life expectancy is increased. 😀 Usually agents promote insurance products as investment product. People fall prey to them (I am one of them). They suggest you ULIP policies as they get more commision and there is less sum assured it it.
Thanks for this eye opening article.
In a recent meeting with my agent, I asked him to suggest good term insurance. He was reluctant and saying ideally I don’t need a term insurance considering the general experience that the chances of death are rare, life expectancy is increased. 😀 Usually agents promote insurance products as investment product. People fall prey to them (I am one of them). They suggest you ULIP policies as they get more commision and there is less sum assured it it.
Thanks for this eye opening article.
very honest article. much appreciated.
very honest article. much appreciated.
Vivek, KK, LIC has finally launched their online term plan 3 days back. Check it out.
Vivek, KK, LIC has finally launched their online term plan 3 days back. Check it out.
Mario, LIC has finally launched their term plan. In case you are still interested, you can check it out.
Mario, LIC has finally launched their term plan. In case you are still interested, you can check it out.
I used to see so many ads for online term policy. I always was thinking why my agent is always talking about Jeevan Shree policy and not a term policy. Now I am understanding. I think they only care for the money they are making. nice article you have written. very very informative for people like us. now i am sure that i have to buy only a term policy. thanks.
I used to see so many ads for online term policy. I always was thinking why my agent is always talking about Jeevan Shree policy and not a term policy. Now I am understanding. I think they only care for the money they are making. nice article you have written. very very informative for people like us. now i am sure that i have to buy only a term policy. thanks.
We appreciate that, Kartick. While Pure term is the best, TROP may not be the best option, we feel. More in this article link below.
https://www.mintwise.com/blog/return-of-premium-term-insurance-not-worth/
We appreciate that, Kartick. While Pure term is the best, it may not be the best option, we feel. More in this article link below.
https://www.mintwise.com/blog/return-of-premium-term-insurance-not-worth/
I always sell term plan (Pure/TROP)
I always sell term plan (Pure/TROP)
We believe Term Insurance is the first insurance product agents should recommend. And there are (only) some agents who do it. These are those agents who really understand their customers’ needs and make sure that these needs are met.
You may continue to sell endowments and money-backs to those customers wherein the saving habit is irregular. So rather than spending, it is better that they lock themselves up with compulsory saving with a high exit cost.
We believe Term Insurance is the first insurance product agents should recommend. And there are (only) some agents who do it. These are those agents who really understand their customers’ needs and make sure that these needs are met.
I agree. this is important that everyone knows what kind of insurance they must buy even it is from their agents.
I agree. this is important that everyone knows what kind of insurance they must buy even it is from their agents.
I think you are not in favour of agents because we are not selling term insurance plans. that is not correct. we are selling other plans because our customers are liking to buy to those good plans with lot of bonus and loyalty additions.
I think you are not in favour of agents because we are not selling term insurance plans. that is not correct. we are selling other plans because our customers are liking to buy to those good plans with lot of bonus and loyalty additions.
Rarely does someone share things like this. Very good that you are transparent, Mintwise.
Rarely does someone share things like this. Very good that you are transparent, Mintwise.
It is up to them and overdue. We hope they launch soon.
It is up to them and overdue. I hope they launch soon.
when LIC will come out with online term insurance product?
when LIC will come out with online term insurance product?
thanks to you for letting us know about this truths.
thanks to you for letting us know about this truths.
Sharad, it is good to hear that your advisor has made you buy a term plan. We don’t know when you bought it, so if you have bought it long back, you should check today’s market since prices have crashed if you buy online. It is likely you will get more life insurance cover for the same premium.
Yes, you can surely look at other plans from LIC if it fits your needs. Go for it if your want to do compulsory savings and are okay to get returns in the range of 6%-8%.
Sharad, it is good to hear that your advisor has made you buy a term plan. I don’t know when you bought it, so if you have bought it long back, you should check today’s market since prices have crashed if you buy online. It is likely you will get more life insurance cover for the same premium.
Yes, you can surely look at other plans from LIC if it fits your needs. Go for it if your want to do compulsory savings and are okay to get returns in the range of 6%-8%.
i am from pune. i have a good advisor who has made me buy term insurance from LIC. but she is also insisting i should buy some other products of LIC. is it really worth?
i am from pune. i have a good advisor who has made me buy term insurance from LIC. but she is also insisting i should buy some other products of LIC. is it really worth?
Kavita, all agents are not bad. Some good agents really recommend term insurance products (along with some other savings products). Any agent who does not sell you a high life cover is NOT a good agent. Older agents or more experienced agents are not necessarily the best ones. Choose your agent wisely else you may get wrong advice, very little insurance and end up with a big hole in your pocket! 🙂
Kavita, all agents are not bad. Some good agents really recommend term insurance products (along with some other savings products). Any agent who does not sell you a high life cover is NOT a good agent. Older agents or more experienced agents are not necessarily the best ones. Choose your agent wisely else you may get wrong advice, very little insurance and end up with a big hole in your pocket! 🙂
this is a eye-opening information. i always thought that agents were trying to give maximum benefit to us, not take away the maximum benefit themselves.
thanks a lot.
this is a eye-opening information. i always thought that agents were trying to give maximum benefit to us, not take away the maximum benefit themselves.
thanks a lot.
You are right, Mario. LIC does not have an online term plan yet. However we feel they will launch it soon. You do not have to delay your purchase till then. Go to a good comparison website and buy a good online plan. Cheapest need not always be the best. You can read this article below before you proceed.
https://www.mintwise.com/blog/compare-and-buy-best-online-term-insurance-in-india/
You are right, Mario. LIC does not have an online term plan yet. However I feel they will launch it soon. You do not have to delay your purchase till then. Go to a good comparison website and buy a good online plan. Cheapest need not always be the best. You can read this article below before you proceed.
https://www.mintwise.com/blog/compare-and-buy-best-online-term-insurance-in-india/
my LIC agent was trying to sell me term plan but it is very expensive. i wanted to buy it online but looks like LIC is not having online term plan. please advice what i should do.
my LIC agent was trying to sell me term plan but it is very expensive. i wanted to buy it online but looks like LIC is not having online term plan. please advice what i should do.
Vivek, LIC has 2 term plans, Anmol Jeevan (max. life insurance cover of Rs. 25 lakhs) and Amulya Jeevan (min. life insurance cover of Rs. 25 lakhs). You can choose either depending on how much life insurance you need. They can be bought only from agents.
We would however caution you that because this is not available online, you may find the premiums extremely high when compared to online term insurance plans.
Since we do not recommend or disapprove any company or its products, the decision of what to buy is entirely yours.
Vivek, LIC has 2 term plans, Anmol Jeevan (max. life insurance cover of Rs. 25 lakhs) and Amulya Jeevan (min. life insurance cover of Rs. 25 lakhs). You can choose either depending on how much life insurance you need. They can be bought only from agents.
Let me however caution you that because this is not available online, you may find the premiums extremely high when compared to online term insurance plans.
Since we do not recommend or disapprove any company or its products, the decision of what to buy is entirely yours.
intresting article. my agent has always asked me to buy money back policies claiming that it will give good returns. she has never suggested term insurance. can you please tell me which is the term insurance plan from LIC so that i can ask her about it?
intresting article. my agent has always asked me to buy money back policies claiming that it will give good returns. she has never suggested term insurance. can you please tell me which is the term insurance plan from LIC so that i can ask her about it?