How is life insurance sold?

I hope to God no underwriter or actuary is reading this article. It is just a collection of the channels through which life insurance is sold these days. If some retired people cannot recognize some of the channels, please stop shaking your heads! Let us look at the channels:

1. The life insurance agent: the old, tried tested method. An agent is appointed then there is a manager to look after this agents requirement. This manager is given a lot of fancy names – Unit manager, business development manager, sales manager, etc. The agent has to first pass an exam – “conducted” by IRDA approved institutions. In the English dictionary the closest word to this exam is Joke.

2. The “relationship manager”: Employed by banks these guys (and gals too) know your bank balance, your salary, your credit card payment….so they know how much of life insurance you need, so they sell to you. A very aggressive channel, training, if any is strictly optional. If anything it is a hindrance – 3 training days means 3 sales days less :)

3. The “relationship manager” who works in brokerage houses like Indiainfoline, Kotak securities, Edelweiss, Motilal Oswal, Sharekhan, Angel broking, etc. more or less similar to 2.

4. Wives of agents: Unlike doctors, lawyers, Chartered Accountants, once a person becomes an agent his whole family can start selling life insurance products. So the wife of an agent, mother, father, major son, major daughter, partner, neighbor all pitch life insurance products.

5. MLM: Multi Level Marketing agencies like Amway, enroll new members on a daily basis. So when you are enrolled as a “sales officer” – you need to get say 2500 points to start. Of course you can do this by simply buying a life insurance with a premium of Rs. 15000! So here is a fantastic way to sell life insurance – every day if you enroll 200 members a day, you would be selling (rather the new sales officer would be buying) a life policy to “qualify” as a member! So this channel works like a sales and back office processing factory. There is a large no. of people selling and a million people filling up the form, etc. Here there is no requirement of training. Simple.

6. Agents of other companies selling life insurance: All the old Indian names who have entered the life insurance business got a lot of “walk-in” agents. These are the old Indian hands who were selling equities, mutual funds, equities, etc. Now since these guys are MDRT agents, TOT agents, COT agents (titles for high life insurance sales people). The competitor companies put a plan in place to “attract” these high title agents with fantastic schemes so that they start selling the competitors’ products also. Let me explain – suppose Ms. K N is a top agent of ABC life insurance company. DEF Life insurance company knows about Ms. KN. They approach her to sell their product – and this is without her having to do any paper work. So a new channel has been set up :).

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One Response to “How is life insurance sold?”

  1. So true, that’s why knowledge and avaibility of internet is must, with online world growing and growing and lot of insurance available online much cheaper will help people to select and choose the best.

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