Your money: preserving the link between the agent and the policyholder


In the insurance industry, policy management is an integral part of the product itself. Without a policy service, the product ceases to exist. Unless agents and policyholders are in contact with each other, policyholders may miss something very important regarding the use of the policy. An unscrupulous person can force the insured to surrender his policy to buy a new one. This results in a loss for the insured, the insurer and the agent.

Many policyholders complain that agents do not keep in touch with them. This can happen for various reasons. In some cases, agents are fired or left the industry of their own accord. But other cases deserve special attention. Let’s get some reality on agent commissions.

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Commissions earned by agents

Many of us have a false perception that agents earn huge commissions and other incentives from their companies. Some experts advise clients to ask agents to clearly state the amount of commission they will earn from selling a policy. The thing is, agents don’t earn unlimited commissions. Yes, the first commission is really good. But the renewal commissions are significantly lower than that. Not all agents are eligible for additional incentives and allowances. First year commission is the bread and butter of agents because they have worked hard to discover suitable clients and sell them suitable products.

Many clients ask agents to share part of the first commission (and sometimes all of the first commission) with them as a condition of purchasing policies. First, such an act of reimbursement violates Section 41 of the Insurance Act 1938, prohibiting all types of reimbursements and the agent risks losing his job. Secondly, if the agents waive the first commission, it will take a long time to recoup the loss suffered by them. If the first commission is 25% and the renewal commission is 5%, the agent can only break even after six years. An agent may not find it worth going the extra mile for such clients.

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A stable life insurance agent has around 500 to 1000 clients to serve. Usually an agent is not just a life insurance agent. It takes agencies from non-life insurance company, post office, housing finance company or even mutual funds.

This is why a mature agent is able to provide comprehensive financial services. It is in the interest of the insured to remain associated with the agent not only for the duration of the policy, but also beyond. Here is a financial planning expert who is available almost free of charge and offers all the advice on insurance and financial planning. In our country, only life insurance agents have been able to carve out a prominent place for themselves as friends of the family. Customers are expected to select agents with a proven track record of excellent customer service.

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