Today we will look for the reasons about why your insurance agent not sold you Term Insurance. Each true Financial Advisers recommending you to have it first to cover your life risk, but on the other side your Insurance Agents or Advisers are forcing you to buy the products which are Insurance+Investments where your will fail to cover your basic life risk to the fullest. It happened in past, is happening now and will continue in future too until investors awakes and ask 1000 questions for the reasons of recommending the particular product. These are the few reasons which may forcing agents to be away from selling Term Plans.
1) Lack of Knowledge by Agents: When you ask agents about insurance, they usually have standard list of products which they used to sell on daily. Which makes them drawing their own comfortable level about products. When you ask about any older products or odd products, they totally not aware of those things. Primary reason for not having enough knowledge is, major chunk of insurance agents in India works as part time. Which will not let them to have enough time and patience to grab the desired knowledge.
2) Lack of Knowledge by Insurance seekers: Majority of people especially in India think that Insurance is a investment tool rather than a protective tool. It happened so due to no available avenues for investment in past. But presently when you have so many avenues to invest for then why you need to stick to the Insurance format where both insurance and investment mixed? It is also wrong thing to blindly follow your agents suggestion and signing the offer document without knowing the impact it will create on your future financial life. Yesterday itself I came across such a incident where one of my client asked my advise about investing yearly Rs.1,00,000 in any insurance products of one particular company. When I asked for reasons of his investments and choosing the particular company, he told he want to accumulate some decent money after 10 years and major reason is he want to help the agent who is his friend’s mother. I simply asked him Rs.1,00,000 is what percentage of his yearly income?? He never calculated that too. Finally advised him, if he really interested to help that agent then better to have term plan with that company. You will find such a cases regularly.
3) Earnings of Agents: When agent selling you the product which is Insurance+Investment, he have good opportunity to earn the handsome income. Like for example, if he recommend you any Endowment Plan with the premium of around Rs.1,00,000 his income will be around Rs.25,000. This plan with such a high premium may cover your life risk around Rs.20,00,000. But if he sell you the same sum assured product i,e Rs.20,00,000 Term Insurance then premium may be around Rs.6,000. So by selling this Term Plan he will get the commission of around Rs.1,500 (25% of your premium). Then who will loose such a opportunity of selling Endowment Plan rather than Term plan??
4) Future business for Agents: When he sell you the Endowment plans or ULIPs and created your mindset such that insurance products are for investment, he have every opportunity to get continues business from you in the name of investment on regular base. So whenever their is a salary hike, increase in income or new family members entry (like birth and marriage) he uses such opportunities to generate his business. But when he convince you about the benefits of Term Insurance and sell you the product then you will not look back at him to purchase any insurance product for another 15 to 20 years. So he will loose the huge future business opportunity by selling you the term plans.
I think these are the major factors which led your insurance agents not recommending you Term Plans. Hope you now got bit of awareness and cover your life first. I will conclude this article with one example how even wrong media can create wrong perceptions about Insurance. Yesterday when I was watching the super, competitive, breaking news spreading, and unbiased Kananda news channel, they showed one line breaking news that they are airing the programme which is mainly about “INSURANCE INVESTMENT IDEAS”. Strange even few medias also think that Insurance is investment 🙂