Life insurers go for need-based selling

For an industry where mis-selling has been rampant for years, life insurance appears to have suddenly woken up to need-based selling.

Among others, Edelweiss Tokio, Max Life and HDFC have already kickstarted efforts to win back the trust of customers.

The life insurers are in the process of framing a standard proposal form to be distributed along with a  wealth and need analysis kit to customers at the time of sale.

Under this model of selling, an insurance agent has to visit the prospective policyholder at least thrice to make him buy the plan.

The first meeting will be to make the customer familiar with the entire product spectrum of the insurance company.

The second meeting will involve understanding and exploring the customer’s priorities and financial goals. During this stage, the customer will be asked to fill out certain forms, citing his short-term and long-term goals, on the basis of which a wealth accumulation and enhancement framework can be drawn up specific to him.

For instance, Edelweiss Tokio’s need analysis kit asks questions on the current financial status, savings and avenues of savings. It also focuses on areas like future needs, the projected rate of return and the future value of existing funds. Under the wealth enhancement module, one needs to answer questions on the target capital needed to achieve the specific needs within the timeframe laid out.

The actual sale will take place only in the third meeting.

“There will be no compulsion to buy our products, but this will make customers aware about the financial status and we have seen that they themselves come forward to buy the respective plans,” said Deepak Mittal, MD & CEO, Edelweiss Tokio Life.