Buy insurance policy only from a professional agent

Three years ago, Jayalakshmi, a 38 year-old teacher from Kerala, bought an insurance policy from an agent of a private insurance firm. The agent promised her that the principal amount would more than double on completion of the tenure. But three years later she realised that neither did she get what was promised nor the entire principal amount. She then decided to get in touch with the agent only to realise that he was no longer an employee of the same company and had cheated many more investors too.

Such incidents are not rare. People need to be vigilant about the agents and the products they push to sell. Price should not be the only reason for choosing an agent or company. There is a need to consider things like the products available and the services the agent and the company have to offer.

Types of agents
An insurance agent is the one who sells and services insurance policies and will be specialised in either life or general insurance business. An insurance agent can be either an independent agent or a captive agent. An independent agent represents more than one insurance company and sells multiple policies to the customers, whereas, the captive agent sell only products of one particular company. There are chances that the independent agent may sell a product of that company that gives him comparatively a higher commission and vice versa.

GV Nageswara Rao MD & CEO, IDBI Federal Life, says, “Insurance agents with right attitude are required. The agent should be capable in explaining the products in detail. Only a person who is committed to business, having substantial amount of knowledge and basic education background can serve well in the industry. It is always a challenge for the insurance company to have sufficient force of professional agents in the scenario of increasing drop outs of agents.”

Look for an experienced agent
It is important to check whether the agent has got enough experience in this field. Choosing an agent through mere acquaintance or through relatives is not advisable. “It is better to approach an agent who is professional than taking a policy from a person whom you just know and may not have a professional background. Make sure the necessity of the product before buying rather than getting a product that agents try to push,” says Suresh Sadgopan, who runs ladder 7 financial services.

Reference and credibility
It is better to take references from people whose financial advice you respect. Whereas, inquiring about the professional qualification and training credentials would increase the confidence in buying policies.

Quality of knowledge
Make sure that your agent is providing necessary information about the policy you are trying to take. Besides, grab all the necessary information and recent product developments from the agent before buying a policy. “Financial literacy plays a crucial role while making such decisions. A broader knowledge about the insurance products and basic understanding about the necessity of taking a policy are required. It will help the policy holder by not falling prey for the sky high returns offered by the agent,” says Sadgopan.

Trustworthiness
One should be comfortable in communicating with the agent. Clear all your doubts related to the product you wish to buy. After deciding the insurance company you want to deal with, you can get the lists of authorised agents from the particular insurance company.

“Insurance sector is witnessing large scale drop outs of agents. In the current scenario, agents are likely to stay in the industry for not more than three to four months. Around 75% is out of the business after these time period. Hence, financial awareness is required for the people who are buying the policies for not being deceived by these agents. People cannot be emotional in investing their hard earned money,” says, Raunak Roongta, an independent financial planner in Mumbai.