Your Money: Keeping the agent-policyholder tie intact

In the insurance industry, insurance service is an integral part of the product itself. Without policy service, the product ceases to exist. If the agents and the policyholders are not in contact with each other, the policyholders may miss something very important regarding the use of the insurance. An unscrupulous person can make the policyholder give up his insurance to buy a new one. This leads to damage to the policyholder, the insurer and the agent.

Many policyholders complain that agents do not keep in touch with them. This can happen for a variety of reasons. In some cases, agents quit or have left the industry on their own initiative. But there are other cases that deserve special attention. Let’s get some reality check on agents’ commissions.

Commissions earned by agents

Many of us have a misconception that agents make huge commissions and other incentives from their companies. Some experts advise clients to ask agents to clearly state how much commission they will earn from selling a policy. In fact, agents do not earn unlimited commissions. Yes, the first commission is really good. But the renewal commissions are significantly lower than this. Not all agents are entitled to additional incentives and compensation. The first year’s commission is the agents’ bread and butter because they have worked hard to find suitable customers and sell suitable products to them.

Many customers ask agents to share part of the first commission (and sometimes the entire first commission) with them as a condition of purchasing the insurance. First, such a measure of rebates violates Section 41 of the Insurance Act of 1938, which prohibits all types of rebates and the agent risks losing his job. Second, if agents waive the first commission, it will take a very long time to recover the loss they have suffered. If the first commission is 25% and the renewal commission is 5%, the agent can go into equilibrium only after six years. An agent may not think it’s worth the effort to run an extra mile for such clients.

A stable life insurance agent has about 500 to 1000 customers to serve. Usually, an agent is not just a life insurance agent. He runs agencies for non-life insurance companies, post offices, housing finance companies or even funds.

This is why a mature agent can provide comprehensive financial services. It is in the policyholder’s interest to remain associated with the agent not only during the insurance period but also beyond. Here is an expert on financial planning who is available almost free of charge and gives everyone advice on insurance and financial planning. In our country, only life insurance agents have been able to create a prominent position as family friends. Customers are expected to choose the agents who have experience of excellent customer service.

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