Role of Insurance Agent

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Chapter 14ROLE OF AN INSURANCE AGENT

Presented by Ms. Asha Puthran, AAO,Investment Dept., Central Office.


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INTRODCUTION An agent is the first link between the insurer and the insured.

Only companies that have obtained License from the InsuranceRegulatory Development Authority (IRDA) can function asinsurers.

Prior to enactment of IRDA Regulations, LIC was the only insurerinsuring human lives.

After opening of the insurance sector to other players, a numberof insurance companies grant life insurance policies.

As such it is necessary for the LIC agent to be well informedabout the benefits of life insurance and different policies available

to suit the needs of the policy holders.

A person having completed 18 years of age and having passedthe 12th std. (in rural areas 10th Std.) is eligible to become aninsurance agent.


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Grant of licence

A person requires a license to function as anagent.

A person desiring to obtain or renew a licenseto act as an agent has to make an applicationto a designated person as per the IRDAregulations.

a) The designated person may on receipt of theapplication alongwith proof of the payment andon being satisfied that the applicant:

b) Possesses the qualifications and has thepractical training, has passed the examination

INTRODCUTION


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Grant of licence

c) submitted application duly completed,

d) has requisite knowledge to solicit andprocure insurance business,

e) is capable of providing the necessary service

to policyholders.Grant or renew a licence along with identity

card to him.Alicence issued as above entitles theapplicant to act as an insurance agent for thelife insurer.


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INTRODCUTION Every person receives income for services rendered. An

employee in a bank receives salary at the end of themonth.

Likewise an agent receives commission on thepremiums paid by the insured. (First premium &

renewal)

Agent is the main component and link of the distributionchannel for the life insurance business.

Agent has to solicit and procure new life insurancebusiness in amanner that is consistent with the interestsof policyholders and the insurance company in thefollowing manner:


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INTRODCUTION

Contact prospects for life insurance, study their needs

and persuade them to buy.

Complete all related formalities - filling up proposal form,

collecting premium, arranging medical examination, age

proof, reports and other information required by the

underwriter.

After the sale is completed, ensure that the policy

continues, without a lapse, till it matures/ results in a

claim.


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INTRODCUTION

Continuation of the policy till maturity is in interest of all3 personsinsurer, policyholder & agent .

Once a policy is sold, the agent becomes part of thefamily.

He should keep in touch with the policyholder and see

to it that all the renewal premiums are paid on the duedate.

For this the agent should keep a record of all thepolicies sold by him and approach the policyholder

before the due date to make sure that he has sufficientfunds to pay the premium.

The premium should be paid within the days of grace tokeep the policy in force.


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INTRODCUTION

When the agent is in touch with the policyholder it is

likely that he may be invited for family functions.

If the policyholder purchases a new house and the agentis aware of it, or if he is invited for the house warmingceremony, he should advise the life assured to inform

LIC about the change of address. This will ensure thatthe policyholder receives all communications at his newresidence.

So also, if the policyholder gets married and wants tochange the name or nomination, the agent should helphim in the same.


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INTRODCUTION If it is a money back policy, the agent should help the

policyholder in completing the discharge form andgetting the claim from LIC office.

If the policyholder requires a loan, the agent shouldinform him about the amount of loan available under

his policy and the rate of interest. This will enable thepolicy holder to decide whether he wants to avail ofthe loan or not.

In the event of the unfortunate death of the life

assured, the agent should assist the nominee ininforming the LIC office and provide all help inobtaining the claim amount.


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PRE-REQUISITES FOR SUCCESSTo perform the above tasks well, the agent has to be

familiar with:

Benefits under different plans.

LIC offers various plans suited to the needs of differentindividuals like Whole Life, Endowment, Money Back,

Plans for children, Term Assurance, Special plans -

Jeevan Adhar, Asha Deep, Bima Plus, Pension Plans.

Large sum assured rebate and rebate on mode of

payment should also be explained to the prospect.


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PRE-REQUISITES FOR SUCCESS Office procedures for various matters including forms and

documents.

The proposal form has to be filled in by the prospect. The

agent should explain to him the importance of each

question. The agent also has to complete the Agents Confidential

Report (ACR) on the basis of which the underwriter

assesses the risk. All the facts should be correctly

mentioned in this form. If the proposer is a lady, some additional forms may be

required. Likewise, if the proposer is working in a

hazardous occupation, Occupation Questionnaire may be

required.


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PRE-REQUISITES FOR SUCCESS

Legal provisions & tax implications.

Agent should explain the basis of the contract

premiums will have to be paid by the prospect for the full

term so that he can receive the sum assured along with

the bonus on maturity. The importance of nomination, signing the declaration on

the proposal form should be explained to the prospect.

Benefits & advantages of other financial instruments,

suitable for savings and investments. Laws on taxation matters relevant to these instruments.


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PRE-REQUISITES FOR SUCCESS The tax benefits available should be explained Sec. 88 -

20% tax rebate on payment of premiums, Sec 80CCC 100% tax exemption upto SA of Rs. 10,000/- underJeevan Suraksha, Section 10D - Policy proceeds onmaturity are not subject to tax.

The agent should be aware of the benefits availableunder other financial instruments PPF, NSC,Infrastructure bonds, savings accounts, fixed deposits.

He should be aware of the tax reliefs available underthese instruments


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PRE-REQUISITES FOR SUCCESS

He should emphasize that no other instrument provides

for life cover.

In the event of unfortunate death, only the amount paidwill be returned under these instruments, whereas in LIC,

the premiums paid wont be returned, but the full SA

becomes payable in the event of death.


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SELLING INSURANCEHave a continually expanding list of prospects(persons who can be approached for insurance)

People within reach- obtained from friends,relatives, functions, news paper reports,directories, contacts at parties, meetings,seminars.

The agent should have a database of clients,

classified on the basis of age groups, income,gender, occupation and update this datacontinuously.


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SELLING INSURANCE

Prospects have to be qualified health risk, moral

hazard. Prospects who are having health problems high BP,

asthma, adverse family history may require additionalmedical reports or special reports.

Prospects working in dangerous occupations or staying

in unsafe localities, or going for insurancedisproportionate to their income may pose moral hazard.

Those in the qualified prospect list have to be met.

Those whom the agent thinks will finally be fit to beinsured have to be short listed. The agent should makeefforts to meet these people.


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SELLING INSURANCE

Sale results only when the following

steps are met with:

Pre-approach, Approach,

Interview,

Objections, Close.


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PRE-APPROACH

Means preparing to approach the prospect

Agent must be well equipped with all the informationbefore approaching the prospect. He must prepare adetailed questionnaire so that he can get informationfrom the client.

Basic information is required - income, habits,

concerns, interests, saving capacity, family position ofthe prospect.

Variety of sources- personal call on the prospect. This information can be obtained from a variety of

sourcesmeeting the client personally, talking over thephone and arranging for a personal meet at theconvenience of the prospect, enquiries from the clientsfriends, neighbours family , doctor, office.


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PRE-APPROACH Information received in pre-approach stage will

provide reasonable idea of prospects financialposition & his needs & concerns.

What is his income, which plan and for what sum

assured and period he can go in for, as premiums aredifferent under different plans for the same age.

Tentative recommendation of a plan.

This information will enable the agent to suggesta plan suited to the needs of the prospect and hisfamily.


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PRE-APPROACH

Picturise the sale in the mindactual sale will be easy.

Create a strong and clear image in the mind of theentire sale going smoothly. This will in fact make theactual sale very easy.


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As far as possible, the proposal should be in writing.The advantages of a written proposal are:

Details are not missed by agent & prospect,

Impression is more lasting,

Prospect can go back to earlier data on his own, Prospect can understand at his own pace and need not

hurry up,

Easy to stop at any point, clarify questions andcontinue without losing the trend.

If any data is not understood or any question is left, theagent can always clarify the same and complete theproposal.

PRE-APPROACH


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APPROACH Be very clear and straight forward in your

approach.

When you are face to face with the prospect,make it clear to him that you are meeting him to

render the valuable service of ensuring financialsecurity for him & his family through lifeinsurance.

Explain to him the importance of human life,how it cannot be replaced. Insurance can fill thevoid created on the death of the bread winnerand enable his family to maintain the samestandard of living.


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APPROACH

The agent should arouse enough interest in the

prospect so that the interview results into a

successful close. Otherwise the prospect may not pay enough

attention to the proposal.

Establish eye contact with the prospect, clear all

doubts in his mind to see that the interview resultsin a success.


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INTERVIEW The agent should make the prospect listen to the

proposal for insurance.

This can happen if the agent talks about things whichinterest him, his needs, his familys needs, or things thatreally matter to him.

However it should not appear that the agent is flatteringthe prospect.

Proposal should be beneficial and complementary to theexisting arrangements.

Take into consideration the income, family size, age,gender, current requirements, need for insurance of theprospect.


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INTERVIEW Simple rules to be followed: Talk only about the necessary facts.

Do not let the conversation drift to unnecessary

topics. Value the prospects time.

Let it be an interactive discussion.

Dont do all the talking. Let the prospect also be

made an equal partner in the discussion

Create doubts in the prospects mind so that he asks

questions.

Provide facts on the basis of which the prospect

starts thinking and asks questions.


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INTERVIEW

Listen properly to the prospects view point.

Do not try to force your views on the prospect.

Pay attention to his views and guide him properly.

Do not argue, interrupt or contradict his statements. People generally feel good when they are listened to and

then they listen better.


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INTERVIEW

Make the talk interesting by giving true

stories how insurance has helped families.

Quote examples how the insurance sum

assured received on maturity was useful forthe education of the children or performing

their marriage.

How the policyholder could use the moneyobtained from insurance for his family needs

without having to borrow loans from others.


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INTERVIEW

How on the death of a breadwinner the family couldlead a decent life from the money received out ofthe life insurance policy. Use names of his childrenor relatives. This will make the story more touching.

Use additional aids like pictures, graphics andpresentationspower point if you have a lap top.

Colorful pamphlets of different plans can alsobe left with the client, so that he can go throughthem at his own pace.


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INTERVIEW

Make the prospect write down figures of his

needs, liabilities, benefits of the insurance plan

and of the premium.

Work out the insurance in terms of numbers.

Make the prospect write down his age, his likely

retirement age, current income, expenses,

liabilities, benefits of the insurance plan and the

premium to be paid.

This ensures that the prospect is payingattention to the proposal for insurance.


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INTERVIEW Advice to be in the best interest of the prospect,

and not the agents own interest.

While giving all this information, the agent has to

keep the interest of the prospect in mind and not hisown interests.

He should avoid suggesting plans which have a

high premium and which he knows the prospect willnot be able to pay for the entire term. Even though

higher premium would mean more commission for

the agent.


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INTERVIEW

Prepare the flow of the sales talk in advance.

How will the sales talk proceed, what would be the

opening remarks?

Try to be polite and enquire after his well being,

health, occupation, family members and suggest him

the appropriate plan as the talk proceeds.


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OBJECTIONS

Prospects are likely to raise objections, one after theother.

Objections are a part of every sale.

If the prospect remains silent, the agent will not know

how his mind is working.

The objection is the prospects way of referring to furtherinformation that he needs.

Every objection raised by the prospect should be dealtwith carefully by the agent.

The agent should not get angry if the prospect raises anyobjection. He should listen patiently to the same andassure the prospect of the benefits of life insurance.


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OBJECTIONS Try to remove all doubts and fears in the prospects mind

regarding insurance.

Objections give an opportunity to understand the

prospects thinking and remove his mental blocks.

These objections show how the prospects mind works

and enable the agent to guide him .

At the Approach stage itself the prospect may object by

saying- I do not believe in life insurance or I do not

need life insurance.


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OBJECTIONS The agent needs to understand that such objections are

not against life insurance but rather against the agentwhom he wants to put off gracefully, or signs ofindecision or of a fear of being forced into buying.

Objections raised during the interview- I pay more than

what I get back,It is advantageous only if I die,Meetme after six months, are real objections.

The prospect wants the agent to convince him and givedetailed information that will remove his fears and doubts

and enable him to make up his mind to go in forinsurance.


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OBJECTIONS A true agent should welcome objections

as the prospect is actually asking theagent to give him one more reason to buy.

Objections raised at the closing stage I will think it over, I will consult my

father,See me next month after I get my

confirmation/increment/ promotion revealan inability to take a major decision.


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OBJECTIONS

The prospect wants the agent to convince himand give detailed information that will remove hisfears and doubts and enable him to make up hismind to go in for insurance.

A true agent should welcome objections as theprospect is actually asking the agent to give himone more reason to buy.

Objections should be treated in an effectivemanner, convincing the prospect of the need forinsurance.


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OBJECTIONS

The answers to the prospect must be complete andconvince him to make the decision to buy.

His doubts, fears, difficulties need to be removed or

clarified.

The agent should never get into an argument whileanswering the objections.

The yes. but method is very effective . You agree inprinciple with what the prospect says undercircumstances assumed by him; but you say, the actualcircumstances are different and then convey your point.


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OBJECTIONS

The prospect is bound to be receptive to an open giveand take in discussion.

You can say Mr. A, I agree that conditions are hard andpeople have difficulty in saving; but just imagine how

much more difficult it will be if your family has to carry onwithout you.

The secret of successful selling is to make the prospectfeel that he has taken the decisionyou only help him in

the process by answering his objections and clearing hisdoubts.

Make the prospect feel that he has taken the decision togo in for insurance.


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CLOSE The close has to be sensed and timed, as few prospects

of their own accord are ready for insurance.

The agent sensing the close, takes the prospectspositive decision for granted by asking for his implied(not direct) consent - Will you pay the premium by

cash or cheque?, Can you give the age proof now ortomorrow?

A positive answer to any of these questions is anindication to go ahead.

If the interview does not end with a close and is put off toanother time, the interview will have to be gone throughall over again.


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CLOSE

In selling life insurance, an appeal to the heart of theprospect is more useful than an appeal to the head.

Life insurance is brought for the basic reason ofprotecting loved ones, affording a good start in life to

children, caring for old parents or providing for old age.

So a sale can be accomplished only when an appeal ismade to one of these motives.

A sale can be made when an appeal is made to thesentiments of love, affection , concern for the familymembers of the prospect.


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SERVICE TO THE POLICYHOLDER

The prospect becomes a policy holder with the sale of alife insurance policy.

A contract of life insurance is a long termcommitment.

As people are too involved in their day to day activities, itis necessary for the agent to provide service whichincludes monitoring premium payments, nominations,revivals, help in settling claims.

The agent should maintain his own record so that hecan keep track of the renewal premium dates, help thepolicyholder in getting the address changed in therecords, nomination changed, securing loan, reviving thepolicy if it gets lapsed.


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SERVICE TO THE POLICYHOLDER

These services ensure that the policy remains in

force for the full term.

Servicing benefits the agent as he can review the

policyholders need for insurance and advise him

accordingly.

The existing insurance may be inadequate

because of changes in the policyholders financialposition or family.


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SERVICE TO THE POLICYHOLDER If new members are added to the policyholders family, ifthere is a birth of a child in the family, the agent can

suggest the policyholder to insure the child under policiesmeant for children.

If insurance on a minor is taken, the agent should see to it

that when he completes 18 years of age the policy vestsin him and a nomination is done, check out whether thereis further need for insurance on his life.

By providing good service, the agents reliability and

trustworthiness are spread to other people and the agentcan get more prospects. It is necessary for him to build agood reputation in the eyes of the client so that the latterrefers other family members or friends to him. The agentcan thus expand his data base of clients.


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ETHICAL BEHAVIOUREthicsmoral values, principles, beliefs

Of late, reports of improper behaviour are on the rise.

Funds of banks have been misused by theirmanagements to fulfill the greed of their friends.

Officials have used their authority to promote personalbenefits courts have failed to render justice.

People who are trusted by the community to performtheir tasks have betrayed the trust put in them.

This happens when personal greed prevails over thesense of duty.

The insurance agent is placed in a position of trust bythe policyholders and he should not resort to anybehaviour which betrays this trust.


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ETHICAL BEHAVIOUR

On his trust, the policy holders part with their small

savings to an insurer. As such issues of propriety

(politeness/respectability) and ethics are extremely

important. Unethical behaviours happen when the benefits of self

are considered more important than of the other.

Every clause in the code of conduct spelt out by IRDA in

the Agents Regulation should be complied with.

This compliance will be easier if the agent always keeps

the interest of the prospect in mind.


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ETHICAL BEHAVIOUR Things go wrong when the agent is more concerned

about the commission that he will earn from the policy,rather then the benefits to the prospect.

Unethical behaviours happen when the benefits of selfare considered more important than of the other.

LIMRA, (Life Insurance Marketing Research Association- USA)which is the premier international organization ofmatters concerning life insurance marketing, has foundthat the ethics in life insurance consists of mainly putting

the interests of the prospect/policyholder first.


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ETHICAL BEHAVIOUR Such an ethical approach helps the agent through:

Improved business and earnings, by gaining a goodreputation in the market;

Business remaining in the books for a longer period

without lapsation, as the policyholders trust in him is notlost;

Stronger relationship with clients, by being honest in all

the dealings;

More referrals and word of mouth recommendations

which will increase the agents business.


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ETHICAL BEHAVIOUR Some agents feel that they are doing a good turn to the

prospect when they do not reveal certain importantinformation in the proposal form.

They may feel that this information may result in theunderwriter asking for more details and the proposalmay not result into a policy.

However as the agent is the link between the insurerand the prospect, he should disclose all the relevantfacts.

Hiding information may be harmful, in the long run if thepolicy results into an early claim and is repudiated by theinsurer.

.. At that time, the prospects family will be theloser.


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ETHICAL BEHAVIOUR

Credibility of the entire life insurance industry would then

be at stake- of the agents and the insurers.

Rumours may spread that the insurers are not settlingclaims after collecting premium.

The actual truth may never be known.


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ETHICAL BEHAVIOURSome characteristics of good ethical behaviour

are:

Placing the interests of the client above onesown direct or indirect benefits,

Holding in the strictest confidence andconsidering as privileged, all business andpersonal information pertaining to the clients

affairs,

Making full and adequate disclosure of all factsto enable clients make informed decisions.


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ETHICAL BEHAVIOUR

Ethics are likely to be compromised in the followingsituations:

Having to choose between two plans- one giving muchless commission than the other.

Temptation to recommend discontinuance of an existingpolicy and taking out a new one.

Becoming aware of circumstances, that if known to the

insurer would adversely affect the interests of the clientor the beneficiaries of the claim.


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ETHICAL BEHAVIOUR Always keep in mind that the interest of the client has to

be protected.

At the same time the image of the insurance industry is

also to be safeguarded. This will naturally result in good

reputation for the agent.

In the greed for higher commission ,dont compromise

on the basic values of life.


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ETHICAL BEHAVIOUR

Remember you are an agent canvassing for

life insurance, so dont play with the principles of life.

Sell insurance on the principles of honesty, integrity.

Build up a name for yourself in the insurance industry. Equip yourself with the latest changes in the insurance

market.

Be prepared to face the challenges of selling insurance

and make your role as an insurance agent the bright

spot of your life.


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Let your motto to the clients be:INSURE AND BE SECURE.


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THANK YOU

Date post:	14-Apr-2018
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