Many feel that insurance agents and other intermediaries don’t share enough information, don’t give sound enough advice and perhaps don’t know enough to provide the clarity we need to buy insurance. The point is, you should do your research yourself and only then bring an intermediary into the picture.
Take the process of buying a policy. We recognise the need for insurance, but feel anxious and out of depth while buying it. Maybe, because the product is complex with a lot of legality and legal language involved. Perhaps, it is because the product itself is intangible and it is uncomfortable to contemplate loss or death.
Reluctance to buy
All this ends in a reluctance to buy insurance and, ironically, poor analysis and application of mind when actually buying it. Which is why the intermediary, who sells you the policy, can be the biggest help. Or, just the opposite.
There are multiple distribution channels for insurance policies. You can buy from agents, insurance brokers, an insurance marketing firm, a corporate agent, a web aggregator or, even directly from the insurance company, usually online.
Insurance Regulatory and Development Authority of India (IRDAI) regulations lay down the framework within which all these types of intermediaries can sell insurance policies.
Proper licensing, basic educational qualifications, adequate and updated product knowledge, needs-analysis skills and a code of conduct are all part of it.
Agents are the most common type of intermediary from whom we buy personal insurance. They are individuals who earn a commission by selling policies of a single insurer whom they represent. They can be composite agents too, representing one life insurer, one non-life insurer and one standalone health insurer.
It is not a job where they get a salary at the end of the month, so, they are impelled to make the sale to earn their living. Hence their persistence, when they approach you to buy a policy or press you to make a quick decision.
Facilitator’s role
What do you get when you buy from an agent? You plug into his ecosystem of an insurance company. He is familiar with all their policies and options, their documentation and procedures and can take you through the process of buying a policy, maintaining it and renewing it. He will also handhold you at the time of a claim. So, he plays the role of facilitator.
As for the role of adviser, most agents play this role adequately and can get you specific information and clarification about their company’s products. But before an agent can even enter the picture, you have to do the initial research, understand your needs and decide which policies fit the bill.
Fortunately, today, compared with about 25 years ago, information is the easiest thing to access. Once you have a fair idea of what policies are available, you can approach the agent of the company or companies offering the appropriate product to fine tune your buying decision.
At this point, the agent’s knowledge and willingness to get answers to your questions comes into play. His ability to guide you to the right variant of the right product will help here.
But remember, the agent can sell you only policies of his company. So, your first decision should be the type of coverage you want, which leads you to your option of insurers, and then, to an agent.
( The writer is a business journalist specialising in insurance and corporate history)
