Life insurance: Pitfalls cos must avoid at all costs

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The foremost among them is the tendency to fineprint terms and conditions of an insurance plan and not explain them to the prospective buyers. Reuters The foremost among them is the tendency to fineprint terms and conditions of an insurance plan and not explain them to the prospective buyers. Reuters
SummaryLife insurance requires certain preconditions that must be satisfied and values of market conduct that must be honoured.

provision for old age, annuity for life and reversionary bonus, etc.

Truth can never be out of fashion; hence, there is no need to substitute such terminologies with more trendy nomenclature with potentially misleading connotations. The product features may be innovative and distinct, but they need to be simple to understand and equally simple to benefit from should the contingency arise.

Even though telemarketing and networking with policyholders is very much in practice, I would not hesitate to suggest avoiding these channels to extensively interact with customers. Insurance is a business of trust and relationship; and these two elements cannot be initiated or cultivated through mechanical activities. Periodic interface with customers can go a long way in development as well as in conservation of business. Technology must be fully leveraged to communicate with the custome,r but dependence on technology alone for this purpose must be avoided.

Claim settlement is the ultimate act in the business of life insurance. Whether it is maturity claim or death claim, any delay or denial must be avoided, unless there is a legal issue to be resolved or a prima facie suspicion of fraud. Empathy must be the prime motivator in dealing with even the most complicated cases. The promise made years ago must be fulfilled even if it involves walking some extra miles.

* The writer is advisor (Life Reins),GIC Re and former MD & CEO, Star Union Dai-ichi Life

What not to do

* Avoid tendency to fineprint terms and conditions of an insurance plan

* Ensure efficient financial underwriting of proposals

* Avoid deploying untrained or partially trained sales personnel

* Don’t stray into territory of other financial products

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