The trigger for the intent to buy an insurance policy mostly comes when we see a neighbour or a close friend or colleague buy a cover. In all probability, we call the same agents who have sold policies to our acquaintances. But this is not the correct way to go about buying an insurance product.
One should first be convinced that insurance is a must in his life journey. The fact is, insurance is beneficial at all the life stages of an individual. That is why life insurance, which manages financial risks of the future, remains the foundation of any financial plan. There is no dearth of financial products such as bonds, equity or bank deposits.
Managing financial risks
However, there is one fundamental difference between life insurance products and all other products. In all these, one gets a return, high or low on his investments only. If the family needs money suddenly at some point in future, they get the investments made by him up to that point of time plus some return. So that amount is a function of the investments primarily. In life insurance, you can get a return on others’ investments as well, if your own investments are not good enough to reach the required financial goal set by yourself.
The next step will be to select an insurer and then the product that addresses his financial needs. This exercise must be taken up by himself. An agent does not know his life goals and concerns. He may try his best but he can never fully understand why a certain goal is more important than others.
So, children’s education may be a very important goal for one while someone else may want to make enough provision for a physically or mentally disabled dependant. Another may be keen to make enough provision for an old mother suffering from dementia. It is the habit of almost all the agents to decide beforehand which products they will try to sell to a particular individual on the basis of the individual’s paying capacity only. After all, the agent has been given a target to bring a certain premium income and he is always running after that.
These days customers can find out which insurer to select and for which products. When he is confident that he has selected the right product, he is most likely to be committed to keep that policy in force. In case he has some doubt, it is better to discuss it with an insurance intermediary. The intermediary knows that the customer is knowledgeable enough and wants to consult an agent for validation of his decision only and good post sales services.
It is better to consult an agent who understands something about the profession of the customer. In such cases, there will be little chance of mis-selling of products or customers getting poor post sales services.
The writer is an insurance industry analyst
An agent cannot fully understand why a certain goal is more important than others
Choose a product that meets your financial needs. Validate with agent if necessary
Consult an agent who understands something about your profession