Position of NPA as at 31.3.1999

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Chapter 14 ROLE OF AN INSURANCE AGENT
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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 Insurance Regulatory Development Authority
  (IRDA) can function as insurers.
• Prior to enactment of IRDA Regulations, LIC was
  the only insurer insuring human lives.
• After opening of the insurance sector to other
  players, a number of insurance companies grant
  life insurance policies.
• As such it is necessary for the LIC agent to be
  well informed about 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 passed the 12th std. (in rural areas
  10th Std.) is eligible to become an insurance
  agent.

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Grant of licence
INTRODCUTION

• A person requires a license to function as an
  agent.
• A person desiring to obtain or renew a license to
  act as an agent has to make an application to a
  designated person as per the IRDA regulations.
• The designated person may on receipt of the
  application alongwith proof of the payment and on
  being satisfied that the applicant
• Possesses the qualifications and has the
  practical training, has passed the examination

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Grant of licence

• submitted application duly completed,
• d) has requisite knowledge to solicit and
  procure insurance business,
• is capable of providing the necessary service to
  policyholders. Grant or renew a licence along
  with identity card to him. A licence issued as
  above entitles the applicant to act as an
  insurance agent for the life insurer.

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INTRODCUTION

• Every person receives income for services
  rendered. An employee in a bank receives salary
  at the end of the month.
• Likewise an agent receives commission on the
  premiums paid by the insured. (First premium
  renewal)
• Agent is the main component and link of the
  distribution channel for the life insurance
  business.
• Agent has to solicit and procure new life
  insurance business in a manner that is consistent
  with the interests of policyholders and the
  insurance company in the following 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 all 3 persons insurer, policyholder
  agent .
• Once a policy is sold, the agent becomes part of
  the family.
• He should keep in touch with the policyholder and
  see to it that all the renewal premiums are paid
  on the due date.
• For this the agent should keep a record of all
  the policies sold by him and approach the
  policyholder before the due date to make sure
  that he has sufficient funds to pay the premium.
  
• The premium should be paid within the days of
  grace to keep 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
  agent is aware of it, or if he is invited for the
  house warming ceremony, he should advise the life
  assured to inform LIC about the change of
  address. This will ensure that the policyholder
  receives all communications at his new residence.
  
• So also, if the policyholder gets married and
  wants to change the name or nomination, the agent
  should help him 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 and getting the claim from LIC office.
• If the policyholder requires a loan, the agent
  should inform him about the amount of loan
  available under his policy and the rate of
  interest. This will enable the policy holder to
  decide whether he wants to avail of the loan or
  not.
• In the event of the unfortunate death of the life
  assured, the agent should assist the nominee in
  informing the LIC office and provide all help in
  obtaining the claim amount.

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PRE-REQUISITES FOR SUCCESS

• To 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
  different individuals 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 up to SA of Rs.
  10,000/- under Jeevan Suraksha, Section 10D -
  Policy proceeds on maturity are not subject to
  tax.
• The agent should be aware of the benefits
  available under other financial instruments
  PPF, NSC, Infrastructure bonds, savings accounts,
  fixed deposits.
• He should be aware of the tax relief available
  under these 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 paid will 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 INSURANCE

• Have 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 data
  continuously.

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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
  additional medical reports or special reports.
• Prospects working in dangerous occupations or
  staying in unsafe localities, or going for
  insurance disproportionate 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 be insured have to be short listed. The agent
  should make efforts 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
  information before approaching the prospect. He
  must prepare a detailed questionnaire so that he
  can get information from the client.
• Basic information is required - income, habits,
  concerns, interests, saving capacity, family
  position of the prospect.
• Variety of sources- personal call on the
  prospect.
• This information can be obtained from a variety
  of sources meeting the client personally,
  talking over the phone and arranging for a
  personal meet at the convenience of the prospect,
  enquiries from the clients friends, neighbours
  family , doctor, office.

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PRE-APPROACH

• Information received in pre-approach stage
  will provide reasonable idea of prospects
  financial position his needs concerns.
• What is his income, which plan and for what sum
  assured and period he can go in for, as premiums
  are different under different plans for the same
  age.
• Tentative recommendation of a plan.
• This information will enable the agent to
  suggest a plan suited to the needs of the
  prospect and his family.

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PRE-APPROACH

• Picturise the sale in the mind actual sale will
  be easy.
• Create a strong and clear image in the mind of
  the entire sale going smoothly. This will in fact
  make the actual sale very easy.

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PRE-APPROACH

• 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 and
  continue without losing the trend.
• If any data is not understood or any question is
  left, the agent can always clarify the same and
  complete the proposal.

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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 financial
  security for him his family through life
  insurance.
• Explain to him the importance of human life, how
  it cannot be replaced. Insurance can fill the
  void created on the death of the bread winner and
  enable his family to maintain the same standard
  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
  results in 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
  which interest him, his needs, his familys
  needs, or things that really matter to him.
• However it should not appear that the agent is
  flattering the prospect.
• Proposal should be beneficial and complementary
  to the existing arrangements.
• Take into consideration the income, family size,
  age, gender, current requirements, need for
  insurance of the prospect.

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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 for the education
  of the children or performing their marriage.
• How the policyholder could use the money obtained
  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
  could lead a decent life from the money received
  out of the life insurance policy. Use names of
  his children or relatives. This will make the
  story more touching.
• Use additional aids like pictures, graphics and
  presentations power point if you have a lap
  top.
• Colorful pamphlets of different plans can also
  be left with the client, so that he can go
  through them 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 paying
  attention 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 his own interests.
• He should avoid suggesting plans which have a
  high premium and which he knows the prospect will
  not 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 the other.
• 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 further information that he needs.
• Every objection raised by the prospect should be
  dealt with carefully by the agent.
• The agent should not get angry if the prospect
  raises any objection. He should listen patiently
  to the same and assure 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 agent whom he wants to put off
  gracefully, or signs of indecision 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, Meet me after six months, are
  real objections.
• The prospect wants the agent to convince him and
  give detailed information that will remove his
  fears and doubts and enable him to make up his
  mind to go in for insurance.

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OBJECTIONS

• A true agent should welcome objections as the
  prospect is actually asking the agent 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/incremen
  t/ promotion reveal an inability to take a
  major decision.

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OBJECTIONS

• The prospect wants the agent to convince him and
  give detailed information that will remove his
  fears and doubts and enable him to make up his
  mind to go in for insurance.
• A true agent should welcome objections as the
  prospect is actually asking the agent to give him
  one more reason to buy.
• Objections should be treated in an effective
  manner, convincing the prospect of the need for
  insurance.

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OBJECTIONS

• The answers to the prospect must be complete and
  convince 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 while
  answering the objections.
• The yes. but method is very effective . You
  agree in principle with what the prospect says
  under circumstances assumed by him but you say,
  the actual circumstances are different and then
  convey your point.

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OBJECTIONS

• The prospect is bound to be receptive to an open
  give and take in discussion.
• You can say Mr. A, I agree that conditions are
  hard and people have difficulty in saving but
  just imagine how much more difficult it will be
  if your family has to carry on without you.
• The secret of successful selling is to make the
  prospect feel that he has taken the decision
  you only help him in the process by answering his
  objections and clearing his doubts.
• Make the prospect feel that he has taken the
  decision to go 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 prospects
  positive 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 or tomorrow?
• A positive answer to any of these questions is an
  indication to go ahead.
• If the interview does not end with a close and is
  put off to another time, the interview will have
  to be gone through all over again.

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CLOSE

• In selling life insurance, an appeal to the heart
  of the prospect is more useful than an appeal to
  the head.
• Life insurance is brought for the basic reason of
  protecting 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 is made to one of these motives.
• A sale can be made when an appeal is made to the
  sentiments of love, affection , concern for the
  family members of the prospect.

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SERVICE TO THE POLICYHOLDER

• The prospect becomes a policy holder with the
  sale of a life insurance policy.
• A contract of life insurance is a long term
  commitment.
• As people are too involved in their day to day
  activities, it is necessary for the agent to
  provide service which includes monitoring premium
  payments, nominations, revivals, help in settling
  claims.
• The agent should maintain his own record so that
  he can keep track of the renewal premium dates,
  help the policyholder in getting the address
  changed in the records, nomination changed,
  securing loan, reviving the policy 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 financial
  position or family.

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SERVICE TO THE POLICYHOLDER

• If new members are added to the policyholders
  family, if there is a birth of a child in the
  family, the agent can suggest the policyholder to
  insure the child under policies meant 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 vests in him and a nomination
  is done, check out whether there is further need
  for insurance on his life.
• By providing good service, the agents
  reliability and trustworthiness are spread to
  other people and the agent can get more
  prospects. It is necessary for him to build a
  good reputation in the eyes of the client so that
  the latter refers other family members or friends
  to him. The agent can thus expand his data base
  of clients.

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ETHICAL BEHAVIOUR

• Ethics moral values, principles, beliefs
• Of late, reports of improper behaviour are on the
  rise.
• Funds of banks have been misused by their
  managements to fulfill the greed of their
  friends.
• Officials have used their authority to promote
  personal benefits courts have failed to render
  justice.
• People who are trusted by the community to
  perform their tasks have betrayed the trust put
  in them.
• This happens when personal greed prevails over
  the sense of duty.
• The insurance agent is placed in a position of
  trust by the policyholders and he should not
  resort to any behaviour 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
  self are considered more important than of the
  other.
• LIMRA, (Life Insurance Marketing Research
  Association - USA) which is the premier
  international organization of matters concerning
  life insurance marketing, has found that 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 good
  reputation in the market
• Business remaining in the books for a longer
  period without lapsation, as the policyholders
  trust in him is not lost
• 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
  important information in the proposal form.
• They may feel that this information may result in
  the underwriter asking for more details and the
  proposal may not result into a policy.
• However as the agent is the link between the
  insurer and the prospect, he should disclose all
  the relevant facts.
• Hiding information may be harmful, in the long
  run if the policy results into an early claim and
  is repudiated by the insurer.
• .. At that time, the prospects family will be
  the loser.

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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
  settling claims after collecting premium.
• The actual truth may never be known.

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ETHICAL BEHAVIOUR

• Some characteristics of good ethical behaviour
  are
• Placing the interests of the client above ones
  own direct or indirect benefits,
• Holding in the strictest confidence and
  considering as privileged, all business and
  personal information pertaining to the clients
  affairs,
• Making full and adequate disclosure of all facts
  to enable clients make informed decisions.

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ETHICAL BEHAVIOUR

• Ethics are likely to be compromised in the
  following situations
• Having to choose between two plans- one giving
  much less commission than the other.
• Temptation to recommend discontinuance of an
  existing policy and taking out a new one.
• Becoming aware of circumstances, that if known to
  the insurer would adversely affect the interests
  of the client or 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.
55
THANK YOU M. J. MALIKS.B.A.836
B.O.AHMEDABAD D.O.09879094925lic.malik_at_gmail.co
m