Life insurance agents avoid selling you term plans. Here’s why

Sep 19, 2019 | 3 months ago | Read Time: 3 minutes | By iKnowledge Team
Credit: Photo by rawpixel on Unsplash

When it comes to buying insurance, we often take the shorter route of relying solely on information provided to us by insurance agents. After all, who will spend time looking through policies online, reviewing premiums and coverage and hundreds of lines of jargon to determine which policy works for them? Isn’t that the job of the insurance agent: to find you a policy that suits your needs the best? While theoretically yes, that is the job objective of an insurance agent, which is hardly ever the case as insurance agents receive much less training than they are supposed to.

Where does the advice go wrong?

For anyone who doesn’t have life insurance or is just starting out to invest in insurance, a term plan is perhaps the safest option. Term plans are often the cheapest policy available and provide a specific amount of coverage for a certain period of time. The nominee receives the entire insured sum of money under such a plan only if something happens to the insured member (death, disability, illness).

Aegon Life offers term insurance plans with a wide variety of coverage, including protection against 36 critical illnesses, accidental death benefit, lower premium rates for females and non-smokers. It offers four plan benefit options which includes, Life, Life Plus, Life & Health as well as Life & Health Plus. Under this plan, customers have the option to increase coverage as their family expands and grows while still being able to avail the tax benefits of paying term insurance premium.

While experts consider term plans to be the most important insurance plans, agents often do not even mention such plans due to multiple reasons, including low commissions, lack of awareness about protection, and the general attitude towards insurance plans.

Low premiums = low commissions for agents

As mentioned above, term plans often offer the lowest premium among all the plans in the market. Term plans stick to the primary purpose of insurance: to provide protection. They do not offer any returns or monetary gains which is why they are able to provide you substantial cover at affordable prices. Due to the same, if an agent sells a term plan, they earn much less commission as compared to any other plan. Commissions are directly linked to annual premiums paid by the policyholder, and term policy premium is far less.

Lack of adequate training

Educating and training agents who can properly sell products that are profitable to the company as well as in the best interest of the customer has been a challenge that the Indian insurance sector has been dealing with for years. Agents continue to be inadequately trained in understanding the differences between insurance products, due to which they are unable to explain this to the customer or even tell them about the variety of options available. Due to lack to knowledge, they focus their sales pitch to include plans which render a high premium, and do not even encourage first time customers to buy term insurance.

Attitude about insurance in India

Another reason insurance agent simply doesn’t tell you about term plans is that the average Indian customer is not interested in buying a plan that offers no benefits upon maturity. Insurance in India is still looked at as an instrument for investment and tax-saving, rather than being a tool of protection to safeguard you and your loved ones’ finances. The main advantage of term plans: the coverage is much higher in case of the demise of the policyholder as compared to other plans which is hard to understand for customers due to which they are hesitant to buy them.

Next time you meet your insurance agent, ask them about term plans and whether they think it will be suitable for you. If you feel like they are avoiding talking about the plans, switch to buying insurance online after you have done adequate research about the best online term plan for you and all your financial needs. To know about Aegon Life’s life insurance products like health insurance and other products, visit our home page.


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