Why Agents don’t sell Term insurance policy

Term insurance is one of the most important and economical insurance plan in the market. The premium amount of Term Insurance Plans is very low and that’s what makes it an affordable insurance policy. If you are the single breadwinner of the family and looking for an insurance policy with a tight budget, then Term Insurance Policy is the best available option for you. But even with so many benefits, most of the insurance agents avoid selling term insurance policies to the buyers.

The duty of an insurance agent is to understand your need and situation and suggest a plan accordingly, but in most of the cases, the agents look for their one sided benefit while selling insurance policies and rule out your needs and situation. Such unethical practice leads to selling of wrong policy to the customer which gives them no or less  benefit when required. Agents even avoid telling you about different type of policies because it doesn’t give them enough commission and one such product is a term insurance policy.

So let us understand through this article that why an insurance agent don’t sell term insurance plan.

Low commission due to Low premium

Term insurance policies are very cheap in comparison to other products of a life insurance policy. This is because a term insurance policy gives cover for your life only, without any maturity benefit and that’s the reason why the premium amount of Term Insurance Policies is very low in comparison to other policies. So a term insurance policy keeps your loved ones financially protected in case of your demise and it won’t give you any investment  gain in the future. Now, the commission of an insurance agent depends upon the amount of the premium and because the premium amount in term insurance policy is very low, it yields low commission for insurance agents. So the insurance agents avoid selling such kinds of product which gives them low commission.

Customers aren’t interested in a product which gives them No return   

Many customers avoid insurance policies which give them no return and term insurance policy falls in the same category. The customer thinks that he will have to die to earn the benefits  of a term insurance policy and this is the reason why most of the people are not ready to buy it. They don’t understand that  a term insurance policy provides death cover only and the amount of cover is quite large in comparison to to other insurance products. So for an agent, it becomes difficult to make a buyer understand about a term insurance plan and that’s why they keep themselves away from the hassle of explaining a term insurance policy to the customer.

Most of the  agents lack Proper Training of Products

Despite the fact that term insurance policy is very profitable for the insurance companies, very little or no training is given to the insurance agents for selling term insurance policies. The main focus is to sell investment products which give them higher benefits in the form of commission. Most of the insurance agents aren’t eager enough to learn about different types of policies which make their offers for the customers to be limited to high commissioned insurance products which prove unfruitful for the customer. That’s why the agents don’t care about selling a term insurance policy to the customer.

Unawareness among Buyers

In India, most of the people aren’t aware about a term insurance policy. And since the customer doesn’t ask about it, most of the agents don’t bother to explain about a plan which is also less profitable for them. Even if the customer has little knowledge about a term insurance plan, the agent might rule out the option of term insurance because he knows that the buyer isn’t aware about the benefits of a term insurance policy and he could succeed in selling a policy which will give him higher commission.

Conclusion

So it is always good to be aware about different types of policies so that you can choose the best one for you. Solely depending upon the agent for buying an insurance policy is never a good idea. A good insurance policy is bought by understanding your need and requirement otherwise it becomes useless for you. In most of the cases, an agent will try to sell you a product which will give him high commission and you will end paying premium for a product which will give you no benefit when required.

Ask about the term insurance policy from your agent and if you feel like he is trying to avoid the topic, then it’s better to move on to another agent who will help you buy the best plan. You also have the option of buying an online term insurance policy without any involvement of an agent. The detailed information and easy process makes the online purchase of insurance very effective. There are also several web insurance aggregators, which help the buyer to buy the right insurance policy by giving unbiased and effective information and suggestion.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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