Agent’s Commission In Insurance

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Agent’s Commission In Insurance – Mahesh has been staying at your place for many years now. To you and many of your neighbors, he was more of a friend than an insurance agent. Of course, it helps you fill out all the long and complicated insurance quote forms, ensures you don’t have to worry about remembering renewal dates, facilitates the payment process, and provides general insurance assistance. Also, he is the one you can rely on the most when it comes to choosing the best plan from the many insurance plans in India. But is he your well-wisher or he does it all for himself first, with his priority above yours? Commission agent policy is pretty good, and if he sells, he helps himself.

For many years we have been told that insurance is important and should be bought not out of real need, but out of obligation to save taxes or simply because we have to. These thoughts are mainly introduced into our minds by insurance agents who want to profit from our investments. You can say that there is no harm because it is a profession and they have to earn for their work. Well, you are right if you think so, but you should also get the maximum benefit if you invest in an insurance policy and it should not be short.

Agent’s Commission In Insurance

As per Insurance Regulation and Development Authority of India – IRDAI guidelines, insurance agents can earn a maximum of 40% commission in the first year of selling ULIPS. As for unrelated policies, their commission is 35% in the first year. However, IRDAI has made some regulations for unrelated policies as well, where the agent gets more commission if he can get you to commit to a long-term policy. Let us explain with the help of an example:

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*For brokers, the maximum fee is 30% in the first year of a term of 10 years or more and 5% in subsequent years. For agents other than brokers, the maximum commission paid is 40% in the first year for 12 years or more.

These fees vary depending on the terms of the policy, and the agent tries to sell you an insurance policy with the maximum term for their own benefit, whether you need it or not.

Now, for example, you have purchased an endowment policy from Mahesh at an annual premium. 1 GEL for 20 years. Through the term, it intends to earn Rs. 1,25,000/- commission on your investment! This is the amount that only goes towards the commission and then there will be other charges like fund management charges, policy administration charges and some more. Therefore, the return on investment in such a policy is low due to high costs such as.

The best way is to eliminate the need for an agent and buy the policy online. The company offers great plans that are easy to understand, easy to compare and hassle-free to buy. There are websites that are meant to offer you the details of all the plans available in the market on one platform to make it easier for you. Find out and choose the plan that will charge you a lower premium and ensure that your investment achieves a healthy return for you at the lowest cost to the company as well. It’s a win-win situation for the insurer and the insured!

Becoming A Life Insurance Agent

Insurance plans in India have long been sold by agents. It’s time for a change. Take advantage and make your money work wonders for you!

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Sonia Nagpal is an insurance specialist. He has more than 25 years of experience in sales, marketing and corporate alliances. Recently IRDA revised the commission structure paid to insurance agents, corporate agents, insurance brokers, web aggregators and insurance marketing firms. Let’s see how much your life insurance, health insurance and auto insurance agent commissions are fixed.

I know that after writing this post, fraternity agents will feel uncomfortable and may be insulted as well. But my purpose here is not to defend their commission structure nor am I against such a heavy commission structure.

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But as a consumer of an insurance product, I have a right to know the costs associated with that product. One such cost is the insurance agent’s commission. Therefore, I reveal this to everyone.

Knowing your agent’s commission doesn’t mean you have to claim a share of their profits. Remember, according to IRDA rules, sharing commissions or asking for discounts is illegal. Therefore, never allow agents who are ready to share their commission with you or you should also refrain from such bad practices.

At the end of the day, that’s what insurance agents earn. Therefore, if you are completely satisfied with the product you bought, then the agent has the right to receive a full commission.

“No person shall permit or offer to permit, directly or indirectly, as an inducement any person to take, renew or continue insurance against the risk of life or property in India at any discount. or part of the commission paid or any discount on the premium shown in the policy, or any person who executes or renews or continues the policy receives a discount other than such discount as is allowed in accordance with the prospectus or published tables. insurance”.

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Another thing to understand is that insurance contracts are long-term (especially life insurance). Therefore, communication with an agent will be beneficial for you. If you force him to share his commission, then you may lose the relationship with your agent.

Also, if you ask to share the commission, then there is a possibility of mis-selling to get more commission. So, in the end, you can buy a product that you don’t really need.

As in other professions, in the insurance industry, agents act as intermediaries. Therefore, they have every right to receive the commission intended for them. Respect their profession like everyone else. Because at the time of complaint, they are the ones who will help you. But how long the agent will be in the same profession or how professional he will help is up to you.

You buy a product by knowing its features and benefits. Hence, the agent also has the right to commission.

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However, if it mis-sold you, then you have every right to report the same to the insurance company or the regulator. Remember, it’s not just wrong to sell, it’s also wrong to buy from you. Because buying a product blindly without knowing the benefits and features is wrong. Therefore, you are equally responsible.

There are many product categories in insurance. They are life insurance (single and regular premium), health insurance, car insurance or car insurance. Therefore, I try to highlight one for your better understanding.

In the chart below, I show you the commission structure of life insurance agents for regular premium paying products, cash back and term plans.

You will notice that the highest costs for individual term insurance. This will be deliberately revised to facilitate the sale of pure insurance products.

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Now let’s focus on life insurance products. They are usually sold as an investment. However, they failed to generate even 7% returns. Let’s not go over the other costs that life insurance companies have to bear. But take the example of just considering the life insurance agent’s commission and calculate how much income the life insurance company should bring you.

Let’s take an example to see my point. Suppose you buy a traditional 15-year plan, annual premium of Rs.100. Then, as you can tell, the total premium you pay for 15 years is Rs.1500.

If you expect a return of 7% on this investment, then by the end of year 15 or beginning of year 16, the life insurance company should return Rs 2,800 to you. Only then it means that your IRR (how to calculate the rate of return) will be 7%.

However, for life insurance companies, the amount to be invested is less. Because the agent must be paid (forget other costs). So for the life insurance company to get 7% of your return, it has to get more than 7%.

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Therefore, expecting the previous 7% return from you is not the same for the life insurance company. I have tried to explain the same from the following illustration.

This is just an illustration of how important costs are

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