From mis-selling to need-based selling
Insurance industry mostly rely on mis-selling for their business, suddenly focusing on need-based selling. There are huge number of paid-up policies (policies in which insured stop paying premium after few years) in last few years mostly from private insurance companies. This indicates rampant mis-selling in the industry past few years. In such scenario, how it is possible to run business based on need-based selling?
Who is doing need-based selling?
Edelweiss Tokyo, Max New York Life and HDFC Life already kick-started efforts to win back customer's trust. They came up with a model in which agent needs to visit prospective policy holder 3 times to make him buy the products.
How they plan need-based selling?
First meeting just to explain entire product spectrum that insurance company offers. Second meeting is to understand customer's priority and financial goals. Also customer needs to fill certain forms citing his long/short team goals, current financial status, projected returns and target capital needed. Finally actual product will be sold in third meeting.
Will it really benefit customers?
If companies really want to do need-based selling, they should sell only term plans. Companies should discontinue their all other plans like ULIP, Endowment and so on as these plans are investment plans, not insurance plans. Ideally no one should consider insurance as an investment, so it does not make any sense to study someone's net-worth and goals to sell insurance.
If companies really want to perform need-based selling, they should calculate customer's present earning and propose term plan based on that. For doing that, it may not require 3 meetings as mentioned above. Rule of thumb is "Insurance means term plan, nothing else. It should not mixed with investment." Hope insurers and customers will understand that some day....
Insurance industry mostly rely on mis-selling for their business, suddenly focusing on need-based selling. There are huge number of paid-up policies (policies in which insured stop paying premium after few years) in last few years mostly from private insurance companies. This indicates rampant mis-selling in the industry past few years. In such scenario, how it is possible to run business based on need-based selling?
Who is doing need-based selling?
Edelweiss Tokyo, Max New York Life and HDFC Life already kick-started efforts to win back customer's trust. They came up with a model in which agent needs to visit prospective policy holder 3 times to make him buy the products.
How they plan need-based selling?
First meeting just to explain entire product spectrum that insurance company offers. Second meeting is to understand customer's priority and financial goals. Also customer needs to fill certain forms citing his long/short team goals, current financial status, projected returns and target capital needed. Finally actual product will be sold in third meeting.
Will it really benefit customers?
If companies really want to do need-based selling, they should sell only term plans. Companies should discontinue their all other plans like ULIP, Endowment and so on as these plans are investment plans, not insurance plans. Ideally no one should consider insurance as an investment, so it does not make any sense to study someone's net-worth and goals to sell insurance.
If companies really want to perform need-based selling, they should calculate customer's present earning and propose term plan based on that. For doing that, it may not require 3 meetings as mentioned above. Rule of thumb is "Insurance means term plan, nothing else. It should not mixed with investment." Hope insurers and customers will understand that some day....
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