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Like many other businesses before the advent of the internet, face-to-face contact was considered essential in selling a product and insurance is no exception with agents bringing a bulk of business for an insurance company. Now, at a time when direct sale of insurance policies by visiting the website of an insurance company or use of comparison websites is picking up because of the internet that eliminates intermediaries like agents, the role of agents, especially in cities and towns with audience comfortable using PC, is redefined. It can no longer be offering and collecting data from clients which can be done by clients themselves through online means. The challenge for agents here is to provide more value-added services by including insurance as part of complete financial planning. This is one of the reasons why Chartered Accountants with IRDA license are in an advantageous position to secure more insurance business because of involvement in preparation of final accounts of clients (statutory auditors are, of course, not allowed to sell insurance policies at the same time to clients under section 144 of the Companies Act, 2013).
Despite big development stories, the fact remains that literacy level in rural India is still low (without going to statistical data). A visit to a small town/village is enough to suggest that a significant section of the population is not in a position to do a research on best insurance products available online and buy by themselves. Microinsurance should continue to be an important theme for farmers, laborers, small retailers, and artisans here.
Consider Met Grameen Ashray from PNB MetLife. This is a pure term microinsurance plan non-par with a minimum premium of Rs. 61, maximum Rs. 1208. Minimum sum assured is Rs. 5000 and maximum Rs. 50000. In the event of a death of the policyholder during the coverage term, the nominee shall receive the chosen sum assured as lump sum. E.g. a person aged 40 years pays Rs. 395 (inclusive of all taxes at the prevailing rates) every year for a protection amount of Rs. 25,000. In case of death during the Coverage Term of 5 years, his nominee gets Rs. 25,000. Although very useful for the rural populace, such term products are difficult to sell because there is a perception (even in an educated community) that if I survive the policy term, I get zero return. This is a dilemma as life insurance is originally meant to cover risk related to unanticipated death (and not a tool of investment) providing financial security to family members, the concept best reflected in term insurance.
Organizing insurance awareness campaign (exhibitions and fairs), meeting face to face should help add value by agents and brokers, something not possible through the direct portal of an insurance company or comparison websites. Indirectly, this should help address bad reputation that financial agents as a community have earned because of so-called chit (cheat!) funds which have made it difficult to build trust even while selling products from LIC!