Will Insurance Agents deserve those commissions?
- 14 Comment
Introduction
This blog post explains about the new proposal sent to the Insurance Regulator to cut down the existing commissions paid to insurance agents and increase the sum assured for the policy holders. It is just a proposal and it looks nsurance Regulatory & Development Authority (IRDA) is not much interested in the proposal. In this article I will explain about the agents commission structure and the importance of the agents to reach out the customers. Please subscribe to our future articles here.
Commission for Insurance Agents
It is obvious that there should be good income to motivate the agents to get more number of policies. It is true when talking about the insurance agents. They get more commission for their hard work. My humble opinion is they deserve their income because I knew they work hard to get many policy holders. Lets put down few numbers about the commission they are earning to get the policies.
The Insurance Act, 1938, allows insurance companies to pay a maximum commission of 40 per cent of the first year’s premium, 7.5 per cent of the second year’s premium and 5 per cent from there on. The commission paid is limited to 2 per cent in case of single premium policies. In case of pension plans, the commission is limited to 7.5 per cent of the first year’s premium and 2 per cent there on.
As the report points out, for the year from April 1, 2007 to March 31, 2008, the insurance companies paid out a whopping Rs14,704crore as commission.
It is Rs.16.25 for the every Rs.100 . Here the complaint is the high commission for insurance agents leads to low assured value for the policy holder.
Agents deserves the commission
Compare to other countries the awareness and importance of the insurance in India is very low. According to the statistics, more than 90% of the population don’t have the insurance cover for their life. It is not good number for the developing countries like India.
Till now many people are taking the policy because the agents are keen on increasing the convincing the people to take policy which will result in the commission for them. If the IRDA removes the commission, it will be bad day for the insurance sector in India. I hope they could realize the importance of agents.
From the sources, IRDA is in favour of agents, so they will not do anything against the insurance agents.
Summary
In this article I have explained about the importance of insurance agents and their commission structure. If you are one among them, please share your experience as the insurance agent and post your opinion. It will be helpful to the readers. Thank you for reading the article. If you like this article please subscribe to our future articles here.
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14 Comments on this post
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sai said:
How much does an LIC insurance agent get ? I am planning to become an insurance agent do you think its worth working parttime as LIC insurance agent
October 20th, 2009 at 10:27 pm -
Jay said:
Hi Krishna
Can any one become an agent, for eg some one working for a pvt company can write the IRDA exam and become an agent, will it be possible. Since i was chased by an agent and requesting me to write the exam to get more contacts…
Regards,
JayOctober 21st, 2009 at 2:36 am -
krishnas said:
Hello Jay,
Yes. anyone can become the agent if you are clearing the exam. And that also not very difficult. That is why many people are agents.
Thanks,
KrishnaOctober 21st, 2009 at 7:37 pm -
krishnas said:
Hello Sai,
Yes. It is worth becoming agent for insurance and still most of the people don’t have the insurance. It is not anly about the Life insurance, you also can become insurance agent for Car Insurance, Health Insurance, etc.
If you have any doubts, please reply me.
Thanks,
KrishnaOctober 21st, 2009 at 7:40 pm -
Abhishek said:
How much does an LIC insurance agent get ? I am planning to become an insurance agent do you think its worth working parttime as LIC insurance agent
November 24th, 2009 at 12:09 pm -
Abhishek said:
Is it necessary to have an insurance? when money can be retrieved from bank after death also than why insurance? as they also deduct more comissions for agents?
November 24th, 2009 at 12:14 pm -
Abhishek said:
what are the benefits or added values of insurance that we dont get from banks?
November 24th, 2009 at 12:15 pm -
krishnas said:
Hello Abhishek,
Yes. It is worth working as the part time insurance agent. If you have good friends and relatives circle, it is easy to get more number of policies. You have to get at least 12 policies per year.
Thanks,
KrishnaNovember 24th, 2009 at 5:34 pm -
krishnas said:
Hello Abhishek,
Every one should have the insurance. It is for protecting their family.
Thanks,
KrishnaNovember 24th, 2009 at 5:36 pm -
Nikhil said:
I think its ok with the companies to give agents the commission, after all everyone works for money.
but giving 40% is not fair enough.
these high commission lead the agents to mis-sell the products.
i personally saw many agents, giving false claims on returns on various policies in which the entry load is as high as 75-80% of first premium.
to know more about how these agents mis-sell products do visit
http://www.theequitymarkets.com/ulip_agents.htmRegards
June 10th, 2010 at 11:58 pm -
krishnas said:
Hello Nikhil,
Your opinions are correct. It should be regulated with proper rules. There are few good moves by the URDA:
http://www.thinkplaninvest.com/2010/06/disclose-insurance-agents-commissionirda/Thanks,
KrishnaJune 11th, 2010 at 7:50 am -
Vyom said:
Hi nikhil
i visited the site http://www.theequitymarkets.com/ulip_agents.htm
shocked that agents get this much commissions to sell the products, which in turn leads the customer in losses.
i came to know that why these agents say that ULIP is only for 3 years
oh god i’m shocked
thanks http://www.thinkplaninvest.com for making such great site to discuss
Regards
vyomJune 12th, 2010 at 11:12 pm
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