COMPARE-LIC TERM PLAN HAS NO OPTION

(By Sandeep Sapre)

A term plan is the best form of insurance because it gives a very high cover at a low price.
The premium of a term plan is a fraction of what you have to shell out when you buy an
endowment plan, a money-back policy or a ULIP with the same coverage. Of course, this is
also because there is no investment component in a term plan. The entire premium goes in
covering the risk.
However many companies and investment consultants advise you to compare and buy a
term plan. Most of them consider two criteria for selection of plan:
1. Which company has excellent Claim Settlement Ratio
2 .Which company has more features and cheap premiums.

Table 1. Claim Settlement Ratio of All Life Insurers


In the first criteria LIC comes 1
st
with 98 % Claim Settlement Ratio ,whereas LICs premiums
are costly. Here we are not discussing e-plans. A separate article will be posted on e- plans.


Our present focus is on the plans that are bought from individual agents. With this in
mind it is important to look as to whether the two criteria mentioned above are sufficient
to buy a plan. It is very important to see which company gives better after sales service.
The first person that is often contacted by or is expected to have liaison with the insured is
the advisor who sold the policy. In many private insurance companies it is often found that
the person who sold the policy may no longer be working with that company in the next
year. More often than not his agency gets terminated for not fulfilling the criteria of
minimum no. of lives (12 ) to be insured in his agency year. Table no. 2 shows the company
wise average no. of policies an individual agent sold during the year in the past 3 years

Table 2
AVERAGE NO. OF LIFE POLICIES SOLD BY INDIVIDUAL AGENTS

SR.NO. INSURER 2010-11 2011-12 2012-13
1 AEGON RELIGARE 4 4 3
2 AVIVA 3 3 3
3 BAJAJ ALLIANZ 4 3 3
4 BHARTI AXA 4 4 3
5 BIRLA SUNLIFE 3 3 3
6 CANARA HSCBC NA NA NA
7 DLF PRAMERICA 5 5 4
8 EDWLWEISS TOKIO NA 12 8
9 FUTURE GENERALLY 2 2 1
10 HDFC STANDARD 3 3 4
11 ICICI PRIDENTIAL 3 2 2
12 IDBI FEDERAL 4 3 3
13 INDIA FIRST 4 5 7
14 ING LIFE 4 6 5
15 KOTAK MAHINDRA 3 3 2
16 MAX LIFE 7 6 6
17 PNB METLIFE 3 3 3
18 RELIANCE 4 4 3
19 SAHARA 5 5 5
20 SBI LIFE 8 6 6
21 SHRIRAM LIFE 3 5 5
22 STAR UNION DAI-ICHI 3 12 5
23 TATA AIA 3 2 3
PRIVATE AVERAGE 4 3 3
24 LIC 26 27 29


INDUSTRY AVERAGE 15 16 18


SERVICE BY AGENTS


Table No.2 shows that there must be a few individual agents of private insurance companies
doing very good performance in selling the plans but large number of agents sell just 3 to 5
policies, and their agency gets terminated next year. Most of these companies get large part
of their business from Corporate Agents. The Sales Managers who appoint the individual
agents are often under pressure of performance and are always on the lookout of getting a
better job in the same field on higher post and package. As soon as they get this opportunity
they leave their present jobs making the agents orphans. Normally this does not happen
with advisors of LIC.
LIC advisor keeps record of his customers and renders all possible services to them from
reminding about renewal, change of mode, change of address, and claims etc. at his
doorstep. LIC advisors should take maximum advantage of this. They should keep a copy of
Table No.2 with them to emphasize possible hardship if their potential customer is thinking
of buying a policy from private insurer.
LIC AGENTS SHOULD NOT AVOID SELLING TERM INSURANCE
It is observed that LIC agents avoid selling term insurance under the pretext that once
they sell it, they will not have scope to sell him another non term plan in future.
Remember if you avoid selling it, you might lose him permanently. The private insurers
and so called investment consultants are making huge propaganda of compare and buy.
There is all possibility that before you reach the customer he is already insured adequately
by some other insurer. It is always better to combine an endowment type plan with a
term plan so that your customer will also get sizable amount on maturity. Some private
companies have also features like Critical Illness Rider, Premium Waiver Benefit Rider and
Accident Rider etc.. LIC has Plain Vanilla Plan without such tooty fruity. Advisors should be
able to show their customers how much tasty the real stuff is under the tooty fruity.
( Sandeep Sapre)
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