POOJA MANOJ GUPTA
INSURANCE & INVESTMENT ADVISOR
MOBILE NO. 8882286639, 9868944340
EMAIL: mr.mkg26@gmail.com
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THE
INSURANCE REGULATORY and Development Authority of India (Irdai) is actively
considering giving insurance customers an option to switch agents anytime
during the term of the policy, provided the policy term is 20 years or less.
Customers should use this privilege to bond only with those agents who build
enduring relationship.
At
present, insurers keep pushing agents to sell policies as much as they can. As
a result, regularly visiting customers to review their insurance needs and
understanding their grievances take a back seat. While experts talk about low
insurance penetration and low insurance density in India, these indicators
speak nothing about the growth of insured population or the growth of in-force
policies. In fact, barely 20% of Indians are covered by individual life
insurance and more than 60% of insurance customers either stop keeping their
policies in force or surrender them within five years.
The
concept of Net Promoter Score (a globally accepted metric to measure customer
loyalty) has not gained ground here. Much of the growth of life insurance
business happens because of churning of policies by insurance intermediaries.
Under such circumstances, if customers are empowered to switch agents, it may
force agents and insurers to take better care of the existing customers. It
will also result in right policies being sold to people and agents nit making a
windfall at the expense of customers.
In
life insurance, tied agents remain the mainstay of the distribution network as
more than 58% of business is still coming through this channel as compared to
29.03% through this channel. So, Indian customers still have huge faith in the
ubiquitous insurance agents.
All
leading private insurers have at least 50,000 active agents across the country.
The question is how to identify the right agent in the midst of two million
plus agents of the industry. After all the option of agent portability should
be exercised only as the last resort.
There
are many insurance agents who still care for the customers irrespective of the
ticket size of policies. Pick an agent who has a good track record of helping all
his customers. Agents who have made a career out of the job of insurance
selling are more committed than others in the field. Hence, the agents who are
in the profession for at least 10 years have probably invested time and energy
in cementing relationship with customers. Those who offer rebates are not
professional as their prime objective is to keep the agency in force by somehow
registering the required minimum business. Finally, any accomplished agent will
listen to the customers more than delivering a canned sales pitch, to push
certain products of his choice.
Let’s take an example
to understand taxability. Suresh has a policy with a maturity value of Rs.1,
10,000. He paid a premium of Rs.45, 000 on September 16, 2013 which is more
than 10% of the sum assured. Thus insurance maturity earnings are taxable, and
not eligible for any exemption under Section 10(10D). On maturity, Suresh
surrenders it, and since the maturity payout exceeds Rs.1 lakh, the insurance
company is liable to deduct tax at 5%of the income on maturity. Here TDS will
be Rs 3,250 (5% of 1, 10,000-45,000) and net income to Suresh will be Rs
61,750.
Example: Suresh has to now mention this maturity income under the head ‘Income from other sources’ while is filling his income Tax return. He can also claim credit for TDS against his tax liability as defined at the time of filling his income return.
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