63% of insurance buyers got under an hour of advice from agents: Upstox report

Insurance is a critical tool for protecting individuals and their families against financial losses from unforeseen events like death, accidents and illnesses. It provides a financial cushion and peace of mind by covering the lives of breadwinners.

In an attempt to understand insurance buying habits and selling practices, Upstox along with Fingrowth Media surveyed hundreds of respondents across India—both agents and consumers—to understand their knowledge gap and their understanding of insurance.

What we learnt from consumers

63% of the respondents received less than an hour of explanation, making it too little for multi-year contracts, which results in incomplete product understanding. Consequently, 54% of the respondents were unaware (or had not been informed) that failure to pay a premium could result in a reduction of their insurance investment or even the policy lapsing. Besides, around 39% of the respondents feel that they were misled into the buying decision.

But is it correct to blame the agent alone? Not really. Consumers too are interested in insurance and do not take the necessary time and effort to understand what they are buying. This can be understood by the fact that 50% of respondents could not tell the difference between an endowment or ULIP policy, even though a majority of them owned one of the two policies.

What we learned from agents

48% said that they feel pressured to meet targets, and 39% even agreed that they pass back insurance commission, despite being prohibited by law. Agents are still motivated by front-loaded commissions and continue to sell insurance as a protection-cum-investment option. Despite this, almost 60% admit they don’t fully understand the internal rate of return or IRR, which refers to the annualised returns that their clients make over the life of the policy.

While the agents’ intent is not always malicious, these findings also reflect the need for formalised and continuous training programmes for agents.

These are just some of the critical questions answered in our detailed pan-India survey.

• Do insurance buyers trust their agents?

• Are customers happy with the ‘returns’ they realise on investment policies?

• Is term insurance adoption increasing?

• Are insurance agents actually satisfied with the work and income from this role?...