Mis-selling insurance has been a very common practice in India where insurance agents sell wrong products to their customers or give incorrect advice so that they can earn money at the expenses of their clients. This practice is wrong. While mis-selling might give you good commissions for the time being, they ultimately prove disastrous in the long run. If a product is mis-sold to the client, the client loses trust not only on you but also on insurance as a whole. This creates bad publicity and hampers the growth of your insurance business.
So, if you want to grow your business, here are some common mis-selling techniques which you should avoid at all costs –
#1 – Selling the wrong product
It is often seen that insurance advisors pitch only those products which offer them the highest commission rates. They do not understand the needs of their clients in their attempt to earn the maximum commission. This is wrong as your clients’ needs play a prominent role in determining which policy should be sold.
What you should do?
Always do a fact-finding exercise with your clients wherein you understand the needs and requirements of your clients in details. Find out the expenses that your clients face, their existing liabilities, their source of income and their life goals. Then position the right product to meet the requirements that your clients have. When the right product is sold it would ensure that your clients get the maximum benefit from their insurance policies.
#2 – Churning
Another common practice which many advisors resort to is churning. Churning means surrendering or giving up an existing life insurance policy to buy a new one. This allows agents to earn a higher commission on the new plan compared to the small renewal commission on the existing one. Clients stand to lose money if the plan is terminated before the completion of the tenure and so churning should be avoided.
What you should do?
Churning done with a view to earn commissions is unethical and wrong. You should never advise your clients to terminate an existing policy and buy a new one. If their existing plan is not meeting their expectations, they can make the plan paid-up. If the life insurance policy is made paid-up, they wouldn’t have to pay the premiums but the cover would continue. You can then advise them to invest in another suitable policy without giving up the one that they already have. The premiums payable for the existing plan can then be directed to another policy which would be suitable for their coverage needs.
#3 – Not explaining the terms and conditions of the policy
Many insurance advisors fail to explain their clients the detailed terms and conditions of the insurance policy which is being bought. As a result, clients are unable to understand the technical details of the policy and fail to maximize the policy’s benefits.
What you should do?
When selling any insurance policy, explain the policy’s benefit structure, exclusions and other terms and conditions in details. When your customers know the complete details of their insurance coverage, they can utilise the benefits of the coverage to their advantage.
#4 – Promise of unrealistic returns
This practice is very commonly observed when unit linked insurance plans are being sold by insurance advisors. Since ULIPs are market-linked, advisors promise unrealistic returns within very short time offering their customers false hopes. When the plan does not provide the unrealistic returns which were promised, customers lose faith.
What you should do?
Don’t oversell the expected returns from insurance plans. Always present a fair and conservative picture of returns so that your clients do not have unrealistic return expectation from their insurance plans. Consequently, when the plans provide better than expected returns, your clients would be thankful.
#5 – Driving high premium policies for higher commissions
Many insurance advisors also urge their clients to invest in high premium policies so that the commissions that they earn are higher. Such high premium policies might prove to be unaffordable for clients making them discontinue premium payments in future and losing out on the policy benefits.
What should you do?
As mentioned earlier, find out what your clients need and how much they can afford. Ensure that the premiums of the plans that you sell suit your clients’ pockets so that they can easily buy insurance without burning a hole in their pockets. As you sell your clients affordable premium plans, they would place their trust in you to get them the best rates. This would buy you goodwill which would help you to grow your business.
Selling insurance is based on trust. Unless your clients trust you to do what’s best for them, they would not buy insurance from you. Insurance sales is a long term career and only if you adopt the right selling techniques can you take your business to new heights. So, avoid the above-mentioned mis-selling techniques and always keep your clients’ needs, requirements and suitability in the forefront when selling insurance. A good client practice would eventually gain you word of mouth publicity and you would be able to boost your business and automatically earn high commissions.
