Watchouts While Choosing An Insurance Agent

Your insurance agent is more often than not the sole link between you and your insurance company. Beware of insurance agents who sell you improper coverage, advises Jay Sampat

There are many insurance providers in the market, and they all have their unique characteristics. Insurance agents are the intermediaries responsible for finding a ‘suitable match’ for their clients with auto, health and/or life insurance policies. Also, you, as a client, would typically depend on your agent a fair bit – s/he identifies the right policy for you, collects premium cheques when they are due, and is your insurance go-to person. Hence, it is important to proceed with care.

Here’s a look at some definite no-nos while selecting an agent:

1) Is your agent a part-timer? There are many amateurs posing to be authorised agents in the business, hoping to make some money on the side. However, it makes sense to buy from professionals. What if the agent says s/he is a full-timer but you don’t quite know whether to take that at face value? In that case, ask when s/he is available for clients. If it is before or after normal office hours, you can be sure that the agent is a part-timer. Non-availability during these hours is fine only if the agent gives a branch number where s/he can be contacted during the day. Also, be particular to check that the agent is not acting on somebody's behalf. Ask if s/he has an office. If the agent has a fixed office address, s/he probably means business. If not, this agent may not be the person you want. Also, ask for referrals and a service track record, as full-time agents have a reputation to maintain and have lesser chances of disappearing.

2) Is your agent too positive? In such cases, undertake the investment ‘sniff test’. If it looks better than anything you can get anywhere else and it's being touted as safe, the red flags should go up. The rules of the market are like the rules of physics. They don't change. In other words, if it sounds too good to be true . . . well, you know the rest. Or, at least, you should.

3) Is your agent offering you the entire range of products? Your agent should be aware of all policies on offer and subsequently let you choose the end product. One way to judge the agent is to ask his/her opinion about term insurance policies. If s/he discourages you regarding term policies (the cheapest and most efficient policies), the agent is not the one to go with.

4) Is your agent experienced? An undergraduate could get in and out of the profession within a year, or could work for five years to qualify for renewal commissions. But your policy term will be longer than that. Be sure to ask your agent, “How many years have you been in the profession?”

Of course, you need to be judicious. While experience in the business is an asset, in most cases if your agent is attached to one company for many years, s/he may start to believe that only that company is good and the others are worthless. For example, in India you will find enough insurance agents saying that private companies may not pay the claim. This is absolutely incorrect, as all private companies are leading business houses that have strong partners.

5) Is your bank your insurance company as well? If yes, then beware as they know the exact amount of money in your account and your spending habits. Evaluate them carefully before you hand them your insurance business too.

6) Is your agent a friend or a relative? While s/he may be accessible all the time, you shouldn’t swim with him till you have verified the individual’s credentials as an insurance agent. This is more so if this agent has had an unsuccessful track record in whatever s/he has done in the past and at last decided that selling insurance is her/his calling. In such cases it is best to keep distance.

7) Is your agent a known person’s husband/wife/child/uncle…? If the answer yes, then you could be headed for trouble. Be extremely wary of taking them on as your insurance agent, as even if they mess up in their job you will not be able to take them to task.

Buying insurance isn't like everyday shopping. Hence, don't treat the purchase lightly. It is important that the agent you choose be well-versed in policy differences from provider to provider, informed of the latest industry news and trends, concerned with your personal insurance needs and capable of explaining your options in a way you can understand. After all, wealth management and risk cover go hand in hand. Naturally then, taking the right cover assumes great importance. So choose your insurance agent carefully, because the wrong choice can have disastrous consequences.