The Commission-Driven Agent
The agent, in the context of life insurance, acts as a representative to advise and educate consumers on the importance and mechanics of their products. This covers the types of life insurance, their coverage values as well as additional available options and riders that suit the consumer’s financial situation best.
Additionally, policy owners are advised on crucial details such as the surrender values of their policies, the breakdown of the premiums, along with other counsels and tips. Life insurance agents, in essence, are supposed to have technical and ethical knowledge as well as underwriting capabilities to sell policies.
Unfortunately, the reality is that in the Malaysian environment, life insurance agents are commission-driven, and do not always advise consumers on the policies that they really need. A simple look at the incentives that these agent typically earn connects the dots: 9-12% for premiums on certain ILPs, fully-paid vacations for achieving sales targets, agent recruitment bonuses, policy renewal bonuses, policy volume bonuses, the list goes on. The commission rate for life insurance policies is in the vicinity of 35%; considering the comparatively low premiums, agents usually sideline it. Even then, however, the agent’s cut would drive up the premiums one would pay. In a nutshell, misrepresentation is rife in the industry, resulting in an adverse outcome of the function of an agent.
A Simple And Yet Inexpensive Solution
The life insurance industry in Malaysia is evolving fast, largely due to the fact that our government has earmarked one of the Economic Transformation Programme’s Entry Project Points (EPP) to address the high incidence of underinsurance and uninsurance. Couple that with the propagation of user-friendly financial management platforms, as well as educational websites, and we have competitively-priced policies on easily accessible platforms emerging rapidly in the market.
One such service-provider, born from this evolution, is ‘U For Life’, which allows consumers to bypass insurance agents and purchase insurance for themselves directly online. A check by Loanstreet shows that an e-policy can be customised, reviewed and confirmed in 10 minutes, after which coverage instantly takes effect. ‘U For Life’ follows a step-up type policy, which increases in accordance with buyer's age.
Also, due to the fact that the company is purely online, incurring only essential costs, they have the competitive edge when it comes to price. Life insurance protection of RM100,000 can be purchased for a premium starting from just under RM10/month – considerably lower than if one were to purchase a policy through an agent.
On top of speed and affordability, common concerns are swiftly addressed in the form of a Q&A section, and the underwriting function of an agent is replaced by an easily understood list of questions. Payment is done promptly through credit or debit cards, followed by a confirmation to your email; and we’re left wondering why this service is only emerging now.
Becoming your own life insurance agent have never been easier, the benefits far outweigh the trouble of talking to several agents from several companies and ended up with expensive life insurance proposals. You’re now in better charge of your savings on premiums, stronger control over your finances, better knowledge on the subject matter, and the best of all, you don’t lose out from being dictated by inexperienced, commission-driven agents.
Read up more on the workings of life insurance from “7 Common Mistakes People Make With Life Insurance”, and once you feel confident enough, give it a try. You might just become a life insurance agent of sorts for your family and friends and spread the useful tips!