LAPSED LIFE INSURANCE POLICIES REASON & SOLUTIONS

ACCORDING TO COMPILATION:

HANDBOOK OF STATISTICS BY INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA FOR 2014-15 FINANCIA YEAR, PERSISTENCY OF LIFE INSURANCE POLIES FOR DIFFERENT INSURERS FOR 2014-15 FY WAS:

  • AT THE END OF 13TH MONTH: 21-78%
  • AT THE END OF 25TH MONTH : 29-63%
  • AT THE END OF 37TH MONTH: 91-70 .18%
  • AT THE END OF 49TH MONTH: 61 -71.29%
  • AT THE END OF 61TH MONTHS:    42 – 54.47%

 

SINCE THE DATA IS BASED ON PERFORMANCE OF 24 INSURANCE COMPANIES, IT IS SKEWED. AS PER FINANANICAL RESULTS DECLARED BY SBI LIFE INSURANCE COMPANY FOR THE PERIOD ENDED JUNE 30, 2016, THE PICTURE IS MORE  CLEAR SO FAR AS NUMBER OF POLICES IS CONCERNED. THE PERSISTENCY RATIO FOR PERIOD ENDED JUNE 30, 2016 WAS:-

 

  • FOR 13TH MONTH: 26% (69.16% FOR                                                                 PERIOD ENDED JUNE                                                              30,2015)
  • FOR 25TH MONTH: 74% (57.55% FOR                                                                 PERIOD ENDED JUNE                                                              30, 2015)
  • FOR 37TH MONTH: 80% (47.79% FOR                                                                 PERIOD ENDED JUNE                                                              30, 2015)

(iv)        FOR 49TH MONTH:                     42.57% (38. 60% FOR                                                                                    THE PERIOD ENDED                                                                                   JUNE 30, 2015)

(v)         For 61th month :                           24. 95% (16. 37% FOR                                                                                  PERIOD ENDED JUNE                                                                                 30, 2015)

AT THE END OF 37TH MONTH 50.80% PERSISTENCY RATIO MEANS THAT PREMIUMS WERE PAID AGAINST 50.80% POLICIES ONLY AND NO PREMIUM WAS PAID FOR REMAINING 49.20% OF POLICIES OUT OF TOTAL NUMBER OF POLICIES ISSUED EARLIER.

DROP IN NUMBER OF POLICIES WAS SIGINFICANT AT THE END OF 49TH MONTH AND DIASASTROUS AT THE END OF 61ST MNTH – JUST 24.95% PERSISTENCY RATIO FOR THE PERIOD ENDING JUNE 30, 2016 AND ONLY 16.37% FOR THE PERIOD ENDING JUNE 30, 2016, SO FAR AS WORKING OF SBI LIFE AND OTHER INSURES ARE CONCERNED.

 

THE REASONS

  1. PERSISTENCY RATIO OF JUST 70.26% FOR SBI LIFE AND 43.21 – 78% FOR OTHER INSURERS SHOULD BE VIEWED IN LIGHT OF TARGETS FIXED BY IRDAI FOR AGENTS:-
  2. 1,00,000/- ANNUAL PREMIUM PLUS LIFE INSURANCE ON 12 LIVES (MUTUAL FUNDS HAVE NO SUCH TARGETS)

(NOT EITHER OR BUT ON BOTH COUNTS, OTHERWISE THEIR AGENCIES WILL BE TERMINATED. THEY WILL LOSE THEIR SELF GENERATED JOB AS AGENTS). PREMIUM COLLECTION OF Rs. 1, 00,000/- EVERY YEAR BY AN AGENT MAY BE OK. SINCE, PREMIUM INCOME IS LIFE LINE FOR AN INSURER, 12 LIVES MEAN MORE AND UN-NECESSARY WORK FOR INSURER, THEREBY INCURRING MORE EXPENSES OUT OF PREMIUM PAID BY THE LOYAL POLICY HOLDERS. ANYWAY, AGENT TRIES HIS BEST FOR SELLING OR MIS- SELLING LIFE INSURANCE PLANS. IN TURN DEVELOPMENT OFFICERS AND HIGHER UPS HAVE ALSO THEIR TARGETS AND POLICY HOLDER BECOMES TARGET OF TARGETS CHAIN. SINCE TARGETS ARE ONLY FOR THE NEW BUSINESS, THE SAME PROCEDURE IS REPEATED EVERY YEAR FOR NEW BUSINESS.

THE POLICY ATTAINS PAID UP VALUE AFTER COMPLETION OF 3 YEARS. PERSONS WITH REGULAR JOBS CONTINUE. THOSE WHO HAVE IRREGULAR INCOME OR INSUFFICIENT INCOME OPT OUT THE LONG TERM INVESTMENT IN LIFE INSURANCE.

  1. HOW MIS-SELLING TAKES PLACE?

AS PER IRDAI REGULATIONS, RETURNS ON INVESTMENTS IN LIFE INSURANCE CANNOT BE INDICATED PRECISELY, SO FAR AS INSURERS ARE CONCERNED. THE INSURER DECLARES: BONUS IF ANY. THE INSURER AND IRDAI DO NOT TALK ABOUT INSURANCE CHARGES. WHEN POLICY HOLDER ASKS ABOUT RETURNS ON HIS INVESTMENT, IT IS THE MOST DIFFICULT QUESTION TO ANSWER BY AGENTS. VIEW OF IN AMBIGUITY ON ACCOUNT OF RETURNS THE POLICYHOLDER IS RELUCTANT TO PAY FURTHER PREMIUMS. THE POLICY LAPSES. IT BECOMES MORE DIFFICULT TO GET NEW BUSINESS FOR THE AGENT.

SOLUTION OF THE

PROBLEMS

 

LIKS MUTUAL FUNDS IRDAI MUST NOT IMPOSE ANY TARGETS FOR AGENTS, EXCEPT THEIR SHORT TERM TGRAINING. IRDAI MUST REALISE THAT PAID UP POLICY IS NOT ONLY A LOSS TO INSURER BUT IT IS A HUGE LOSS TO POLICYHOLDER. WHY AGENT SHOULD BE UNDER PRESSURE OF TARGETS WHEN HE IS NOT AN EMPLOYEE OF THE INSURANCE COMPANY? HIS SALARY/ COMMISSION DEPENDS UPON HIS PERFORMANCE. PERSISTENCY RATIOS OF LIFE INSURANCE POLICIES MUST BE A GRAVE CONCERN FOR ALL SINCE PUBLIC LOSSES ARE MOUNTING DAY BY DAY. THIS IS DUE TO ARBITRARY TARGETS IMPOSED ON WORK FORCE.

V.D . PURI

vdasspuri@yahoo.com

S.KAPOOR

&

  1. PURI

DATED ; JAMMU, 28-07-2016

NOTE: LONG TERM OF 10 TO 35 YEARS IS WORST SELLING POINT. LET THE MINIMUM TERM BE 5 YEARS ONWARDS. VERY FEW PEOPLE ARE SURE ABOUT THEIR PREMIUM PAYING CAPACITY IN NEXT 10 TO 35 YEARS.

SOURCE: HANDBOOK OF STATSTICS BY

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA –FOR 2014-2015 FY.PAGE 211

 

SOURCE:   BUSINESS STANDARD DTTED, TUESDAY, 26                                    JULY 2016 PAGE- 22 UNANDITED FINANCIAL                                   RESULTS FOR THE PERIOD ENDED JUNE 30,                                   2016 SBI LIFE INSURANCE


 

 

THE AUTHORYS

 

  1. D. PURI , RETIRED DIRECTOR, GEOLOGICAL SURNEY OF INDIA – DOB 7-09-1931 M.SC RETURED IN 1988

AGENT MUTUAL FUNDS OF INDIA

ARN: 18638

  1. KAPOOR, B.SC. AGENT: LIC

CODE: 03244, BRANCH 134, JAMMU MENT .

  1. PURI

B.COM, PG DIPLOMA IN FINANCIAL MANAGEMENT

2ND YEAR STUDENT OF MBA.

 

TF  94191-31073

E.MAIL vdasspuri@yahoo.com

Residential Address:-

134/ sector 5 Trikuta Nagar Jammu. 180012

Contact Person:- V.D. PURI

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