Insurance companies hard sell schemes being phased out - Times of India

NAGPUR: As rules of the game are set to change for insurance players from the new year, there is a rush to rake in maximum business before the deadline. Almost all existing insurance plans will be withdrawn from January 1 onwards and replaced by new ones.

This is following the Insurance Regulatory and Development Authority (IRDA)'s diktat to revamp the insurance products with focus on doing away with guaranteed returns. On account of this, a number of old plans will be phased out. The biggest impact will be on public sector Life Insurance Corporation (LIC), whose over 30 plans will be withdrawn, including som e popular ones like Jeevan Anand or Jeevan Saral.

Sources in agency business said companies were pushing the agents to sell as much as they could in this period. The most active was LIC as it would have maximum number of plans phased out. SBI Life was also in the race, said a source.

"We hope to rake in Rs 100 crore of fresh premium by end of December," said a source in LIC. However, a senior management officer denied putting in any extra effort to sell insurance in this period. "There are no such targets except those fixed originally. Till date, LIC has garnered around Rs 250 crore premium and the budgeted estimates are Rs 450 crore for Nagpur division," the officer said.

Earlier, the plans were supposed to be phased out from September 31 but IRDA extended the deadline to December end. LIC ended up netting Rs 2,000 crore premium through last minute sales at that time. A similar exercise is being undertaken now, a source said.

"Much of the selling is being done by saying this is the last chance for buying the plan. There have been instances of misinforming too," said Ranjit Dani, a financial consultant. For example, an insurance plan is being sold on the grounds that it provides 11% return. This is misleading as 11% yield is on sum assured. In this plan, the premium paid is more than the sum assured. If a calculation is done on the basis of return derived on premium paid, it does not go beyond 5%, Dani said.

In yet another scheme, agents are claiming that on paying Rs 50,000 each for five years, an investor can get Rs 4.30 lakh at the end of the term. Such claims can be misleading unless fine print is read, said another financial advisor. Milind Khasnis, a financial advisor, said new plans were likely to be more investor friendly. At the same time, there were certain unique schemes in the existing pack being hard sold these days, he added.

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