It’s very normal seeing advertisements from Life Insurance companies to join them as Insurance Advisors or simply, Agents. Most of you may know that Agents earn their living by selling policies; a part of the premium customers pay towards the policy would go to agents for few initial years (see LIC Agent in India). Apart from this sort of commission, the agents wouldn’t get any fixed amount from the Insurance company they are working with/for (remember, agents are not employees of that company). Although some companies have recently started offering certain fixed amount for agents under training as a encouraging move, giving them more confidence.
Now, Reliance Life Insurance, on a mission to take Life Insurance to rural India, is planning to take in some 6000 insurance agents this year (2011). What’s making the news is, the company, apart from offering fixed amount during the training period, is also looking to offer fixed amount for agents when they begin their field work. This is apart from the normal commission that they would earn from selling policies.
This makes sense, at least from the agents point of view, since people in rural areas do not yet know the benefits of Insurance and hence would be reluctant to opt in to a policy. Even if they are some how convinced, they might not have the capacity to go for lakhs worth of SA policy and hence, the commission that an agent would get too will be less. Also, with IRDA mulling removal of agent commission for Unit Linked Insurance Policies (ULIP), the revenue source is definitely reduced. So this fixed pay idea definitely makes them feel a little more secured.
The company says that Agents need more training period to gain experience in selling policies in rural areas and are hence providing with fixed pay to give them confidence.
It remains to be seen if this will just be limited to agents in rural areas or will be extended to all agents as well. Boy, that will be a big boom time for all agents.