New Delhi: Professionals such as doctors, chartered accountants and lawyers are moonlighting as life insurance agents to earn extra money as the economic downturn hurts their practice.
The commissions earned from selling life policies is an “additional income to me. Now, many of my friends have also joined me”, said a 38-year-old doctor in Bangalore who didn’t want to be named.
The doctor realized around July last year that many of his patients had stopped visiting him for treatment of minor ailments such as a cold or sore throat, and decided to become an agent for a private insurance firm.
Today, the commissions he earns make up 10-25% of his monthly income.
Life insurance agents are paid a commission on the policy sold. According to the guidelines of the Insurance Regulatory and Development Authority, the commission depends on the type of insurance plan.
For single-premium products, the maximum commission rate is 2% of premium paid, and for regular premium products, the rate is in the range of 15-30% of the premium in the first year, followed by 5-7% in subsequent years.
The premium size of life insurance policies are larger and the agents earn more in commission compared with what they would on non-life insurance policies.
According to Munish Sharda, director of direct sales, Aviva Life Insurance Co. India Ltd, the trend is catching on. “We are indeed seeing a trend that more professionals are inclined to talk to us to join as advisers, who were not keen to join six months or one year back.”
“Now their income levels have fallen (and) many of them are keen to explore an alternative profession,” Sharda said.
Says Paresh Parasnis, executive director with HDFC Standard Life Insurance Co. Ltd: “Professionals from diverse educational backgrounds are opting for this profession. These professionals now constitute a little under 5% of our financial consultant (agency) force, which we have added this year. Earlier, this percentage was only between 1% and 1.5%.”
To be sure, even the insurance industry has been hurt by the economic downturn, forcing some insurers to trim their branch networks and put hiring on hold.
India’s life insurance industry registered a 10% fall in new premium income in the last fiscal compared with 2007-08, led by slumping demand for unit-linked insurance plans, a policy with market-related returns.
Still, professionals are valued as agents by insurers because they have access to high net-worth individuals.
At ING Vysya Life Insurance Co. Ltd, professionals such as doctors, lawyers and engineers make up about 3,000 of its 70,000-strong sales force, said T.K. Uthappa, director, sales.
“Going forward, this number will increase as this group has high potential that is waiting to be tapped, purely because these advisors have access to high net-worth individuals and possess greater awareness levels which makes it easier for them to communicate with customers,” Uthappa added.