Originally Posted by anonymous
I must thank you KB for this wonderful explanation. Now let me add my views as well
1 - I also mentioned that I did my own research before going for the policy and obviously I had asked my friends, relatives etc as well.
2 - I may be wrong here and you can correct me, I think when one applies for insurance policy, agent doesn't give any document at that point of time, rather agent takes all the paper, photos cheque etc. Once company receives them and approved them, then only they send the policy to the customer, So if this is the case, what can one do besides beliving the agent?
3 - Being a normal customer, I would not know the internal process of these companies, I would think that they would check the paperwork first and if everything is fine, then only they will send the cheque for clearence.
Please accept my apology as it I didn't understand your previous post.
Actually all three are wrong
Which is why I originally asked - "Who is your Financial Advisor". Almost all of us go ask our friends and relatives what they have done - Now we are assuming that they know what they are doing. Tomorrow - should anything go wrong - who will you hold responsible? In fact in India, I have generally seen a lot of ppl basing their investment decision based on what their Chartered Accountant told them. Unfortunately no one realises that this is like asking a butcher about Brain Surgery! The CA's do not have a single paper on Investment in their course material. They are tax consultants - Period! Therefore - unless my friends and relatives are certified investment consultants, they are not qualified to give me investment advice. I will use them purely as sources of information on products that they have bought, customer service experience and such. An investment consultant is someone who is trained and practices this for a living SUCCESSFULLY!! For selling Mutual funds, Life Insurance, etc one needs to complete sepcified days of training, and pass an exam after which he/she is given a license to operate in the country. I would rather trust a full time successful professional when it comes to advise regarding my money, than anyone else.
Secondly yes you are partly right - the agent is key as in you will never know what information the agent is withholding. One must always insist on a brochure of the products you are considering - along with proof of the past track record of returns etc. You must specifically ask him what might be the document required- it varies along with Premium and Sum Assured - the larger and the more documentation becomes necessary. hallf the time the agents do not know their products/requirements completely. In this case he should have not committed the policy will get issued in 7 days. He has absolutely no way of influencing that!
Thirdly, the documents that you give together constitute a "proposal". If you read carefully the application form will clearly state that it is a 'Proposal' - a request from you asking the company to accept your risk based on the particulars you have provided. This then gets sent to the place where the risk ius assessed - it varies from company to company - most private companies have this centralised at their HQ. There typically the whole thing gets scanned, a proposal/contract number is generated , and the whole thing is uploaded into a work flow in an electronic format with this unique number- its paperless from here. Meanwhile the cheque is sent for collection . The file - in its now electronic form- hits an underwriter - or a series of underwriters (medical,fiscal,moral etc) where additional/missing requirements may be called for. In the interim your cheque might have gotten cleared and the cash is uploaded into a suspense account against your contract number. If you do not supply the documentation called fro then the company after thier specified number of days may unilaterally cancel your application and return your money to you. Else the document you provide will again go thru scanning and hit the same underwriter for his assessment. He can choose to accept, increase your premium, decrease term or sum assured, deny or modify riders, postpone the decision for 3-6 months, or deny the policy altogether. (By law no reason needs to be provided but they might and do tell you orally what went wrong.) If the policy goes thru then the system automatically checks for money - if there is money in the account then the system 'issues' the policy and transmits the file for printing. The policy docket then gets printed, and after the QC gets despatched to you . Most companies have this or a variant of this as their process. there are various other things as well but I have tried to keep it as simple as I can.
Now during month, quarter, and year ends, the flow of policies tend to be heavy and therefore things tend to get stacked. IN case the requirements are not complete, a letter asking for the missing thing is raised and the file gets shunted to the bottom of the pile again! Most companies follow a FIFO system - "First In - First Out"
I ensure that all my clients are aware fo what exactly they can expect - but the fact is most agents don't even know what or how it happens! Some companies do try to teach but most of them are unfortunately not interested in learning.
Trust this clarifies
Last edited by kb100 : 4th July 2008 at 19:03.