Bancassurance: A model driven for bank than for customers

In this competitive era every Bank is in a rat race to mark their presence in the market. How do they do so? The answer to this is “The revenue earned from cross – sell products”. A cross-sell product is a product that can be sold across with the basic services of the bank, commonly known as an “add-on product”. Mutual Funds and Life Insurance are the primary product of cross-sell, there is a revenue (a form of fee) which is paid to the bank by the concerned management companies on the selling of the respective financial products.

The concept of insurance selling has become so important to bankers, as like breathing is to a normal person. The pitch of buying insurance is basically a pledge of a banker which is read-out-loud after every service rendered. The ask of the insurance doesn’t appear to be an ask, it is more of a push or a demand. The problem is not about the selling of insurance, but the fact that due to the demand of the higher ups, bankers often sell insurance without proper risk profiling of their client, just for the sake of selling somehow and customer who trusts the bank because of their big name and relation with their “Relationship Manager” end up purchasing these policies unaware of the product in general.

Since this is a never-ending hunger for the bank which requires and tasks their employees to sell Insurance policies on a daily basis, they resort to mis-selling of the policies just for a quick grab and making a mockery of the trust that the customers have bestowed upon them. Mind you, the bigger the cheque value, the bigger is the rewards and revenue garnered by that particular banker who sold the policies. Thus, for example: a banker knows you might not have the capacity to pay 10 lacs per annum for 5 years, but will still propose a ULIP which is originally payable for 5 years saying you can pay only for 1 or 2 years and then discontinue it after which the money will be credited at the end of 5th year which is the end of the lock-in period. These 10 lacs that YOU pay has earned the banker the reward he wanted, however since you cannot pay for the entire 5 years or you were told not to pay, you end up burning your hands as the returns you get are barely anything and at times even lesser than what you pay!!