5 things to check before hiring an insurance agent
Before hiring an insurance agent, verify their IRDAI licence, professional qualifications, commission disclosure, claim settlement track record, and after-sale service habits. These five checks prevent mis-sold policies and the premium lapses that affect 40 percent of Indian buyers.
About 40 percent of insurance policies sold in India lapse within three years, according to IRDAI data. The most common reason is not price or performance. It is that the policy was wrong for the buyer from day one, often because the agent sold what paid them the highest commission, not what the customer needed.
A sound Insurance Planning Strategy begins with choosing the right agent, not the right policy. Five checks separate honest professionals from commission chasers. Run through all five before you sign anything, and you will avoid most of the lapse risk that hurts Indian policyholders.
Why the agent matters more than the brand
Every major Indian insurer sells roughly the same product categories: term plans, health plans, ULIPs, endowment policies, and annuities. Within each category, the differences between companies are small. The agent, on the other hand, decides which policy you actually buy, how long you hold it, and whether claims get paid on time.
A good agent asks about your goals before recommending a product. A bad one opens with a product catalog and pushes whichever has the highest first-year commission. The next five checks will tell you which one is sitting across from you.
1. Check the IRDAI licence first
Every insurance agent or broker in India must hold a valid IRDAI licence. This is non-negotiable.
- Ask for the agent's IRDAI licence number and date of validity
- Verify the number on the IRDAI portal or through the insurance company's website
- Confirm which insurers the licence covers (individual agents usually work with one insurer; brokers work with many)
- Walk away if the agent cannot produce the licence number within a day
Unlicensed agents have no regulatory accountability. Claims disputes involving them drag on for months. Dealing only with licensed professionals protects the paper trail you will need if something goes wrong.
2. Check their qualification and experience
A licence is the minimum. Quality of advice depends on how much the agent actually understands.
- Professional certifications: look for Certified Financial Planner (CFP), CISI, or NISM qualifications
- Years in the industry: at least 5 years of active work in insurance
- Client base size: agents who handle only 20 clients can give personalized service; agents handling 500 cannot
- Specialization: some agents focus on health insurance, others on wealth products; pick one whose focus matches your main need
The strongest signal is how the agent answers technical questions. Ask them to explain how surrender value works on an endowment plan or how no-claim bonus compounds on a health policy. A clear answer in plain language means they understand. A vague answer means they do not, or they are hiding the bad math.
3. Check the commission disclosure
Many agents will not volunteer this information. The right ones will tell you up front.
Under IRDAI rules, first-year commissions on life insurance can go up to:
- Up to 35 percent on traditional endowment policies
- Up to 7.5 percent on term insurance
- Up to 5 percent on single-premium plans
- Up to 15 percent on health insurance policies
When an agent is pushing a high-commission product while a lower-commission term plan better fits your need, the recommendation is compromised. Good agents put client goals ahead of commission tier; bad agents optimize for their own take.
Ask the agent directly: "What is your first-year commission on this plan?" Note the answer. If the agent refuses to disclose, that silence is your answer.
4. Check the claim settlement track record
The best Insurance Planning Strategy is pointless if the claim is delayed or rejected. Two numbers tell you whether the agent is backing you up.
- Insurer claim settlement ratio: published annually by IRDAI, look for insurers above 95 percent for life and 85 percent for health
- Agent's personal claim assistance record: ask how many claims they have helped settle in the last 12 months and what the success rate was
An agent who has never actively assisted with a claim has not been tested. A seasoned agent can recall specific cases and describe what paperwork was needed. This is the single most practical filter you can apply before signing.
5. Check their after-sale service habits
Most insurance agents are great in the first three months and invisible by month six. The quality of service after the sale is where most disputes happen.
- Annual policy review: does the agent offer a yearly check to confirm coverage is still appropriate?
- Premium reminder system: do they send timely reminders or only reach out when commissions are due?
- Response time: how quickly do they respond to calls or messages during and outside business hours?
- Backup contact: if the agent moves firms or retires, who handles your policy?
Talk to two existing clients the agent refers. A confident agent will offer references without hesitation. A defensive one will stall.
Warning signs to walk away
A few behaviors are instant deal-breakers, no matter how smooth the sales pitch.
- Pressure to buy the same day or within the week
- Reluctance to share the full policy document before you pay
- Advice to buy maximum sum assured on endowment plans instead of term insurance
- Claims of guaranteed returns above 7 percent on traditional life policies
- Any insistence on paying the premium in cash without a direct insurer receipt
A single warning sign is enough to walk away. Insurance is a decades-long contract. Getting the relationship right at the start matters more than the speed of the sale.
How to start the search
Good agents usually arrive through three channels: referrals from trusted family, recommendations from certified financial planners, and long-standing relationships at reputed insurance brokerages. Online directories and cold calls are the worst channels. Start with referrals, verify the five checks above, and pick the agent who passes all five. Your Insurance Planning Strategy hinges on this person for the next 20 years, so spend two weeks getting the choice right rather than two minutes getting it wrong.
Frequently Asked Questions
- How can I verify an insurance agent's IRDAI licence?
- Ask for the licence number and check it on the IRDAI portal's public agent search tool. You can also confirm with the insurance company directly by calling their customer service line with the agent's name and code.
- Is a broker better than an individual agent?
- It depends on your needs. Brokers offer multi-insurer options and usually better service for complex needs. Individual agents often have deeper product knowledge for a single insurer and longer-term relationships. Both can be excellent or poor; the five checks matter more than the category.
- What commission do insurance agents earn on a term plan?
- First-year commission on pure term insurance is capped at around 7.5 percent of premium under IRDAI rules. This is one of the lowest commission products, which is one reason some agents try to divert buyers toward higher-commission endowment plans.
- How does an Insurance Planning Strategy change by age?
- In your 20s and 30s, prioritize term insurance and health cover. In your 40s, add critical illness and disability riders. In your 50s and later, focus on health renewability and long-term care planning. Any agent who does not adjust recommendations by age is not planning properly.
- What should I do if my agent is pushing a bad policy?
- Get a second opinion from a fee-only financial planner who does not earn insurance commissions. Compare the policy against a plain term or mediclaim policy for the same coverage. If the pushed policy has higher premiums and lower coverage, walk away and find another agent.