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Transformational Times

Change is ever-present and it may bring transparency to the insurance sector

I am a student and I have heard that insurance companies are doing away with insurance agents. What are its effects or benefits?

The situation as of now is that there are 30 lakh insurance agents in the country. Almost all of insurance except for Group Life is sold through agents only. So as of now, it does not look feasible that insurance business can be done without the agents.

But we live in transformational times and things might change in the future. There can be a situation in which the process of explaining insurance policies might go in for a complete change. There may be a situation in which insurance companies come out with their own selling mechanism.

Apart from that, what may get targetted is the cost of selling insurance, which comes to around 30-40 per cent. So I think, in comparison to the entire business, the less costly it becomes, people would be able to understand its utility in a better way.

Insurance is a need. Today, we are not asking whether the insurance industry will work without agents, rather we are discussing whether there will be more transparency in the functioning of this sector.

I want to invest Rs 6,000 through SIPs. The portfolio that I have created includes Birla Sun Life Frontline Equity, DSPBR Top 100, HDFC Top 200 and Reliance Growth Fund. I want to add another fund in my portfolio. Please suggest one.

The four funds which you have are enough. I would rather suggest that you hold only three funds in your portfolio and invest a round number of Rs 2,000 and your portfolio will be very strong. But always keep in mind to invest consistently and you should not be needing to look to redeem this money before five years.

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