Assignment of a life insurance policy – 11

Assignment and marketing

In the last Post I have discussed how assignment can be used to bring in more new business. If more new business does not flow in it is due to refusal of the marketing people to learn. Many of them stand on the periphery of knowledge and demand more importance from the society and their companies than they give unto them.

We know that assignment is transfer of property. Have you ever compared this transfer with transfer of some other property, say land / building. A father will transfer property worth Rs 10 lacs to his daughter through a partition deed on her marriage, which is expected after 10 years. You, as a dependable salesman, suggest to the father now to purchase a Rs 10 lakh with-profit policy for 10 years (Marriage endowment of LIC, for example) and conditionally assign it to the daughter. Let us see how these two transfers operate on the finances of the father.

Expenses on transfer                                         Land                           Policy

1. Fee for document writer                             Rs.    25, 000                   Nil

2. Stamp fee @10% (minimum)                    Rs.1, 00, 000                  No stamp fee

3.Costoftraveltosub-Registry(minimum)       Rs.       1,000                  No such cost                  

4. Miscellaneous expenses                             Rs.    10, 000             No such expense

                                                           Total   Rs. 1, 36, 000            No expense

These figures may vary for different States of India. But the fact remains that when the father transfers land or building he spends around 13.6% of the cost as avoidable expense.

 When he transfers money to daughter through a life insurance policy he gains in three ways (in the example)  (i) saving of Rs 1, 36, 000 (ii) policy brings an additional income by way of bonus, assuming Rs 40/00 the daughter gets Rs 4 lacs more on her marriage (iii) if the father dies during the premium paying period no premium need be paid thereafter   and the Rs 14 lacs will be directly paid to the daughter by the insurer. This is the security a father can give to his daughter. In father’s absence who knows how the equations of partition will change among legal heirs?

My question to the salesmen of life insurance is; have you ever used assignment as a marketing tool in this way? If not, use it.