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What is Bancassurance
Hello Guys, Welcome to the Insurance Series Episode 3, “What is Bancassurance”. But, before we start learning what a new Lesson is, let’s repeat again what is insurance. In simple words, Insurance is a Risk transfer mechanism, Financial Risk mitigation, and financial protection in case of any misshape.
Let’s see what is Bancassurance:
The word “Bancassurance” contains two words, “Banc” and “Assurance”. The word “Banc” came from Bank and the word “Assurance” came from Insurance. Moreover, this Insurance Product is sold through Bank Premises. That’s why it is called Bancassurance. This is a partnership Contract between two organizations, one is a Bank and the other is an insurance company. So the meaning of Bancassurance is selling insurance products through a banking channel (Bank Branches) called Bancassurance. It is mutually beneficial for both banks and insurance companies. The valued customers of banks do not need to visit the insurance company’s office. So, they will have insurance policies from banks.
As far as insurance companies are concerned, they will have a big and identified portfolio. So this is a win-win situation for Banks and insurance companies as well.
Example No. 1:
Let’s assume I am bank valued customer. I have a handsome deposit in my account. I have already availed Credit card, auto loan, personal loan, etc., and now I want to buy an insurance policy. My bank staff facilitates Me buy the insurance policy. That way my relationship with the bank will remain for minimum next 10 years. Because the Minimum term for any insurance policy is 10 years.
Example No. 2:
If I am an insurance agent. Then, I have to visit door to door in different Offices, Shops, and Homes to meet many customers to find a suitable prospect to sell the Insurance Policy. So, Bancassurance is an easy way to find new Customers within the Bank Premises.
