Life insurance products with high upfront commission not the best choice

With high upfront commission and low renewal commission, distributors often influence customers into buying new products every year instead of continuing with their existing policies, one expert said.

A working committee set up by the Insurance Regulatory and Development Authority of India (Irdai) is currently examining the issue of ushering in level commissions throughout the tenure of life insurance policies, instead of the current practice of offering high upfront commissions to distributors prevalent in some policies. 

Experts believe that this will improve the persistency ratio (the number of policies still alive and being serviced by customers after a certain time period compared to the total sold) of life insurance policies and reduce mis-selling. 

High upfront commissions are prevalent in traditional life policies. Here, the upfront commission paid in