IRDA to introduce Prospect Product Matrix: Looks like Mini Financial Planning!

Propspect Product MatrixBelow is a circular issued by IRDA on introducing insurance product sales based on Need Analysis of clients. It looks like now even IRDA is serious about graduating insurance agents into advisors and trying to do its bit. If insurance agents really follow this advisory and sales process in the right spirit and recommend the products based on life stage, need category and income level,  mis-selling should come down. Do download and check out Prospect Product Matrix & Need Analysis Form from the links given in the circular.

Well it does look like mini financial planning. What say?


Ref: 16/CA/PPI/PPM/11-12

31st January, 2012

Re:  Exposure Draft on Guidelines on Prospect Product Matrix for Life Insurance

On 18th June, 2010, the Authority had put up a draft in the nature of a Discussion Paper on the need to prescribe standards and procedures for Needs Analysis for sale of life insurance policies. Needs Analysis by the intermediaries and the insurance companies is necessary before effecting the sale of a life insurance policy in order to ensure that the product that is proposed to be sold is suitable for the prospect and meets his or her needs.

It is proposed to mandate carrying out Needs Analysis for life insurance policies . Insurers shall, in terms of Regulation 4 (1) of the IRDA Regulations for Protection of Policyholders’ Interests, 2002 adopt a standard Proposal cum Needs Analysis form.

It is also proposed to issue guidelines to life insurance companies to develop and implement a Prospect Product Matrix that will serve as a tool to assess whether or not the proposed sale is based on the Needs Analysis. This shall currently be made applicable to all life insurance policies (Traditional, ULIPs, Pension and Health) sold as individual policies.

The Draft Guidelines, along with an illustration of a Prospect Product Matrix (Annexure B) and the Standard Proposal cum Need Analysis Form (Annexure A) are attached. Stakeholders are requested to send in their comments on the draft guidelines as soon as possible but definitely on or before 29th February, 2012. Feedback may be sent to



Network FP would like to thank Jagadish Bhat, CFP and Principal Officer at Ambit Insurance who shared this circular and documents with us.


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  1. Where is the download link please

  2. Thanks. This is a welcome move by IRDA. Though this is an exposure draft only, however, its implementation will bring some sanity in the whole way insurance is sold today. This will definitely be good for insurers as well, as the right products sold will increase the persistency of insurance premium. Needs to be looked at how this evolves.

  3. Jagdish Bhat by Email;

    IRDA has initially called for feedback till 29-Feb-12 which means any implementation will happen during the next financial year (can happen as fast as 1-Apr).

    The impact of this process will bring in a systematic approach by introducing the financial planning aspect into the life insurance buying process. Though this is being done to some extent now, the new guidelines will bring in a more detailed and fiduciary approach to the whole process. Intermediaries will have to put in more thought and time into analysing the prospects need and prove suitability of the product suggested which should definitely benefit the customer in the long run.

  4. This is a much required change for the life insurance sector. This would lead to a reduction in mis-selling which is very rampant at present. Hope it is implemented soon.

  5. I read the proposal need cum analysis form. It is deemed to see as welcome move by IRDA but on getting implementation, it would become again formality over the time as you know that agents or advisors tend to fill the proposal form by themselves and get the signature in blank and take other informations in casual paper and subsequent it gets fair in proposal form. IRDA new form is not convincing as the protection of investors. There is need to regulate on agents those are mis-selling the insurance products, albeit gathering more information and getting transparent in proposal form.

  6. Its a great and bold step of IRDA. Really appreciating.
    Now I think that may individual consumer are got right insurance product. Which will be fit for his & her life

    Thanks for updating.

    Prabir Shama
    M/s. Feel Bureau Of Financial Planning.

  7. I think this is a good step but IRDA should also define some penalty for miss selling to Insurance Companies as well as the advisors i.e professional liability. So as to ensure the right selling.

    Chetan Doshi

  8. it will bring responsibility for advisers as well as need of qualified professions in the industry.

  9. IRDA’s move will benefit the investors (policy holders) in some way. But there are few areas which IRDA and the Insurers should contemplate and do some soul searching.

    1. IRDA’s efforts should be in the direction to bring the core objective of protection to the forefront, with savings and investment being secondary objectives. The true value of a life insurance solution is delivered to the family when the unfortunate event of death occurs.
    2. IRDA should not forget that the Industry operates in a larger market which is seeking more transparency in products being offered.
    3. The regulator along with Insurers needs to ensure that the risk adjusted returns offered are competitive with those offered by other asset classes.
    4. The product mix matrix as suggested by IRDA appears to be useful for product mapping. But this will encourage Insurers to dish out plethora of products which would hardly differ from one another. Say a product is mapped to A1 in the matrix (to cover life). How will this product be different from a product mapped to A6 in the matrix? Except the age criterion, there would be no difference at all. Most term insurance products would cover a wide age range at the time of entry. The matrix suggests that an Insurer would require at 75 products to be offered for a one stop solution.
    5. IRDA should seek simplicity in the products that are being offered. Products that fortify trust in life insurance solutions and exemplary claim settlement procedures.

  10. I think that IRDA should also ensure that the PRAPOSAL CUM NEED ANALYSIS FORM and Prospect Product Matrix are not managed while compliting the form for the want of selling the product as the Insurance agents take the advantage of their relations/goodwill with the client and get the blank forms signed by them then they tend to fill the forms as per the requierement of product selling. In this way what are the cross cheaks.

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