What your life insurance agent won't tell you
Agents serve an important role in Nepal's insurance market. But their incentives don't always align with yours. Here are the facts — sourced from NIA regulations.
We maintain a directory of licensed agents. The facts on this page apply to all agents — including ours.How much your agent earns from your policy
Commission is paid by the insurer from your premiums. These are NIA-approved maximums — actual rates vary slightly by company and agent grade.
| Plan type | Year 1 commission | Year 2–3 | Year 4+ | On NPR 50,000 premium (yr 1) |
|---|---|---|---|---|
| Endowment | 35% | 7.5% | 5% | NPR 17,500 |
| Money Back | 32% | 7.5% | 5% | NPR 16,000 |
| Whole Life | 30% | 7.5% | 5% | NPR 15,000 |
| ULIP | 25% | 5% | 2% | NPR 12,500 |
| Term | 15% | 5% | 2% | NPR 7,500 |
An agent who sells you an endowment plan earns 2.3× more than selling you a term plan at the same premium. Term delivers more coverage for the same cost — but agents earn less from it. This is not fraud; it is the incentive structure. Knowing it helps you ask the right questions.
9 things your agent may not mention
These are facts — not accusations. Most agents are honest professionals. But the information below is rarely volunteered.
Renewal commission drops sharply after year one
Year 1 commission on endowment is 35%. From year 4 onwards, it falls to 5%. An agent who sells you a new policy every few years — advising you to surrender the old one — earns far more than an agent who simply services a long-running policy. Watch for unsolicited "upgrade" advice.
Churning your policy is illegal — and costs you money
Churning means advising you to surrender a running policy and buy a new one without a genuine financial benefit to you. It resets your surrender timeline to zero, you lose accumulated bonuses, and the agent collects another year-one commission. NIA regulations prohibit churning. If your agent suggests this, ask for a written cost-benefit comparison first.
You must receive a Benefit Illustration before you sign
A Benefit Illustration is a document showing your projected premiums, maturity value, and surrender values at years 3, 5, 10, and maturity. NIA requires agents to provide this before policy issuance — not after. If you haven't seen one, ask before signing anything. An agent who cannot or will not produce one is not complying with regulations.
Verbal promises are legally worthless
Whatever an agent promises verbally — a specific return, a waived clause, a bonus, a free rider — has zero legal standing unless it appears in the signed policy bond. Insurers are not bound by what their agents say outside the contract. If you are offered something verbally, ask for it to be written into the policy before you pay the first premium.
Endowment IRR is typically 3.6–4.1% — below bank FD rates
The internal rate of return on most Nepal endowment plans, held to maturity, is approximately 3.6–4.1% per year — well below current bank fixed deposit rates of 8–9%. Endowment combines insurance with savings, but as a savings vehicle it underperforms. Term plan + FD is mathematically better for most people. Agents rarely present this comparison.
Early surrender wipes out most of what you've paid
On a typical endowment plan, surrendering in year 2 returns only 20% of total premiums paid. Year 3: 35%. You have to hold for 20 years to get 100% back — before any return. This information is in the Benefit Illustration, but it is rarely explained clearly at the point of sale.
ULIP carries fund management charges on top of commission
ULIP products carry annual fund management charges — typically 1–2.5% of the invested amount — deducted every year regardless of fund performance. Combined with mortality charges and year-one commission, a significant portion of early premiums never reaches investment. Always ask for the full charges illustration before buying ULIP.
Agents cannot guarantee ULIP or market-linked returns
Any agent who quotes you a specific or guaranteed return on a ULIP or market-linked plan is misstating the product. These returns depend entirely on market performance — they are not guaranteed by the insurer or by NIA. Guaranteed return language in the context of ULIP is a regulatory violation.
You can compare all 14 insurers — and buy from anyone
You are under no obligation to buy from the agent who approaches you. All 14 NIA-licensed insurers operate under the same regulatory framework. You can compare plans independently, then contact the insurer's branch directly or choose any licensed agent. Independent comparison is the most effective protection against mis-selling.
7 red flags — pause if you hear any of these
If your agent says or does any of the following, slow down and verify before signing.
- Agent quotes a specific guaranteed return on a ULIP or market-linked plan
- Agent says "no need to read the document, just sign here"
- Agent pressures you to decide on the same day — "offer expires today"
- Agent cannot show you their NIA licence number when asked
- Agent recommends surrendering a running policy to start a new one, without a written financial comparison
- Agent discourages you from comparing premiums or plans at other insurers
- Agent has not provided a Benefit Illustration document before asking you to sign
Verify your agent's NIA licence
Every authorised agent has a unique NIA licence number. Ask for it. You can verify active licences on the NIA official website. An agent without a current licence is operating outside the law — any policy they sell may face complications during claims.
Compare without an agent — right now
Our tools show you every plan from all 14 insurers, with premiums, claim ratios, and surrender timelines. No pressure, no commission.