Ninety-Day Rural Campaign with a Fixed Budget
A semi-urban LIC branch has 8 advisors, a 90-day campaign budget of ₹1,50,000 and a target of 150 new policies. The catchment is mostly small farmers and shopkeepers with irregular monthly incomes. The branch's current average first-year premium is ₹25,000 per policy, and the local bank is aggressively selling market-linked products with higher commissions to the same customers. The branch's lead vendor charges ₹150 per qualified lead, and the branch's historical conversion from qualified lead to issued policy is 12%. The divisional office wants a written campaign plan covering lead generation, product focus, advisor briefing and compliance. One advisor has suggested telling customers that a particular endowment plan will 'double their money in ten years' because the illustration at 8% looks close to that figure. The branch manager must decide whether to approve the plan and the advisor's line.
1. Using the lead cost and conversion rate, calculate the number of leads and the lead-generation budget needed for 150 policies. Is the plan feasible within ₹1,50,000? What conversion or cost per lead would make it feasible?
Read the worked answer
Policies needed = 150. At 12% conversion, leads needed = 150 ÷ 0.12 = 1,250 leads. Lead cost = 1,250 × ₹150 = ₹1,87,500, which exceeds the ₹1,50,000 budget by ₹37,500.
Feasible alternatives:
- Raise conversion to 15%: 150 ÷ 0.15 = 1,000 leads; 1,000 × ₹150 = ₹1,50,000 - fits exactly.
- Cut cost per lead to ₹120: 1,250 × ₹120 = ₹1,50,000.
- Keep 12% and ₹150 but reduce the target to 120 policies: 120 ÷ 0.12 = 1,000 leads × ₹150 = ₹1,50,000.
The original plan is not feasible as written. The branch should also build in a contingency, because spending exactly ₹1,50,000 on leads leaves nothing for adviser travel, camp materials or follow-up calls.
2. Recommend a product approach for a 45-year-old farmer with irregular income who needs family protection and some savings. Justify using suitability, affordability and persistency, not just commission.
Read the worked answer
For a 45-year-old farmer with irregular income, the starting point is protection, not premium maximisation. A pure term or micro-term cover can provide a meaningful sum assured at low cost, and PMJJBY/PMSBY can be added as low-cost life and accident cover if eligible. A small endowment with monthly or quarterly modes can follow only if the premium is comfortably within the household's sustainable cash flow - as a working guide, total annual premium should not eat into crop-cycle or emergency needs.
The branch should do a documented needs analysis, explain that the endowment's illustrated returns are not guaranteed, and check persistency risk. A smaller policy that survives is better for the customer and the branch than a large policy that lapses in year two. Commission should not be the deciding variable; a high-commission sale that lapses damages both trust and the branch's persistency record.
3. Assess the advisor's 'double your money' statement against insurance marketing rules. What should the branch manager do before the campaign starts?
Read the worked answer
The statement is misleading and should not be approved. An 8% illustration is a scenario, not a promise; presenting it as 'double your money in ten years' turns an assumed rate into a guaranteed outcome and can amount to an unfair trade practice. Insurance marketing must use approved sales literature, disclose that benefits are not guaranteed except where the product guarantees them, and avoid comparisons that imply certainty.
Before the campaign the manager should: withdraw the line; brief all 8 advisers on approved illustrations; require a standard script and a 'not guaranteed' disclosure; keep a record of the briefing; and monitor calls and complaints. If the line has already been used with customers, the branch should correct it in writing and log the incident with compliance.