Amway leverages distribution network to sell insurance products

The firm, which is into ‘network selling’, has tied up with Max New York Life Insurance Co Ltd and Royal Sundaram Alliance Insurance to market insurance products via a subsidiary, through its more than four lakh distributors

AmSure Insurance Agency Ltd—a joint venture between Hollard Insurance and Amway India Enterprises—is leveraging the latter’s large distribution network across India to market insurance products. AmSure, a corporate agent of Max New York Life Insurance, started network marketing of insurance products a few years back. AmSure sells six products including life insurance, health insurance, and unit-linked insurance plans (ULIPs).  

When Moneylife contacted an Amway distributor, he said that Max New York Life conducts training sessions for all distributors on a periodic basis. The company also has dedicated insurance planners certified by the Insurance Regulatory and Development Authority (IRDA). Insurance companies’ teaming up with corporate agents is not something new. Many private insurance companies have granted corporate agency licenses to numerous firms with some of the agents openly encouraging bizarre pyramid schemes.

A person who wishes to join Amway need not necessarily buy an Amway product or an insurance policy. To become an independent Amway distributor, one has to become a member by coughing up Rs995 as registration fee. The distributor can avail of 20% discount on all Amway products. The distributor has to shell out Rs495 annually to renew his membership.

The amount of premium paid by a policy holder is the business volume (BV). If a distributor attains Rs16,500 worth of BV, he gets 6% commission on this amount. Every Amway product also has denominated points. For a total BV of Rs16,500, a distributor gets 300 denominated points, which works out to the monetary equivalent of Rs55 (Rs16,500/300).

The commission on the BV can range from 6%-21%, on a graded basis. The commission is directly credited to the distributors’ bank account through the electronic clearing system. The distributors can carry on their marketing across all cities where Amway offices are situated. Unlike other pyramid schemes where the commission depends on new registrations, Amway’s commission structure is based on business volumes of its products. For instance, existing Amway distributors can buy Amway products and attain the requisite business volume to earn commission. According to Amway distributors, the commission structure is also applicable for insurance products.

“Referral fee is allowed in income-tax parlance. Many big insurance agents don’t pay any tax. One cannot prove that the person has only referred and not taken part in selling insurance,” said a certified financial planner. An email query sent to Max New York Life remained unanswered.

Amway India started its operations in 1998 and has over 450 fast-moving consumer goods (FMCG) products in nutrition, wellness, beauty, home, and commercial products on offer. These products are exorbitantly priced and sold through fat commissions and pyramid schemes. The company is a member of the Indian Direct Selling Association (IDSA). The company claims that it has 4.50 lakh independent Amway business owners. Amway officials could not be contacted for immediate comments.

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COMMENTS

Paddy Matlolane

5 years ago

Need a short term policy for a vehicle my number is 082 888 2243 or 012 310 8463

Dipali Soni

6 years ago

sir i want some more information related with policy after retirement

Anita Kumari

6 years ago

Insuranse Plan

Sabu

6 years ago

I am very much satisfied customer of almost all the poducts

Brajesh Parihar

6 years ago

Nice web site for information of all products. The Health Insurance of royalsundaram. Pl sent about all data of heath insurance.
thanks.

lokesh bansal

6 years ago

sir,
my resistation check in ur life insaurance in amway plane

MAYUR KULKARNI

7 years ago

Recently I met one such AMWAY distributor, though amway claim that their insurance partner MAX NYL conduct trainings, the said distributor was totally ignorant about Investment, Insurance, ULIPS & Health Insurance, He was just looking at me as a 'BAKARA' to kill, & generate maximum PV.
IRDA must look into this at its earliest.

Suresh Ramasubramanian

7 years ago

That is the usual consequence of selling insurance products through an MLM.

Ramesh Karel

7 years ago

Dear Mr. Suntos/Sharma,

I am surprised at your answers. Mr. Bharat has raised a simple and vital question and that is the premium allocation costs on Amway's insurance products for 1st year is 100%. Neither of you replied to this issue.

Instead, you are praising how big the company is, how profitable it is, how it shares its profits with its dealers, etc.?

Your angle is purely company and dealer-centric. However, here, the question is not how big Amway is and how profitable it is and how it benefits the dealers. Even Enron was big and in top Fortune and other lists. Even it was said to make huge profits.

Here, the focus is on - is the deal fair and worth to the consumer?

And, so the very valid question of Mr. Bharat still remains - what are the PAC that Amway charges in 1st year for its insurance products? Why is not the process transparent? If you have answers to THESE questions, we are eagerly awaiting them.

Btw, again, I compliment the author and her team.

Nuno Santos

7 years ago

Dear Mr Bharat. I wonder for how long you have been Amway IBO? Without making no comments about your knowledge about the insurance issues, that for sure are deepper than mine, let me ask you how many weeks or months you did really have been as active IBO in Amway. Well if you had offer to yourself the oportunity of study the company you probably would find that this company is very different of all you might known. And that this company, that had just raise arround 20 positions in the list of Forbes in one year as the greatest companies in the world (in Top 30 actually) that thay are probably the biggest private partner of UNICEF in all world and also ONU had give them a medal of honor... well i have more if you want.
Please think with me... why such a company that always is exposed device to all human and planet programs, that are involved should take risks and made something that would punish themselves.
Yes they have profit and yes they pay a lot of money to those who diserve to earn it, so what. Isn't suppose a company have profit. What about your company or the company you work for... if there is no profit, take care and look another. If Amway really is fooling everyone as you say, don't worry because someday they will be notified by some competent authority. Do not ALARM everyone with things that you cannot comprehend because if you do, you would be participating. Unfortunelly not everyone can see that everyone is participating in the market in some way. Those who have vision participate sharing profits and having benefits the other who prefer stay out, put their money in others pockets and still complaining.

So the real issue should be:

- Do not participate, still crying and complainig bills seeing money going away with no benefit and with the companies getting bigger but sharing the money with the accionists that already have a lot of it.

or


- Participate, have benefits helping others having themselves benifits too. How? Informing everyone. Why? Because Amway has a lot of money that invests in research of healthy solutions, because they share the profits with theys partners equitativly (more than 3 thousand million in 2008) to more than 4 millions IBO's in more than 90 countries.

BE OBSERVER or ACTOR is everyone's choice.


bharat gandhi

7 years ago

DEAR R K SHARMA,
I WAS AN AMWAY DISTRIBUTOR AND AM A SHARE BROKER DOING INSURANCE ALSO, PREMIUM ALLOCATION CHARGES ARE CHARGES. THEY ARE NOT INVESTED. ALL OTHER COMPANIES INCLUDING THE MUCH MALIGNED ULIP SCHEMES HAVE ONLY 10-35% PREMIUM ALLOCATION CHARGES IN FIRST YEAR. AMWAY SWALLOWS THE FULL FIRST YEAR PREMIUM. 40% IS DISTRIBUTED BETWEEN ITS ABOs (DISTRIBUTORS) AND THE BALANCE 60% GOES TO FILL THE COFFERS OF AMWAY CORP. AND THE AUDICITY OF THE WHOLE THING IS THAT AMWAY CLAIMS ITS INSURANCE IS UNIQUE AS NO OTHER COMPANIES GIVES SUCH POLICIES!! SO PLEASE CONSULT ANY INSURANCE AGENT AND KNOW WHAT PREMIUM ALLOCATION CHARGES ARE. AND IF U R WILLING TO DISCUSS WHAT AMWAY IS I CAN GIVE ALL THE DETAILS, EVEN MS. SUCHETA DALAL IN THE WORKSHOP HAVE MENTIONED THAT AMWAY IS ONE OF THE MULTILEVEL MARKETING COMPANIES WHICH ARE FOOLING THE INDIAN PUBLIC.

R K Sharma

7 years ago

Dear Bharat
I wish you study the allocation in detail and see how first year premium is invested in your funds only.
No company is doing this other than Amway

This is the most ethical company I have ever seen.

I am not a distributor but I have studied this company deeply as a case study.

This company is most discussed and least understood world wide

Can you imagine that if you buy a pouch of cleaner you pay tax to Govt of India.

Just ask honestly to your self that are most of us doing so while purchasing our soaps, shampoos and other things

Amway as its corporate responsibility is supporting blind children in almost all states of India

What do you think about Unilever, P&G, Coca cola, Pepsi............etc etc are they INDIAN Companies ???

Every one need to study before saying it just for sake of saying

Regards

Tapas Chakraborty

7 years ago

This is a timely article on the quality of REGULATION done by IRDA. There are numerous other such company selling Insurance schemes under similar schemes with corporate agencies with LIC. Waiting for your expose

Dillip kumar swain

7 years ago

DEAR ML,UR COMMENTS IS RIGHT.BUT EVERYTHING IS WITH THE KNOWLEDGE OF IRDA CHAIRMAN.MR CHAIRMAN IS A I.A.S./I.P.S. BOSS OF THE HOUSE SHOULD BE KNOWLEDGABLE. IRDA ISSUING LICENCE WITHOUT ETHICS.TALK MORE ,WORK LESS.IRDA THINK INSURANCE IS HIS PARENTAL PROPERTY.

Dillip kumar swain

7 years ago

DEAR ML,UR COMMENTS IS RIGHT.BUT EVERYTHING IS WITH THE KNOWLEDGE OF IRDA CHAIRMAN.MR CHAIRMAN IS A I.A.S./I.P.S. BOSS OF THE HOUSE SHOULD BE KNOWLEDGABLE. IRDA ISSUING LICENCE WITHOUT ETHICS.TALK MORE ,WORK LESS.IRDA THINK INSURANCE IS HIS PARENTAL PROPERTY.

Flat as you go

As we said yesterday, the correction will continue to weigh on the market—unless the Sensex goes above 17,600

The market was range-bound in the afternoon session and ended the day with a marginal gain. The Sensex ended at 17,472, higher by 12 points (0.07%) and the Nifty ended at 5,245, higher by 15 points (0.28%). The bourse started on a higher note, taking a cue from strong Asian markets. However, gains were pared in the morning session and the index traded in a low range till mid-afternoon, when it touched the intraday low.

Although the market rebounded from there, trading was range-bound till the close. Asian stocks rose on Wednesday, as better-than-estimated results from Elpida Memory Inc and Apple Inc boosted confidence over the global economic recovery. Key benchmark indices in China, Indonesia, Japan, South Korea and Taiwan rose by 0.47% to 1.8%. Key benchmark indices in Hong Kong and Singapore fell by 0.29% to 0.52%. US stocks ended higher on Tuesday after some good earnings reports. The Dow rose 25 points (0.23%) to 11,117. The S&P 500 gained 9 points (0.81%) to 1,207. The Nasdaq rose 20.20 points (0.81%) to 2,500. Greece has started discussions with other EU members and the International Monetary Fund to chalk out a plan worth €40 billion-€45 billion for it to exit the debt crisis. The country is struggling to narrow its budgetary deficit with painful austerity measures to convince the market that it will not default on its debt. 

Closer home, the prime minister said that India’s economy is expected to grow at 8.25% in the current fiscal. The Reserve Bank of India (RBI) has said that it will continue using cash reserve ratio (CRR) as a monetary tool. The central bank wants to return to the monetary policy that existed before the financial crisis. It does not want to use the statutory liquidity ratio (SLR) as a monetary policy tool, calling any increase in this measure “retrogressive” as it is a safety pool of money and not a policy instrument. On de-regularising bank saving rates—currently fixed at 3.5%—the RBI said that it has yet to take a decision over this; but it expressed its concerns that de-regularising rates would destabilise the system. Foreign institutional investors were net sellers on Tuesday of Rs156 crore. Domestic institutional investors were net buyers of Rs101 crore. The rupee was strong due to the impact of a weak dollar against major currencies.

Tata Consultancy Services (down 0.5%) will provide Rolls-Royce with a range of engineering services. Electrotherm (up 5%) plans to buy 100% shareholding of Ram Electro Cast at a consideration of up to Rs850 million. Shiva Cement (up 6%) plans to set up a 25MW power plant. Royal Orchid Hotels (up 0.6%) announced that it has opened its new 4-star hotel, Royal Orchid Central Grazia, at Vashi, Navi Mumbai. Unitech (up 2.4%) plans to merge its arms Aditya Property and Unitech Holdings with it. It will demerge its infrastructure and telecom operations into a separate company. GMR Infrastructures (up 2.3%) the holding company of the GMR Group, said that it has added GMR OSE Hungund Hospet Highways and GMR Chennai Outer Ring Road as subsidiary companies. Videocon Industries (up 1.6%) may sell up to 26% stake in the company to foreign players. It said that “many foreign companies are interested in it” and it will dilute stake “when a good price will be available.” Essar Shipping Ports & Logistics (up 3.5%) will invest Rs500 crore and handle 16 million tonnes per annum (tpa) of dry bulk cargo at Paradip Port in Orissa. After completion of the project by April 2011, the port’s total terminal capacity will increase to 30 million tpa.

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Sunil Hitech Engineers to venture into road sector through joint ventures

The company will look beyond the power sector and plans to bid for NHAI projects

Sunil Hitech Engineers Ltd, which has been focussing on the power sector, now plans to bid for road projects. The company will target schemes from the National Highways Authority of India (NHAI) through joint ventures.

“This year we plan an executive meeting to think about venturing into other sectors. We may probably foray into the road sector,” said Sunil Gutte, joint managing director, Sunil Hitech. However, the plans are still at a preliminary stage.

Mr Gutte said that the focus was on both build-operate & transfer projects as well as contract-based road projects from the NHAI. “I think it (the road sector) is a very promising sector. This year’s Budget has given a major impetus to road projects. Also, as a sector, it provides ample and never-ending opportunities. A number of big road contracts are likely to come up for bidding,” said Mr Gutte.

In order to bid and qualify for NHAI projects, the company plans joint ventures with other companies. “We may look for joint ventures—both domestic and international—to bid and qualify for these projects,” said Mr Gutte.

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COMMENTS

R N GUPTA

7 years ago

Sunil hitech is a deserving candidate for growth as it has done well in power sector in central india and western india

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