Top 10 tricks used by Agents for misselling financial products

by Manish Chauhan · 215 comments

Buyers Beware. This is the mantra one has to follow in Indian financial markets. From last many years agents and so-called “Financial Advisors” are using fancy words and tactics to lure investors and sell them inappropriate products like wrong Mutual funds, ULIPS, ULPP’s and Endowment Policies. In this article we will see what are the common tactics used by agents and how we should handle them and demand logical explanation. Note that this is not an exhaustive list and there are many more miss-selling techniques which is not covered here. Lets see them one by one.

1# High Dividends declared by Mutual funds.

 

This is very common tactic used by agents. Even the mutual fund companies advertise about big dividend payout to lure investors. Investors who do not how mutual funds with dividend options work fall in the trap thinking that dividend is something extra which they get apart from growth, where as the reality is that dividend is your own money which comes back to you and then NAV goes down by that much quantity. Have a look at Difference between Growth and Dividend option in Mutual funds

2# Premium can be stopped after the first 3 years

 

This is a very effective statement because every investor wants “no trap” investment option, hearing that we just have to premiums for 3 yrs and still our insurance cover and policy will keep running makes us interested in these products. There are two wrong things here: Firstly, ULIP premiums can be stopped even before 3 yrs, there is just lock in period of 3 yrs, even some agents don’t know that you can stop the premiums of ULIP’s anytime after 1 yr and you won’t loose 100% money, the other thing is that advising paying premiums just for 3 yrs is wrong thing as ULIPs are long-term products and should not be used for short term. This is against the basic principle of any equity related product. 

 

3# This fund has returned 36.6% annual return in last 4 years

Last 4-6 yrs have been extremely good for Indian markets and performance of every mutual funds , ETF or Equity linked product has been great. This single most fact has been used by agents and they have been advertsing about the “great performance” of their respective ULIP’s and mutual funds . What one has to really look at are the returns a product has provided over and above its benchmark or other peers . If Nifty has given 40% return and a mutual funds with bench mark as Nifty has given 41% , there is nothing great in this . In fact its better to use Nifty ETF’s then and get 40% return without the fund manager risk and other costs associated with Mutual fund . We should also ask the agent about the performance of product in bad times and not just good times .

4# ULIPs offers guaranteed returns

This is not true! Any Unit Linked product does not come with Guaranteed returns. Agents some times just say this to attract customers and moreover their Greed! There might be the case that there is some guarantee for initial years premium or over all but then it will be so low that its not even worth considering. A simple thumb rule is that anything beyond Bank FD returns will always carry some level of risk otherwise why will someone buy FD at all if they can get some guaranteed returns. Nothing comes free in this world, there is always some risk involved.

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5# This is regarding 180% – 250% guaranteed return plan Sir.

 

 

Now a days I can see this strange thing with most of the products, that they have started giving “guaranteed returns” with first year premiums. This has two reasons, people in India like words like “guaranteed” and “secure” especially at times when markets are doing bad, second reason is that they can use these words at the time of promoting their products, I get a lot of calls which start with “Hello sir, this call is regarding 250% guaranteed return plan sir, Can i explain it to you?” I can sense that sense of pride in the caller’s voice clearly when they say this even though they dont know whom they are talking too. My first question to them is “Just tell me the IRR of this policy” and then starts the process of “wait sir, let me transfer the call to my senior” and then “wait sir, Let me transfer the call to the regional manager and CEO” who have no idea what is IRR!!! Finally

6# I will give you 10% of Cash back on premiums paid .

ULIPs and an endowment plans have very high commissions in the first year [See a case of miss-selling in ULIP]. So agents lure customers by giving back some part of their commissions back, in this way they get more clients and more money overall. Don’t fall in trap of this. Many agents also offer to pay your premiums for 1 yr so that you fall into the trap and take the policy.

7# Money doubling in three years

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This is again based on past performance, ask for the average rate of return over long term and anything above 15-16% should look unrealistic. Many agents tell the illustration by taking 20% or as high as 30% as return, they will show your last 5 yrs data when this has actually happened, but its not a right thing for 2 reasons. First reason is that as per IRDA they are supposed to show you illustration with 6% and 10%, nothing other than this. Ask the agent to explain why they are showing you anything other than 6% or 10%. The other reason is that 20% and 30% are not realistic returns from equity in very long run, you should not expect more than 12-15%. see this article which explains what are the realistic long term returns from Equity

8# You also get Free Insurance and Tax Benefit.

Free Life insurance cover and tax benefit , tricks used by agents for misselling the financial products

“Free”, we love this word. You can see that even I have used this word at the top of the page right hand side of this page to lure visitors to subscribe to this blog. It works in most of the cases. There is nothing called as “Free Insurance”, most of the investors do not understand how insurance works and what are the terminologies, they don’t know that there is something called as “mortality charges” which we have to pay as cost of Insurance. Apart from this agents also stress on tax saving part which is not something which is unique to those products. We have tax savings on different products anyways.

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9# These are most bought product in the market and have good returns .

Misselling of ULIP with reason of "most solf products in India"

Now this is vicious circle, ULIPs are around 70-80% of the products sold by Life insurance companies these days, the reasons are simple. They are explained by agents in such a way that things looks so rosy that customers feel its a worth buying product. So agents pitch these products to other investors and then they feel “if everyone is doing it then it should be right thing“, far from the actual and real truth. Common sense is not common, so don’t do what others are doing just blindly, think about it yourself, evaluate it. You should rather be doing what very less people do. Buy Term Insurance which is not even 1-2% of policies sold :).

10# Low NAV of a NFO from mutual funds

Low NAV of NFO misselling by agents

Most of the NFO’s pay very heavy commissions to agents. This is the reason agents tell investors that they should invest in this mutual funds because they will get more units. Even Investors confuse NAV of mutual funds as share price of a company. At the end its fund performance which should matter and not NAV number, truly speaking we should request IRDA to ban publishing NAV numbers. Some agents also lure investors saying that they should buy low NAV mutual funds because they will get more units and then more dividend as dividend is paid per unit basis. This is true but again at the end investor will not benefit as dividend is nothing but their own money.

11# Readers Contribution

Add a comment telling how agent tried miss-selling a product to you and I will add it here :). You can also share any incident small or big.

Readers Tip, How to reduce Misselling:  One of the readers “Jagbir” has suggested an excellent idea for IRDA to curb miss-selling:  As per Jagbir, “Agents must get commission only after customer feedback , If customer is not satisfied with the agent suggestion or his way of selling , they can give the feedback and then agent commission will not be paid ” . What do you guys think about this ? Please comment ..

Conclusion

India financial markets have two main issues

  • High commissions for agents: Because of high commissions, agents tend to go beyond limits and start unethical selling. Apart from this lot of sales pressure, pressure of meeting targets force agents to achieve the target by hook or crook. IRDA should finally come up with some rule where they remove the commissions on the products.
  • Low awareness and understanding from investors: Finance Industry has very smart people at higher level, CEO, Relationship managers, advisors and everyone. they are smart people. they understand human psychology. They know Indian public more than indian public knows themselves. They know what words to use when and how to divert our minds, our thinking. Why do they come up with “Guaranteed return products” when markets are low? That the the perfect and the most right time for everyone to enter Equity, but companies know we are afraid of losing, we don’t like losses, we have lesser risk appetite and then all the Jeevan Astha and Jeevan Nishchay and other Secured products like RGF will pop up. Most of the NFO’s will come in the bull markets and when markets are already up because that is the time we are charged up and ready to bet our home on anything, that is the time when we have to avoid those things.

So finally avoid the trap, ask questions, doubt everything!!

I would like to hear if anything like this has happened with you did some agent every tried some tactic to missell a product to you. Please share your experience and let others know what happened with you.

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{ 211 comments… read them below or add one }

1 Zamil January 17, 2010 at 11:58 pm

Manish,

Another great post. Excellent and impressive job.
Infact, I myself have experienced the same words from many agents.
Manish, keep the same spirit in your coming posts…

Zamil

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2 Mohan January 18, 2010 at 6:49 am

I second that!
Very well depicted in the form of a conversation followed by some background to the context. Good article once again Manish. Keep more such things coming.
.-= Mohan´s last blog ..Guide for Buying Insurance =-.

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3 manish January 18, 2010 at 3:28 pm

Thanks Mohan

I am sure you must not have fallen in any trap like that . What do you think about the commision based selling . If you are on the board of IRDA, what will be your “mantra” of changing the way things are sold in India .

your views ?

Manish

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4 Mohan January 19, 2010 at 3:31 pm

Fotunately, I found a very good Business development officer @ LIC during the initial years of my career. He was the one who introduced me to term insurance when not many were aware such a product! I don’t have too many insurance policies ;) Just enough to make up for the cover incase of my absense.
.-= Mohan´s last blog ..Adopt an Animal & Get Tax Benefit =-.

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5 manish January 19, 2010 at 4:22 pm

Wow ..

I am glad to hear that. You dont have a term insurance ? How come ? What policies you have then ?

Manish

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6 manish January 18, 2010 at 2:54 pm

Zamil

your comment after a long time . You seem to be a busy person :)

What product they were trying to sell you ? Can you share more .. may be we have some thing to learn from that experience

Manish

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7 Guru January 18, 2010 at 1:56 am

This incident had already occured when I was informed about it. Hats off to this great salesman, who had wooed about 20+ clients from a single organization to sign for this Insurance policy within 3 days. All of them are still searching for him ;-)

This was a single premium policy and the Sum assured (upon death) was 5 times the single premium amount. For example: if the single premium amount was Rs 50000/= the sum assured was Rs 2,50,000/ (in case of death)
This Insurance agent had told each of these 20+ client that he himself had taken this policy and he showed the policy bond to all of them and explained them that the customers would get 5 times their single premium amount as SUM ASSURED after 5 years. (upon maturity)
Also, he had told that the next day was the last day for the above said policy & it was extented till the next day because of public demand.
Most of these 20+ people did not even think of what the term “SUM ASSURED” means & blindly paid the single premium amount expecting to multiply their money by 5 times in 5 years (Minimum premium was 50k)
Some of them tried to enquire more about it, but this salesman kept on telling about the last day of this offer and he was very busy since he had more client to service and he could provide details only after few days.

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8 manish January 18, 2010 at 2:58 pm

Guru

What policy was that ? I am sure this policy has some great premium allocation charges because this salesman is trying to hard . Can you share more about the policy .

Guru , What do you think IRDA should think about it . As you are a certified Insurance agent, how would you like to take this forward . May be we can draft a proposal and take it forward . I can talk to some CFP’s regarding this .

This needs to be changed .

manish

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9 nirmalkumar March 11, 2010 at 1:34 am

some of the agents give you details of the policy and ask you as to when do you want to fill up the application form saying that last date for this policy is very near and you should apply as soon as possible.when you say that you want to think and need some more time then they say that he will get target halved (meaning he will get double commission) if you subscribe before so and so date thereby trying to get your sympathy.if you still not agree then he will offer to give you commission(thereby reducing his own commission)and lastly do not allow him to contact you for this policy otherwise he will disturb you off and on.tell him that you will summon him if you desire to take policy

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10 Manish Chauhan March 11, 2010 at 2:03 pm

Nirmal Kumar

Nice comment , yes this is true , many people fall into this trap as they feel that extra money coming out of their premium is a good idea and they are lucky to get it .

Manish

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11 Nikhil Shah January 18, 2010 at 2:29 am

Manish,

good article..

Nikhil Shah

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12 manish January 18, 2010 at 3:01 pm

Thanks Nikhil

Have you faced this yourself . What are your views on this . Dont you think IRDA should remove high commisions on these products ?

Manish

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13 Nikhil Sharma February 19, 2010 at 8:41 am

Hi Manish,
I think removing or reducing commission is not the only way,IRDA should make some regulations for the isurance companies in terms of the cap on their TOP LINE & Renewal of previously sold policies ….
It was the insurance companies who launched these products and also gave a selling pitch to the Agents,All this while these policies were here was no CEO or Company who stood up and did something about it.
They all just slept over it.
This bloody race of commission combined together with the drive which the companies do to lure agents by offering attractive commissions and other schemes like trips etc is the KILLER…
I have been in this sector since last 7 years and seen this from closeup.

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14 Manish Chauhan February 20, 2010 at 1:56 am

Nikhil

thanks for the comments .. Your suggestions make sense and we have discussed them too .. but dont you think that makes “rules” is a tough thing , corporate world has a big say in govt bodies in some way .. its going to be a political issue too .

Manish

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15 Amit Kumar January 18, 2010 at 8:25 am

An excellent way of presentation. I especially liked the graphic stuff :)
U know this ULIP mis selling happened to my father and his colleagues. Back in 2005 when the markets were doing good they were all sold Metlife Plan saying its just a 3 year product with blockbuster returns.
I think mis selling is more prominent in small towns where people are least aware of investment products & various alternatives to insurance. I still know people there who “invest” in LIC for their retirement or daughter’s marriage. I hope they realize that “I” in LIC is for “insurance” and not “Investment”. And to top it all IRDA seems to be most toothless regulator around.
.-= Amit Kumar´s last blog ..Best Tax Saving/ ELSS Funds by Dividend Payout =-.

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16 manish January 18, 2010 at 3:03 pm

Amit

yes , I would agree that these misselling is more prevalent in smaller cities because investors there have much lesser awareness than their big-cities counterparts .
What city are you from and what are the current returns from those policy bought by your father ?

manish

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17 Amit January 22, 2010 at 12:14 am

Oh!! don’t talk about the returns :) My dad didn’t even recover the principal amount. In the fourth year he got out of it and invested in Mutual Fund. Fortuantely the amount involved was not high.
This happened in a small town of Jharkhand – Rehla
.-= Amit´s last blog ..Dividend Reinvestment for ELSS (Tax Saving Fund) – a worthless option? Think Again! =-.

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18 manish January 22, 2010 at 12:30 am

Amit

What policy was that ? I am sure the PAC must be very high and the market timing must also be very bad .. sometime around 2005-2006 ..

Is it ?

The problem is no consideration of risk apetite .. Why did your father buy pure equity option ulip ? Why ;? high risk appetite ?

Manish

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19 Fundu Vishy January 18, 2010 at 10:22 am

A nice article indeed. You have clearly summed up the type of questions that have to be asked for various ‘sales tricks’.

While I tend to agree with you on most of the recommendations, I do not believe that the solution is ‘Doubt Everything’. The first step is to ‘ask the right questions’ which has been brought out in your blog. The next is to ‘empower yourself’ which can only be done by ‘knowledge’ and also depending on ‘sources’ which are independent of either manufacturers or distributor of a product. Unless you start believing, you can not move forward. The question is whom to believe rather than doubting everything.

What would probably be a good approach is to find ways of ‘finding’ a right ‘advisor’ and make sure that the ‘advisor’ works for you and not for the product manufacturers. This further means that you should be able to ‘appoint him’ and pay him the necessary fees so that you ‘retain the power to ask questions’ and ‘demand service’.

I am hopeful that this will happen sooner than later in our markets.

Thanks for a nice article which will help people to open their eyes to the available pitfalls.

Fundu Vishy
blog.PowerMF.com

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20 manish January 18, 2010 at 3:09 pm

Fundu Vishy

Thanks for your valuable comment .

When I say “Doubt Everything”, I actually am only talking about agents and financial advisors who come to sell us products . I am not talking about the Financial Planner one has choosen after a careful evaluation . The idea is that one should have basic knowledge to quickly think and calculate things so that no body makes them fool .

over all what you suggested makes sense . I was little unclear in my comments . thanks for comment .

You have a nice blog . Good work . What do you think about choosing a right advisor ? Even in today time , most of the CFP’s are nothing but agents or some official in some insurance or investment company . 99% people are still making most of their money through selling products and not advice . What are your views on this .

Manish

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21 Fundu Vishy January 18, 2010 at 7:31 pm

Manish

I agree with you that most of the CFPs today are ‘agents’ or ‘distributors’or ‘relationship managers’ rather than advisors.

However, the recent change in the mutual fund industry with respect to entry load will surely, but slowly create this change which will over a period of time bring in ‘customer focused advise’ backed by ‘customer based revenue earning’. Hopefully, this will move to other parts of the investment services including insurance, pension, equities etc. I am a strong believer that a person is more committed only to the source from which he gets his bread and butter. Further, it has to be come a ‘remunerative’ profession to be ‘an advisor’. I am sure, this will evolve and we will see it happen sooner than later.

Fundu Vishy
blog. PowerMF.com

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22 manish January 18, 2010 at 7:44 pm

Fundu Vishy

hmm.. Well , even I believe that model will shift from “Commision based selling” to “advisory model” from both the sides . Even investors will start recognising the role of a financial planner . Right now they just dont want to pay for “advice” , because they dont see a value in this . Do you think its a problem with Indian mindset to some extent ?

I can see that you write a lot on mutual funds and your blog is also dedicated towards that . Do you find misselling happening in Mutual funds in some other way than I discussed here . I am sure there must be other ways agents cheat investors and you can highlight them here :)

Manish

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23 Jagbir January 18, 2010 at 10:53 am

Again excellent article Manish. congrats!! :)

I think it’s happened with everybody now and then. and worse, those who conquer you are some close friend or relative whom you respect. A single “positive” reply to them and they will kill you with number of calls. So better say “No” at the first hand to avoid wasting our time and money. I remember how the family of a close friend ruined our friendship over this. every time we call.. the only topic they interested was to force me to take insurance policy from their son who is short of “few” policies to achieve some target.
.-= Jagbir´s last blog ..Setting up mutiple MySQL Database servers on a single linux machine =-.

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24 manish January 18, 2010 at 3:14 pm

Jagbir

You have raised a very important point here . I know a lot of instances where a close relative or some friends tries to sell you a policy and at last it affects the relationships . I am going to write a post on this . Would like to hear from you more on this . Can you send me some detail about this incident to that I can use it on the article . It would be a great thing . Thanks for sharing this . I would not use names at all , just the incident is enough . mail me at manish@jagoinvestor.com

Manish

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25 srinivasu February 6, 2010 at 11:47 am

true !
this happens every where , every place irrespective of their social status becauseof the following reasons.
1. life insurance is sold never bought.
2. life insurance is treated as a income tax benefit ( so more business in march ) rather than protection/ risk cover.
3.All life insurance co.. TRAIN the agents to follow (?) their natural market like freinds, relatives.co workers , neighbours etc..(obligation )
4. even though if some one wants to understand ulips, its very complex use iargons
5. sales pitch like invest for your childs marriage/education or happy retirement by showing very very attractive sales promotion tactics.
its your money,beware !!
IRDA is aware of this mis selling, but very minium regulatory powers like SEBI.
ex. in 2006 they found 2 pvt.. life insurance co . charging initial management charges 7 % on the first year annual premiums.immediately issued notice and removed the charges.
but the sad part in thae same is not CREDITED to the policy holders A/c.
thanks,

p.s. i am still working in the same business for a living.

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26 Manish Chauhan February 10, 2010 at 10:26 pm

Sriniwas

Nice thoughts

The problem is that IRDA is also sometimes get influnced by big corporates , so making changes to policies is not fast .by the way where did you get the information about 2006 incident thing you mentioned .

Manish

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27 Swathi January 18, 2010 at 12:35 pm

Excellent ! A Must read post for everyone. Even I was a vicitim of misselling after which I thought I should make myself aware of everything and started reading about planning extensively.Your blog helped me a lot in learning all this..Thanks a lot Manish.

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28 manish January 18, 2010 at 3:16 pm

Swathi

Great to hear from you again .. you are 2nd top commentator on this blog till date (look at the side bar) ,

Regarding the misselling with you , which policy was it ? Insurance policy or some ULIP ? Can you share that with us . Would like to know what did agent say to you to missell ?

I am glad that you are trying to learn more and more after you were cheated . You are on right track , I am proud of readers like you .

manish

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29 Amarnath January 18, 2010 at 1:23 pm

Manish ,

Excellent post , Thak you very much for sharing your valuble knowledge and educating us :) .i must have come to this blog 3 months before . My bad with out knowing much about things i started investing in ULIPS with 4000PM for next 30 years . Now after reading some of your blogs I feel very bad for purchasing the ULIPs. Becasuse of my ingonesrence now I am the victim of misselling of ULIPS

I dont want to continue to spend my hard earned money any more in this trap. The agent never mentioned me about PAC is 60% for 1st year. I has already paid 3 installements , pls advise me the best way to get rid of this polocy .

BTW after reading your blog on I term , i have decided it to purchase online and replace the ULIP plan , invest remaining amount in good MF’s .

My sincere thanks to you for providing such valuble information .

Thanks and regards

Amanath

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30 manish January 18, 2010 at 3:18 pm

Amarnath

60% PAC !! thats too much .The costs are very high . What policy is this ? Just give the company name .

Are you in profit or loss ? But it does not matter . I would say that if you dont like the product and cant handle it . Its better to get out . Better move to goal based investing and do your financial planning soon .

Manish

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31 Amarnath January 18, 2010 at 4:56 pm

manish ,

it is HDFC ULIP endowmnet plus 2 , i blindly took the policy with out looking at the PAC of 60% . neither the agent has informend any thing about it . i should blame my self . I have paid 3 installement of 12000 . i shold concider to cancell this policy rather losing 60% money on my investing for next 9 months . I am no where in porfit . I know that i am going to loose all the money as the polocy is one 3 months old . But when i see term insurance i need to pay onlt 5000/- per year a 50 lac which is almost a month instalment what i am paying to HDFC. I feel it is best to loose 12000 and invest carefully in future .

Lesson learnt from the mistake :) ( ofcourse it cost me alot) .

Do you have any suggestions for term policy appart from Iterm . I want to have one more as back up plan , as i am only 27 years and AR Iterm has max 25 years terms . I am looking for 30+ years .

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32 manish January 18, 2010 at 5:40 pm

Amarnath

Correct me . Is your policy 3 months old or 1 yr and 3 months old . If its less than 1 yr then yes , you will loose all the money paid . But if its more than 1 yr , then you will not .

Regarding Term insurance , you can look at SBI shield plan , thats the one I have, Better look at apnainsurance.com for comparision .

manish

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33 Amarnath January 18, 2010 at 5:51 pm

Manish ,

Yes it is only 3 months old , i know i will loose money . However i cant continue till 1 year ( to only loosse 60% of my money ) and keep it for 3 more year in fund with no increase in value / 5 years to get 80C benifit. I feel it is better if i come out with loss of 12000 now .

what do u say ?

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34 manish January 18, 2010 at 5:59 pm

Amarnath

Yes , I think the best thing is to come out and consider the premium as the tution fees for learning a lesson . Btw , are you interested in watching market movements and then take switching desicions in a ULIP .

just trying to understand what product will suit your profile .

Manish

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35 Amarnath January 18, 2010 at 6:23 pm

manish ,

Thanks , yes i should serously consider it as tution fee :) . Instead I would have paid to you ;) .

I am interested in market , but i am very afraid of trading . More interested in MF’s ,so i have started SIP of 5000/- pm in REL RSF , HDFC Prudence , SBI Magnum contra and HDFC top 200 . its only 2 moths old . Concidering few more to invest as you suggested in your artcle.

For long term looking forward to invest in 2 ELSS as SIP ( instead of ULIPS) .

I have taken LIC jevan anand policy ( 3 years back ,ofcourse my only motive was to show in 80C :) ) of 40000 per year premium .

Now thinking of stoping it too and go for a back up term plan .

i am right now in abraod for an assignment and will stay for atleast one year. So thinking of opting to as many as MF’s with good track record and invest as much as i can for one year.

For balancing my asset allocation once i come back to inida thinking opening PPF and few NSS .

Need to make more rigid financial plan .

It makes my job more easy with your blog , :) thank you very much.

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36 manish January 18, 2010 at 6:39 pm

Amarnath

The funds you have used are good ones . Just that they should be looked upon as long term investments and not short term .

What is NSS ? I think you are talking about NSC .

Manish

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37 Amarnath January 18, 2010 at 6:46 pm

Manish ,

I will keep them for longterm . I think it is the best way to keep money in MF’s in terms of retunrs or liquidity in emergency .

What do you say about LIC jevan anand plan ? do you agree that it is best to stop it , take backup term life and invest rest in MF?

Reply

38 manish January 18, 2010 at 7:27 pm

Regarding LIC jeevan Anand , its an endowment plan and just like other policies the return does not come close to what you can get with Term + MF combo in long term .

What is your insurance requirement ? May be you can use Term plan + ELSS + PPF for your long term goals . I would suggest go for a financial planer .

Manish

39 Amarnath January 18, 2010 at 7:35 pm

Manish ,

Financial planer ? you mean agent ?

40 allthecrap January 18, 2010 at 3:16 pm

How much a agent earns on ULIP of lets say 25K/year?
.-= allthecrap´s last blog ..Just Do It!!! =-.

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41 Manish Chauhan January 18, 2010 at 3:25 pm

Hi Allthecrap ( i like the name)

As per Irda guidelines, insurers can pay up to 40 per cent of the first-year premium in Ulips as commission to agents. As the commisions in the first year is the highest , agent can make upto 10k as commisions at max . This is very high for giving you a form and submitting it and speaking some crap ;)

hehe .. you from comment its clear that you are one of the victim , which policy ?

Manish

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42 allthecrap January 19, 2010 at 8:26 am

some market plus…worth 35K
.-= allthecrap´s last blog ..Just Do It!!! =-.

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43 Ajay January 18, 2010 at 3:48 pm

Great Post Manish!
‘During redemption, highest NAV over the duration of 3/5 years will be calculated for the allocated units” is the latest trick which I came across by an agent who was trying to sell me a ULIP. ;-)

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44 manish January 18, 2010 at 4:05 pm

Ajay

Thanks for comment . This tactic looks new to me .. What is it exactly ? What policy is this one ?

Manish

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45 Orangesplaash January 18, 2010 at 4:16 pm

Good pointers to keep in mind, while going for such stuff. I liked the graphic way of representation a lot..wonderful idea!! Keep up with such great informative posts.
.-= Orangesplaash´s last blog ..Awesum Blogger Award!! =-.

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46 Manish Chauhan January 18, 2010 at 4:19 pm

Arwa

Nice to hear back from you . Did you face any misselling incident ever ? What are your views on the commission based selling ?

Manish

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47 Orangesplaash January 18, 2010 at 10:08 pm

Hi Manish, Thankfully havent faced any such misselling incident yet..and hope to not face in the future too. I am an Indian expat living in Netherlands and have my own expat blog too. I like checking out your blog for the informative updates on the financial front
.-= Orangesplaash´s last blog ..Awesum Blogger Award!! =-.

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48 manish January 19, 2010 at 12:00 am

Orangesplaash

Nice to know that .. Are you permanently in Netherlands ? Are you looking for general investing wisdom or Indian specific products information ?

And which blog are you talking about ? http://orangesplaash.blogspot.com ? whats Expat blog ?

Manish

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49 Orangesplaash January 19, 2010 at 12:45 am

I am interested in investment oppurtunities in India, its been a little more than a year in Netherlands now for us.
Yes, am talking about this blog only..By expat blog, I meant a blog written by an expat, (thats me) – so my blog intends to provides useful information and my personal experiences on living in Netherlands..Do check it out and feel free to put in your comments there!!
.-= Orangesplaash´s last blog ..Awesum Blogger Award!! =-.

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50 manish January 19, 2010 at 12:48 am

ok great ..

It means you have demat accounts and bank accounts through which you can transact online in indian products . WIll check your blog :)

Manish

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51 Anbusivam January 18, 2010 at 5:38 pm

Manish,

Fantastic job….Excellent post yet again.

– Anbusivam

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52 Manish Chauhan January 18, 2010 at 7:37 pm

Anbusivam

Thanks for your comment .. You seem to be a silent reader of this blog :)

So have you faced misselling against you ever ? What are the effective solutions from your side to curb this misselling ? Who is the culprit , agent or investors themselves ? Would love to hear your views ?

Manish

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53 Raman January 18, 2010 at 5:59 pm

I am also victim of Misselliing,
when i went to ICICI bank for making FD of 30k,
as they had neatly given me a ULIP of ICICI Lifestage Pension
which will give returns more than FD and Guaranteed returns
only need to pay for 3 yrs,after that withdrawal of 50% possible,
more flexible,in FD not possible,
at that time i am unware of this blog,financially illiterate
went to trap,become victim,

Now,i decided not to pay next permimun.

thanks for clear explanation

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54 Manish Chauhan January 18, 2010 at 7:35 pm

Ramanji

Nice to hear from you .. I think FD was the best product you could have invested in . Do you still understand the ULPP policy you have (its not ULIP) . DO you understand pension products ?

What are your views on Term + MF combo ? Do you invest in Mutual funds ?

Manish

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55 Ramanji January 19, 2010 at 10:09 am

Manish,

is ULPP means unit linked pension plan? is there any difference between ULIP and this,
i not understood,pls provide some info,what it is?

FD ,now may be there is a chance of increasing interest rates in FD.
i am looking for FD this time, with out paying ULIP next premium due in 2months
waiting for interest rate changes.what do u say?

i am happy to say that next time i wont be into trap, i had learnt from mistake,
this credit will goes to u, u are making a lot of people , i.e like me, financially literate .

Term+MF (SIP) is very good option,
i am using same term + MF through SIP+ PPF
term – 30L with increase option,
MF – ELSS 72k per year,
PPF – 30 k per year

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56 Manish Chauhan January 19, 2010 at 11:08 am

Ramanji

ULPP are unit linked pension plans , I think you have taken that only as there is “pension” in name . The way they work is same like ULIP’s . just that they have pension products rules , like at the maturity you have to use atleast 60% to buy annuity plan and rest you can take as lumpsum (check the numbers) .

I have no idea about the interest rates figures , its more complicated then we think . The best thing for you would be to go for financial planning , only then the best strategy can be devised . MF + Term + PPF looks good for anyone for long term .

Manish

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57 Yogesh January 18, 2010 at 8:31 pm

Hi Manish,

What is IRR of this policy ? what does it means.

I also came in trap once.My FD got matured and went to ICICI bank to renew and they told
me u r young n can take risk .I will tell u better plan thn FD.Which in any case will be better
then FD. and has some other advantage like (insurance n tax benfit).While he was explaining i thought lets go with n doesn’t seems to be anything wrong.
This type of plan was explained to me earlier also by some one but that time i didn’t purchased the product.Then second time i decided lets investment.

That time i thought investment can’t be made if i will think more.As all proucts will be same.
No one will less and no one will more.
That guy didn’t told me about deduction.I scolded tht person like anything later.

But after taking product (on 17th dec 07) and till one yr i was scolding why i took.My money become half(Its an 100% euity fund i shd have switched to 100% debt fund but was not having knowledge).In order to save my money i tried to learn things and when i put second premium things turn
my way n now i m in profit.

I only learend after purchasing the product.

In 2008 yr purchased jeevan anand before joining ur blogs n quit after paying 1st premium.
THis product i purchased with my decision n after comparing many products.i picked this product becuase SUm assured of 5 lachs will continue even after policy is over.So this was addition 5 lachs rupee.After joining ur blogs I quit n now will take term insurance and put 70,000rs(in one shot) in PF this year.Atleast will get 8% instead to getting 5-6% from Jeevan anand.

In between many agent approached even close friends n were telling/forcing to tell any product as there target is close n plz help us.But i refused to take products and made my mind won’t come in any one talk(this i decided when i was scolding myself for taking ICICI ULIP)

So in short i wrongly took Jeevan anand.

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58 manish January 18, 2010 at 8:42 pm

Yogesh

IRR is the actual rate of return which you get from your investment . Generally the return Agent talk about is plain returns a product has earned . but IRR adjusts all the costs and then give a return for investor hand and its called IRR . See my post on IRR .

Thanks for sharing the story about your ULIP misselling . I am glad other can read it and get benefitted .

Now are you taking term insurance or not ? What time frame are you looking at ?

Manish

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59 Yogesh January 18, 2010 at 8:45 pm

Hi Manish,

IRDA shd set up there office and sell the product.
Before selling product shd educate n train people to buy insurance product.
Those person shd be salarised n no commission .This can help
in giving some employment to unemployed people.

Or

Set up office to educate n train people n product purchasing shd be made online

Or

If they want to continue with current set up shd fix commission same for all products.Shd
not encourage variable commission.after that agent will not sell product based on commission
priority.

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60 manish January 18, 2010 at 9:09 pm

Yogesh

Nice points . But setting up offices would be difficult because its a govt body and setting up offices like pvt companies would be a political issue then .

Regarding your suggestion on fixing the commission ,thats a good idea, but I am not sure how they can stop companies to pay “extra incentives” . but overall good discussion .

manish

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61 Yogesh January 18, 2010 at 8:56 pm

Hi Manish,

I am thinking to buy term isurance.First i thought to buy Religarce one but now put on hold.

Currently I am working outside india(malaysia) so can’t purchase any product.Is there any
other online term insurance product which i can purchase ??I am looking to cover my life till 60 year .My current age is 30 year.So for 30 years atleast.

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62 manish January 18, 2010 at 9:13 pm

Yogesh

Currently you cant buy anything online . You should plan for buying it when you travel to India . Have you calculated your insurance requirement ? What are your main concerns while buying the policy ?

What do you think about iTerm .

manish

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63 Yogesh January 18, 2010 at 9:20 pm

Reagrding How IRDA can stop companies to pay extra incentives.

IRDA shd issue common rules on commssion .For Extra incentives they can set range of number of insurance policies in year or in 2 yrs.

For Ex:
1) Person who perform 100 insurance will get 10% extra
2)Person who perform 200 insurance policies will get 15% extra.

Some thing like this but per policy commission shd be same.This is key point.

Plus IRDA can sometime ask for commssion report given to agents by isurance companies to cross check whether companies are following IRDA rule n regulations..

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64 manish January 18, 2010 at 9:38 pm

Yogesh

Nice points .. I liked the idea of extra commisions on per 100 or 200 policies done . But then the main issue still remains , an agent will then try to sell more frequently to complete this 100 policies :(

Commission reports is a good idea again , IRDA can also publish it in annual report . from my side I think the best solution is to make awareness, because people who want to make money through wrong way will always find the ways, so the real issue will still remain the same .

Dont you think so ? I am really amazed to see how readers now a days are getting so energetic to reply to my comments also .. Kudos to you :) . I am sure others will benefit from this talk .

Manish

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65 Jagbir January 18, 2010 at 9:48 pm

apart from awareness, IRDA can do:

1) force companies to have and advertise alternate system which enable end customer to purchase product directly by themselves via online or visiting companies office.

2) some mechanism where commission to agent will be released only after customer’s feedback. say after 30 days of policy commencement, company or agent must approach customer and take his feedback, if customer is able to certify that agent did some foulplay while selling etc. then commission will be refunded to customer. so such agents will take care in future.


Jagbir
.-= Jagbir´s last blog ..Setting up mutiple MySQL Database servers on a single linux machine =-.

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66 manish January 18, 2010 at 9:53 pm

Oh my god !!

Jagbir , why are you not on IRDA board !! .. The 2nd point is excellent , no match , truly .

“Commission will be paid only after customer feedback !!” . This is golden rule .. It can change the things in great way . I need put this on article right now .

The only issues are

– After how much time will customer feedback will be taken because most of the people dont read the policy document .

manish

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67 Jagbir January 18, 2010 at 10:00 pm

everything can’t be tackle down manish, but at least customer will have the end power and some time which threatens agent about not taking risk of selling misleading products.

another thing, IRDA should setup easily accessible nationwide help line where any customer can dial in and clear their doubts or lodge complaints about misleading advertisements, promises of agents/companies.

all these can minimize the misuse but at the end, its only ‘awareness’ which can fully save customer’s own interests.


Jagbir
.-= Jagbir´s last blog ..Setting up mutiple MySQL Database servers on a single linux machine =-.

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68 manish January 18, 2010 at 11:57 pm

Jagbir

Yea .. The top most thing is “consumer awareness” . That is something our nation is missing badly . Not just financial domain but every where .

You have highlighted some good points about helpline :) . Nice
Manish

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69 Yogesh January 18, 2010 at 9:32 pm

Manish, As per me 60 yr is safe n by setting it to 60 yr age, insurance role may come in play n family can get benefit with good amt of money in anything wrong happen with insurance rider

It will look funny but if we are putting money shd think of covering such condition by which can avail
benefit from what is paid by us ?

One can take coverage till 55 age but suppose he thinks for 60 or 65 insurance factor can cme in play n chance of family getting benefit is high.

What do u think ?

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70 manish January 18, 2010 at 9:41 pm

Yogesh

60 yrs is good enough time I dont think any one works around that time .. If once takes insurance policy at the age of 55, the premiums would be anyways too high ..

I acutally did not understand your comment . Can you please rephrase in easy language ?

manish

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71 Yogesh January 18, 2010 at 9:35 pm

I think iterm is best as by this agent won’t get any commision n our policy premium will also be less.

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72 manish January 18, 2010 at 9:43 pm

Yogesh

Thats the reason why iterm is so cheap , the company has removed any middlemen involved and directly dealing with investors .. But lets wait for some time to get more info on this .

Are you not concerned about claim ratio like others :) .. ohh god , i can remember how I was beaten up by other readers on “promoting iTerm” .. hehe

Manish

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73 Nilesh Panchal January 21, 2010 at 11:49 am

Regarding iTerm, I have a question, that since this is to be bought online what in case of getting claim if a sudden death occures. In case of policy taken from agent our family members can approach the agent for getting claim but in this case how the family members tackle the claim?

Most of the family members are not educated so as to connect to internet and check the claim procedures and can not even read and understand the policy document.

This could be a point to be noted while purchasing online iTerm.

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74 manish January 21, 2010 at 1:27 pm

Nilesh

Did you check the iterm policy that after how many days the plan is in force ? It might happen that you are only covered after 1 month . that happens . And we already know this before buying the policy .

So we should never assume things , If a person is not comfortable with what their rules are , its better to avoid the product ? What do you think ?

Manish

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75 vipin January 18, 2010 at 11:53 pm

Excellent …. This is the most useful Article to train the Indian people about the mis selling. Thanks a lot Manish for this post .

Recently I also received the Phone call about the Guaranteed return Product and also on Dividend thing , Thankfully i did not fell in the Trap as i was some what aware. Each and Every Indian Should go through this article.

Once again G8 Job …
.-= vipin´s last blog ..Need Financial Analysis for this crisis … =-.

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76 manish January 19, 2010 at 12:43 am

Vipin

thanks for your comment . What do you think is the catch in the guaranteed return products ?

Feel free to send this article to any one of your friends .

Manish

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77 Rakesh January 19, 2010 at 12:14 am

Hi Manish,

Very good post, In the past i too had fallen prey to endowment and pension plans. Not any more, thanks to JagoInvestor, i have stopped them and switched to term plans.
Way to go……..

Rakesh

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78 manish January 19, 2010 at 12:17 am

Rakesh

Nice to know that you have switched to term plans . Which policy did you buy ? Was it the cheapest one by price or did you do with the claim history .

Also I would like to hear your views about what IRDA can do to reduce the misselling .

Manish

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79 Rakesh January 20, 2010 at 12:24 am

Hi Manish,

I split my term plan between LIC and AgeonReligare. I still think LIC is best and safe with regards to claims settlement. As for IRDA it should streamline its rules.

Rakesh

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80 manish January 20, 2010 at 12:41 am

Rakesh

Yes, LIC has had record for best claim settlement . Accepted . AR is new and we can wait to see how it performs in that area .

I didnt understand your point on “IRDA should streamline its rules” . Which rules ?

Manish

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81 yogesh January 19, 2010 at 8:00 am

Hi Manish,

I agree with u that awareness is the most important thing to avoid misselling of any product
but in country with 2nd largest population in world, is this easy ?

How long it will take to educate all people and how many people read blogs
or use computer.?
I am in IT from last 5+ yr and now only came to know little abt these things.

In short it will take long time to educate whole population so counter measures are highly
required.I think there shd not be any hestitation to remove such things from system which we know are wrong and shdn’t allow agent to keep doing wrong.

Currently there is a big fault in system as it provide different range of commission on diff. products.
No body in this world want to earn less.Its like welcoming agent to exploit common people.

We shd urge IRDA to stop endowsement plans as they are useless and fix same commission for all
products n provide extra incentives on no. of policies.I agree with u still misselling will be there but less from existing and in this case agent will give same priority to all products as commission is same.By this they may also guide people on correct products.

If we opt for both things (Education & check on agents & some correction in exisiting commission system ) then can quickly reach to our objective.

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82 manish January 19, 2010 at 11:04 am

Yogesh

There are other deep problems . IRDA is a govt body , but it is influenced by big corporates who are CEO’s and MD’s and Founders of these big financial corporations . So it will take time for things to change . It will happen but will take time .

I agree that the best thing is to educate investors about their rights and whats right and wrong for them .

I think around 10 yrs is a time when things will start showing signs of change drastically , what do you feel ? And what about rural areas , its still dominated by single companies like LIC .

Manish

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83 yogesh January 19, 2010 at 11:48 am

Manish,I think u r also financial planner,right ?

Generally how much is the charges if we opt for planner ?Is it yearly bases or plan/policy bases ??

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84 manish January 19, 2010 at 11:55 am

Yogesh

Financial planning is still very new to India and there are different models of charging the clients . Most of the CFP’s in India still make most of the money through products sold through them , So they will plan for things and then ask you to execute it through them . This is not the best thing .
The best thing would be to go for independent consulting and then buy products from where ever you want , It can be additional service/ choice to sell the products.

I also do financial planning but I take very less clients due to my busy schedule .

Manish

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85 Ranjan January 19, 2010 at 11:58 am

Recently I saw a ULIP which had 0% premium allocation charge. But on seeing the fine print, I saw 2.5% policy administration charge per month. That works out to 30%!!

And the Branch Head had come to explain that product, not just another agent/advisor!
.-= Ranjan´s last blog ..How to Sell ULIPs to Unsuspecting Customers =-.

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86 Manish Chauhan January 19, 2010 at 2:43 pm

Ranjan

Branch Managers are the people in ULIP industry who are the main culprit . They only teach agents how to talk to customers .
Ranjan , What are your suggestions on stopping the misselling ?

Manish

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87 Ranjan January 19, 2010 at 12:04 pm

Recently I saw a ULIP with 0% premium allocation charge. Reading the fine print, I saw a 2.5% per month policy administration charge. This translates to 30%!!

And this was being explained by a Branch Head, and not just another agent/advisor
.-= Ranjan´s last blog ..How to Sell ULIPs to Unsuspecting Customers =-.

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88 Manish Chauhan January 19, 2010 at 2:44 pm

2.5% admin charge per month … my god .. what company is this ? Can you name or give me link . This needs to be highlighted :)

Manish

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89 raju February 1, 2011 at 6:37 pm

Tata Aig Life Invest Assure Sampatti

http://money.outlookindia.com/article.aspx?263750

Below are the policy administration charges
Per Rs 1,000 basic sum assured – Re 1 per month
Per Rs 1,000 of basic sum assured for the first two policy years – Rs 4.25 per month

Friends…i am one of the victim of this product, please be away from these ULIP products.

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90 raju February 1, 2011 at 6:45 pm

Tata Aig Life Invest Assure Sampatti
yearly premium – 30000, Sum assured is 1,50000…

Below are the policy administration charges
Per Rs 1,000 basic sum assured – Re 1 per month
Per Rs 1,000 of basic sum assured for the first two policy years – Rs 4.25 per month

I bought this policy last year feb 2010, and i recently got statement in the last month. Since i was out of india i couldn’t track over the last whole year, and i was really surprised looking at the charges which are coming around 10000 till now for just one year. I haven’t paid the 2nd premium and just finding ways to come out of this policy.

Manish please advice me with your valuable suggestions on how to deal with this policy whether to discontinue or pay for 3 years and leave it or any other option…

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91 Manish Chauhan February 1, 2011 at 7:35 pm

Raju

sadly you will have to be a victim now as you didnt pay attention and didnt enquire yourself about the policy , they have put Premium allocation charges as ZERO , but charged you by using other name like “Policy admin charges” .

Manish

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92 Yogesh Tiwari January 19, 2010 at 3:01 pm

Hi Manish,

Please put some light on new ULIPs that guarantee highest premium at maturity.

These are being sold with great enthu these days.

Regards
Yogesh Tiwari

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93 manish January 19, 2010 at 4:21 pm
94 Yogesh Tiwari January 19, 2010 at 4:48 pm

Wow…I didnt know that stuff (I wasnt even close to guessing it)….Thanks a lot

Regards
Yogesh Tiwari

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95 manish January 19, 2010 at 9:35 pm

Yogesh

I will soon come up with the post on that where I will explain it in details and in easy langauge. So finallly you understand the truth of those policies .. ?

Manish

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96 yogesh January 20, 2010 at 7:25 am

Hi Rakesh,

Which LIC term inusrance product u have taken ?

How much premium is paid by u annually & how much is cover & for how long ?

Aside to manish,

Is it wise to purchase insurance for females ? And Is there any group family insurance concept.I think
wouldn’t be there.Just wanna cross check with u.

Regards
Yogesh

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97 manish January 20, 2010 at 9:37 pm

Yogesh

Pattu has already replied to you on your query for “Insurance for Women” . He is totally correct .

From my side , i would like to say that you have to understand what Insurance is ? Your question shows that you have still not understood what is insurance . Insurance is nothing but protection against loss of income from the main earner from family . So wheather its men or women , it does not matter . Any potential financial impact caused by loss of person shall be compensated using Insurance .

Personally are you asking for your Wife or Mother ?

Manish

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98 Rakesh January 22, 2010 at 1:56 am

Hi Yogesh,

I had taken Amulya Jeevan Policy, SA – 25 Lakhs, Term – 25 yrs, premium is approx 10k for a 30 year old mail.

Rakesh

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99 manish January 28, 2010 at 11:18 am

Rakesh

Are you adquately covered with this policy ? Is your cover only 25 lacs, may be you want to review it again and may be this time you want to try other company :)

Manish

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100 sumayya January 20, 2010 at 2:28 pm

Hi Manish,

Awesome article. Loved the style of educating. I have so far had a nice experience with my Broker who had explained ELSS schemes to me. However my dad had some really bad experience with Max New York insurance agents as well as kotak ULIPS. Printed sheets with some highly unreasonable gains ‘guaranteed’ . The agents managed to swindle him for quite a big amount. Once you invest they manage to disappear or conveniently change their nos. So you end up coordinating with a different person later. Of course the new person doesn’t give a dam about what promises were made earlier. Dad being new learnt it the hard way. This article should be promoted all over as a cause. “To protect indian investors from agent malpractices” Let the post be available to a larger audience.
.-= sumayya´s last blog ..Stock Investing Strategy for 2010 =-.

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101 Manish Chauhan January 20, 2010 at 2:43 pm

Sumayya

I am glad you liked the article .. Regarding your dad case.. its a common story of investors in India . IRDA should really comeup with some strict rules against agents .
So is you dad’s ULIP in red now or back in profit . I doubt .

Manish

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102 Sachin January 20, 2010 at 7:15 pm

hello manish,
In countries like US, Japan, etc Interest rates are very low from 1 to 3%. In India before 15 years ineterest rates were nearly 12-15% now they are around 7-8% (Bank, Post, etc, etc), what will be interest rates in india after next 20 years. Please give your thoughts on this.

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103 Manish Chauhan January 20, 2010 at 11:07 pm

Sachin

Countries like US and Japan has low interest rates because they are developed countries , they have no much to develop now which India and China have . So the equity markets there are also not as attractive as India and even debt market. So in future I can see that happening to india also , but not in 50 yrs .

What do you think .

Manish

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104 pattu January 20, 2010 at 7:31 pm

@ Yogesh

“Is it wise to purchase insurance for females ?” Aside from being politically incorrect its insulting to women. Insurance is gender independent. It only comes down who is the bread winner in the family. He/She then has to be insured.

Manish,
You keep asking people to wait and watch AR. This is okay for an analyst or enthusiast in personal finance. I don’ see how this make sense for someone who wants insurance. We need to look at AR for definitely more than 6 months. (I would only keep looking!)
The longer you wait the higher would be the premium incl backdating charges. Waiting maybe okay for someone in mid 20s. For someone in late 20s BP and cholestrol set in early 30s for most working Indians. This will have bigger impact on premium. The point is waiting and watching has implications.

Financial advice is heavily age dependent which is again linked to risk appetite. I feel that when you offer advice in comments section you don’t take age into account often enough.
But you cant be blamed for that because people don’t mention age and most of the time don’t reply back to you.

I suggest you conduct a poll reg age of jago investor reader. This will help you write better.

As for AR facts like customer service and more than half claims rejected so far are quite against it. Wait or not, wait this stigma will be difficult to remove for an informed investor. Facts are more important than instinct.

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105 manish January 20, 2010 at 9:31 pm

@Pattu

Hmm .. I need to be more elaborate while suggesting , From my side for most of the people I asked to wait for AR made an impression on me that they are thinking of Insurance casually and not very seriously .

For any one who is seriously looking for insurance should definately go for insurance without waiting . Later in life when they feel that AR is a good choice and economically it makes sense they can shift .

Thanks for your suggestion on taking the poll regarding age . I have added the poll in the side bar :)

Pattu , considering your experience , I would like to hear your views on ways to handle misselling in real life . What would you like to suggest IRDA or whole system so that we can reduce miselling .

Your thoughts ?

Manish

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106 pattu January 20, 2010 at 10:05 pm

Dear Manish,

Thanks for adding the poll. I am the first to vote! Your open mindedness and ability to take criticism is I think your unique quality, I value that more than your financial knowledge.
Mis-selling occurs mainly because of indifference. A while back my friend opened a ELSS sip through an agent. The agent gave him the form with a ‘cross’ at places he has to sign and that’s it it was opened. However the agent filled the dividend option instead of growth without consulting my friend. If my friend has read the form he would have asked for the difference bet. growth dividend etc. However he thought all he had to do was sign a cheque and ECS mandate for investing.
The point is financial planning is hard work perhaps harder than ones job! It requires investigation. Sometimes I think its is best for people to get cheated once. Then only they will wake up!

As for IRDA, they should start advertising against mis-selling. The IT dept advertises against people who cheat on IT. So should IRDA. IRDA should also have tighter norms on selling ULIPS (it has recently started this).
Also if I am not wrong IRDA wants to do away with agent commission for many products but has met with opposition from companies. As long as insurance agents exist, mis-selling will be around. Which is why online insurance schemes are good this will promote transparency provided the client has patience to read the fine print

The bottom line is unless the investor wakes up nothing can be done after all some portion of mis-selling at least is due to indifference of customer.

At the moment Jago investor is doing more than most others to create awareness.
Thank you very much for all your efforts.

Reply

107 manish January 21, 2010 at 2:26 am

“Sometimes I think its is best for people to get cheated once” .. hehe .. very true .. Thats exactly what is happening with poeple in ULIP’s , but they are cheated very hard there and finally they are taking charge of things they should have done earliar :) . Regarding the real life case you told . I can see the gap between two things .. One is the level of involvement peole have (your friend carelessness) and other is “no good service from agents” . These two things need to improve and from both side the gap needs to be filled . Investors should understand that no one other than them will be more interested in their finances , neither manish nor jagoinvetor . Its them finally at the end . And regarding agents , here comes the next points, what you said in your comment next .

I strongly support Online selling of policies which has started happening now from insurancemall.in and some other portals , but still low awareness is the issue . Apart from big cities its really going to be tough to cover smaller cities where still LIC and some companies dominate .

One of the readers “Jagbir” has suggested an excellent idea for IRDA to curb misselling , As per Jagbir, “Agents must get commission only after customer feedback , If customer is not satisfied with the agent suggestion or his way of selling , they can give the feedback and then agent commission will not be paid ” . What do you guys think about this ? Please comment ..

What do you think about that ? Do you think it would make sense to ask IRDA for explaination to some points we discuss here and get more information ? I may be little over excited when I say this , but its our right :)

Manish

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108 pattu January 21, 2010 at 6:57 am

“Agents must get commission only after customer feedback”
A bit extreme because you are not paying for services rendered by him. The alternative is a cut in the commission % if any complaint is received and a black mar in the agents service history. To enable this every agent should be given a unique id no independent of their present company. This way a complaint can be lodged with IRDA directly.

The point is IRDA has to regulate but it has restrictions on its own since agents are a very important interface bet company and public.

Another way is an agent feedback from issued by the company with the policy document. It would ask the person if the agent explained this and this etc. The % commission is set depending upon the feedback received.

We have every right to seek explanation with IRDA. But will they respond? and that too sensibly and usefully? Sometime back you write to IRDA reg documentation necessary for death claims. Did you hear from them?

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109 manish January 21, 2010 at 10:27 am

Pattu

Agent feedback form with Policy document is a good idea, just that how successful it will be. Given that agents are able to make people fool now with documents and all , they can do the same thing at that time also .

I didnt receive any reply from IRDA for my last query :( .

Manish

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110 srinivasu February 25, 2010 at 10:47 am

dear all !
WELCOME
very happy to be here.
my views on commissions to life insurance agents paid.
1.uniform/regular payouts every year.
presently 4o % in the first tear,, 5 % in next year onwards…
this is one of the reason for the huge lapsation of polices.
2.promote term policies with reasonable commission.
presently its 6% yearly, which involves in collecting documentsof income proof , medicals in company approved hospitals.
this requires some follow up, and coordination with insurance office. or some times TPA
THIS IS THE REASON FOR LESS TERM PLAN SALES.
thanks for this service.

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111 Manish Chauhan March 1, 2010 at 1:25 pm

Srinivasu

Thanks for your views :)

manish

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112 Yogesh Tiwari January 20, 2010 at 8:16 pm

Just wanted to say that Yogesh and Yogesh Tiwari are 2 different people. I dont know the former, at all.

I dont know why, but just wanted to say….LOL

Regards
Yogesh Tiwari

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113 manish January 20, 2010 at 10:27 pm

Dont worry Yogesh

We identify everyone with email id ;)

Manish

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114 Yogesh January 20, 2010 at 8:25 pm

Hi Padu,

I just asked whether it’s wise or not ?I haven’t suggested that shd have insurance for females.

i know few of my friends which have taken insurance for their wifes.

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115 Sunil January 21, 2010 at 3:56 pm

Hi Manish,

Thanks for all the good stuff.

Any insights on what is the hidden agenda of agents who sell ULIPs that guarantee the highest NAV achieved in say 7 years? SBI came with such plan and now I hear ICICI has that too.

Sunil

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116 manish January 21, 2010 at 11:15 pm

Sunil

I will come up with the post on that , for now you can read : http://www.indianexpress.com/news/no-free-lunches-in-financial-markets/568433/0

Let me know what are your views ?

Manish

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117 Sunil January 24, 2010 at 12:00 pm

Manish,

That was a good link. I was almost convinced by an agent around 3 months back. He kept on telling that 1) majority of money goes into equity market, otherwise SBI would not make money too 2) SBI can be trusted and 3) they have enough funds to take a hit in case markets keep falling.
His argument was, SBI can take risk as it has great expertise in equity markets.

My brother told me to ignore it since there was no reason why SBI would take a risk on our behalf. I too felt there may be a catch. The link you provided clearly explains how they can assure highest NAV.

Sunil

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118 varun agrawal January 21, 2010 at 5:10 pm

hi manish,

again a good post…
a very good brain washing article, for this indian mass.especially..
..keep it up..
very soon i wil start my blog also..but right nw i m in learning phase…
its a gud learning frm u..and ur posts…
i hope i will get ur support alws to kick all these stupid and greedy agents , who just see there benefits rather than providing a good solution..
so i will also put my step forward , to remove this financial ignorance among the indian public especiallyyy….
and i knw we can do it..
so done..!!!.

regards,
varun

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119 varun agrawal January 21, 2010 at 5:11 pm

hi manish,

again a good post…
a very good brain washing article, for this indian mass.especially..
..keep it up..
very soon i wil start my blog also..but right nw i m in learning phase…
its a gud learning frm u..and ur posts…
i hope i will get ur support alws to kick all these stupid and greedy agents , who just see there benefits rather than providing a good solution..
so i will also put my step forward , to remove this financial ignorance among the indian public especiallyyy….
and i knw we can do it..
so done..!!!.

regards,
varun

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120 manish January 21, 2010 at 10:28 pm

Varun

Thanks for the comment . Make sure you start your blogging from wordpress itself incase you are serious about it . Blogging is tough :)

What blog are you trying to start on ? Make sure you keep somethings in mind

1. Great eyecatching small name like “jagoinvestor” :)
2. Relevent name and content .
3. Stick to the theme and consistent in writing :)

Manish

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121 varun agrawal January 22, 2010 at 9:41 am

yaa manish,,..
definitely i will take care of aall these things..dat u told me…
but these is my short term goal , first i have to learn a lot regarding this…
and when i will take ur advice also when i will start so dat it cud become userfirendly…and the ppl cud get benefit out of it….and wo bhi free of any cost….
coz wat i believe is dat knowledge increases on sharing without thinking of any benefit u will get out of it on sharing..
as u also doing a very gud work here…but if we want to bring revolution among indian mass regarding this subject then we have to do a lotttt…
and i hope we will try to do it….so i hope ur support will be ther?…
even we cud make a team…wat u think dear..?/
ur suggesstions will be appreciated…( as nw u have better knowedge than me..in this field )
…….
regards
varun

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122 manish January 28, 2010 at 11:22 am

Varun

thanks for your kind words .. looking for more interactions from you in future on posts .

Manish

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123 yogesh January 21, 2010 at 7:33 pm

Hi Manish,

I think point raised by nilesh panchal is good.

In Iterm how claim needs to be done ?Is that online also only ?How computer illiterate person will proceed in that case ??

In developed countries doesn’t bank don’t want money from public ..Is this the reason the interest rates are low in developed country than developing countries ??

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124 yogesh January 21, 2010 at 7:35 pm

Correecting my previous response..plz read this one

Hi Manish,

I think point raised by nilesh panchal is good.

In Iterm how claim needs to be done ?Is that online also only ?How computer illiterate person will proceed in that case ??

In developed countries does bank don’t want money from public ..Is this the reason the interest rates are low in developed country than developing countries ??

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125 manish January 21, 2010 at 10:32 pm

Yogesh

Even I am not sure about the claim process in that . A person will be covered just after he gets the policies (just after he buys it online , because its written that in free look up period they will also cut the premium for the amount for the cover till that date , which means its covered from day 1)

Regading claim ,I think it can be done online and also through their office ,. this needs more clarity . can one of you take some effort to find out exactly how its planned ?

Manish

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126 pattu January 22, 2010 at 6:52 am
127 manish January 28, 2010 at 11:20 am

Pattu

I liked the lines from articles which says “Mis-selling is not an incidental evil that results from poorly-trained agents and financially illiterate customers. Instead, it is built into the current business model of the insurance industry.”

So true .. I can realise this the moment I read it . What do you feel ?

Manish

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128 pattu January 28, 2010 at 3:26 pm

Yes of course mis-selling is built into the business model. This is the contribution of fancy MBAs who promote mis-selling by asking agents to emphasis on “guaranteed returns” for ULIPS!!

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129 manish January 28, 2010 at 9:23 pm

Pattu

the same thing happens with traditional LIC policies .. they also come up with the “guaranteed plans” . Not that they are “unethical” or “framed up”, but definately they take advantage of the timings and hit the product at the time when public should avoid them ..

Manish

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130 pattu January 28, 2010 at 9:34 pm

Agreed. LIC agents are not better than other agents or advisors. In fact the way I see it these people should be treated as mere messengers or our informed decision to the company and back. Nothing more. In this IRDA should shoot unethical messengers!

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131 Amandeep Singh January 22, 2010 at 4:17 pm

Hey Manish,

Another great article from you… :)

I have to mentione about point number 2 here… Last year the same happened to me… A metlife agent did the same to me and also I was caught in his trab… In addition he did not tell me that my premium allocation in the forst year was nil… the fund allocation will be from the 2nd year… Later discontinued the policy within the grace period and got the money refunded…
.-= Amandeep Singh´s last blog ..Jubilant FoodWorks IPO subscribed 31.11 times =-.

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132 manish January 28, 2010 at 11:26 am

Great ..

thats the correct and informed decision .. i know many who just dont give back the policy within freelookup period just because of lazyness :)

Manish

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133 Amarnath January 24, 2010 at 1:07 pm

Food for thought for investors

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134 Amarnath January 24, 2010 at 1:09 pm
135 Amarnath January 24, 2010 at 1:11 pm
136 Amarnath January 24, 2010 at 1:13 pm

why i cant add emmbedded vedio ? , i can only add link .

http://www.youtube.com/watch?v=ZlCNtWv-pYA

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137 manish January 28, 2010 at 11:37 am

Amarnath

How is this link relevant to the topic we are discussing ?

Manish

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138 Amarnath January 28, 2010 at 12:05 pm

Manish ,
As it clealy explains about how agents are miselling to buy ULIP’s as short term investements and 35% return promise on ULIP’s. I feel it is relevant video to be viewed by users on misselling . what do you say ? . Am i missing something?

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139 manish January 28, 2010 at 12:15 pm

Amarnath

Err … Its my mistake .. I didnt see full video and spoke in hurry … Good link :)

Manish

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140 Amarnath January 28, 2010 at 12:41 pm

:) no probs , latest episode links of this program

Are the lines blurring between ULIPs and MFs?

http://www.youtube.com/watch?v=XqwkJdyfTTc

http://www.youtube.com/watch?v=s8_eIOeHcgE

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141 yogesh January 24, 2010 at 2:07 pm

Hi Manish/Padu/srinivas & all,

My friend is having Jeevan Anand Lic policy .paying premium of 20,808 yearly and policy tenure is 25 year.Sun assured is rs 5 lachs.
.Want to know at the end of 25 year how much money he will get.

He & I treid to check on apnainsurance.com but it doesn’t help to know abt final amount.
Can u let me know any suitable link or if u have any doc to know the final amt.

Regards,
Yogesh

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142 manish January 28, 2010 at 11:39 am

Yogesh

The way I can think of calculating is to look at the illustrations at LIC page and then calculate for yourself . You will atleast get an approximate figure as the bonus and all is not fixed and changes every year .

Manish

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143 yogesh January 24, 2010 at 4:07 pm

Hi all,

I got some information from below link…

If any one has any specific link from which can know maturity amount of all policies/products..Plz share

Thanks,
Yogesh

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144 Praveen January 28, 2010 at 4:48 pm

My friend bought some highest NAV assured ULIP from Birla Sun life., when I searched on net for info on that ULIP what I came to know is the NAV prices are recorded on 15th of every month and on mature of the plan(or some mature date i.e some date in 2016 ) the highest between the higest of these recorded dates or the NAV at the mature time is given (which ever is highest). I can’t understand how they can do this??? Can we believe this product?? what if the market goes to all time high in 2015(there by NAV) and tumbles to half in 2016 (at maturity time)., how can they give the higest NAV then???

Is this plan an authentic plan or another gimmick???

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145 manish January 28, 2010 at 9:21 pm
146 Praveen January 28, 2010 at 10:36 pm

Thanks for the link Manish
.-= Praveen´s last blog ..ELIPS Studio: Mobile Application Developement using Adobe Flex Builder =-.

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147 Ashutosh Chakraborty January 28, 2010 at 7:00 pm

Hi Manish,

My mother is a salaried central govt employee. For tax saving, she puts Rs 10K pm towards her GPF (general provident fund?), which should mean total 1.2L into GPF annually. In addition she puts nearly 35K per year as my LIC policy. Last time I visited her, I came to know that some agent had convinced her this year to purchase a life insurance policy (premium of 30K per year) called Reliance super market return plan (regular premium) to save tax. On checking the policy papers, I saw that for next 10 years, consistently, the charges are as mush as 35% and as low as 25%!. I have the following doubts:

– The tax deduction under 80C is 1L (ditto for females?). If my mother already puts 1.2L in GPF + 35K as LIC premium, isnt she already over the tax saving threshold even without this Reliance life insurance plan? How come the agent suggested it would reduce her tax. Am I missing something? If not, I need to find a way to stop wasting her 30K every year.

I read in one of the threads in jagoinvestor.com that for ULIP policies, it is not mandatory to pay the premium. However, the agent when contacted by mom said that she has to pay 30K for next 10 year or early withdrawal penalty will be levied.

PS: The brochure of the plan is at http://www.reliancelife.com/RLIC/Products/SolutionsforIndividuals/Plans/MarketReturnPlan/Super%20MRP%20-%20Brochure.pdf

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148 manish January 29, 2010 at 12:57 am

Ashutosh

1. Yes your mother has already exhausted 80C limit .. there is not benefit in taking more products in 80C and locking them .

2, No , if you see the policy document , it says that you can stop it after 3 yrs . Look at the document . Yeah .. early withdrawal may attract penalty , thats surrender charge .

Manish

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149 Yogesh February 7, 2010 at 5:29 pm

HI Manish,

Does in long term (lets say form 10yrs) ULIP & Mutual funds give same returns
on invested money ?

Am I Right ? OR in long term mutual fund will give better returns thn ULIP?

Plz clarify

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150 Amit Jain February 9, 2010 at 1:14 pm

One more false promise from agent
1: No health checkups for this policy sir, generally insurance companies send health executive after receving cheque from investor and by that he is in trap.

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151 Manish Chauhan February 9, 2010 at 9:22 pm

Amit

Nice info , I never heard this one , did this happen to you :)

Manish

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152 Amit Jain February 11, 2010 at 3:12 am

i dont take ULIPs :) but yes my friends recently had this problem.

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153 Ganesh February 11, 2010 at 8:57 am

I am planning to take LIC’s Market Plus (or) Money Plus. What would be ideal?
Also I want to know about Mutual Fund. It’s better to go to LIC or Mutual Fund.
Your comment pl.

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154 Manish Chauhan February 11, 2010 at 10:42 am

Ganesh

Any ULIP is not advisable , wheather is from LIC or other company for general investors . See more on ULIP in this same blog . Take MF for long term investment through SIP .

Manish

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155 Lalitha February 15, 2010 at 7:03 pm

I am planning to take LIC’s – Child Future plan. My son aged 10 years and If I plan to take SA 1,00,000 for PPT 8 what will be the amount i receive in between and also in final.

Otherwise pl. suggest me for one of the best policy for his education purpose. I need some amount at the time of my son’s 18th year.

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156 Manish Chauhan February 18, 2010 at 9:59 am

Lalitha

You should not take any ULIP policy as they are not the right product for general public . They are costly , complicated and trapping products . so better plan for child education the way i have suggested at http://www.jagoinvestor.com/2010/01/5-easy-steps-to-do-your-childs-education-planning.html

Get back if any questions :)

Manish

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157 chetan pandey February 19, 2010 at 5:25 pm

my agent show all my policy document and told me that u r in big trouble as he says that my family history and my smoking habits are not disclosed by my old agent both the policies are child plan is he right in saying that this contract is null and void. if he is right than what should do.

ALWAYS FIIL YOUR FORM BY YOUR HAND EVEN THOUGH YOU DONT HAVE TIME TO DO THAT! EVEN IF THAT TRIGERS MEDICAL!

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158 Manish Chauhan February 20, 2010 at 1:39 am

Chetan

Yes ,he is right , the company can decline the insurance claim based on this grounds, you should now disclose the facts to your company .

Manish

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159 deepak gala February 19, 2010 at 10:34 pm

you seems telling & misleading that ulips are not good option in comparision with mutual funds & traditional plans. but ulips is combination of insurance & investments. only thing is that seller should check the client’s need & risk appetite.

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160 Manish Chauhan February 19, 2010 at 11:54 pm

Deepak

No man , I am not mis leading anyone , you ask readers on this blog , they will tell there own personal experience. Also , why dont you do some analysis on ULIP and MF and we can then sit togther and review it :) . I am sure we will learn a lot . What do you say ?

Manish

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161 Praveen February 22, 2010 at 6:51 pm

Yesterday I saw an ULIP payment receipt with my colleague. when I inquired with him what it is, he told he had done it for ‘Tax saving’ :)

With the little knowledge I had (from your blog), I told him that ULIP’s are costly and asked him whether he know how much commission (or PAC) they are charging? The answer I got is that he doesn’t aware of any of those charges and the agent doesn’t told him of ‘any charges’. Later I searched in the net for its brochure (it is SBI Unit Plus 3) I saw PAC at 20% for first year and that too it is mentioned in last pages. Then I sent that brochure link to my colleague., but nothing is there he can do bcoz already the cheque he had given was en cashed two weeks back.

Then I came to know two persons in my team had also done the same ‘tax saving’(each for 50,000) and this guy for 30,000. At 20% PAC the agent got around 26,000 as commission :)

The worst thing is that agent is not an friend/acquaintance of our colleagues, some body just called him for ‘tax savings’ and these guys done that with him.

Its high time for controllers(like IRDA) had to start some consumer awareness programs.

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162 Manish Chauhan February 22, 2010 at 7:44 pm

Praveen

Sad but true , agents trap investors and dont tell them the full picture of the product and investors believe the agents and then later they cant do anything :(

IRDA should really do something soon .

manish

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163 ABHISHEK April 8, 2010 at 8:57 am

gr8 job dude.keep it up.

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164 rahul April 10, 2010 at 4:30 pm

hi
there is so many policy offered by insurance company,high allocation charge =80%
zero allocation charge with high amount of hidden charhe. addministration charge etc
my question is how thease product approved by IRDA,
I THINK HEAVY ILLEGAL TRANSACTION TO APPROVED THEASE POLICY(my personal view)

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165 Manish Chauhan April 10, 2010 at 10:29 pm

rahul

Yea . ULIPs by design have heavy upfront costs . Anyways … now ULIPS are finally banned for the moment from SEBI .

Manish

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166 keshav May 3, 2010 at 5:17 pm

My father has taken a ulip and the return is still in a negative after 4 years of premium being paid would it be right to quit specially when the higher percentage of commission has already been paid off
Should I wait till I achieve a break-even or some positive return (maybe next 2-3 years) or should immediately quit because now also even if I quit it will charge me something

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167 Manish Chauhan May 3, 2010 at 5:56 pm

Keshav

YOu can get out if you are not ok , waiting does not mean sense ,you will be loosing the time anywyas ,which you can use to grow the amount anywhere anyways .

Surrendering the ULIP before 5 yrs , will attract tax on the amount which you recieve , as it will be treated the income .

Manish

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168 Giridhar May 5, 2010 at 12:56 pm

Hi Manish,
Excellent presentation. Its spot on. In my family, we have invested in at least 4 UILPs without knowing each other. Generally the agents impress you and dont give much time to think about it (saying that the last date is round the corner). Mostly these agents are your friends/acquaintance and try to play at emotional level.
My suggestion is each fund should have a feedback post in their website where the unit holders can give feed back. I have seen there are lots of good funds which are not getting attention in common public, only the unit holders know their benefits. Vice versa for negative aspects of the funds as well.
Looking forward for more enlightening articles from you.
Thanks, Giridhar

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169 Manish Chauhan May 5, 2010 at 1:21 pm

Giridhar

Good suggestions :) .

Manish

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170 ADi May 26, 2010 at 6:33 pm

Its really wonderful to see such elaborated blog for personal finance.
Also please make me clear is their any logic so that we rank which is the best insurance company from which we can take cover.
I don’t want to compare by Cost of the policy, cost is almost 10-20% around.
If we can have information about companies financial health, claim ratio, turnaround time, ratings by CRA’s etc.

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171 Manish Chauhan May 26, 2010 at 9:07 pm

Adi

This is a question asked by almost everyone , and truly speaking i dont think one should think much about it . the problem happens most of the times from customer side while giving details to insurance companies which lead to claim rejection .

How ever , what a customer should concentrate on is giving 100% proper info while filling info , you can select any company after that .

Manish

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172 Durga July 15, 2010 at 11:40 am

Hi Manish,
I am 24 years old software employee.I have taken HDFC ULIP endowmnet plus 2(equity plan) on Sept 2009 for Rs3000 SIP .I have paid 11 installments (Rs 33000) .Current fund value is Rs11000.After reading lot of blogs i came to know that ULIP is not a better option for long term.

Now i want to come out of this plan.what is the appropriate time(after 3 or 5 years) to stop paying the premiums.Can you give me your suggestions on the same.

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173 Manish Chauhan July 15, 2010 at 6:34 pm

Durga

looks like your charges are too high , you paid 33k and the total value right now is just 11k , you can get out of this after 5 yr without any charges , after 3 yrs you can take money out but you will have to give some surrender charges as per policy docs .

Manish

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174 Durga July 15, 2010 at 7:22 pm

Thanks for suggestion Manish,
i have some more question regarding my ulip plan.
1)My fund was equity managed fund(60% – 90% in equity & 10% – 40% in debt)from beginning.Till now i have not used the switching option.Is it good time to switch the fund to growth fund(90% in equity and 10% debt).As from 2nd year onwards deductions are very less(7%) compared to 1st year,so most of my money will be invested in market.My plan was to stay invested for at least 5 years and come out of it.
Can you tell me what are the precautions taken into consideration before using switch option

2)I was not clear about the NAV growth concept for HDFC ULIP endowment plus 2(presnt NAV is 10.60) when i was taken the policy last year endowment plus 2 NAV is approximately 9.
Is this mean endowment plus 2 is not performing well or because of steady stock market?

3) Right now Sum Assured was 3lakhs and i want to reduced to less amount as much as possible and planning to take a term insurance.Does this make any sense?

Eagerly waiting for your response

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175 Durga July 23, 2010 at 5:45 pm

Manish can you give your inputs on the above

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176 Manish Chauhan July 24, 2010 at 11:22 am

1) How to do switching ? : This is equal to saying how to sense market movements , Its not a short game which can be learned in fews hours , thats the reason ULIP’s are not suitable product for everyone , its for people who can understand market well so that they can also time their switching in ULIP’s .

If you ask for my personal opinion which can be dangerous to apply on some one else financial life , My opinion is that its not the right time to switch to equity , the reason is that now market is in over bought region , markets can fall down , but we dont know when , 1 month or 6 month , we really dont know , but its not the best time to buy , thats sure .

2) Fund NAV comes after deducting the charges , and als0 where is this investing ? from the name seems like they are more into debt instruments , if that is so then its not a high growth investment option , its more of a secured option .

3) ULIP’s insurance is also same as Term insurance , they cut the mortality charges only for insurance, which is same as term insurance . However i would suggest go for term insurance anyways .. I am not sure if you have an option to reduce your cover in ULIP , anyways its just 3 lacs :)

Manish

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177 Durga July 30, 2010 at 6:58 pm

Manish,
Because of initial high charges I am already in loss of 22k, which is better option do i need to invest for 2 more years (36k + 36k) and surrender after 2 years(total 3 years premium of Rs1,06,000 ) to recover some loss or stop paying the premium no itself.

I don’t know how much money i will get after 3 years if i stop paying the premium right now.

I am in confusion I need your suggestion on the same.

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178 Manish Chauhan July 30, 2010 at 7:11 pm

I had a look at this plan just 2 days back because one of my team mate was holding this one and I saw this policy . I must say .. “One of the worst ULIP policies” .

here is the policy document .

First the allocation charges itself are so high , 60% in first year (the document shows 40% allocation rate) . And 7% in the second year and 2% after that every year .

On the top of that the surrender charges are also so high , if you complete 3 yrs and surrender , it would be 15% of the fund value .

So over all I do see much value in this plan , but if you have paid 2 premiums , then just stop paying anything further and then take money out after 5 yrs .

Manish
If you look at the Surrender charges section

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179 Durga July 30, 2010 at 8:05 pm

Manish
Thanks for the quick inputs , i am paying the policy using SIP.Till now i have paid 12 premium(1 year completed).If i stop paying now and if i take the money after 5 years what will be the NAV value taking into consideration while redeeming the units.

Do i need to explicitly tell them i don’t want to pay the further premiums??

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180 Durga August 3, 2010 at 12:32 am

Manish,
Can you pls give ur input on the above

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181 Manish Chauhan August 3, 2010 at 12:45 am

Durga

NAV cant be predicted , Not sure on what happens if you surrender before 3 yrs , generally there are two things which happens , either they sell everything and keep your money in cash , and then pay you back after 3 yrs , or the value of NAV goes up and down as per market , but in that case the yearly charges will still apply .

Manish

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182 Sarin August 17, 2010 at 2:22 pm

financial products are not just MF’s & ULIP’s right?? instead of criticising each act of a financial product marketing executive, thinking of the need of insurance, will also be desirable. It’s high time that india should implement compulsary isurance to every citizen jus like american and british nations…

most of the posts above shows the pre conditioned nature of typical indian mind.. sorry to put it this way though i too agree that not all financial products are worth it..

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183 Manish Chauhan August 17, 2010 at 2:29 pm

Sarin

ULIP’s and mutual funds are the most missold products to most of the people , so thats the reason those are covered .

Manish

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184 Amit October 13, 2010 at 3:38 pm

Hi Manish Excellent work Once Again.

I would also like to share one more trick they are using now a days.

I suppose many of them even never thinked of it ever before.
I meet one Insurance agent who was having as usual a great hunger(or rather never ending) hunger to sell the policies.
when we meet for first time he did not uttered a single word about any policy.Same was the case for subsequent 4 to 5 visits. I was wondered!!! then on one fine day he asked me what does your sister in law do? Does she go to job or does she do any work ? I replied NO, she is a housewife. He said she has opportunity to earn extra amount & doesn’t has to go to any office. He offered us to make her Insurance agent by simply passing IRDA exams. we thought that it was good & she can earn by her own & that to without going office. He took some 800Rs. fees,filled up some forms & given us the date for exam. She prepared a lot for exam & got Passed out by Good numbers.
This is where we actually entered the trap.after some days he started calling her to sell at least one Insurance policy. Friends, Relatives every one was tried out but all in vain. At last we decided to take one Insurance policy by ourselves. Same thing next month, again some attraction of some good commission & attractive prizes. Again the same trial for friends & relatives & again we took one more policy. This was again repeated for the third time but this was the time when we got alerted. His main motto was not make a good agent but to sell his policyto us, the only thing is that he was having a different way.
Hats off to this Guy & to his idea!!!

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185 Manish Chauhan October 13, 2010 at 4:40 pm

Amit

thats interesting :) , many agents might read this and try this trick now :) . But never mind , In the example you mentioned, why was your sister in law not able to sell any policies, lets take this as a positive event and really she got some opportunity to earn some money provided she does it right way .Can you tell why didnt she sell any policy and how does pressure from that agent matter ? He was not the boss in this case ? right ?

Manish

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186 srinivasu December 21, 2010 at 10:01 am

yes,every word is true.
the agent has not lost his 800 rs any more, instead he got some incentives for refering one agent plus pass in the exam successfully plus active by giving some polices.
this is a old trick.
But the readers can learn from this is life insurance co. are more interested in natural market with OBLIGATION instead of teaching agents about financial planning.
thanks for this service

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187 Manish Chauhan December 21, 2010 at 12:30 pm

Thanks for updating :)

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188 Pankaj Parmar December 19, 2010 at 11:37 am

HI all

Here while browsing the details, I, on first hand, got the idea, that it all at the end AGENTS are held liable for selling ( mis-selling) of any financial products. But I think, that apart, the onus of responsibilities also lie with the COMPANY, they are also under full stress for achieving the TARGETS, as set by their top-notch, and all they in the company, get is their benefits ( commission – charges ) on turn-over of AUM, which might be daily, weekly, fortnightly, monthly etc.etc. that is finer point, everybody giving a blind eye to it.

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189 Manish Chauhan December 19, 2010 at 11:52 am

Pankaj

Yes , I agree with you . Its not just agents but also companies for designing those kind of products and have aggressive marketing and competition . However this is not yet highlihted on the articles.

Manish

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190 swarup January 1, 2011 at 7:55 pm

i like to know whose fault is this –

Policy holders, agent, company who is creating such product to cheat others .

I believe lack of awarness among the agents is the root cause.
If you go and asked any agent atleast 70% dont know about the products.
and sell to there family mambers

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191 Manish Chauhan January 1, 2011 at 11:29 pm

Swarup

I agree with you , agents in India are also mis-informed at the same level as investors

Manish

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192 Moorthy January 27, 2011 at 9:35 pm

Manish,

Thanks. Thats a great article. I am in the trap. 3 years I have invested in ICICI Lifestage Pension Plan 100000 rupees premium a year. I already have paid 3 years. As of today, the fund values are about 3.95 lacs. I would like cancel and withdraw my money and invest in good mutual funds.

My questions,

1. How can i cancel my policy and get back my money?
2. Can you name few good mutual fund names?

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193 Manish Chauhan January 27, 2011 at 9:46 pm

Moorthy

You can take money out but there will be surrender charges in it ,.look at policy document on how much is it . Regarding mutual funds , there is already an article which has those names

Manish

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194 Pankaj Parmar January 27, 2011 at 10:37 pm

Hi all

WHile browsing some of the comments, what I find interesting is that it is not the SELLERS, but BUYERS, who are more greedy on two counts, i.e. rather than trying to get into the nitty-gritty of the products, what MAXIMUM RETURNS ( GREEDINESS ), they would achieve; and secondly what the under-the-table ( commission ) the SELLERS ( CFA ) are going to get and they would part with how much portion.

I apprehend, if honestly all BUYERS OF financial products, stick to their requirements, and make some home-work, brain-storming session with couple of CFAs, then certainly, whole is blame-gaming would get over

Comments from viewers welcome, as also from the moderator

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195 Manish Chauhan January 28, 2011 at 2:52 am

Pankaj

I would agree with you .. You are right in saying that buyers are in mess today because of the wrong expectations they have created over the years .

Manish

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196 Rahul9618 November 13, 2011 at 5:24 pm

Dear Manish,

Looks you have very deep knowledge of Insurance Industry.
I need a suggestion:

I’m seeking to purchase a health insurance & I’ve even done R&D to my level.
As per my findings Apollo munich is best one but I have a doubt ,how Apollo providing the lifetime renewal,is there something hidden cause maximum of the companies have renewal limit till 70years,but how come Apollo is providing lifetime & that with flat premium for life time.
We all lucky to have a person like you in our network who tells the facts very bluntly to the level that many of Insurance guys don’t like to read.
Kindly suggest me ….!
Expecting your reply soon..!!!!

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197 Manish Chauhan November 13, 2011 at 6:09 pm

Rahul

First thing you need to know is that premiums not FLAT for lifetime . It can change every year because its a yearly contract only . Also the premiums today might consider the LIFE TIME RENEWAL THING . Each company has their own thinking, experience in health insurance and based on that thye feel that they can provide life time renewal . Other company might not think like that .

Also when a person would be of high age , his premiums at that time will also be big

Manish

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198 Umesh December 30, 2011 at 4:20 pm

Dear Manish,

This is 2nd year of the HDFC Young Star Supreme Suvidh plan i took for my daughter. I can recall all the statements from agent as mentioned by you. Now the policy fund value is even than the premium i already paid. I am little worried. The term is 15 Years.

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199 Manish Chauhan December 30, 2011 at 6:03 pm

Umesh

What does policy document say about stopping the premiums before the lock in period of 3 yrs ? Better stop this policy and start your investments in some MF

Manish

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200 shashi May 19, 2012 at 9:47 am

OH.. i am already in the trap. Either there is very less awareness or it was my fault of not enquiring. i bought the metsmart plus back in 2006. The agent might have used almost all of the above 10 tricks to get me into it.
policy details:
insurance of 1200000
expirs in 73 yrs
its a multiplier
monthly premium : 4000

I paid the premium regularly for 3 yrs and then stopped.

I have always noticed that the fund value has never gone above my principle amount that i have paid. and if i plan to discontinue i will get the sum after deducting 10% of the total value. (Which is ridiculos)). i had paid total of 148000 and the current value is 141ooo. And its dropping by the day.

i have not been paying the premium since 2010.
They say its only after 10 yrs i will be able to get the amout out without any charges. I guess they are right as by that time they anywys might have eaten up the entire sum.

Just one question.. i am going ahead and discontinuing it.. Taking out whatever is left..Paying them what ever charges..i guess the total i will get in hand frm them is around 110000. its better than losing the entire sum…
There is no other way out right? Switching the fund wont help right?

By the way manish i have listed your site on my blog aswell..as i feel everyone should visit your blog before making any finanacil decisions.

Thankyou

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201 Manish Chauhan May 19, 2012 at 7:10 pm

I think you are over panicking .. i know your fund has not done good and most of the returns have been eaten up , but once markets take a U turn from here you can see some good jump in your ULIP . However if you just want to get rid of it . just surrender it !

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202 Amit verma January 12, 2013 at 7:16 pm

in 2008 my lic agent explain me about market linked policy and i give her money for 2 policies but they handover my jeevan aastha which i just recently got to know is not market linked…i dont have any writen prove about our conversation of that time…what should i do..please help..

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203 Manish Chauhan January 14, 2013 at 2:24 pm

If you dont have it written or any kind of proof , then its as good as you are lying ! . I know you are not lying , but how do you prove it ?

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204 venky March 7, 2013 at 5:53 pm

this website spreading false news about life insurance ..he always talkng abt term insurance but in rural area u dont find all the private sector life insurance comp which will give term insurance in cheaply …only few of the agents will mis sell the insurance products ……this website is endorsed by stock market brokers it seems ….term plus ppf and other investment is gud …but our rural ppl r not that much educated in invest in stocks and mutual fund ….
Manish stop spreading false news about life insurance …..only few of the educated fools were cheated by smart agents …but most of the ppl are aware about life insurance ..sbi life insurance educating policy holders…..every where agents will get commission even stock brokers also …..

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205 Manish Chauhan March 7, 2013 at 8:59 pm

Hi Venky

Which statement is false or misleading , can you give me that line ?

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206 Manish Chauhan January 18, 2010 at 11:54 pm

Amarnath

I am talking about “Financial Planners” , professionals with CFP certifications . CFP is the standard certificate financial planners hold .

Manish

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207 Amarnath January 19, 2010 at 11:28 am

Manish ,

Do you have any trusted “Financial Planners” contacts/site , if yes pls let me know the details .

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208 manish January 19, 2010 at 11:41 am

Amarnath

You can look at http://www.fpsb.co.in/scripts/CFPCertificantProfiles.aspx , this is the directory of all the CFP’s in India . However I would recommend you choose only “independent planners” and not someone employed by a company .

Manish

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209 Amarnath January 19, 2010 at 5:04 pm

Two differnt views from same HDFC for cancelling my ULIPS

1. Agent told me to issue a letter duly signed by me and submit the same to him along with policy document.

2.As my next ECS is tomorrow i am worried about it and called HDFC life brach at hyderabad . here the excutive said to make my account balance less than ECS amount and after 15 days ULIP will automatically goes to laps state . If there is no formal request from me again to reopen the plan by paying the pending amount it will be in laps state . means i dont have to submit any application to cancell my policy. i requested him to show any written documnet saying the same ,but he dont have the same. he only advised me to call back after 5 days of my ECS date to ensure my policy is in laps and no more ECS done in future.

Thanks to manish to providing timely advises :) . i already made my account balance less than my ECS :) .

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210 manish January 19, 2010 at 9:38 pm

Amarnath

I am amazed at the honesty of ULIP personals at 2nd point .Looks like they dont get commissions .. hehehe .

So Amarnath , Did you also check your policy documents , I am sure it will have the procedure . No ?

Manish

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211 srinivasu February 2, 2011 at 11:21 am

dear all,
stopping or cancelling a ulip is first to issue a stop payment letter signed by the a/c holder to his bank, next visit the life insurance co.. and again fill a paid up letter in a proforma of that co…
there is a difference between lapsed and paid up policy.
no charges applicable for reviving a paid up policy in future.
kindly visit the life office or call the help line instead of believing every word of agents or executives..
thanks for this good work.

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