Why the Big Push for Child plans?

POSTED BY Ram Mohan ON March 22, 2012 1:16 am COMMENTS (8)

So, here is my story.

I had gone to the bank to get a statement for my wife for passport renewal purpose along with our 1 year old daughter. Now this guy appears out of nowhere and helps us fill in the forms etc. All very good.

Then he just asks me casually if I would be interested in any child plans. I politely say “no” and move out. Now I had to go back to the bank today to get the statement and the same guy walks in, recognizes me and asks if I have changed my mind about child plan.

I say “no thank you”, but the loads are too high. He says “No, the load is only 4% (for 8 years which he conveniently forgot to mention) and then it’s 1% thereafter. I say ok,fine,but returns are not good enough. Putting the same money in Mutual funds will give me more returns. He sheepishly says “Sir, but should some eventuality happen — he was not willing to say “If you die” ….I say I have a term insurance to cover that 🙂 ” — i also told him I have read a lot of how to create my own child plan 🙂 — I could see a smile on his face on finding a knowledgeable investor , but he hid it….

Final push from him – but sir, you cannot move funds between different schemes in Mutual funds. I wanted him to taste victory, so I just ignored when I could have easily said “I can manually move it based on performance”

So my question is — why the big push for child plans….Do companies make as much money as from ULIPS? This is not really a question than to share my experience.

So my question is…why the big push for child plans

8 replies on this article “Why the Big Push for Child plans?”

  1. Is it not like trying to encash on people’s weakness. People get lots of call from insurance agents but not from genuine adviser. If agents can get business then genuine adviser also has right to call and sell right thing that will reward the client and himself.

  2. BanyanFA says:

    There are lot of other investors in the market who are possibly not that educated to get their investment and insurance done – hence an all in one investment is being offered by Insurance Companies.

    Regards
    BFA

  3. Mohan, Lucky you they targeted you. Many a times its the mothers who are targetted. I tell you incident that happen with my friend. Not sure how they got to know, Just couple of day after my friend became father, One of the insurance agent called and said
    Sir, Would you like to secure your child future. Its right time to plan your future for your girl child.

    My friend, passed the phone to me, i said i have baby boy. There was sudden silence for second from his end. I am not sure it was guess or some how they got this information.

    I politely said, My child does not need insurance, no body is dependent on the baby. So i m not interested in child plan. Plate change. Sir, i have another plan that is applicable for you?

    I asked Insurance? He said No sir, investment product. He spoke for 3 mintues then spilled the bean, product something similar to Money back.

    Take away for everybody is : Its better to be direct when somebody offers child plan. Parents should not get emotional and commit them selves into product where returns are low.
    Plan for your child is One Good MF -Invest in SIP way and One Term plan for yourself

  4. Dear Ram, the typical Indian mentality – saving for children’s future at any cost is the biggest reason for this push. Sales people know very well that it’s hard to sell a product for you but very easy for your child.

    Thanks

    Ashal

  5. Dominic Prakash says:

    In India parent would do anything for their children till they reach 12. After that its a different story 🙂

  6. The big push can have 2-3 reasons

    1. Commissions – While the commissions are down from its peak, still they are good enough and people coming to bank easily convert.

    2. Target ! . He might loose a job or it might be atleast at stake if he does not complete the target , hence the desperation !

    3. He might have thought he have CONVINCING POWER – In his earliar experience , he might have actually converated this into sales lot of times. But you defeated him 🙂

    Manish

  7. Sachin says:

    Its foolish to take child plan/wife plan/ girlfriend plan/self plan… whatever name says… Common sense is to Insure bread earner and not other way. If child is your bread earner then insure him.
    If wife is earning and husband is at home, insure wife and not husband.
    I hope people add some common sense while taking insurance.

  8. Child Plans and also Retirement Plans – especially the former – strike an emotional chord with people. While very few of us are aware that a Term Plan is a MUST and a combination of Debt and Euity will yield great returns a majority of the population refuses to take the pain to learn basic finance. It is not uncommon for people to earn lacs each month but put all the money in FDs calling stocks and MFs a gamble!!

    Financial literacy is extremely poor in India (as with the middle class of most countries indeed). And when someone offers a “Child Plan” people become so excited and dump their hard earned money in these plans. Laziness is another reason!

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