If you are a little confused about the title of this story, well you should not be. Many people confuse cheap to be inexpensive. Wrong. Cheap is normally meant to denote quality, inexpensive to describe price.

Here is a great life insurance agent who met a client. Unfortunately I had not known her client…I met the widow of the client. The agent was a smooth talker and sold 2 life insurance policies to her client. When he expressed that he was already fully insured – she did the classic. She asked him to buy life insurance FOR HIS TWO DEPENDENT SCHOOL GOING DAUGHTERS! And the client did just that.

That was about 18 months back. 12 months back the client died. Now the kids have no money to pay the premium (Ok I am exaggerating but on a small corpus of Rs. 45 lakhs paying Rs. 6 lakhs is not a priority). Amazing how this woman would have gone on a big trip, got incentives, etc. from companies which keep saying they are here to do a ‘social service’ of selling life insurance.

IRDA instead of tinkering with charges should ban policies taken on non-earning people unless the named actuary or the head of underwriting SIGNs on the form saying ‘In this special case a non earning person is being given life insurance’. Anything else is plain cheating. It is time the life insurance industry woke up to and accepted the nonsense their sales force is doing on the ground. And the persons to be blamed are NOT the kids going out and selling but the Managing Directors who are pushing people to get cheques – immaterial of whether it is relevant or no.

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  1. another trick insurance companies use (while making demands like FDI etc) is to quote life insurance penetration in the country….but what they are selling is not even life insurance so how can they say they are contributing to life insurance in the country?

  2. First of all – the father knew he was dying. Did she tell him – if you die the premium will be WAIVED, we will never know. He would have been shattered (cancer patients get to know about imminent death), and as a desperate measure accepted whatever the sales person told him.

  3. Mis-selling is inevitable in insurance as long as people do not understand the difference between pure risk and investment income.

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