When times are tough, well times are tough. Surely you had not heard of this earlier!!

Well from 1st of September the unit linked plan will undergo a major change in the charging structure. This is perhaps good for the customer, but the sales force is now willing to do anything to show some sales. So they approach existing policy holders and say “Sir, please surrender your old plan….and take a new one”.

Now fairly obviously this is a criminally expensive thing to do. That I think all magazines, newspapers, blogs,….tell you.

I wish to tell you why it is DANGEROUS too.

Most of these juveniles who approach you will first get you the surrender form (a simple letter will do) and a new proposal form. When you fill up both the forms, the existing policy will be surrendered and the new application will still be just a ‘proposal’. Which means if you died between the surrender and the conversion your NOMINEE will get NOTHING.

The other thing that can happen is your health may have deteriorated so your new application could GET RATED UP or worse DECLINED.

Take a case where you have a new policy and you die within 2 months of taking the new plan from a NEW company. That company will put a lot of effort to ensure that they do not have to pay the claim. So your NOMINEE may run from pillar to post to get the claim. You can be sure that the sales guy will be missing.

So, if an agent (Christian name) masquerading as a Relationship manager, brother -in-law, boss….is asking you to switch policies, say ….#@$%^& but no.

However there is an exception to this. If you have a term insurance APPLY FOR A NEW POLICY (pure term not even return of premium) wait for it to be converted, THEN give up the OLD plan. …and pay the premium regularly..

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  1. Which term insurer is good according to your analysis. I am just curious to know since most insurance companies are in loss now!

  2. Subra Sir,

    What’s your views about new ICICI prudential iPruProtect term policy which can be bought online only. Its showing premium of Rs. 10900/- for a 30 years old male for duration of 30 years. I already have 30 Lakh term from Tata-Aig and wants to bump up to 1 crore by buying one more policy.


  3. Hi Subra,

    Have been following your writings for some time and have found it quite interesting and enlightening.
    Just needed a clarification in your write up today. “So, if an agent (Christian name)”, Are you implying that we should be careful/ worried ONLY if a Christian name agent approaches us with this proposal? Any specific reason for picking on Christians? Have they started ruining people financially and taking everyone for a ride?

  4. Viji!

    Ha ha ..sorry the word ‘Christian Name’ is used as in English name. This is the ‘original’ name – nothing to do with Chrtistianity as a religion at all. So an agent is an agent that is what it means – do not fall for the designation on his card. Check Oxford dictionary for the word ‘Christian name’ and you will know what I mean. An agent is an agent whether he is a hindu, chrtistian, muslim, sikh, buddhist,…

  5. what apart from the price and prompt customer service should one look for in a pure term life?. the history of private players is too limited to make any confident judgement about them. is it naive to assume that a life insurance policy issued by a company which consequently goes bankrupt will all be honored because IRDA ensures enough capital adequacy for this activity?

  6. Subra,

    Did not get the last setence,

    “However there is an exception to this. If you have a term insurance APPLY FOR A NEW POLICY (pure term not even return of premium) wait for it to be converted, THEN give up the OLD plan. …and pay the premium regularly.”

    Can you please explain in detail. I have an Amulya Jeevan term plan for 25L since last 3 years.


  7. Subruji,

    xxx company (very famous) premium is 30k for 1 crore term, 30 years policy. whereas I**** (pvt. company) is giving same at 9k premium!! What could be the catch???

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