No this is not a lesson 101 on insurance sales…it is how insurance is normally sold!

First of all let us understand the government will NEVER want to reduce sales of life insurance companies: this is because LIC has 79% market share and it owns LIC. Also the life insurance companies are mandated to invest a lot of money in government securities. As more money flows into the government kitty, interest rates can be kept low. So while mutual funds have a zero entry load, life insurance products will NEVER be at zero load.

Having said that let us see what all things do life insurance sales guys and gals tell you:

1. Sir this is a good investment product: Complete bull. It is almost impossible to build an investment product, with administrative charges, risk charges, asset management charges, as well as being efficient.

2. You do not have to undergo medical tests: Well true, the risk coverage is very low and you are giving a declaration that you are fine. In case something happens to you (death), there will be an investigation. Your nominee will be told ‘he had high blood pressure and he had not declared it…so we cannot pay’. It is impossible to create a reasonable life insurance product and price it the same for all the buyers. It is obviously unfair on the fit people!

3. You will get very good returns Рsay in the region of 15-18% : It is impossible to get such returns in ANY mass managed product over 30 years! No country or even a company  in the world can grow at such rates. So the salesperson is talking through his hat. Absolutely wrong.

4. This is the last week for making this investment: Amazing lie which works very well with most people. Men, women, educated, uneducated..all fall for this fantastic sales ploy. I really have no comments why people fall for it. The oldest salesman trick.

5. Sir, this is LIC’s UNIT LINKED PLAN, so the returns are guaranteed by the Government of India: If you believe this, you will believe anything! There are no guaranteed ULIPs at all in the world. When you take a traditional life insurance plan (endowment) there is a guaranteed amount. This is at an extremely low rate of return (remember the greedy government getting low cost funds?) however in a ULIP – by anybody be it SBI, Hdfc, Lic, Icici – THE RISK IS COMPLETELY on you. Beware.

 

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  1. They will also tell you the following:
    1. You just have to pay for 5 years and you get free cover for life
    2. Even worse, insurance comes free
    3. You get tax benefit (without understanding whether I have already taken care of the 80C benefits)

  2. i have experienced somthing better than above questions (new marketing strategy to sell insurance ) to people.

    ====================================================================

    Sir,

    nowdays insurance agent are calling and telling if you have any loan requirement, we have insurance plan for you.

    Suppose i have requirement of Rs. 2,00,000 then i need to pay 10% amount (i.e. Rs 20,000) as yearly premier. and from 2nd year onwaords i can convert premium mode to quarterly or half yearly.

    Here is the procedure (which i had got verbelly from Mr. Vivek Agarwal) and the period of getting loan amount in bank account (day-by-day updates)

    If i have filled form on 1st July, 2011,
    03 july – cheque gets clear
    05 July – receipt will received by post/courier
    21 July – bond paper will come by courier
    05 August – loan papers will come to correspondence address
    07 Aug – amount will credit to bank account or cheque will come to correspondence address.
    ======================
    more details:
    cheque in favour of: Birla sun life
    Insurnace Plan name Birla sunlife – vision

    ===================================
    Insurance: 12 lakh
    Mediclaim: 2 lakhs
    ===================================

    ===================================
    Contact person: Vivek Agarwal
    cell number: 09891604097
    location: Noida
    =======================

    I have spoken with this person and told him to send me all above details in email of send me in writing, he just refused to give me any details in writing. and many people are getting in this trap. i would like to request you to write on this.

    thanks regards
    Digamber
    ===============================================================

  3. Yes, Ronak’s points should be included in the list. It kills me to talk to these idiots. Most of the times, they have no idea of what they are saying.

  4. I agree with all your points mentioned above. Never mix insurance with investment. Term plan is the best insurance plan. Unfortunately I am saddled with money back policies which my elders told me take.The returns are pathetic. In words of a Cfp if one takes an insurance policy to reduce his tax outflow,it is the most expensive option one can take. Please remember the final call should be yours only.If you have any doubt’s consult an Cfp.

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