When Indians need to invest they look at Gold, Real estate, Post office, bank fixed deposits, life insurance, mutual funds…in that order.
Is it too wrong? According to P Chidambaram it is.
You are supposed to keep your money in ‘Financial Assets’ so that PC and his brethren can benefit. One of the brilliantly sold products is the ‘Endowment Policy’ – The classic endowment policy and its BETTER cousin the Unit Linked Endowment Policy.
Suppose you had bought a policy in 2003 for a period of 20 years. Say sum assured Rs. 30 lakhs, and the premium was Rs. 120,000.
You paid the premium (you were doing well all these years) – which means you have paid Rs. 120,000* 10 = Rs. 12,00,000. This also has some ‘bonuses’ attached to it…so the policy has a value of say Rs. 16,00,000.
So you think if you surrender it, you will get Rs. 16L, right?
Wrong. They will tell you that it cost them a) sales costs b) medical expenses c) other expenses…so they will deduct ‘something’ and pay you a lesser amount.
So ‘Sir we will deduct the first premium COMPLETELY (Rs. 1.2L) + a %age for each year, the bonuses are ‘attached’ so that is not available……blah blah and you will be given a cheque of Rs. 9,75,000.
Is it fair? Obviously not, completely not.
How come they do this? Simply because the old conventional policy does NOT give you a break up where the money was getting invested.
So what can be done?
Simple SELL the policies to a neutral buyer. Suppose my client wants to surrender this policy, he is getting Rs. 9.75L. Now a new person can come in and offer say Rs. 10.75L – and buy the policy. I as the policy holder would happy to get a higher amount than what the insurance company is paying..the only loser is the life insurance company.
Do you think this will happen in India?
Give me a break, all the money will run out of LIC.
Should you blame anybody for buying gold? It is a clear message that the people of the country do not trust the balance sheets – so no equity, inflation is too high – so no debt, no mutual funds – very complicated a product, no life insurance – no returns, …
Soon he will stop buying Real Estate (impact cost of 10% is too damn high), no gold (made illegal anyway)….
lol..have money? spend it…
Post Footer automatically generated by Add Post Footer Plugin for wordpress.