There is a good chance that somebody will approach you or would have already approached you to buy a financial product. Assuming it is an investment product or an insurance product, this is how you go about doing it:

1. If it is an insurance product, ask him is it TERM insurance?

2. How do you compare in costs to Religare, Kotak, and Icici?

3. Can I pay the premium on a Quarterly basis?

Seriously, you need not ask any other question. I do not like the ‘how many claims have you settled’ question, because the answer can be manipulated – and you will not know.

Now let us come to investments: THESE QUESTIONS you must print out and write down the answers. Then you should be able to explain the investment to your spouse (and children if they are over 14 years of age and understand compounding):

1. Will this give me a return greater than PPF, or the 8.35% p.a. which is available on the REC bonds?

2. Will the returns year on year fluctuate or is it a fixed return?

3. If the issuing company is a life insurance company, how much is the risk premium that I am paying? And why am I not listening to and buying this product instead of term insurance?

4. You are saying I have to pay for 5 years – what happens if I pay only for 1 year? 3 years? 4 years?

5. How much do you make on this product? Tell me how much the bank makes – if you do not know, sell elsewhere.

6. If I need the money can I get it when i want it?

7. Why is there a lock in? because of income tax or because of the product design?

8. How much can it go down in value? 40%? 50%? 100%?

9. If I put a gun on your head and said I want the money NOW how much will i get? How much will the haircut be?

10. Have you bought this product? why not?

11. I am impressed with your answers, now be a good girl and give it to me in writing.

I will now discuss with my brother in law who trades Derivatives for Goldman Sachs on their London desk, and get back to you.


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  1. Subra , This will be a real test of the training provided by you to the insurance salespeople.

    Sadly , the financial products and consumers are not in a win win situation.

  2. Would you believe it if I told you that this is the strategy which I adopt when I am offered a financial product by a life insurance company?

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