In the Long Run we are all dead or a new CEO will kill us. – Just modifying Lord Keynes’s words.

This is likely to be a little long and boring post, so please bear with me.

How many of us have been saddled with a bad / terrible life insurance product masquerading as an investment product? I guess the answer is about 10 million Indians. This is not a small figure by any stretch of imagination and covers a sizable portion of the upper middle class.

Let us go back to the year 2001 when the life insurance products were launched with a lot of fanfare. I am referring to one particular company, but if you cut and paste this for the other companies it would look the same.

The sales game had started and as is wont the two products that were REALLY pushed was the Endowment product. Term insurance was just heard of, and it was not very popular. So endowment it was.

The sales pitch was simple: We are a simple company with very low costs, so we will be the MOST efficient in managing your money, we are good in under-writing – so we will pay lesser claims than the competitors. Both these put together we will be able to EARN more money. We will attach a small bonus (a.k.a reversionary bonus) and since we manage our funds very well we will give you a BIG TERMINAL bonus. In fact, Subra, when our partner pays out claims, as much as 60% of the amount paid out in his country is TERMINAL BONUS.

oh! wow said most of the sales guys.

They were told that if a customer pays say Rs. 100,000 a year, at the end of 10 years they would have paid Rs. 10,00,000, have a rev. bonus of Rs. 400,000 and have about Rs. 600,000 as terminal bonus.

They were told ‘do not look at LIC we manage funds much better, look at our performance, look at our principal’s performance – such results are a given.

In 2014 as the policies start maturing the client is getting SUB BANK FD kinda return.

Current CEO has only one question :” If the client goes to court, will we win?”, then do it.

If companies are run by CEOs who have NO responsiblity to nurture the brand image, and have full authority to destroy the values for which it stood, God bless them.

What is true for one company is true for all of them. The ONLY thing that worries them is a written complaint to the powers that be – like somebody who can call up the regulator – worries them.

Or a call to a couple of members on the Board – at least I am assured that my email gets replied.

What happens to a policy holder from Azamgarh, Badlapur, Chattisgarh, ….or Zanzibar…not sure whether the Chairman cares. He is surely looking for sinecure no. 2.

Lucky he!

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  1. Even today banks try to sell ULIPs. The relationship manager calls and tells that he specially assigned to take care of relationship. He goes on ..there is X amount lying in SB account which earns only 4% and they will get you 12% return. They will spend good 15 minutes explaining product and once you say you are not interested in ULIP’s, they will close discussion in less than a minute. They will not even suggest to move amount lying in FD for short period maturity ( like 8+ % for 46 days). Forget investments suggestions to MF etc..

    Its very sad that even bank safe deposit lockers are being tied to purchase of ULIP .. they are not happy with even FD for a higher amount ..discussion will start saying they have some lockers and as soon as you say sorry no ULIPS please, it ends with something like “I will contact you sir when locker is available..”

    MANY THANKS to SUBRA SIR, who teach FISHING and not sell DEAD RATS.

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