by Vinaya HS on April 1, 2013
in Finance
Oops!
It’s been close to 3-months now since I last wrote — it’s the usual “life just got busy” excuse and I pick-up all the blame for letting things slip. We’ve also just entered a brand-new financial year and I wish each of you a prosperous year ahead. Lot’s of stuff did happen in between including some new investments and having to let go of the Swift in lieu for what I personally think is its perfect replacement. More on that in the coming weeks — I promise!
But first, guess what nudged me over the edge and back here?
A “Unit Account Statement” for LIC’s Market Plus scheme that turned-up in the post box. Now this happens to be one of D’s legacy mis-investments and upon opening the statement we discovered to our horror that a secret [off-market?] Rs 20 was being happily deducted each month under the guise of “Admin Charges.” I guess this has been happening each month since the investment was first made quite a number of years back. Don’t even ask me about it’s Market Value — it’s deeper than the Titanic’s depth of sink!
There’s a whole bunch of other columns for various other off-market charges — which thankfully were zero in our statement.
Here’s a sample –
- Mortality Exp/FY Renw(*) [WTH?]
- Accident Charges [WTH? I hope I'm not charged for meeting with an accident!]
- Ser Tax Rsk Prm Chrgs [WTH?]
It’s time to cut the flab including another mis-investment — Money Plus!
by Vinaya HS on January 4, 2013
in Finance
A colleague asked for my opinion about a certain Capital Multiplier Plan that he’d been investing in since a few years. I looked up the plan and the details turned out to be as scary as a horror show. A few samples –
[From the brochure]
This plan is best suited for you…
– If you are looking for an investment plan for your child and want a flexible money-back plan that gives you the power to decide the amount and time of withdrawals.
– If you are planning for your retirement and require a plan that allows you to withdraw any amount as per your need and at the same time invest your money prudently to get you bonuses on the balance in your account.
– If you think that from time to time you will have extra cash, which you would like to invest in an instrument which is safe and which will get you attractive returns.
Quite hilarious — an investment that can solve all financial problems in your life.
And how does the capital get multiplied?
There would be sales and administration expense charges of 3.5% and 1% respectively.
There you go. The capital multiplication isn’t meant for you at all.
Clever!
Perhaps “Capital Divider Plan” would be a more appropriate name? After all, your hard-earned capital is being divided amongst the insurance company and the insurance agent.
High charges. Low insurance cover. Overly complicated features. All toxic ingredients.
by Vinaya HS on December 31, 2012
in Finance
A reader of this blog shared an actual quotation that they received for the AEGON Religare iTerm Plan — here’s my review of this online term life insurance plan. The reader also gave me permission to publish this here so that it’d help serve as a reference for other readers.
Rs 13,600 per annum for a cover of Rs 15,000,000 (1.5 crore) is pretty grab-worthy in my opinion.
by Vinaya HS on December 26, 2012
in Finance
This post was updated on December 25, 2012
By chance, I happened to read in a financial newspaper that the Bharti AXA Life eProtect Online Term Plan had some updated terms and conditions. Previously, I’d said that I like the simple and no-frills approach of this plan. I take that statement back now because in an attempt to extend the maximum age at maturity parameter, Bharti AXA has managed to kind of mess-up the plan and has made at more confusing. Take a look at the new terms –
I tried to interpret the meaning of the term “To Age XY” but couldn’t. What’s the difference between “Entry Age 50 + Policy Term 10-Years” vs. “Entry Age 50 + Policy Term ‘To Age 60′”? I tried to download the product brochure but the file seems to be corrupted. Not a good experience at all and does nothing to get to the top spot.
The original post below was published on July 18, 2012.
So finally, I am coming around to reviewing online term life insurance plans. I’ve lost track of how many requests I have received through Capital Advisor over the past few months asking for my thoughts and perspectives on purchasing term life insurance plans online. I’ve also been meaning to buy one for myself from quite some time now, but you know the whole ere-thing has me totally consumed reading up on strategies and ways and means.
I thought I’d keep my reviews a bit different by simply jotting down quick notes on whatever plans I happen to review. Each quick note will compare an online term plan against the one from the previous quick note and then pick my choice from the two. That way I hope to emerge with the one online term plan that looks like the best bet.
I’d be delighted if you could participate in this process by offering your own thoughts, perspectives, and experiences as well as suggesting other online term plans that you’d like reviewed in subsequent quick notes.
So here’s the first one inspired by an email ad that I received for the Bharti AXA Life eProtect online term plan.
Quick Notes on Bharti AXA Life eProtect–
- Maximum age at maturity is 60. But the maximum policy term is only 30 years. So, if you’re some bits below 30, you will be left uncovered (!) for a few years before you retire (taking the traditional retirement approach and when you’d typically not need life insurance anymore due to your retirement corpus kicking in).
- I like the Family Care Benefit clause that promises an initial payout of Rs 1 lac within 2-business days of claim submission. Immediate cash is always useful in such situations.
- I also like the simple and no-frills approach of this plan. For a 30-30-1 plan (30-year old buying a 30-year plan for Rs 1 crore cover), the indicated premium is Rs 7,300 excluding service tax.
- I’m also comfortable with the Bharti AXA brand but this is extremely subjective and also subject to bias. You might have experienced otherwise. But when in doubt, simply go by your gut feel and you will do fine. I’ll also stick my limb out and say that all those arguments about claim ratios and payouts shouldn’t bother you if you’re honest when filling up the forms. Plus with IRDA cleaning-up it’s own act and that of the industry, things would only get better.
That takes us off to a good start.
Again,
I’d be delighted if you could participate in this process by offering your own thoughts, perspectives, and experiences as well as suggesting other online term plans that you’d like reviewed in subsequent quick notes.
I’ll pick the next one based on your comments.
Note: To help you to keep up with new term plan reviews, to go back and refer to past reviews, and to share all of this content with your friends, I’ve created the following easy to remember link — http://bit.ly/termplans. So, go ahead, bookmark and share.
by Vinaya HS on November 2, 2012
in Finance
So, I came across this life insurance plan that provides the twin benefit of comprehensive protection and guaranteed additions [on the cumulative premium] of up to 10%. I was really intrigued. On the face of it, a 10% guaranteed addition each year on the cumulative premium is something that you just can’t scoff at and ignore — it’s as good as earning a 10% rate of return on your money. But when it’s a life insurance company extending such an offer, there has to be some magic in the math.
And indeed there is!
Take a look at the below illustrations for an idea of the kind of money the life insurance company would make off you. Even if the life insurance company’s rate of return on your money was exactly 10%, they’d still be walking away with a sizable stash while you’d be left with some chump change.
Analysis at 10% rate of return –
(Click on the image for a larger version.)
Analysis at 15% rate of return –
(Click on the image for a larger version.)
And with some good investment strategies, if the life insurance company’s rate of return on your money was 15%, they’d run all the way to the Bank with huge gobs of money while you’d be left wondering what happened in those 20 years.
But then again, you don’t get to see this part of the calculation in the Sales Brochure do you?
by Vinaya HS on October 22, 2012
in Finance
That was quite a hiatus from the world of personal finance. A number of you wrote in asking if I was away on work-related travel again — since whenever the blog goes silent it’s usually because I’m traveling. This time though, I was helping D venture into the fascinating world of entrepreneurship. The past couple of weeks have been a roller-coaster ride as we’ve had to significantly evaluate quite a number of things in our life. (Should D leave her job or not? Should we discuss this step with family members or not? Should we even get into all this at all? What if everything fails? How would people around us react? And quite a number of other such, generally pessimistic, thoughts.) I’ll probably compile all of this into a series of articles — I’ve seen a good number of people having similar thoughts and ultimately failing to take even a single step forward. But all of that for a bit later. It’s back to the world of personal finance for now.
So, here’s this headline that recently caught my attention –
A Life Insurance Plan where you pay for 12 years and get double of what you’ve paid every year for the next 12 years, guaranteed.
It’s got to be good right?
But take a look at these charts –
Chart that shows how the life insurance company can afford such claims purely off the interest earned from the premiums that you pay! (Click on the image to see a full-size version.)
Illustration that shows just how profitable you can be for the life insurance company. (Click on the image to see a full-size version.)
Illustration that shows how, in general, you’re generally very profitable for the life insurance company. (Click on the image to see a full-size version.)
After seeing all this, why would you even want to invest in such a plan? Oops! See there you go — we subconsciously used the word “invest” when we’re actually looking at a “life insurance” plan. Stay away whenever you even get a whiff of such a thing.
by Vinaya HS on September 7, 2012
in Finance
September’s Book Giveaway is fun to participate in and your comments could prove extremely helpful to one of our fellow readers.
Continuing the story from where I left it last, a Capital Advisor reader wrote in –
My husband, aged 35, has a Jeevan Anand policy for a sum assured of Rs 15 lacs for which the annual premium is Rs 82,524. The policy inception date is 23-November-2009 and the maturity date is 23-November-2030.
I, being a housewife and aged 30, also have a Jeevan Anand policy for a sum assured of Rs 10 lacs for which the annual premium is Rs 51,510. The policy inception date is 26-November-2009 and the maturity date is 26-November-2030.
I honestly don’t understand why the agent sold us a policy in my name. The premium for this year is soon due in November, 2012, but having read your past articles I’m not sure if we should continue these policies at all. I’d like to know which Jeevan Anand policy should we surrender and what our overall loss would be upon surrendering.
Rs 134,034 per year as premium for two Jeevan Anand policies! I am speechless! But here’s your chance to speak up and advise this reader about what they ought to do with those useless policies.
The best answer wins a full year’s subscription (12-issues; postal delivery) to Value Research’s Wealth Insight magazine. I read this magazine each month and I find it quite insightful (!).
To participate, simply leave a comment explaining what you believe the reader should do about their Jeevan Anand policies. Remember, the more insightful your answer is, the higher are your chances at winning. And don’t forget to leave your email address along with your comment.
by Vinaya HS on August 31, 2012
in Finance
I simply love coffee. You can hook me up permanently to a Coffee-IV and that would be a debt which I can never hope to repay.
Jokes apart, there’s this coffee bean grinding place near D’s place that dishes out some exceptionally aromatic coffee powder. I’m hooked to that coffee powder but unfortunately the owner of that place also happens to sell LIC policies on the side. You can almost predict what would happen in such a volatile situation!
Yeah!
After a few visits and chit-chat that confirmed my status as a “prospect”, I was pitched a “Jeevan Anand” life insurance policy — the once-in-your-lifetime saving-plus-investment-plus-insurance opportunity.
Seriously.
I’m beginning to think that “Jeevan Anand” is almost as good as God (not Gold). It’s invisible, omnipresent, and will have you begging for mercy each morning.
What do you think?
I’ll tell you another day about this email I just received where both the husband and wife have individual Jeevan Anand policies (for a total annual premium of about Rs 1.35 lacs) and they don’t know why they took the policies (“the agent sold it to us” is what I read).
So, coming back to my story, here’s how I escaped with just my coffee powder –
“I already have a Jeevan Anand policy for Rs 5 lacs for which I am paying a premium of Rs 25,000-odd each year. I’m already finding it difficult to pay that annual premium given all of my other EMIs (car loan, personal loan, etc.).
So, unfortunately, I will not be able to buy another policy at this time even though I know that my insurance cover is abysmally low. But once my EMIs are over in a few years’ time, I will definitely buy another Jeevan Anand policy from you.”
That did the trick.
And since I’m in a jokey-mood, here’s another one.
A business model for Starbucks in India — A Jeevan Anand “To-Go” with Your Espresso.
Brilliant?
by Vinaya HS on August 9, 2012
in Finance
I walked into my sister’s house the other day only to find my brother-in-law with one hand on his head, some insurance documents scattered all around him on the floor, muttering away to glory in frustration.
I peeked at the insurance policy lying on the floor. It was an HDFC Children’s Plan. I think my brother-in-law has invested close to Rs 2 lacs (200,000) of his hard-earned money in this plan and it’s current worth is somewhere in the region of Rs 1.2 lacs (120,000).
A couple of days later, a senior developer in my team walked-up to my desk and asked me if the Public Provident Fund plus a term life insurance plan was a better savings tool for his child’s future than the — you guessed it — HDFC Children’s Plan.
I almost choked. Whoa!
Seems an Advisor (?) at the local HDFC Bank dished out advise that the HDFC Children’s Plan was the better option of the two. It’s honestly a better option — albeit for the Advisor and HDFC Bank and most certainly NOT for you. Thankfully, my colleague said he’d need to rethink and came straight to me for advise. You can guess what my advise to him was — to run away as fast as he could in a direction that’d take him far far far away from HDFC Bank and the Advisor. He’s now burning the midnight oil reading up on articles from the Capital Advisor archives.
I’m really glad that Capital Advisor is meeting its stated objectives.
by Vinaya HS on August 2, 2012
in Finance
As I’d promised in one the comments on a previous post in this series, I’m picking up the Aviva i-Life online term plan for review. In the most recent review, I was super impressed with the flexibility offered by the AEGON Religare iTerm plan. So let’s see if the Aviva i-Life plan has got what it takes to get to pole position. (One of my regular readers of this blog has purchased this plan and he was impressed by the responsiveness of the company as well as the smooth buying process.)
So here’s what I read of this online term plan –
- The direct information on the website for the product and the downloadable product brochure available on the same website seem to differ in illustrating the specifications for the product. The brochure talks about an optional Accidental Death Benefit rider being available but the website seems to have no mention anywhere about this option. So which one’s correct? My guess would be to trust the website and that’s what I will base this review upon. But surely not a good omen to begin this review with! In a highly competitive market, an insurer cannot afford even the slightest slip-up. Compare this what I said about the AEGON Religare iTerm Plan –
That’s what I am generally liking about AEGON Religare — the portal is very well designed and everything seems to be stated up-front and in a very visible way.
Aviva i-Life product specifications as seen directly on the website (note the absence of any rider options) –
Aviva i-Life product specifications per the downloadable brochure (note the rider options) –
- The maximum maturity age is 70-years which is a good thing since it extends well into traditional retirement but because the maximum policy term is 35-years you might end up without cover for a few years before traditional retirement were you to buy this policy in your very early twenties. But does anyone even buy life insurance policies at that early age? I don’t count this as a significant limitation. But again, the AEGON Religare iTerm plan is one-up because it offers a maximum policy term of 40-years.
- Otherwise this plan is pretty simple and straightforward.
- For our usual 30-30-1 benchmark plan (30-year old buying a 30-year plan for Rs 1 crore cover), the indicated premium is Rs 8,279 but this includes service tax. Excluding service tax, the premium works out to around Rs 7,300, the same as our incumbent.
Premium calculations for our 30-30-1 benchmark –
-
I think I also like this approach of telling you upfront the overall cost of buying insurance — other plans that I’ve reviewed so far give an impression of lower cost with the service tax clause put underneath usually in fine print. There’s also an additional rebate for female lives of 5% on the tabular premium rates for male lives.
So, for this particular plan, if we consider a female life, premium calculations for our 30-30-1 benchmark would be –
Given all this, does the Aviva i-Life plan have what it takes to beat the incumbent AEGON Religare iTerm plan?
Nope. I continue to keep the AEGON Religare iTerm plan in top position, because I believe with its flexibility it’d address the term insurance needs of a much wider audience.
But, what do you think?
A quick reminder: To help you to keep up with new term plan reviews, to go back and refer to past reviews, and to share all of this content with your friends, I’ve created the following easy to remember link — http://bit.ly/termplans. So, please go ahead, bookmark and share — I see that many of you already are. Thanks!
by Vinaya HS on July 25, 2012
in Finance
For the third review in this series, I decided to pick-up the AEGON Religare iTerm Plan (Online) — perhaps the most popular online term insurance plan out there. What stood out and immediately cried for attention on the portal was that the claims statistics are openly published for everyone to see. Impressive. The company also provides an explanation behind the one rejected claim. Supports my hypothesis that if you’re brutally honest when filling up the policy form, you really would have nothing to worry about.
A quick reminder: To help you to keep up with new term plan reviews, to go back and refer to past reviews, and to share all of this content with your friends, I’ve created the following easy to remember link — http://bit.ly/termplans. So, please go ahead, bookmark and share — I see that many of you already are. Thanks!
- The plan offers some optional riders — Accidental Death Benefit, Waiver of Premium on Critical Illness, and Women Critical Illness. I’m not too impressed by the features offered by the latter two, so the only useful rider seems to be the Accidental Death Benefit. But I couldn’t find a way to customize the coverage offered under this rider — the premium calculator seems to automatically pick a coverage based on the other factors such as policy term, your age, etc. and in some combinations the rider option seems to disappear.
- I also like the built-in Terminal Illness clause, which, on diagnosis of any Terminal Illness, 25% of the base sum assured will be paid (maximum of Rs 100 lacs) & the base sum assured will be reduced by an amount equal to the benefit paid under this clause. In my opinion, large cash infusions into your savings account in such situations would directly benefit you.
- Maximum maturity age is 75. So, unlike the current incumbent Bharti AXA Life eProtect plan, you’ll be very well covered even into traditional retirement. The policy term is continuous rather than being restricted to blocks of years (5-years, 10-years, 15-years, and so on).
- Medicals are not required up to a coverage of 25 lacs, seem to be optional up to a coverage of 50 lacs and are compulsory beyond that. The great thing is that all of these are stated upfront. That’s what I am generally liking about AEGON Religare — the portal is very well designed and everything seems to be stated up-front and in a very visible way.
- For our usual 30-30-1 benchmark plan (30-year old buying a 30-year plan for Rs 1 crore cover), the indicated premium is Rs 7,300 excluding service tax which happens to be exactly the same as that for the Bharti AXA Life eProtect plan.
- I’m also comfortable with the AEGON Religare brand.
So, do we have a new winner?
I believe we do. In my opinion, the AEGON Religare iTerm Plan offers you a lot more flexibility than the Bharti AXA Life eProtect Plan (the current title holder) at the same benchmark premium. That now puts the AEGON Religare iTerm Plan in pole position.
What do you think?
by Vinaya HS on July 23, 2012
in Finance
I simply love my readers. I was a bit apprehensive about how my “quick notes” reviewing online term life insurance plans would be received, but seeing your responses to the first one has me motivated. Now, for the second review in this series, I’ve picked up an online term plan from Kotak Life Insurance called Kotak e-Preferred Term.
Note: To help you to keep up with new term plan reviews, to go back and refer to past reviews, and to share all of this content with your friends, I’ve created the following easy to remember link — http://bit.ly/termplans. So, go ahead, bookmark and share.
Here’s what I think of this plan –
- I really like the Step-Up option that lets you increase your coverage at key stages in your life (marriage, purchase of a house, and birth or legal adoption of a child being the key ones) without undergoing new medical tests. These typically are the situations when you’d need to review and increase your life insurance needs. And normally these changes in your life do occur before you turn 45 which is when this plan would no longer give you the step-up option. So, I’m OK with that clause.
- What’s more, there’s even a Step-Down option if you need to lower your insurance needs!
- Maximum maturity age is 70. So, unlike the Bharti AXA Life eProtect plan, you’ll be pretty well covered even into traditional retirement. The policy term is continuous (anything from 5-years to 30-years) rather than being restricted to blocks of years (5-years, 10-years, 15-years, and so on up to 30-years).
- For our 30-30-1 benchmark plan (30-year old buying a 30-year plan for Rs 1 crore cover), the indicated premium is Rs 11,500 excluding service tax which is 1.57 times the Bharti AXA Life eProtect plan. That’s quite expensive!
- I’m also comfortable with the Kotak brand and if you’re keen on knowing the claims settlement ratio it’s about 89.30% for the time period 2010 — 2011.
- But what concerns me the most is the high premium (and the premium would only increase further with the step-up options and with service tax) for nothing spectacularly different. And remember, you’d be paying these high premiums for the next 20- to 3o-years.
So, for now, I still keep the Bharti AXA Life eProtect plan in pole position.
But what do you think? Do you agree with my reasoning?
Again, to help you to keep up with new term plan reviews, to go back and refer to past reviews, and to share all of this content with your friends, I’ve created the following easy to remember link — http://bit.ly/termplans. So, go ahead, bookmark and share.
by Vinaya HS on July 18, 2012
in Finance
So finally, I am coming around to reviewing online term life insurance plans. I’ve lost track of how many requests I have received through Capital Advisor over the past few months asking for my thoughts and perspectives on purchasing term life insurance plans online. I’ve also been meaning to buy one for myself from quite some time now, but you know the whole ere-thing has me totally consumed reading up on strategies and ways and means.
I thought I’d keep my reviews a bit different by simply jotting down quick notes on whatever plans I happen to review. Each quick note will compare an online term plan against the one from the previous quick note and then pick my choice from the two. That way I hope to emerge with the one online term plan that looks like the best bet.
I’d be delighted if you could participate in this process by offering your own thoughts, perspectives, and experiences as well as suggesting other online term plans that you’d like reviewed in subsequent quick notes.
So here’s the first one inspired by an email ad that I received for the Bharti AXA Life eProtect online term plan.
Quick Notes on Bharti AXA Life eProtect–
- Maximum age at maturity is 60. But the maximum policy term is only 30 years. So, if you’re some bits below 30, you will be left uncovered (!) for a few years before you retire (taking the traditional retirement approach and when you’d typically not need life insurance anymore due to your retirement corpus kicking in).
- I like the Family Care Benefit clause that promises an initial payout of Rs 1 lac within 2-business days of claim submission. Immediate cash is always useful in such situations.
- I also like the simple and no-frills approach of this plan. For a 30-30-1 plan (30-year old buying a 30-year plan for Rs 1 crore cover), the indicated premium is Rs 7,300 excluding service tax.
- I’m also comfortable with the Bharti AXA brand but this is extremely subjective and also subject to bias. You might have experienced otherwise. But when in doubt, simply go by your gut feel and you will do fine. I’ll also stick my limb out and say that all those arguments about claim ratios and payouts shouldn’t bother you if you’re honest when filling up the forms. Plus with IRDA cleaning-up it’s own act and that of the industry, things would only get better.
That takes us off to a good start.
Again,
I’d be delighted if you could participate in this process by offering your own thoughts, perspectives, and experiences as well as suggesting other online term plans that you’d like reviewed in subsequent quick notes.
I’ll pick the next one based on your comments.
Note: To help you to keep up with new term plan reviews, to go back and refer to past reviews, and to share all of this content with your friends, I’ve created the following easy to remember link — http://bit.ly/termplans. So, go ahead, bookmark and share.
by Vinaya HS on May 21, 2012
in Finance
A few days back, I happened to see an ad for this Monthly Income Plan from MetLife, a life insurance company. In this plan, you’re supposed to pay the premiums for about 10-years and then post these 10-years of paying premiums you’re guaranteed a fixed monthly income for the next 15-years.
As it always happens, I immediately started to think if a Do-It-Yourself (DIY) Monthly Income Plan (MIP) would be much much better off for you (after all why would you ever want the monthly income to stop after X number of years?) than a monthly income plan from a life insurer. In the MetLife plan, there are some complexities involved around your death and the related death benefits (since this is an insurance-cum-investment plan) but we’ll ignore all of these since I assume that you’d want to enjoy the monthly income in your own hand and not eye it virtually (!) from up above.
In the product brochure of the MetLife Monthly Income Plan (click here to download the product brochure), the following example illustration is shown –
You can see from the above illustration that you pay Rs 35,541 each year for 10-years and then you get back Rs 2,500 per month for 15-years. After 15-years, the monthly income stops!
But what if you think a bit different from everybody else, don’t mix insurance and investment, and go for a do-it-yourself monthly income plan? Here’s what the above illustration would turn into –
You’d get the same Rs 2,500 per month in perpetuity! You could open a new Fixed Deposit each year for 10-years and implement this plan. It’s as simple as that. Or, you could even open a Recurring Deposit with a monthly payment of Rs 3,000 per month. There are many options. But what’s more important is that you stay in complete control of your money (it’s in front of your own eyes).
For the purpose of comparison with the insurance plan, if your DIY MIP were to earn an 8% rate of interest, here’s what your monthly income would look like –
About Rs 3,700 per month in perpetuity! (The insurance plan still continues to pay out only Rs 2,500 per month.)
And at a 10% rate of interest, here’s what your DIY MIP look like –
More than Rs 5,000 per month in perpetuity! (The insurance plan still continues to pay out only Rs 2,500 per month.)
Finally, the corpus left over (the maturity benefit figure in the insurance illustration) from the insurance plan is seriously laughable when you compare it with the corpus left over from your DIY plan.
So, why would you ever want to give your hard-earned money to a life insurer?
What do you think?
by Vinaya HS on May 14, 2012
in Finance
I’ve simply lost track of the number of horror stories I’ve heard about totally junk life insurance being forcibly dumped on your head by relatives/friends-cum-insurance-agents. Everyone out there seems to have bought a life insurance policy from either a relative, or a friend, or a friend of a relative, or a relative of a friend, or a relative of a relative, or a friend of a friend, and similar relationship chains. It’s quite horrible.
I asked D, who also happens to be a victim of such a life insurance policy, to create an art of finance sketch on this concept. Here’s the result –
I think all of her bottled-up vengeance came out in this sketch! And I think it’s true to every word. A junk life insurance policy is like a tight noose around your neck just waiting to snap it into two. The scenario is just like a guillotine and you can guess who the executioner is! So, if you currently happen to be in such a mess, make a plan to jump off the frame before the axe wields. And if you currently being led towards one, now’s probably a great time to run away. Think about it.
by Vinaya HS on April 11, 2012
in Finance
by Vinaya HS on April 9, 2012
in Finance
About a month back, you read my analysis of the Bajaj Allianz Cash Rich Insurance Plan. From the analysis, you also found out that it’s most certainly NOT YOU who’s becoming rich as part of this plan (literally?).
So, imagine my utter horror when I came across this interview piece (in a personal finance magazine) with management –
I really can’t find that “corpus which can be used in your retirement years” anywhere! What you actually get from this plan is more of a financial corpse than a financial corpus. And what’s that end-to-end retirement solution? You end your working career and then get ended by this plan?
Seriously! Run away as fast as you can in the opposite direction. I can’t even fathom what that pension [tension?] product being talked about would look like. I’m already running away just hearing about it.
by Vinaya HS on March 30, 2012
in Finance
I seriously think ULIPs ought to be called Unit “Loss” Investment Plans.
I am yet to come across someone who has actually made money off a ULIP. A recent comment on one of the other posts reads — “My wife had taken a ULIP from Bajaj Allianz 5-years back and the first year charges were 90%! Would you believe it? We sold the policy after 4-years and just about managed to recover the investment amount.” There are countless other ULIP-horror stories that you can read when you have some leisure time.
But then, it’s very easy to be misled into buying a ULIP, especially when you see ads such as this:
You’d be forgiven for thinking that life insurance can solve all major problems in your life from [having children?, to] educating your children, to marrying them off, to saving/investing for your goals, to saving enough money to say no to work that you do just for the sake of doing it. Wow! So, is there something that life insurance can’t do?
But then remember these words: “One click is all it takes to lose your hard-earned money.” That should have been the ad’s tagline but then you really can’t publish that can you?
With ULIPs, Units Lose and United [We] Lose. Simply run away as fast as you can whenever someone (usually it’s a relative or a family friend isn’t it?) uses the words “unit” and “linked” in the same sentence. You’ll be financially much better off in life.
by Vinaya HS on March 12, 2012
in Finance
I seem to be writing quite a bit about insurance of late. But I’m also seeing quite a number of absolutely “WTF?” insurance products of late. For example, see this piece on Birla Sun Life’s Classic Child Plan –
To quote –
This joint-life, unit-linked, children’s plan covers both the child and the parent. Later, any time after the child attains majority, but before 27-years of age, he can become the primary life assured and the parent the secondary insured. The date on which this option is exercised is known as the Savings Date.
Prior to the Savings Date, on the death of the life assured (parent), the policy pays the Sum Assured (SA) to the nominee to take care of the child’s immediate financial needs. The future premium from the next policy year is borne by the insurer (called waiver of premium option). On the death of the child, the policy is terminated on the Savings Date and the Fund Value (FV) is paid. From the Savings Date onwards, upon the death of the child, the basic SA is paid. In both the cases, on the last death, of either the primary or the secondary life assured, the policy is terminated and the FV along with the commuted value of any future premiums (if any) is paid.
Seriously, what a complete mess! Why in heaven’s name would you want to be paid were your child to die? Have we as a race really become that cruel and insensitive? Let’s make money no matter how? I really wonder who designs such insurance plans. I so wish this plan dies a horrible death because there were exactly zero takers for it.
