Sales Pitches used for "Mis-selling"

I had heard about mis-selling of insurance products earlier, but I was really shocked when I really experienced it. There are certain standard "sales pitches", which a life insurance advisor makes while mis-selling insurance products. Lets see these standard pitches and be aware in future that you are not a victim of mis-selling of insurance products:

1. ULIPs have free insurance
   
   If any advisor says he's giving free insurance with mutual funds, then he is probably talking of Unit Linked Insurance Plans (ULIPs). But remember always that insurance can never be free. Some mortality charge is always levied (depending on your age), even if the advisor says its free.
   
   Tip: Don't fell into trap, ask for the brochure or call customer care (toll-free numbers) to know the hidden charges.
   
   
2. No details on the expenses involved
   
   Unit Linked Insurance Plans (ULIPs) always involve high upfront charges, referred to as Policy Administration Charges, which range from 14% to 75% of the Premium Amount. Most or all of this amount is passed on to the advisor as a commission.
   
   Tip: To protect yourself from this mis-selling, always ask the advisor to give you a brochure of the product he is selling and look for the table detailing the "Premium Allocation Charge".
   
   
3. Money-back offer
   
   Some of the advisors make huge commissions on the sale of insurance products. They have their own targets and they have conventions and foreign tours to be own. To achieve their targets, they may offer you some cashback. Say you are investing 10,000 bucks and the advisor is making 2,000 bucks of commission (20%). He/She may offer you 1,000 bucks of cashback. (Believe me, I have seen advisors which offer 100% cashback, means they pay your first year premium. But then???)
   
   So, should you invest just because you are getting 1,000 bucks back? Remember, the advisor will offer cashback only in the first year and if the insurance's premium paying term is 15-20 years, you need to pay 10,000 bucks * 20 = 2,00,000 bucks. You will be trapped in a wrong product and your investments and financial planning will fail.
   
   Tip: Understand the product, call the toll-free number, clear your doubts and then go for any insurance product. Don't invest 2,00,000 bucks just to save 1,000 bucks.
   
   
4. Double your money in 3 years
   
   This is the "sales pitch" which is most popular now-a-days. What do you think, is this possible? I have an downloadable excel sheet here, which staes that if you are investing 10,000 bucks per year, then in 3 years you will invest 30,000 bucks and to double that, means to make it 60,000 bucks, you need return on investment of 51.20%. I don't feel any asset class can give such assured guaranteed return constantly. If you believe then just check your investments. The stock market's behavior right now can give you heart attack.
   
   I came across many people, who have been victim of mis-selling by other advisors and they have bought 10s of insurance products for each and every member of their house and burnt their hands in this choppy market. They were shown illustrations with return of 25-26% by their advisors. This is purely illegal.
   
   Insurance Regulatory and Development Authority of India (IRDA) only allows illustration which assumes return of 6% and 10%, which is achievable too. The moment you see illustrations other than return of 6% or 10%, they are purely assumed and illegal and the advisor is mis-selling you the insurance product.
   
   Tip: Consult your friends and financially knowledgeable people and if you know the markets well, study them well and make sure you are investing in a right insurance product. Ask the upfront charges that will be deducted as "Policy Administration Charges".
   
   
5. Pay premium for only 3 years and forget it
   
   This is the sales pitch used for mass mis-selling. Unit Linked Insurance Plans (ULIPs) have a cover continuation option, which continues the life coverage of the individual, if in any case he/she is unable to pay the premium after the initial 3 years. But stopping to pay premiums after the first 3 years will not help you either.
   
   Initially, for the first 3 years, the charges are high and the amount invested is thus less. After 3 years, the charges gets reduce to nearly 1% of the premium amount and rest gets invested. But if you stop paying premiums after first 3 years, you will not build a capital in longer term (This is for what you bought a policy). If you continue to pay premiums for full premium payment term, then you can build a capital that is nearly 10-15 times of your investment in 20-25 years.
   
   I learned from my friends that advisors even guarantee a payment of 16,00,000 bucks after 20 years if you pay 10,000 bucks for initial 3 years. That's 30,000 turned into 16,00,000 (53 times approximately). My downloadable excel sheet here shows that you need 26% increment every year to achieve that target. Ask yourself, have equities given that much return with a guarantee?
   
   Tip: Whenever you choose an insurance product, foresee your expenses and plan in a way so that you can pay premiums for a full premium payment term. Don't rush in to get every new insurance product. When you hear such "sales pitches", ask for the charges straight forward and invest wisely. Don't be "Penny Wise and Pound Foolish".
   

So this was a pretty long list of some "Sales Pitches" used for mis-sellings and my tips to avoid those. Don't be trapped into those and if you save yourself from those mis-sellings, don't forget to leave a word of thank for me.

Planning your finances early

The first job for any individual marks a turning point in his life. The first paycheck acts as a gateway to new opportunities and of course, financial independence.

It could also mean preparing to shoulder responsibilities, if your family budget is in need of augmentation.

Even if you are not required to contribute, you still owe it to yourself to handle your finances with care.

Below are some of the steps, which you must take to ensure financial independence:

1. Insure yourself
The first thing that you need to look at once you get your salary is insurance — for yourself as well as your dependents. You should opt for a term life insurance cover now that you have a steady stream of income. If you buy a life insurance cover at a young age, you will have to pay lower premiums. The value of the cover can be 10 times your annual cost-to-company (CTC). Life insurance premium paid is eligible for tax deduction under Section 80 C, but protection, and not tax benefits, should be the criterion for taking such decisions.

However, there is no need to get a life insurance policy in the first year of work-life if you have no dependents. You would be better off acquiring a mediclaim with a cover of Rs 3 lakh-5 lakh. Even if your organization offers a health insurance cover, it would still be worthwhile to sign up for a standalone insurance policy. In addition, you can claim a deduction of up to Rs 15,000 under Section 80 D on health insurance premiums. You can get a health insurance cover for your parents. It entitles you to an additional tax deduction of up to Rs 15,000.

2. Avoid loans
Next, you need to guard against the temptation to borrow funds to purchase cars, bikes or consumer durables.

You should leave such decisions for the second year if not later. Consumption loans are not a good idea.

Also, if at all you have any surplus left after addressing your needs, it is advisable to avail of a home loan jointly with your parent/s.

3. Strive to save
If you are single and living by yourself with a monthly income of less than Rs 25,000, your target savings rate can be 40%; while it can be 50% for those earning Rs 25,000 to Rs 50,000.

For people with an monthly income of above Rs 50,000, the ideal savings rate would be 60%. A part of the savings could go towards building a corpus for meeting emergency needs.

Ideally, you should direct a minimum of 25% of your gross income towards investments. If you are jittery about dealing in equities, you could put small amounts of money into Unit Linked Insurance Plans (ULIPs), Public Provident Funds (PPFs) and Fixed Deposits (FDs).

While FDs can yield a return of around 10% at the moment, you should go for them only if you fall in the no-tax or low-tax brackets. PPF, which carries a return of 8% p.a, offers tax breaks under Section 80 C. Investing small sums on a regular basis , in Unit Linked Insurance Plans (ULIPs), could result in a sizable corpus over a period of time.

If you invest Rs 5,000 every month in a PPF, your kitty would swell to Rs 17.40 lakh after 15 years. The returns are certainly not comparable to those offered by equities, but it is better than letting your money lie idle in a savings account.

However, your risk-taking capacity would be high when you are in your 20s. Investing in equities — either directly or through systematic investment — could be your best bet. To start with, you need to invest 80% of your target savings in equity through the Unit Linked Insurance Plans (ULIPs).

If you stay invested with a long-term view, equities can offer you far better returns than other avenues.

Besides, investments of up to Rs 1 lakh in some equity MF schemes — equity-linked saving schemes (ELSS) — are eligible for deduction under Section 80 C, thus presenting you with the dual benefit of tax-saving as well as investment.

So, when are you starting your investment and looking forward to build a great corpus???

Bear markets? ULIPs are still a good bet

For holders of unit-linked insurance plans, the current market conditions do not matter much. The markets have fallen considerably from the highs of January this year, and the possibility of a long-term, sustained recovery is largely seen in the context of three factors - oil price, the Indian growth story and the US economy.

A common thread going through these factors is that their impact can be measured only over a period of time. Ulips are bundled investment products designed to boost long-term savings more than short-to-medium duration ones. The benefit is reflected in low costs if the savings are over a long period of time.

Should the weakening stockmarket worry investors who take the Ulip route to equities? The product is best for generating wealth over periods not less than 10 years. There is also enough evidence to show that equity outperforms other assets and can give annualised returns of 15-20 per cent over the long term.

Existing holders: If you are holding Ulips with full exposure to equity, stay invested that way till maturity is around five years away. Ulips allow investors to switch their corpus to non-equity options like debt or balanced funds. If the fund value has eroded over the last six months or so, stick to the equity option.

If you have been putting premiums in the debt fund option, now is the time to move into equity. You can do this in two ways - by moving the entire corpus in one go or by transferring smaller amounts at regular intervals.

New buyers: Invest in a Ulip for the right reasons. Weak or strong market conditions should never be the cue for starting savings in any asset class or financial product. The equity fund option is the best option, so go for a fund that takes 100 per cent exposure to stocks.

The other way to go about it is to put the premium in a debt or a balanced fund and then switch to equity when you feel that the market is strengthening. The problem with this is that you will have to time the market, which you should ideally avoid.

Switching options: Insurers provide a specified number of free switches among fund options in a year. These can be done both offline and online.

What to do? Shift gains from equity funds of more than 20 per cent in any year to debt or balanced funds. Markets move in cycles and there could be three or four opportunities of extraordinary returns in a 15-20-year holding period.

While restructuring fund options, ensure that optimum balance is maintained between returns and life coverage. If you lower the sum assured to maximise returns, your life cover may fall below your requirements. Finally, uncertain market conditions, as are being seen now, should never be the reason for a full exit from Ulips. Costs in most Ulips are front-loaded and, hence, it is important to make them run their full course.

Source: http://www.rediff.com/money/2008/aug/13perfin.htm

3 most necessary life insurance policies

I would like to explain in details the investment and insurance options, so that I can help you in making informed decisions and you can invest in a better way and generate capital in longer term and also protect yourself from the unexpected occurrences of illnesses.

We'll review 3 most popular and most necessary life insurance policies which any individual should have in his/her insurance portfolio for a financially independent life-style.

1. Health Insurance:

First and most important is health insurance.

Hospital rooms. Doctor's Bills. Stress. Worry. Tears. Frustration.

Life seems to be over the moment one is diagnosed with a critical illness. Critical illnesses, like cancer or heart attack are extremely unpredictable and can strike anytime, anywhere.

With Health First from TATA AIG LIFE, life doesn't have to come to a standstill. Because the financial cover it offers plays a large role in contributing to your peace of mind and subsequent recovery. If you are ever diagnosed with any of the 12 Critical Illnesses, or need surgery, this special benefit provides you with a lumpsum amount.

The 12 Critical Illnesses covered are: Cancer, Stroke, Heart Attack, Chronic Renal Failure, Aorta Surgery, Heart Valve Surgery, Major Organ Transplants, Coronary Bypass Surgery, Parkinson's Disease, Paralysis, Benign Brain Tumour, Total Blindness.

Features of Health First:

1. Daily Hospitalization Benefit: Rs.250 per day for Max 90 days
2. Post Hospitalization Benefit: Rs. 125 three times within 30 days of discharge.
3. Surgical Benefit: Rs. 12,500 per unit
4. Critical Illness: Rs. 1,25,000 per unit.
5. Death Benefit: Rs. 1,000 per unit.

The Annual Premium of Health First for one unit is shown below and the total benefit of one unit is Rs. 2,50,000

Age of life assured	Male	Female
18	786	765
19	792	775
20	801	791
21	841	835
22	886	882
23	928	929
24	970	982
25	1022	1044
26	1073	1113

So, even if you go for 4 units, then you need to pay approximately just Rs. 3600 yearly, i.e. Rs. 300 per month only and you will have the coverage of Rs. 10,00,000.

For more details, please visit http://www.tata-aig-life.com/Individual/Adult/adultHealthFirst.htm

2. Unit-Linked Insurance Plans (ULIPs):

Second is an insurance with investment perspective.

If u are still young you can generate tremendous wealth if you start early.

But before I show you the real wonder, lets see what are the benefits you can have if you act right now by investing in equities:

1. Equities, even being volatile in the short term, are the best instruments for long term growth of capital.
2. Regular investment will help compounding your wealth.
3. It will help to fight Inflation.
4. It will help to plan for your financial goals.

The 2 tables below shows the effect of the inflation:

i. Effect on our Bigger Spendings:

Spendings on	Year - 1985 (Price in Rs.)	Year - 2008 (Price in Rs.)	Inflation(% per year)
Balcony Ticket	15	240	13.43%
Hotel Bill	100	1,200	11.96%
Petrol	8/litre	56/litre	9.00%
MBA Course	40,000	8,00,000	14.59%

ii. Effect on our Daily Spendings:

Product	Year - 1985 (Price in Rs.)	Year - 2008 (Price in Rs.)
Toothpaste	5	50
Masala Dosa	5	25
1 Kg of Sugar	4	22
1 Kg of Salt	2	10
1 Kg of Onions	3	18
1Litre Milk	4	24

Compared to inflation above the increment in the salary was negligible, as shown below:

Post	Year - 1985 (Salary in Rs./month)	Year - 2008 (Salary in Rs./month)	Increment(% per annum)
Accountant	5,000	24,000	7.39%
Manager	8,000	40,000	7.59%

Investing in Equity is Risky, but not investing in Equity could be Riskier...

Growth is a NEED today, and not an option.

The best ULIP in the industry at present is TATA AIG LIFE's INVEST ASSURE FLEXI...

I have an excel file where you can input the Yearly Premium to pay and Rate Of Interest you assume to get, and you will get the result for the next 40 years...

You can download the excel file from this location:

Download File

Just edit the 2 cells, with black background and red text:

1. Premium, which is 25000 by default
2. ROI, which is 20% by default.

You will not believe, but the power of compounding is great. Compound interest is the 8th wonder of the world.

Investing just Rs.25000/year, for 40 years, will give you Rs. 13,43,36,909!!!

Believe me 13 crores against an investment of just 10 lakhs.

Delays could severely affect your wealth creation goals.

Follow the simple rule below:

Start Early + Invest Regularly = Create Wealth

Start Early:

The example below shows the benefit of starting early:

	You	Your Friend
Current Age (years):	25	25
Start (age):	Today	At age 30
Invest for (years):	5	20
Amount invested per year (Rs.):	18,000	18,000
Total Invested Amount (Rs.):	90,000	3,60,000
Redemption at age (years):	60	60
Amount accumulated at 60 years, assuming 20% return (Rs.):	2,19,83,800	1,68,73,411

As you can see your friend, even after investing for 20 long years could not beat your investment of 5 years, simply because he started late. Only 5 years late. I hope you don't want to be late.

Invest Regularly:

Even small amounts invested regularly can grow substantially.

Buying MORE units @ low prices & buying FEWER units @ high prices helps AVERAGE out your purchase price.

Rs.1,500/- invested every month for 20 years = 18,000 * 20 = Rs. 3,60,000

Fund Value at 20% return per annum = Rs. 30,76,680

A whooping Rs.30 lacs, 10 times the invested amount!!! So, you might be eager to invest today, right now. Won't you?

For more details, please visit http://www.tata-aig-life.com/Individual/Adult/adultInvestAssure Flexi.htm

3. Term Life Insurance:

Third is term life insurance, which you must take if you are not going for a ULIP.

If you have lesser savings at present you can start with a term life insurance, and then when your savings increase you can go for ULIPs. Because, when something wrong happens to you (I hope it doesn't, but this is the reality of this world), all your dependents will have hard times living, as you are the bread-earner. If they receive a lumpsum amount, they could plan and live on their-self. Even if you have too much money and you have bought property (land) all across, if you don't have insurance, the value of that property will decrease drastically, once you leave this world. Because all the buyers will know that your family needs money and they need to sell the property or anything to leave their life.

By the way Term Life Insurance is the best form of life insurance and its the real insurance. Others such as ULIPs, or Money-Back Plans or Endowment plans are modified form of insurance with an investment perspective.

For term life insurance you need to go for RAKSHA from TATA AIG LIFE, as it has the lowest charges. You can compare with any other company.

This is premium table of RAKSHA for sum assured Rs. 10,00,000:

Age of life assured	Policy term 10 year	Policy term 15 year	Policy term 20 year	Policy term 25 year
18	1720	1780	1830	1900
19	1750	1780	1870	1940
20	1770	1830	1900	1980
21	1790	1850	1930	2020
22	1810	1870	1960	2060
23	1820	1900	2000	2110
24	1840	1920	2040	2150
25	1860	1960	2080	2210
26	1880	1990	2130	2270

For more details, please visit: http://www.tata-aig-life.com/Individual/Adult/adultRaksha.htm

Plus there are many more products, which can give you guaranteed returns, which can assure your retirement plans, which can plan for your children's education or marriage, which can plan for a holiday abroad, which can protect you for the life-time, which can give you monthly returns after your retirement. But those can be discussed on specific needs. We need time to discuss those things. If you have any other requirements you can always forward your query.

Why choose TATA AIG LIFE INSURANCE COMPANY:

Tata AIG Life is the one of the most trusted Life Insurance Companies in India. Since its inception in 2001, it has grown by leaps and bounds. Today, Tata AIG Life is present in 24 states and 156 cities across the country. It covers over 22 life insurance products and has over 250 product combinations. It is hardly surprising that Tata AIG Life has been voted No 1 in customer satisfaction* among life insurance companies in India.

* Source: Consumer Voice Survey 2006

Why choose ME as your LIFE INSURANCE ADVISOR:

You must have come across the frauds and false sales made by the advisors of life insurance companies, in the newspapers or might have experienced yourself too. They sell wrong products with wrong targets, and wrong promises. Do you know why? Because its their job. They get commission for that, and they are solely dependent no. of policies sold. They don't have any other source of income. So to fulfill the needs of themselves and their family, they need to sell life insurance policies anyhow. They try all the combinations and give false commitments and fly away with their commissions. This is not the case with me. I am a Software Engineer, I have my monthly salaries credited in my bank account regularly. I work as a Life Insurance Advisor, so that I never get cheated by the frauds all around us. I protect my friends, family members and relatives too. I help them to take informed decisions, and never give false targets or false promises. If I sell a policy or don't, me and my family don't have to worry about the money. So, I make trusty and true sales and build a long-term good relationship. So its on you to choose an advisor who thinks of your profits or who thinks of his/her own profits. Hope you take a smart decision.

For brochures of the life insurance products discussed above or other products you have heard off, or any queries regarding investments contact me as soon as possible.

Even if you don't buy insurances from me, feel free to discuss your requirements.

Any queries will be highly appreciated. I will feel you have learnt something from this.

For any other detail, you can have a look at the official website of the company: http://www.tata-aig-life.com/

I also want you to look once at the newly launched website of the company: http://www.assuremydreams.com/

Real GOLD among all is INVEST ASSURE GOLD

Hi,

Today I wanna discuss with you regarding INVEST ASSURE GOLD, a whole life unit linked insurance plan from TATA AIG LIFE.

In this policy you have the coverage for lifetime or upto 100 years of your age. The key features are listed below

Key features:

* Flexibility to choose your premium payment term: 5 years or for the entire duration of the policy.
* Benefit period: For the entire life till 100 years of age.
* Facility to increase the premium through Top up Premium.
* Provides security to your family in case of your unfortunate death.
* Facility to increase the Sum Assured through Top up Premium.
* Gives you the flexibility to choose your fund based on your risk profile - Whole Life Mid Cap Equity, Whole Life Aggressive Growth, Whole Life Stable Growth, Whole Life Income, and Whole Life Short Term Fixed Income. You may choose to switch between the funds, anytime subject to certain conditions.
* Enables you to enjoy market-linked returns with a potential for higher growth.
* Opportunity to bring you additional income on funds that might have otherwise given you minimum returns in your savings account, subject to market performance.
* Loyalty Benefit: Additional 0.25% of units under the Regular Premium Account every 5 years provided the policy is in force.

The age is 30 days (minimum) to 70 years of your age (maximum). Now, imagine if you go for this life insurance policy for your new born baby, then you will cover his/her whole life with unlimited gains possibility.

The minimum sum assured is the higher of: (i) 5 times the annual regular premium or (ii) ((Annual regular premium)/2)/(70-age at entry). There is no cap on the maximum sum assured.

For example, if you are aged 35 years and want to pay the Annual regular premium of Rs.1lakh, the minimum sum assured that u have to take is Rs.17.5lakhs, which is a premium multiple of 17.5 based on your entry age. You also have the option to increase the sum assured by paying extra amount later as a Top-Up Amount at no extra charge..

Now for above example if you opt for a premium payment term of 5 years, i.e. if you pay 1lakh for 5 yrs, total 5 lakhs then on your 100th b'day you will get 9,38,34,040!!! Yes, a whoopping 9crores... and may be more...because this is assumed at 10% growth rate only...

And in case of your unfortunate death, your family gets the higher of sum assured or fund value.. i.e. your family gets Rs.17.5 lakhs or more....

So this is the real golden plan from TATA AIG LIFE...

Contact me soon to apply for this.

Calculate your retirement

The best ULIP in the industry at present is TATA AIG LIFE's INVEST ASSURE FLEXI...

The ULIP policy has great features which are listed below and the charges are lowest in the life insurance industry...

For the first two years, only 16% charges are deducted(84% invested), and for the next three years only 3% charges are deducted(97% invested). Later from the 6th year the whole premium amount is invested and that's a beauty... I have an excel file where you can input the Yearly Premium to pay and Rate Of Interest you assume to get, and you will get the result for the next 40 years...

You can download the excel file from this location:

Download File

Just edit the 2 cells, with black background and red text:
1. Premium, which is 25000 by default
2. ROI, which is 20% by default.

You will not believe, but the power of compounding is great. Compound interest is the 8th wonder of the world, I feel. Investing just Rs.25000/year will give you Rs.13,43,36,909!!! believe me 13 crores against an investment of just 10 lakhs.

Key features include:

* Provides security to your family in case of your unfortunate demise.
* Flexible Policy Term: You may choose the policy term from 5 years to 40 years depending on your needs.
* Flexible Premium Paying Term: You can choose premium paying term of 3, 5, 10, 15, 20, 25, 30, 35 or 40 years. You can also opt for a premium paying term which is same as policy term chosen by you.
* Flexible Sum Assured: The minimum sum assured is higher of 5 times or (policy term/2) times the annual premium.
* Seven Fund Options: Whole Life Mid-cap Equity Fund, Whole Life Aggressive Growth Fund, Whole Life Stable Growth Fund, Whole Life Income Fund, Whole Life Short-Term Fixed Income Fund, Capital Guarantee Fund, Large Cap Equity Fund.
* Minimum Issue age of 0 (30 days) and maximum issue age of 70 years with maximum maturity age of 80 years.
* Minimum Premium: Rs. 15,000 p.a.

It also has the critical illness insurance life as a rider.
To get life insurance quote online, contact me soon.

India's best Ulips

January 03, 2008
Source: Rediff.com

The winner is Tata AIG Life's InvestAssure II, which has scored primarily because its one-year return, at 72%, was way above the benchmark return of 53% of the BSE Sensex.

This despite the fact that it has a fund management charge of 1.75%, more than double the 0.8% that HDFC Standard Life charges.

At returns of 42.7%, HDFC Standard Life has underperformed the benchmark by about 10% points. In fact, Tata and Bharti have outperformed the index by 10% points or more.