1) Unlike other types of Insurance products,Agents will never sell term insurance as they get comparatively very less commission 2) When you go for a medical test, they will ask you to get medical test done at their prescribed clinics. Later they will say there is certain abnormality in your medical report eg. High BP, High Sugar -some of the common excuses and therefore your premium will be high. This way they make you pay a higher premium. Beware of this strategy.
Re: My experience with Term insurance
by Manoja on Oct 20, 2009 07:16 PM
Another misguided and misinformed soul!
1. Term insurance pays a higher rate of commission than ULIPs. Please be aware of this.
2. If you find any anamoly in the medical report of an insurance company, you can always cross verify it with another doctor of your choice and then question the insurance company on this. As I have seen, a lot of people are under the misconception that they are totally healthy! When confronted with reality, they start putting up excuses. Like what has been mentioned above.
Re: Re: My experience with Term insurance
by asad hgjkf on Oct 20, 2009 11:13 PM
Term insurance for 50 lakhs for a 27 yr old will cost Rs. 6000. Even if the company gives 50% commission, it comes to only Rs. 3000. If an agent sells a ULIP for Rs. 1lakh, at a commission of only 20%, he'll get 20,000 Please do the maths.
What the author has mentioned is a simple calculation. Support you want to buy an endowment policy with an annual premium of Rs.50,000. Just calculate how much you get at the end of the plan and what is the coverage? Similarly, calculate how much you have to pay for the same coverage if you take a term policy and how much you can get if you invest the balance of 50,000 after taking the term policy, in some other form of investment, cos the returns from LIC are very low. For Manoja's information, a 25 year old can get a coverage of Rs.20 lakhs for 20 years with an annual premium of just Rs.5000 (Anmol Jeevan-I). Are the returns from ULIPS assured?
Re: simple maths
by Manoja on Oct 20, 2009 02:05 PM
Rahul,
My question then would be " Are the returns from Mutual funds/ stock market assured?". We know the answer, right?
When you are implying that by investing in mutual funds you can certain rate of return, you must also know that ULIPs too invest in the same set of instruments where mutual funds are investing. Therefore, if the MFs are generating a good return, ULIPs also will generate almost the same kind of return.
Re: Re: simple maths
by Rahul on Oct 20, 2009 02:22 PM
I didnt say Mutual Funds. I just said any other form of investment will yield better returns than an endowment policy
Re: Re: Re: simple maths
by Manoja on Oct 20, 2009 04:31 PM
So tell me which other form of investment you can think of for a lay person? Mutual funds were touted to be the avenue for those who didnt understand the stock market. FDs, post the tax implications, give a real rate of return between 5.6% to 6.4%. Gold could be one of the investment options, but then it is not a very liquid investment. Moreover, there is no organised market in this country to SELL gold, though you can BUY gold from any banks or jewellers. What is left then? Direct investments into stock markets? Doesnt it have its own perils???
Re: Re: Re: Re: simple maths
by Vineet J on Oct 20, 2009 06:18 PM
Manoja...
Gold is offcourse an good liquied option.. Instead of buying Gold as a jewellary , buy it as an ETF( Exchange traded fund)..So you can get money immediately... there are no toehr labour charges. Regarding other investment options... why not to go for PPF.. which offers Min 8% ROI Tax Free... i thnk still it will be equal to your ULIPs.. Furthwer more why to put money in ULIPS.. instead put it in equity... go for ETF of Nifty... it give same retuns.. there are many more avenues.. but Some agents missell these ULIPS... these agents are cheaters...
Re: Re: simple maths
by rrrr on Oct 20, 2009 12:31 PM
ULIPS are better than endowment policy ,but are inferior when compared to term insurance. Huge cuts in the money invested in first 3 years , so many fees make ULIPs unattractive. In fact many agents sell ULIPs as three year fixed deposits. It is always better to buy term cover and invest rest in bank deposits or stocks depending on one's risk profile
If this Young Man can afford Rs.9,000 to pay as premium without getting anything back, then he can certainly pay Rs.18,000 as ULIP premium because at the end of the plan period, even at the conservative rate of 10% that IRDA wants the projections to be at, the Young Man would get back about Rs.9.30 lakhs. And the best part is he would have paid only Rs.90,000/- as the over all premium instead of Rs.333,000/- as in the case of Term Plan!!!
Seven, a term insurance CANNOT be converted into an endowment plan as this author is suggesting. Each insurance policy is a contract in its own right. If a person wants an endowment plan at a later stage, he needs to go in for an endowment plan as a SEPARATE policy.
In a simple write up on term insurance, there are seven mistakes. Imagine what would be the status if this author writes on more complicated stuff like fund management and financial planning!!!
Re: Pathetic
by pratt on Oct 20, 2009 12:19 PM
Please tell me which ULIP will give me 20lakh cover at 18000 premium. I am sure no insurance company will give that. May be the author has not explained well, but term insurance is always advisable.
Re: Re: Pathetic
by Manoja on Oct 20, 2009 02:01 PM
PRATT,
Keep your mind open. Check with Insurance companies. Depending on the age, you will be able to get life insurance cover for 20 lakhs at 18 K premium per annum. The key word is AGE. If you are below 25, you will get this. If you are below 30 you may have to pay 25000.
Re: Re: Re: Pathetic
by asad hgjkf on Oct 21, 2009 12:26 AM
HDFC standard gives a maximum life cover of 20 times the annual premium. So, for an annual premium of 18,000, the face amount will be 3.6 lakhs. For a face amount of 20 lakhs, the insured will need to pay 1 lakh per year as premium. Now, policies may differ, but the case i presented is definitely a broad indication of how high the premiums for ULIPs are.
Re: Re: Re: Pathetic
by asad hgjkf on Oct 20, 2009 11:20 PM
There is no ULIP offering 20 lakh life cover for 18,000 per annum. If there is any, please let me know the plan
Re: Pathetic
by rrrr on Oct 20, 2009 11:58 AM
instead of 18000 in ULIP, if buy term cover for 9000 and invest the rest 9000 in bank deposit at 8% interest rate ,i will have 25 lakhs at end of 37 years
Re: Re: Pathetic
by Manoja on Oct 20, 2009 12:14 PM
The 18,000 investment here is only for 5 years. Post that, the premium payments can be stopped and the entire amount can be invested in any investment vehicle.
By the way, Rs.9,000 invested every year at 8% returns per annum, compounded over a period of 37 years will fetch Rs.19.74 lakhs as returns.
Investing Rs.18,000 at the same rate for 32 years will fetch Rs.26.09 lakhs PLUS the return from ULIP of 9.30 lakhs!!!
Re: Re: Re: Pathetic
by rrrr on Oct 20, 2009 12:24 PM
Are you saying that after 5 years ,we get automatic insurance of 20 lakhs even after stopping payments
Re: Re: Re: Re: Re: Pathetic
by Vijay Pahuja on Oct 20, 2009 02:44 PM
Provided the fund in which your money has been invested is earning money for you.
If the fund is losing money then life cover stops.
Re: Re: Re: Re: Re: Pathetic
by asad hgjkf on Oct 20, 2009 11:18 PM
If u stop premium payments, the premium is paid from the cash value of the policy. If this cash value is not sifficient to pay the premiums due, the policy will lapse, and the life cover will not be applicable. Some ppl here are trying to act just like insurance agents- tell only the positives without describing the conditions.
out of 1 lakhs in india, one dies accident death,, what good business, out of 45000 one person get hospitalisation, out of 1 lakhs , majority of people ;suffer from contaminated water disease if they adopt some what clean environment, ,water and adopt basic formulas of hand cleaning, carpet, houses, majority of them willbe away from hospital, smoking, drinking,gambling and socalled modern system of gambling and useless education which help people to dream high and later become life dry, compel people to tension, frustration and low esteem, estrangement from dear and near,, bring good business for doctor, specially whole bunch of socalled surgen, mental doctor automatically kill people and addict with strong drugs,bring them business,majority of people are not have any knowledge of body function, its healing power and effect of chamical and allopathy, so doctor can prescribe any thing and earn huge profits,, in america majority of people dies because of good doctor advices like marlinmuneero,, micheal jackson dies becuase of doctor advices, fear of death and dream of future can generate wanted money for well wisher of system so it is good business, with inflation and controling of system by m n c like in usa, australia, newzeland where even for geting general medicine , some one need to get visit to doctor paying at least 1/2 weak salary for doctor,, and whole operation of general surgery does cost in india like 1000 rupees cost 15 lakhs in advanced countries,,
One more pathetic and half baked information dished out by a so called expert. There are so many holes in this write up that even an elephant can pass thru this without any problem!!!
One, in the assumption made, the author says the young man needs a life cover of Rs.20 Lakhs. But later on in the explanation part, the term insurance premium is given for Rs.10 lakhs, making it appear a meagre amount.
Two, the period for which this "young man" needs the cover is not given. Is this for one year? Two years? 20 years? 30 years? Assuming that this "young man" retires at the age of 60, he would in all probability needs the cover for 37 years.
Three, let us go by the assumption made by this author. If the premium for Ten lakh cover is 4,500/-, then it follows that for Twenty lakhs it would be Rs.9,000/-. Correct? Now paying a premium of Rs.9,000/- for 37 years means this "young man" would have paid Rs.333,000/- by the time he reaches the age of 60. Not a "small" amount of money. Right??
Four, if this "young man" is in a job which pays him only Rs.One lakh as salary when even a mundane call center job today is fetching a salary not less than 1.5-2 lakhs, it is presumed that he is not a very bright fellow!!! Now the author expects him to invest the differential in stock market and earn higher returns!!! Blah...
Five, if one were to consider ULIPs, the same amount of Rs.20 lakhs of insurance cover can be obtained by paying an annual premium of Rs.18,000/- for 5 years.
Re: Pathetic
by vivek singh on Oct 20, 2009 11:40 AM
dude this is how insurance work be it india or any country ,if u think pathetic then dont buy it.why ur are taking it as investment,a person can die in first month also ,so he is getting 10 lac by paying 4500 .so who bears the loss,insurance is all about risk sharing .those are buying are not fools. what author has written is perfectly alright.
Re: Pathetic
by pratt on Oct 20, 2009 12:18 PM
Please tell me which ULIP will give me 20lakh cover at 18000 premium. I am sure no insurance company will give that.
can any body explain ---suppose if i take a term insurance i will be covered if anything happens, but this is we are paying as long as we want to cover the risk for life, but once we stop we wont get anything for the period for what we paid, whether 25 years of 30 years only at the time of death your family will be nefited correct or not endowlment means premium you will get at the end of the period with bonus and interest and you are getting back your money after certain period for example paying after 25 years
Re: term insurane and endowment plan
by rrrr on Oct 20, 2009 11:46 AM
Yes, your understanding is absolutely correct. But dont forget insurance is not an investment. It is a compulsory expenditure. Buy only term ,forget about endowment insurance
Re: Re: Exclusions in term insurance
by True Voice on Oct 20, 2009 10:53 AM
We have to be very careful on these issues. If you were in the vehicle whose driver didnt hav valied licence, then insurance company can argue on it. Secondly, illness is due to life style like chain smoker, alcoholic etc.. still insurance company can argue on it dont release the payment
Concept of insurance is sharing of loss of life or property damages by all, insured. Utmost good faith and such others are part of principles. Certain areas without valid insurance,no trade or business will work. Insurance Regulatory Development Authority (IRDA) is regulating terms good/suitable to insuring public. Premium is not only investment for life cover but also risk is covered called under-writing.
