Friday, June 28, 2013

Scamming of the retired by insurance companies

Insurance penetration in India is supposed to be low. It is hardly any surprise if I consider my experiences with insurance companies. My father who was over 80 kept getting calls from agents of 2 private insurance companies. I was surprised at their persistence in spite of getting a 'Do Not Disturb' on his landline. It was very frustrating and depressing to get these calls for him even after he passed away.

My small protest was that I have not invested even 1 rupee in even the mutual funds of these companies. After the second experience given below, I requested my children to do the same.

Recently, I tried to help a distant relation, who retired some years ago. He was the target of a very friendly and 'helpful' insurance agent from one of the companies which had pestered my father.

The agent gave him a mountain full of BS getting investments in multiple different policies. My relation believed that these were like fixed deposits to help with the wedding expenses of his children.

Actually, he was paying the first premium of a life insurance policy for over 30 years, where he could get the money if he lived beyond a hundred years! He told me that the agent was such a nice youngster! Since the first instalments were from his retirement benefits, the insurance agent knew perfectly well that it was not possible for the insured to pay the subsequent premiums.

Since my relation did not act in 15 days, all his investments are lost. By the way, all the policy details were in English only. The legalese English in fine print was hard for me to decode as well.

It amazes me that IRDA allows insurance companies to target the retired people. It makes no sense to me for a person to take a life insurance policy after retirement, and, hence, such policies should be banned.

India is not unique. I recently saw a show about the Swiss insurance companies on TV5 Monde where the insurance companies were charging a lot more for the same benefits which were provided by the pension funds!

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