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Insurance Rip off !!Views: 844
Oct 09, 2013 2:43 amInsurance Rip off !!#

anand sharma
Short and brief... I took a policy 5 years ago in HDFC ...some #$@%^& ULIP plan crap...They say "pay" 3 years and enjoy for 5 5 years ...so I did...Then they say after 3 years pay 2 years more..I say NO...they say "Ogay"..5 years later I got a cheque for around 42 % of how much I paid them in total premium...and a letter saying "your policy has been cancelled !!! I go th the office and argue...A moron sitting there gives me sad look and gives some real hi tech financial economics like 140 points sensex stuff and as to the reason why O'Bama has a boil on his butt...and as to why there is life on Mars etc...End point is even the guy standing for free ladoos in tirumala would get more respect !!! Is there anything I can do ???
the other horror is i still have another 3 policies withe these guys !!!
HELP....
Anu

Private Reply to anand sharma

Oct 09, 2013 4:29 amre: Insurance Rip off !!#

niranjan burke
HDFC are the biggest con guys around...

Private Reply to niranjan burke

Oct 09, 2013 5:30 amre: re: Insurance Rip off !!#

Manoj Vijayan
They've been trying their best to get me to sign on to their schemes...glad I resisted.

Private Reply to Manoj Vijayan

Oct 09, 2013 6:32 amre: re: re: Insurance Rip off !!#

R Ramkumar
I think it is important to understand how some of these policies work before diving in and investing.
Firstly, the guy who is trying to sell you the policy will always try and paint an extremely bright picture. Though the IRDA has tried to regulate this a bit by saying that they need to provide scenarios of 6% and max 10% returns per year (I think those are the guidelines), the agent will always tell you this is the minimum and actual will be higher.
All of us need to understand that the money is invested in products linked to the share market / debt markets as per the ratios defined in the policy. When the share markets are down, these will reflect in the value of the money we have invested in these policies to the extent of the ratio defined.
It is not only HDFC - all of the other insurance companies that provide similar products come with the same set of issues.
What can we do about this? If the agent has grossly misrepresented the product, we can take this up with the IRDA on grounds of misrepresentation (which is strictly prohibited). If the agent has assured you of more than 10% returns annually, it will also qualify for an IRDA complaint.
If the agent has advised at the time of selling the policy that the returns will be in line with the market conditions, then there is pretty little chance that any appellate authority will help.
This is purely my take on the situation - I am not an expert on this- I am purely just another "investor". I had to terminate 2 policies recently (in the last 6 months) - one of HDFC and one of Birla Sun Life due to a financial requirement. I lost some money on the Birla Sunlife (about 10% of my investment) but actually made marginal money on the HDFC policy (I guess I was lucky with the market situation being favourable at the time of my termination of the policy).

Private Reply to R Ramkumar

Oct 09, 2013 6:38 amre: re: re: Insurance Rip off !!#

anand sharma
Thanks Shobha..
But you know what actually cheesed me off was the attitude of these so called customer relations clowns sitting in the reception....one Lady GaGa replica wa so busy discussing her dinner plans with some maggot on her mobile while taking few second breaks in between to talk to us...The other moron gives us this sarcastic stare and says...neevu sign madithuvae alva...no problems sir..."Go to whichever venue you need to "..."WE HAVE ONLY SAFE GUARDED YOUR INVESTMENT B'COZ THE DOLLAR IS FALLING ETC !!!!!!....Safeguarded...my foot....and there are so many others like me milling around over there without a clue...
I seriously think these guys have ripped millions from the public...Lady GaGa says ""The stocks options are down !! I asked her whether she had asked me before investing in the companies !!!
I still dont understand how HDFC suddenly decided my "life" wasnt worth insuring ????
Anu

Private Reply to anand sharma

Oct 09, 2013 8:34 amre: re: re: re: Insurance Rip off !!#

Jayant Tewari, OutSourced CFO
The Problem is most people confuse the objective of Insurance (cover risk) with Investment (earn returns) -
You're actually better off taking a whopping Pure Term Plan for a small premium and covering risk and then personally investing in Mutual Funds for the Returns.
Further, I really don't see the logic of saving tax and then handing over that amount of saving, or most of it, to the Insurance Company as Agent Commission and other costs.
Even if you are in a ULIP, its entirely up to you to manage it dynamically so that you're in Equity when the market is rising and in Debt Funds when the market's falling ...
You can manage your ULIP Portfolio just as actively as your Mutual Fund portfolio - unfortunately, no one ever does.
The fact is no-one reads his Policy anyway, and that's a self defeating mode of operation, as the fine print actually contradicts ever element of the "sales pitch" given by the agent.
It is a rip-off, but by not applying our own minds, aren't we facilitating it ?

Private Reply to Jayant Tewari, OutSourced CFO

Oct 09, 2013 9:37 amre: Insurance Rip off !!#

Musa R Kaiser
Hi Anand,

It's unfortunate that you had to go through the experience with HDFC. Unfortunately also, I know many others who have the same experience or are stuck with a financial investment they really did not need / want in the first place!

Let me first state that what has happened with you is pretty widespread and is happens across insurance companies & across the world. In some ways, insurance, especially life insurance is perhaps the bigger legal ponzi scheme in the world!

While I have no quick solutions to offer, let this (& many other similar instances) highlight the principle of Caveat Emptor - The principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Since I bridge a few subjects: Medicine, Equity Markets & Financial Planning, I can say with certainty that the "system" is NOT set up to safeguard our interest. Indeed, it is so riddled with Conflicts of Interest that experiences such as yours, which the insurance industry label's as "mis selling" and I think most of us would call "cheating" are very prevalent.

Unless you, I & all of us take FULL responsibility of what we are doing with our money - in terms of REALLY UNDERSTANDING the products that we invest in, we will continue to suffer from such experiences. The cost of this, financial illiteracy, over a lifetime, is well above 50 Lacs - 1 Cr PER PERSON!

Let me add that I state all of the above from personal experience, industry inside knowledge & market data that I am happy to share with anyone willing to listen. This is also one motivation why Bangalore Investors Club was set up.

Coming to what you can do ...

1. Take it up with the IRDA ombudsman - I doubt anything will happen since you would have signed on the T&C before the policy was issued. So in effect, you have legally stated that you have UNDERSTOOD the policy.

A very important to note:
In law, YOU applied for the policy, the policy was not offered to you! Everyone, please read your application forms!


2. Go to Consumer Court - as already suggested.
You will probably loose the case in my opinion. Sorry for the bad news!

3. File a case against the Insurance Advisor - I think it will be the first of its kind & should scare the hell out of him & others of his kind!

4. It's probably too late to do this, because the policy has been closed, but see if you can get help for Moneylife Foundation in Mumbai - they have had some success in such matter in helping their members.

5. Based on what you have stated, I overall & very broadly think you in the long term, you probably would have lost a lot more by continuing the policy so the only good news is that your loss now is much smaller than it would otherwise have been.

6. MOST IMPORTANTLY - Get educated on the world of personal finance, financial products, investing etc ... It's amazing how most of us spend 5-10 years getting ourselves a professional degree to get a job / consult, make good money there but so easily then loose this hard earned money via such not-good-for-me but good-for-the-industry investments!

Not sure if any of the above helps. But I hope it's at least been some food for thought. Do post if there is anything I can support you with, would be happy to do what I can.

Dr. Musa R. MD, CMT.
Founder, BIC
http://www.BangaloreInvestorsClub.com/

Disclaimer: I am a medical & financial industry insider so I state the above from first hand knowledge & experience. Sad to say that quite a bit of what I about the sales process in both these "industries" is very unethical.

ps: My family is one more victim of this & other such legal "scams"! That's why I decided that I will take "charge" of my money - not some agent / company / system!

pps: Couldn't help this, did you not state on your ryze page "Quintessentially a Nut !!"?

Private Reply to Musa R Kaiser

Oct 09, 2013 10:22 amre: re: Insurance Rip off !!#

R Ramkumar
Musa / Jayant
You make very valid points - we have signed off on the application form where the fine-print contradicts most of what the agent has sold us during his sales pitch and automatically absolved the agent of all wrong-doing. The only thing we can do is scare the hell out of the insurance advisor by taking him to court - I am not sure what will come out of it but it will probably put the brakes on the gross mis-selling and misrepresentation.
Basically the insurance agent / advisor takes full advantage of our own laziness to take charge of our own money / investments.
Finally - very valid point on buying the "insurance" - if we are looking at insurance, the best policy would be a pure term insurance - these days one gets a coverage of 1cr for a premium of between INR 15,000 and 20,000 per year. LIC's insurance policies are not dependent on market investments and thus give you assured protection of capital with reasonable returns as well. The market risk creeps in when the carrot of "high returns" being dangled in front of customers and they sign on for the "insurance policies" which are nothing but market investments in the guise of "insurance policies".

Private Reply to R Ramkumar

Oct 09, 2013 11:16 amre: re: re: Insurance Rip off !!#

anand sharma
1. Take it up with the IRDA ombudsman - I donno who or what this is ???

A very important to note:
In law, YOU applied for the policy! Huh...No Way, the guy scared the shit out of me...and I almost came to the conclusion that I was not gonna reach home that day !!! either run over by a bus or get robbed and then knifed to death etc......


2. Go to Consumer Court - as already suggested.
They will most proably tell me "LOOK MISTER...YOU ARE STILL ALIVE ARENT YOU !!!Think about who would have been enjoying all that money if you had died a miserable death somewhere !!!

3. File a case against the Insurance Advisor - NOPE...Not possible,He happens to be a good friend who got this job in this weirdo company after a long break...and also I am godfather to his eldest kid !!!

4. It's probably too late to do this, because the policy has been closed, TRUE !!! I already deposited the cheque in the bank and ate it all up tooo !!!!
5. Based on what you have stated, I overall & very broadly think you in the long term, you probably would have lost a lot more by continuing the policy so the only good news(IF I HAD DIED MAYBE SOME PEOPLE WHO HATED ME WHILE I LIVED MIGHT BLESS ME !!!! )

6. MOST IMPORTANTLY - Get educated on the world of personal finance, financial products, investing etc ... not applicable from now on....I PLAN TO SAVE ALL MY MONEY IN THE FORM OF GOLD COINS OR INGOTS OR INVEST IN HERBAL OR ECO FRIENDLY PAPER MONEY !!! WHO SAYS WE CANT TAKE MONEY TO THE GRAVE WITH US !!!
Anu

Private Reply to anand sharma

Oct 09, 2013 4:57 pmre: re: re: re: Insurance Rip off !!#

Nagaraj Nayak
Hi,

Couple of points which I have come across & used....

1. Have you heard of "Allocation points"?

Allocation points is the amount of money invested in the fund & the amount siphoned off as administrative charges. this is very easily available right before signing up. A simple question on allocation points & the agent will have to show you the material about this.

Reliance is well known for this. A ULIP plan can have 90% as administrative charges in the first year & only 10% into the fund. The second year, it can be 50/50 & the third year the investment into fund can go upto 80%.
What does this mean? If you have paid a premium of 1 lakh, the investment in the first year is only 10k. Remaining 90% goes to administrative charges - commission, insurance coverage... the list can go on.

So first lesson if you dare to invest in ULIP fund instead of term insurance. Check on the allocation points.
BTW, there are ULIP funds with administrative charges as less as 10% also. But an agent will not sell it:-)

2. Invariably the agent claims a lot of stuff... Just ask for a mail or list down the claims by the agent.. ask for a mail of his manager & get a confirmation... the distilled story that finally comes out will paint another picture

3. Insurance agents get a commission of 35% in the first year & subsequently 3% to 5% for each yr you pay the premium. If you negotiate properly, the agent will let go of his 1st year commission.. so typically you pay 65% of your premium the first year & the agent will pay the remaining part from his pocket only to get it back...

It's a game... nothing wrong in being one up I feel.



Private Reply to Nagaraj Nayak

Oct 10, 2013 3:47 amre: re: re: re: re: Insurance Rip off !!#

anand sharma
35 PERCENT !!!! A FRIEND OF MINE IS GOING TO DIE A GORY DEATH !!!!!!I know I am still crying in the rain...but here is the update...I went yesterday to salvage whatever remains of the remaining policies by cancelling them..Lady GaGa tells me that in addition to the depleted values of my poor policies...I have to pay the "Surrender " charges of Rs.4800 per policy !!!
In effect I think it is time to 'SURRENDER' in total...
Anu

Private Reply to anand sharma

Oct 10, 2013 6:06 amre: re: re: re: re: re: Insurance Rip off !!#

R Ramkumar
Hi

If you look at most of the responses, it boils down to the following:

1. The agent or advisor who enticed you to apply for the policy appears to have indulged in a lot of mis-representation of facts and profitability.
2. The fine print was apparently not read probably because you believed in the agent or advisor fully.

The fact that the agent / advisor is a good friend of yours does not help much. If he was such a good friend, should he have not alerted you to the fine print and the consequences?

Please note that I have used the terms "appears" and "apparently" as I am assuming these happened from the trail of the discussion.

Private Reply to R Ramkumar

Oct 11, 2013 2:20 pmre: re: re: re: re: re: re: Insurance Rip off !!#

anand sharma
HuH !! Now I am convinced there is an 'ORGANIZED" syndicate behind this whole set up !!! Barely 48 hours since I ended our marriage to HDFC and I have received 8 calls so far from different insurance companies....A girlie calls up on my mobile at 9 am..
Girlie: Good morning ..How are you today ??
Me: (Full thrilled at hearing that husky voice)..yes,,,yes.....I...I...I am good and how are you..
Girlie: Did I disturb you Mr.Anand ??
Me: (Oh heavens...sweetie with a voice like that you could dig me up from the grave ..for all I care) Aah no..it is ok it is ok...go on...
Girlie :I want to take care of your health...
Me:(Oh man !!! and here I have been married for 14 painful years and never once have I heard this line from my bitter half !!!) Oh sure I mean ..errr...WHAT !!!
Girlie: Many people dont do what is needed to safeguard themselves...
Me: I agree I agree ...errr ( Sweetheart..All those morons who dont take care should be lined up and shot in front of you !!!
Girlie: I am calling from Max Bupa ...
CLICK.....beep....beep....beeep.....
Man !! what a blooper...and the best thing was I couldnt get back to sleep either after that...Wonder when Angelina Jolie joined Max Bupa telecalling team..
Sigh ...
Anu

Private Reply to anand sharma

Oct 11, 2013 5:26 pmre: re: re: re: re: re: re: re: Insurance Rip off !!#

R Ramkumar
I am not sure about organized syndicate but there are a bunch of people who somehow get access to your policy details and then somehow try and tell you the benefits of cashing in on your investment or sometimes even tell you to claim the "bonus" which the insurance company has not told you about. They seem to be ex-employees I guess in order for them to be able to get all of the details including policy number. They tell you that they will send somebody to your home with the form and get your signature to collect the bonus. This sounded very fishy and I told them the insurance company office was just a short distance from my home and I could go over and hand over the form. They did their best to dissuade me. I went over to Birla Sunlife to check on what this was all about - and sure enough there was no such "bonus" that I was entitled to.
The worst part of all of this was that the personnel at Birla Sun Life seemed to be least bothered that such attempts were being made by unknown persons to defraud their customers - this inspite of the fact that I gave the phone numbers from where the calls were being made to me (they were Delhi numbers).
Of late, there are people claiming to be from SBI Life and calling my landline at home regarding redemption of a policy. They seem to be fishing for more information. My wife told them to call me on my cell phone but they do not do that - they keep calling her onthe landline at home and ask for information (which she refused to give). all of this happens on weekdays only. One weekday I was unwell and therefore at home when the call came through. The moment she said I was at home and would take the call, they cut off the line.
These days one needs to be very wary of investing in the first place and then if one does invest one needs to protect the investment from all kinds of people who try to con you. I keep asking myself - wouldn't a simple FD suffice?

Private Reply to R Ramkumar

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