Tiwai Hill, Rajgurunagar Wade Road
near Chaas Kaman Dam & Bima Shankar
Pune Dist. 410 513 Maharashtra
Tata Indicom : 92266 86703
From: Anil Agarwal <anilsagarwal@
To: ICAI_CIRC_MEERUT_
Sent: Friday, 25 January, 2008 7:26:57 PM
Subject: RE: {Brainstormers -CA} private insurance companies
Dear Friends,
I certainly agree with my learned friend though I differ in certain areas. In the context of the insurance companies and the current day scenario in Insurance I would like to highlight the following issues which I have experienced personally.
1. The Private insurance companies are also within the regulatory framework of IRDA as is LIC.
2. No insurance company is allowed to lay false promises of returns on investment. They are bound my norms of the IRDA in this respect which makes it mandatory to restrain from showing return on investment beyond a particular rate of return. Also it is mandatory in any illustration to give two illustration at 6% and 10% returns and no further than that. You can visit http://www.irdaindi a.org/ for further information. Any company not abiding by the same can be sued against in the appropriate courts. Any investor in insurance should be made aware of the aforesaid.
3. Insurance in India is perhaps viewed more as a investment tool rather than for insurance by itself. Most of the general public is not aware of the term insurance plans which are offered by all the insurance companies. Further even in case of ULIP products or other endowment policies there is only a small amount that goes for actual insurance the remaining is invested on our behalf in the chosen fund.
For example for a policy of Rs.5.00 lakhs the endowment premium for 25 years of age is around 20000 and term insurance premium is around 1250 which means that when we go for a endowment plan the remaining Rs.18750 goes into a sort of mutual fund. So why not invest 18750 directly in Mutual fund and take a policy of Rs.500000/- with a term cover. In most of the cases the insurance agents or advisors are more interested in their own commission and hence they guide the investors to go for endowment or ULIPs.
4. As for professionalism of LIC it is the only company for which the list of plans offered is not available at the IRDA site as mentioned above.
5. One must read the offer brochure carefully and procure all details before going in for any policy.
6. One must fillup of the policy application form by himself and state therein the accurate particulars about self ,a misstatement can be deterrent to his own interests later on.
7. One must choose a advisor who is ethically strong and is well informed. Many advisors or agents hardly know about insurance even though they have passed the IRDA exams which is mandatory now a days.
8. There are TV programs on NDTV Profit and even other business channels specially dedicated to insurance issues. These programs are really informative and a good resource to get queries solved.
9. Further one must insure himself adequately , irrespective of whether 80 C is applicable or not. Insurance is much more than tax saving and if carefully chosen a insurance policy can save a person from financial crises in difficult times.
10. Please note that in most cases we pay lower premiums for our own lives then we pay for other valuables like car bikes office etc, if we compare the term portion of the "life insurance premium" paid with the "general insurance premium" paid for the valuables. Our lives are invaluable, so ensure to that you get fully insured.
I regret if I have tried to put forth a issue that is well known to all the users of the group.
Please note these are my personal views and are based on my experiences. And also neither myself nor any of my family members are insurance advisors or agents.
Regards,
Anil S Agarwal
Chartered Accountant.
12-13 Vishal Residency,
Ground Floor, Kasarwadi
Pune 411034
91-20-27126974
91-98-90906974
"Nothing ever happens till you create the space for it to happen."
From: ICAI_CIRC_MEERUT_ CA@yahoogroups. com [mailto:ICAI_ CIRC_MEERUT_ CA@yahoogroups. com] On Behalf Of ramauditor1
Sent: Friday, January 25, 2008 5:33 PM
To: ICAI_CIRC_MEERUT_ CA@yahoogroups. com
Subject: {Brainstormers -CA} privatre insurance companies
Dear Friends
We have been advising our clients to invest u/sec 80C to claim the tax
benefit.
They in turn invest in as many MNC insurance companies as available.
We too do it to plaese our friends.
These companies come with a very tall promise of even awarding ten to
fifteen times the investment in a few years' time. They also promise
about an expert fund manager of their reputed organisation - whose
face will never be known to us ( forget his efficiency)
By experience of the last four to five years - all of you / us must
have observed that our investment certainly do not fetch anything -
apart from being exposed to the risk of share market fluctuation / crash.
The agent advisor is a character who will be seen by or heard by you
only the subsequent year. Or your insurance company will write to you
stating that your advisor will hence forth be XYZ and his or her phone
no. is so and so. This advisor will never pick your call too.
The Companies' customer care will not record your actual complaint -
because any complaint against the company cannot be recorded by them.
( I learnt it from Max New York and ICICI Prudential)
Summing it up -
We are investing in face less organisations and hence the assurance on
even the death benefit to the nominee may be uncertain;
The fund value never increases as promised - apart from standard risk
(leave alone the specific percentage you lose to the Insurer annually)
In this case, are we safe in trusting these companies?
Are we advising our clients to lose 100% money in the name of saving
30% of it?
I feel that it is safe and steady to invest in LIC like companies
where there is a Govt Assurance behind and that they are at least
proven to be decent.
Even depositing in Nationalised Banks blocking the money for a few
years u/sec 80 C is sure to have a confirmed return.
ALTERNATIVELY, THE GOVT CAN INCLUDE INDRA VIKAS PATRA U/SEC 80 C WITH
A LESSER RETURN BEING PROMISED.
Please note that there is no Insurance Agent in my family and that I
am starting this topic unbiased.
The agonies faced by many of our CA brethren and their clients may be
posted on this forum to open up our minds for a suitable advice to our
clients and our family members.
REMEMBER YOU ARE GETTING CLOSER TO MARCH. AN ILL ADVICE MAY NOW BE
PREVENTED IF YOU FIND THESE MNC'S FACELESS.
Thanks and regards
Ramkumar Srinivasan
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