Malathi Madhusudhan left the following comment on my post about LIC Jeevan Vriddhi and her comment nicely illustrates why a lot of people feel frustrated with insurance plus investment products even when they aren’t particularly bad.
Here is the comment:
I would like invest in LIC â€“ Jeevan Vriddhi plan for Rs. 1,00,000 (one lac only). Not very clear about the returns, i.e. as an agent told, after 10 yrs of investment, we get the returns of 5 times, i.e hopefully it should be 5,00,000 / -(five lacs). IS IT CORRECT ???
Also please let me know, what about the death coverage ? i.e. if any death happens in 3 â€“ 5 yrs, will the payment of 5,00000 get immediately or should we wait til 10 years .
Please clarify the details.
If you remember this product then you will very clearly see what’s going on in here. This product gives you an insurance coverage of 5 times and then at maturity, it gives you some returns.
Those returns are not 5 times your money, but rather the guaranteed part of it falls a little under double your money in 10 years.
Now, 5 times in 10 years doesn’t sound incredibly lot and that’s why it’s easy to see how it doesn’t immediately raise suspicion in regular folks but you can’t say the same thing about agents.
Surely, it is their responsibility to figure out the difference between returns and coverage, and if they don’t even do that then what good are they?
Raj, who left good counter points to my post asked how this is possible and if this agent is a crook or is really ignorant and my first reaction was – dishonest or incompetent – those are the only choices I have?
I think this comment and the situation nicely illustrates the problem with the whole insurance environment right now, something thatÂ Jitendra and Debasish Ray touched upon in the same thread as well.
When you ponder about these things for long you wonder about what role a blog plays in the midst of this environment, and I think more than a blog – a blog reader can make a lot of difference. This is because if you’re the kind of person who follows personal finance blogs you are probably the one in your family and circle of friends that are approached when people need a bit of advice related to money. If you are that person, then imagine how easy it is for you to help someone avoid making a mistake and make a better decision.
I’m really curious to know if you are that person and if you have experiences like this and what you think about the agent. Please do leave comments.