Rana Ram Singh, Ex-Sarpanch of the village Agampur in Anandpur Sahib tehsil bought a Unit Linked Insurance Plan (ULIP) of a company in 1998. After regularly paying for five years, today the real growth of his investment-cum-insurance plan is negative. He parted with his savings for this long only to feel cheated now.
This is the story of not only Ram Singh but so many people in the rural Punjab who were induced to buy the ULIP plans and were sold the insurance products blended with investment.
These products were sold by the agents or investment advisers for a very high commission reaching almost even to 100 percent of the first premium.
Aggressive marketing strategies by the insurance and the Asset Management Companies coupled with the financial illiteracy of the people are ruining people of their financial health.
People especially the salaried class and the pensioners are the prime target of the Insurance and the Asset Management Companies. These companies offer to their clients, the products that do not serve financial goals of the people investing their savings in these financial instruments.
Due to financial illiteracy people are unable to calculate the risk reward ratio of financial products offered as insurance or investment: hence a flawed financial planning that leaves them lurking during the maturity of the plan or during their needs.
Most of the banks that operate in the rural areas in Punjab have had ‘Investment advisers’ at their front desks at their branches. These ‘investment advisers’ track the would-be investors who have savings and look to invest some money for their future needs.
Investment advisers’ sell or advice the plans that do not take into consideration the paying capacity or the future financial need of the person and his family. This wrong planning by the investor mostly results either in the lapse of the policies or with a little appreciation thus leaving the investor bereft of benefits of insurance as well as their investment.
The front desk advisors who are mostly the local ‘friendly people’ connected with the would-be customers have target oriented jobs that compel them to sell products to their acquaintance’s without ascertaining the financial goals of their clients.
People are ruined of their hard-earned money and are left constrained during their needs. Some people even borrow to pay their insurance/investment premiums.
The plans sold to the people citing the lucrative return of the stock market returns of earlier times are feeling cheated. So many people have invested in the mutual funds and market linked plans without the knowledge of the financial or stock market and without taking into consideration the risks that they had to bear and charges that they have to pay.
These charges/expenses known as policy allocation charges, policy admin charges, switching charges, fund management charges are too complicated for a lay man to be understood.
September 04, 2020
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Ran Bahadurr Singh, Freelance Journalist
rbsrana73@gmail.com
Phone No. : 9463218996
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