“A person may be wealthier if he were to buy the cheaper term policy and invest the balance amount, which would have otherwise gone towards high premiums of saving-linked policies, like MFs. In this way he would be risk-covered and also generate higher returns”. So then, why there are more ULIP, Money back policies and other investment products (rather Term Insurance) from all Life Insurance companies?
Insurance companies are doing business to make profit, not for charity. With ULIP and other investment products they make huge profits, so more products are on the selves. Second it’s the mentality of the people to look for return in insurance. You are shocked to know that LIC - Term Plan with return premium had sold more policies then LIC pure term plan.
I would say it’s due to awareness among common people. We buy insurance from our friend or relative agent. We accept whatever he told to us. He normally sell us the products which has more commission. So Term Plans are on back bench. Second it’s only few people, who are internet literate are aware about that the term plan is better than other plans.
Awareness is the main thing here with the coming of the Pvt. Insurance companies and IRDA regulation to give 100 hours (now 50 hours) training to every agent. Prior to this agent used to bring client to the development officer and the DO used to explain products to the client. Same way agent needs to tell client about the commission he is getting on the product. I still remember LIC policies used to sold by the table no.
I think you have not read the question :-)Quote:
Originally Posted by Matrix
It more or less miss-selling of the ULIP product by the agent to hit the targets and get good commission. Not everybody understand the complex product. Most of the agent, I met said to me that you just have to pay for three years. Because lock in period is three years. Nobody told me about the charges I would incur in first three years or what I would get after three years. It’s not all the ULIP products are bad, it’s who is buying and what is the time horizon and purpose of buying insurance. If the purpose is only investment then investor is in the wrong boat.