Beware while taking Life Insurance Policy
Majority of people who take Life Insurance policy are either unsatisfied or feel cheated by the Insurance company. But, it is too late by the time they realize this fact and then run pillar to post for remedy. And it is the honest salaried Tax payer's money which these companies are targeting with a vulture's eye. Therefore, please be careful while taking new Life Insurance policy. Also, please share this message so that more and more people, including your friends, children, other family members, nears and dears are careful and can be protected from the menace of Life insurance.
1. On the pretext of providing protection, Insurance companies do not pay returns even equivalent to Bank interest rates.
2. Life Insurance claim is around 0.6% i.e. only 6 out of 1000 people insured, die before the completion of policy and claim Insurance.
3. Premium of Rs. 50 Lakhs term policy for 20 years is ONLY Rs. 4,500 odd per year. Therefore, any premium being paid over and above that, should be considered as investment.
4. Income Tax rebate is available on Insurance premium only and not on the Service Tax paid on policy. Whereas we get tax rebate on entire amount invested if we invest in instruments like PPF.
5. Income Tax rebates on Life Insurance Policy is available U/s 80C of Income Tax in which other investments like EPF and PPF are also covered. Therefore, Tax Rebates on Life Insurance premium is only in excess of such investments and to a combined limit of Rs. 1,50,000/- per year at present.
6. Investments under EPF and PPF fall under FFF (Free, Free, Free) category for the purpose of Income Tax and give much better returns than Life insurance.
7. Majority of Insurance agents or advisors themselves are not aware of all the features of a plan they recommend. They also do not carry brochure of the policy they recommend. They always insist to sign the form and issue the cheque on the spot not because they want to extend convenience but because they want to trap the person without giving time for due diligence.
8. Term policies are available to be taken online because agents don't get hefty commissions on term plans as they get on other policies where they are expected to trap the customer.
9. All Life Insurance companies are sitting of huge amount of funds and earnings from the money invested by their customers and not rewarding them with due returns.
10. IRDA is supposed to be regulating Insurance Policies. But they also are dedicated for the benefits of the Insurance companies. Had they been for the benefits of the customers, they would have forced companies to frame policies considering above mentioned facts.
In view of these facts, suggestions are as follows:
A) Entire limit of Rs. 1.50 Lakh of Income Tax exemption available u/s 80C can be invested in more rewarding EPF or PPF itself.
B) Don't consider Life Insurance as investment or Tax saving instrument. For protection, take Term Policy.
C) If at all, you have decided to take a Life Insurance policy, read the policy brochure carefully and understand all its features before taking a policy. If brochure is not provided by the agent or advisor, download from company's website. If any confusion persists, ask the agent or the advisor to clarify the same.
D) Take a policy only after due diligence, considering all pros and cons of the policy.
E) Do not sign blank form. Ask the agent or advisor to provide duly filled form and sign it only after reading and understanding it thoroughly.
F) Compare Life Insurance returns with those available from other financial instruments. more
1. On the pretext of providing protection, Insurance companies do not pay returns even equivalent to Bank interest rates.
2. Life Insurance claim is around 0.6% i.e. only 6 out of 1000 people insured, die before the completion of policy and claim Insurance.
3. Premium of Rs. 50 Lakhs term policy for 20 years is ONLY Rs. 4,500 odd per year. Therefore, any premium being paid over and above that, should be considered as investment.
4. Income Tax rebate is available on Insurance premium only and not on the Service Tax paid on policy. Whereas we get tax rebate on entire amount invested if we invest in instruments like PPF.
5. Income Tax rebates on Life Insurance Policy is available U/s 80C of Income Tax in which other investments like EPF and PPF are also covered. Therefore, Tax Rebates on Life Insurance premium is only in excess of such investments and to a combined limit of Rs. 1,50,000/- per year at present.
6. Investments under EPF and PPF fall under FFF (Free, Free, Free) category for the purpose of Income Tax and give much better returns than Life insurance.
7. Majority of Insurance agents or advisors themselves are not aware of all the features of a plan they recommend. They also do not carry brochure of the policy they recommend. They always insist to sign the form and issue the cheque on the spot not because they want to extend convenience but because they want to trap the person without giving time for due diligence.
8. Term policies are available to be taken online because agents don't get hefty commissions on term plans as they get on other policies where they are expected to trap the customer.
9. All Life Insurance companies are sitting of huge amount of funds and earnings from the money invested by their customers and not rewarding them with due returns.
10. IRDA is supposed to be regulating Insurance Policies. But they also are dedicated for the benefits of the Insurance companies. Had they been for the benefits of the customers, they would have forced companies to frame policies considering above mentioned facts.
In view of these facts, suggestions are as follows:
A) Entire limit of Rs. 1.50 Lakh of Income Tax exemption available u/s 80C can be invested in more rewarding EPF or PPF itself.
B) Don't consider Life Insurance as investment or Tax saving instrument. For protection, take Term Policy.
C) If at all, you have decided to take a Life Insurance policy, read the policy brochure carefully and understand all its features before taking a policy. If brochure is not provided by the agent or advisor, download from company's website. If any confusion persists, ask the agent or the advisor to clarify the same.
D) Take a policy only after due diligence, considering all pros and cons of the policy.
E) Do not sign blank form. Ask the agent or advisor to provide duly filled form and sign it only after reading and understanding it thoroughly.
F) Compare Life Insurance returns with those available from other financial instruments. more
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View all 38 comments Below 38 comments
Thanks for bringing such naked truth. Any Insurance policies are just like cheating the public. more
Dec 02
There is Rs. 840 Cr. Un-claimed amount pending. A single Company. What these people do - just omit couple of words of the address so to establish that they had communicated to the hairs of the policy holder. Keep the record and get the additional Bonus or Increment. The Agent - once registered policy vanishes in thin air and the Company encourage him to hunt for NEW customer/Bakara. more
Oct 12
Mr Jauhari has very correctly & clearly clarified the issue, which clearly clarify that the policy holders are given only a fraction of the earnings the insurance companies are pocketing out of the premium amounts. However, in my opinion, the majority of the Life Insurance policy holders opt for a Life Insurance Policy mainly for two reasons, (1) to extend financial support to their bereaved families in the event of untimely death (though the rate of death is minimal as explained in the post but there are still .00001% possibilities of any untoward incidents and no one knows whose number it is) and (2) premature surrendering of a policy causes heavy financial losses to the policy holders compelling to avoid such action. I would suggest to opt for a policy from our national Insurance Company, i.e. LIC of India rather than a private player, who are often in search of clues to deny even a legitimate claim. more
Oct 04
v true,,, in the hospitals also diff set of bill has been raised…yes it is the biggest waste and swindling and cheating people.. more
Oct 03
Wahab Saheb, Term Life policies are available online. These policies are to secure your family in case of any untoward incidence. Premiums are very low for very high coverage. As I mentioned in my post, one can have nearly 50 Lakh insurance for 20 years @ Rs. 5,000 per year, which may vary depending on the age at which one enters into the policy. For more details, please search "Online Life Term Policy" on internet. more
Oct 03
