Insurance Thuggery

Normally I keep all letters for Saturday to put with my weekly mail.
However, when some mail comes which warns people of cheating and other crimes which may befall then, each day counts. So I put it on the blog immediately so that others do not fall prey.
Sourabh's letter posted below gives us such warning

Radheshyam

Dear Sir,

I wish to share two experiences with in our GMS fraternity, and others all well, so that people are fore warned about these so called Life Insurance Companies.

Some time In Januray this year I was approached by Birla Sun Life Insurance, for a PMS cum Life insurance Policy. Initially it was touted only as a PMS( portfolio Management service). The charges would be only 1.5% pa, which on the face of it sounded very attractive. The advisors too seemed very genuine.So I happily agreed to the same and the minimum amount was starting from Rs 50,000/-. It seemed like a good investment. Like all other advisors, I was told that I would need to pay the premium for only 5 years.

When I received the Policy I was in for a shocker. The Policy had fund magament charges of 1.5% all right, but in addition to it it had Policy Administration Charges( Monthly charge per 10,000 of sum asuured was Rs 25). this amount worked out to 30 % pa.
This was a far cry from the promise of 1.5% charges only. Needless to say I will be discontinuing with the Policy.

The second was with ICICI. i had gone to deposit some money in my account when I was approached by their Employee for a RGF( Return guaranteed Fund) which promised 50% return in 5 years or 10 % pa.Again the charges were just 1.5% pa.It seemed a good way to diversify my Portfolio with some debt allocation.Imagine my surprise when i got the Policy. Lo and Behold there were Policy Administration charges of 0.5 % per month, which worked out to 6% pa, and including their Fund Management charge, the total was 7.5% pa. So in effect I would be getting only 2.5% pa , and if you take inflation of around 5% pa, the return was in effect -2.5% pa.I will be discontinuing this Policy as well.

Both these incidents have left a very bad taste in my mouth. I was supposed to leave for Delhi today, but now will be leaving a few days later just so that I can discontinue these Policies.

Please circulate these to all possible so that it gets maximum no of readers, and let us expose the rot.It has opened my eyes. Lets hope it will educate others as well.

regards,

Saurabh K Pramanik