We all see many advertisements on the net & television about new insurance policies. Every insurance agent claims that their policies are the best. In the market it seems a fight going on among the agents to sell their products. The reason being lot of commision for the agents. These agents usually give false promises about the returns & advantages and sell you a policy which may not suit you at all. However not all the agents are same but you must educate youself about different tricks which they have up their sleeves and learn how to deal with them. Some of these tricks are :
1. If you have ever come acros an LIC agent he would have definitely told you that his product is the best as there is a guarantee from the government because its not a private company. But don't get fooled by it. LIC only guarantees sum assured. This guarantee you will get from all the companies including the private ones. So why do they say it? Well the catch is that whatever the returns they are promising is not guaranteed. But just because its not a private company and the agent keeps on repeating this ' Guarantee ' word you may believe that returns are also guaranteed. Agent from a private company also cannot guarantee returns. But yes there are certain policies in the market including ULIPs in which the company guarantees minimum returns. Unless this thing is in black and white from the company itself you must not trust your agent.
2. Even if an agent does not guarantee returns he might say that a particular policy has been giving around 15 % returns in the past. He will tell that he himself has invested in it along with his relatives because this one is best in the market. To proove he may also show you papers in which you can see 15 % annual returns in the previous years. So should you opt for it? The answer is not yet. Many agents will show you this kind of paper with excellent returns but the papers are not always from the company. These are beautifully made on a computer by the agents themselves. I myself have a personal experience of it. So always look for approved sales brochure from the company.
3. Often people get calls from their agents to surrender the current ULIP and change over to the another. This happens mostly after their policies have run for five years. When anybody asks the reason behind it they are told that the current plan is not giving proper returns and as per a research this will continue for another one or two years. Your agent will suggest you another ULIP and will press you to act fast before its too late. The reason behind it is that during first five years of a ULIP the charges are highest. So the returns are lesser. An agent gets maximum commision during this time. So if you invest in a new policy he will again get maximum commision for five years. But on the other hand you will be on the losing side as again for 5 years you will have to pay higher charges for your new policy.
4. If you are having children and someone asks you " is your child insured " what would be your reaction? Well if you are an emotional parent then you might feel that if you have insured yourself then why not for your child. But actually insurance must be bought for the earning members of a family as all other members are dependant on their income. If you are not financially dependant on your child then it is not recommended to insure him/her. It would be wise to invest the same amount somewhere else where you would get maximum returns in the long term. These returns can be used later on to secure your child's education or marriage etc.
5. Many people who are not much aware of the basics of investment get fooled by agents who sell them either unheard policies or policies of unheard companies. Most of these companies are frauds and after some time not only the agent but the office will also vanish from its place. These people are first shown excellent returns of 20 to 50 %, higher sum assured and lower annual premiums but later on these turn out to be a false promises. Sometimes agents sell unheard policies on the name of a reputed companies which is not true. So its better to investigate yourself if you ever come across a unheard policy or company.
1. If you have ever come acros an LIC agent he would have definitely told you that his product is the best as there is a guarantee from the government because its not a private company. But don't get fooled by it. LIC only guarantees sum assured. This guarantee you will get from all the companies including the private ones. So why do they say it? Well the catch is that whatever the returns they are promising is not guaranteed. But just because its not a private company and the agent keeps on repeating this ' Guarantee ' word you may believe that returns are also guaranteed. Agent from a private company also cannot guarantee returns. But yes there are certain policies in the market including ULIPs in which the company guarantees minimum returns. Unless this thing is in black and white from the company itself you must not trust your agent.
2. Even if an agent does not guarantee returns he might say that a particular policy has been giving around 15 % returns in the past. He will tell that he himself has invested in it along with his relatives because this one is best in the market. To proove he may also show you papers in which you can see 15 % annual returns in the previous years. So should you opt for it? The answer is not yet. Many agents will show you this kind of paper with excellent returns but the papers are not always from the company. These are beautifully made on a computer by the agents themselves. I myself have a personal experience of it. So always look for approved sales brochure from the company.
3. Often people get calls from their agents to surrender the current ULIP and change over to the another. This happens mostly after their policies have run for five years. When anybody asks the reason behind it they are told that the current plan is not giving proper returns and as per a research this will continue for another one or two years. Your agent will suggest you another ULIP and will press you to act fast before its too late. The reason behind it is that during first five years of a ULIP the charges are highest. So the returns are lesser. An agent gets maximum commision during this time. So if you invest in a new policy he will again get maximum commision for five years. But on the other hand you will be on the losing side as again for 5 years you will have to pay higher charges for your new policy.
4. If you are having children and someone asks you " is your child insured " what would be your reaction? Well if you are an emotional parent then you might feel that if you have insured yourself then why not for your child. But actually insurance must be bought for the earning members of a family as all other members are dependant on their income. If you are not financially dependant on your child then it is not recommended to insure him/her. It would be wise to invest the same amount somewhere else where you would get maximum returns in the long term. These returns can be used later on to secure your child's education or marriage etc.
5. Many people who are not much aware of the basics of investment get fooled by agents who sell them either unheard policies or policies of unheard companies. Most of these companies are frauds and after some time not only the agent but the office will also vanish from its place. These people are first shown excellent returns of 20 to 50 %, higher sum assured and lower annual premiums but later on these turn out to be a false promises. Sometimes agents sell unheard policies on the name of a reputed companies which is not true. So its better to investigate yourself if you ever come across a unheard policy or company.
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