A lot of the selling is by the local 'family friend' who moonlights as an agent, or by the branch manager who has quotas. With 40% commissions, selling ULIPs was irresistible. It's an easy sucker ploy, too- tell the buyer that he pays 1 lakh, saves 33K on tax, and gets *at least* 1.5 lakhs at the end. Most people anyway submit the receipts to their office HR guy and are too clueless to check how much tax has actually been saved.
I have no sympathy for the 20 and 30 year olds who bought into this con, and then learnt that (a) they were saving no tax because their 80C was used up (b) found that they faced 100% surrender charges, etc (c) saw the value of their units fall. A classic case of throwing good money at a bad product thanks to this 'save tax' madness. That said, this malaise has affected older people who've been suckered into buying useless products (same principle should apply, but I do have a little more sympathy for retirees who've paid money they can ill afford, to scamsters). I have a 65 year old aunt, who does not need life insurance at all, but who was bullied into buying some ULIPs because her local agent shouted at her and said 'Don't you have value for 33K? Do you just want to throw this money away"?. SRS- I don't see why anyone should buy the money-back kind of insurance at all. If you're risk averse, aren't there other ways to put money in tax-saving instruments which have guaranteed returns and shorter lock-ins? NSCs, Post Office deposits, etc? Sent on my BlackBerry® from Vodafone -----Original Message----- From: Srini RamaKrishnan <[email protected]> Sender: [email protected] Date: Tue, 23 Apr 2013 15:40:43 To: [email protected]<[email protected]> Reply-To: [email protected] Subject: Re: [silk] Migrant workers and bank accounts On Tue, Apr 23, 2013 at 3:36 PM, Suresh Ramasubramanian <[email protected]> wrote: > While sophisticated investors might not want to mix insurance and investment, > it still remains an option - in several cases - for less sophisticated > investors, as long as they find a honest advisor who doesn't missell to them. It isn't just that - insurance premium is tax deductible I thought, or something like that. At any rate the tax laws were a driver IIRC.
