India’s surrogate cheating called Life Insurance

November 18th, 2014, 12pm

It was 31°C with nil significant cloud. The breeze was light.

In India insurance policies have become synonyms for surrogate cheating wherein the first and the foremost priority for insurance companies is to reject claims and then pay when you fight for it. This happens with each and every insurer. We have not been able to evolve a practical way insuring our population. The biggest culprit has been LIC. It has sold its policies not as a life cover but as an investment product. You pay for your life time and if you die, you get pittance and if you live on to claim your maturity amount, it is double pittance. LIC is the reason why Indians have never heard of Term Insurance, something each and everyone needs to get covered with.

I remember the LIC agent visiting our house during my childhood and selling products prefixed with Jeevan and suffixed with Varshas to my parents. He would often make us the emotional USP to sell their products blackmailing with money needed for our future. All the parents, including mine, were foolish enough to purchase policies for both of us. This primarily means for the next twenty years, they will pay a quarterly premium and if any one of us die, the parents will get the maturity amount.

How foolish this was? It should have been the other way round. The children need support in case the parents die. But LIC always sold its policies the wrong way and even today continue to do so. It goes against the very tenets of insurance policy which helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered.

This is because LIC functions to feed its staff and agents not to cater its clients who pay them. A good amount of share from premium goes to the Development Officer and the Agent. It is as high as 30 to 40%. In the melee they have completely ignored the insured. Most agents do not clearly state to their clients that if they have multiple policies, all policies have to be clubbed together so that in case of death, a single claim can be made (fortunately my agent was good enough to inform me this).

In most cases, LIC policies are bought out of obligation. If your closest friend or relative is insisting you to buy a policy, you are unlikely to say no. But these policies never complete their term. One or two premiums are paid and thereafter it is completely forgotten. The second list includes policies wherein disputes arise because you have already redeemed your one policy with the death certificate issued (a seal is stamped on the death certificate that LIC has issued its maturity amount and no claim is pending). When you go to redeem your second policy with the same death certificate, you can see the real colour of your agent and Development Officer. In this case if you have multiple agents, your chances of getting this claim are almost nil.

You must have heard a thousand times a disclaimer - Insurance is the Subject matter of Solicitation. This precisely means Insurance policies should not be sold but willingly accepted by the insurer. This doesnt happen in India because our upbringing always made us convert even life policies into investments than risk mitigation. It further says “Please read the Insurance related documents carefully”. This is a joke. No insurance company gives sufficient time to read these documents nor prints them legibly.

David Wade and Vinay said thanks.

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Binu Alex

Jack of all master of none. Reckless Thinker, Bad writer, Tech lover, Safe Driver in Dry Republic of Gujarat. 2 decades in print, web and radio. Unglorified tweeter. No Admirers. Unlimited Foes, Endless envy. Not to be loose shunted

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