Here’s a short case study basis the experiences I have had
while talking to clients about their thoughts on Life Insurance.
To begin with, let me explain these two terms I have
generously used in the article:
ULIP: A Unit Linked Insurance Plan (ULIP) is a product
offered by insurance companies that gives you the benefits of both life
insurance and market investment under a single integrated plan.
Term Insurance: Term insurance is a type of life insurance
policy that provides coverage for a certain period of time, or a specified
“term” of years. If the insured dies during the time period specified in the
policy and the policy is active – or in force – then a death benefit will be
paid to the insured
Case 1:
ULIP Boom and Bust
None of us can forget the era when the so called ULIP Boom
happened. It was at its peak during the year 2010.
In this period life insurance agents had a field day making
promises to clients like- “the money that they invest would automatically get
doubled in 5 years” , “all you need to do is pay your premium for 5 years and
for the rest of the policy term, the insurance company will pay the remaining
amount and still give you huge returns” – the false promises continued so on
and so forth.
Was it the fault of the life insurance agent or the customer?
I would say both.
It is shocking to note that the customer, who probably
haggles with every other vendor in the neighborhood to give him discounts on
everyday goods, never asked any
questions when buying a very important thing like Life Insurance and blindly
believed whatever the insurance agent told them.
He should have at least asked basic questions like-
Whether they were surely going to get said amount after 5
years, could the agent show the proof?
What charges would be levied on this investment?
Does the plan really guaranteed returns or not?
ULIPs sold like hot cakes in this period, but unfortunately
customers who were sold with the dreams of getting double money and other false
claims, were hugely disappointed and felt cheated.
Result : Customers stopped believing in ULIPs.
Now days, with the fall in customer’s positive sentiments for
ULIPs, life insurance companies have tilted the scale towards Term Insurance
Plans.
Case 2:
Life Insurance Companies Focus on Term Insurance
A new insurance agent presents a good“Term Insurance Plan” to
the same customer who earlier bought ULIPs; but things have changed now.
Customers, who had blindly chosen Ulip Insurance India products
without a single question, are now ready with their list of questions. Alas!
Only if they understood life insurance and asked pertinent questions.
Instead of asking questions relevant to Term Insurance, the
customers asks questions like –
How will I be benefited if the money is received after my
death?
If I survive will I get anything?
We often forget that the real meaning of the word “life
insurance” is to build an emergency fund for one’s family and support them in
case one meets with any unforeseen mishap in life. It is surprising to note that not only people
misunderstand term life insurance but also are reluctant to pay relatively
lesser amounts of premium for higher life coverage when compared to other
market linked insurance schemes.
Source: Here’s a short case study basis the experiences I have
had while talking to clients about their thoughts on Life Insurance.
To begin with, let me explain these two terms I have
generously used in the article:
ULIP: A Unit Linked Insurance Plan (ULIP) is a product
offered by insurance companies that gives you the benefits of both life
insurance and market investment under a single integrated plan.
Term Insurance: Term insurance is a type of life insurance
policy that provides coverage for a certain period of time, or a specified
“term” of years. If the insured dies during the time period specified in the
policy and the policy is active – or in force – then a death benefit will be
paid to the insured
Source: http://blogs.rediff.com/bestulipinsurancepolicy/2016/06/15/ritikashah11998-31/
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