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“Life insurance as an investment may lead to grief”

Raj Pradhan discussed six problems that policyholders face and gave tips to overcome these problems. He also informed citizens of the Foundation’s free Insurance Helpline and how to use it effectively for solving frequently observed problems, to a packed hall in Moneylife Foundation’s 177th seminar

Buying life insurance as an investment tool may lead to poor returns and a lot of grief. Often savers don’t do the correct analysis and fall for the pitch of insurers. This includes senior citizens. Then there are other cases where fraudulent selling is involved with inducements such as offers of “interest-free loans”, gold coins, mobile tower rent or sharing the rewards of a contest. In such cases, the victims’ downfall is precipitated due to greed. These are some of the real-life cases we go to know from Moneylife Foundation's Insurance Helpline. The Helpline has received a huge response and offered us insights into the most common problems that people face with their life and health insurance. In a unique event, Moneylife Foundation’s Raj Pradhan shared the insights from the Helpline with the Foundation members.

Mr Pradhan pointed out that it is not always easy to prove mis-selling and hence making the insurance company refund your premium is not easy. But, Moneylife Foundation Insurance Helpline has successfully done it for 17 policyholders for amounts ranging from Rs20,000 to Rs4 lakh.

The Helpline came across several cases of senior citizens falling victim while buying life insurance? Why do they buy life insurance at an advanced age? You do not need any life insurance after retirement and hence please stay away from all life insurance products. In one case we are pursuing, the senior had bought a child plan! Many people used the Helpline cases to ask about surrendering a policy. Moneylife does not recommend blindly surrendering one’s insurance policy. It may be a second blunder after buying a wrong policy. Read Moneylife cover story for more information - Life Insurance: Surrendering policy? Think again

After discussing life insurance, Mr Pradhan went on to discussing health insurance or Mediclaim. These pose more complex problems. Policies differ in their wordings on room rent limit. Some will prorate the hospital bill if you entail higher room rent service. But others may prorate even though the policy requires that the charges be limited to the charges applicable to the entitled room category. If you are aware of it, you can fight for your rights.


Another problem for policyholders, explained Mr Pradhan is that Third-Party Administrators/insurers make a mockery of preferred provider network (PPN) rates. For standard procedures, the network hospital and TPA/insurer should have agreed rates and there is no reason for the insured to pay from pocket. Yet, there are numerous cases of hospital bill much higher than TPA/insurer approved rates. Mr Pradhan advised that it is in your interest to find the hospital rates in advance and know the TPA/insurer rates in case of pre-planned surgeries. That way you will be protected from the farce of PPN rates as hospitals on network do not necessarily mean that rates are sacrosanct. The event ended with a lively discussion question answer session by the audience.



Sumeet R Nayak

3 years ago

Dear Mr. Pradhan,

You mentioned in your presentation that making the policy paid up is a better option rather than surrender or lapse. Could you please elaborate on the procedure/steps we need to take to do this as my agent is unaware of this option.


4 years ago

Paying insurance premiums in India is like paying tax. Subsidizes Govt profligacy.


4 years ago

Good seminar, informative and simple...
Need better public addressing system though.
I think there were many insurance agents attending the seminar, and were not in agreement with Mr. Pradhan and were creating a racket behind. Moneylife, must be careful of who attends the seminars...

Best wishes to Mr. Pradhan, keep the good job up and to Money life...

Jagdish Bramta

nagesh kini

4 years ago

Raj, Insurance as an investment only provides negative returns both in the long and short runs.It is amply proven.
The only redeeming feature is insurance acts as a shield in the face of adversities, albeit, fig leaf. We believe the cover helps. We go on paying premia through our noses and when it comes to lodging claims every genuine claim is fraught with rejections, disallowance and reductions while professional false claim lodgers get away with hefty cheques with blue murder!

Weekly Market Report: Nifty, Sensex under severe bear grip

Nifty may rally a bit mid-week but the trend is firmly down

The holiday-shortened week, which had three days of positive trading, was dragged into the red by a single day of huge sell off. The fall may be attributed to the US 10-year treasury yield crossing the two-year high and the failure of Reserve Bank of India (RBI)’s measures to control the weakening rupee. The rupee made a new record low on Friday.  The Sensex lost 191 points (or 1%) to close the week at 18,598 and the Nifty settled at 5,508, down 58 points (or 1%).


On Monday, the indices rose for the second consecutive trading session. India’s trade deficit declined sharply on year-on-year basis in July 2013 to $12.26 billion from $17.47 billion in July 2012 as exports surged and imports fell. On Tuesday, in spite of the report of weak industrial production data for June 2013, stock market edged higher to make the highest percentage closing gain since 11 July 2013.


On Wednesday, the rise in the wholesale price index (WPI) inflation did not deter the up move. The WPI inflation moved past the RBI’s comfort zone, by rising to 5.79% in July 2013, from 4.86% in June 2013 and yet the market moved higher on Wednesday. The markets were closed on Thursday due to Independence Day holiday.


The next day however, it was bloodbath all the way on the Dalal Street. The Sensex recorded a percentage loss of 3.97%, which is the sharpest since 22 September 2011.


During the week, the RBI increased its control on the downfall of the rupee by cutting the amount local companies can invest overseas without seeking approval to 100% of their net worth from 400%. The central bank has also tightened cash supply, restricted currency derivatives and curbed gold imports.


The top gainers on the Nifty this week were Tata Motors (13%); Tata Steel (8%); Hero MotoCorp (7%); Sun Pharma (7%) and NMDC (7%). The major losers were Bharat Heavy Electricals (10%); Punjab National Bank (7%); Bank of Baroda (7%); Reliance Infrastructure (6%) and State Bank of India (6%).


Out of the 27 main sectors tracked by Moneylife, the top five and the bottom five sectors were:


Top ML sectors


Worst ML sectors






Auto components




Consumer durables


Lifestyle & leisure














4 years ago

In a strong bull market everybody will give tips without having knowledge.Similar to that now exactly opposite is happening.Everywhere is extreme pessimism.Now most of the regional
news channels are dabating about currency stockmarket and bondmarket etc. This is the time one should invest ina gradual manner to reap good rewards over next one to thre years time by way of investing in quality stocks.After one decade indian investor is geting excellent opportunity to invest in stocks.DOnt mis this golden opportunity.This kind of opportunity is very very rare.

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