Insurance through SMS, a Sick Marketing Strategy

Agents are luring customers through SMSs to buy insurance, using gold as a bait. These fly-by-night operators even insist that you sign up for the policy in the first meeting itself. But don’t fall for this, whether it is insurance, pension or any other investment

Dubious investment, insurance and pension plans are being sold via SMS.  Over the past couple of months we have been receiving a steady stream of SMSs with a variety of options. One message offers a gold coin on signing up, while another is promising Rs1 crore after 21 years with no market risk if you pay Rs14,000 per month for 16 years. Some are incorrectly calling it a monthly deposit scheme, to hint that it is like a fixed deposit. Most of these messages contain numerous spelling mistakes in the names, writing Bajaj Allianz as Bajaj Alliance, Future Generali as Future Generalli and so on.

This writer followed one of these messages, to meet with a person who turned out to be a dubious agent who handed over details of a scheme explained on cheap pamphlet paper, the type they distribute outside railway stations. The sales pitch was, “Just sign at these four places and I will get you a policy.” Insurance agents seem to be devising newer and more devious ways to mis-sell policies to gullible investors.

During the conversation over the phone, we inquired how the scheme managed to pay over 10% per annum returns with no market risk, but the agent was not interested in talking about it. We quickly learned that it help to act dumb, when talking to agents.

Some phone numbers we dialled we found were disconnected. A couple of callers promised to get back to us with details of Aviva and Tata AIG plans, but they never did. Still, we managed to meet one insurance agent to understand the offerings.

According to the agent, LIC Saral Pension plan was a combination plan that he had devised. The customer pays Rs5,000 per month for 10 years to get Rs1,20,000 every year from the 11th year to the 20th year, Rs60,000 every year from the 21st year for a lifetime, and Rs9 lakhs as an insurance fund for the family.

The reverse of the pamphlet had a risk cover table (normal and accident) for ages up to 20 years, so they show the benefits that were offered. He claimed the returns were risk free and that he could give a guarantee for it. Needless to say, this is a verbal guarantee that does not mean anything. After 10 years of payment, who does the policyholder turn to if he does not get any money back? The exact plan details are also on the internet and this has a warning about returns not guaranteed. It is obviously sold by many agents.

Interestingly, this agent did not have an LIC agent badge, because he claimed to be mere distributor. He had a genuine LIC form and said that the cheque payment would be made in name of LIC. However, the Saral Pension plan is not specified on the LIC website. Neither was Jeevan Bachat mentioned by another agent we called over the phone. When we called him a couple of months ago, he had told us that this was a new plan from LIC, and when we called him recently he said the plan had started a month ago. The gist of all this is that these combination plans are hard sold today. It is hard to pin down the policy details as there are none. All promises of investments being market risk free are baloney. Neither the agent nor any insurer will give any promise in writing.

Interestingly, combination plans are openly marketed on the internet. is a website of an LIC agent. It says “Retire & Fun II is a combination of LIC plans specially designed to provide tax-free, high returns and high risk cover after retirement. It’s not an LIC Plan.” Another website says, “Jeevan Anand is a combination of Endowment Assurance and Whole Life plan.”

According to Vipin Anand, chief of corporate communications, LIC, “LIC does not promote combination plans. The plans we offer are only the ones that we publicly put on our website and have official brochures. If an agent, for example, proposes a combination of three plans and it is acceptable to the customer, we can only underwrite three plans separately and not a combined plan. We will need three separate proposals.”

Mr Anand recommended that customers visit the LIC website, to know about the firm’s insurance plans, contact the office or customer service for verification and ask the agents for proper documentation and brochures of plans offered. LIC also advertises its plans in newspapers. When asked about the dubious agent we met as well as other LIC pamphlets we received by post, he said, “We have forwarded the details to relevant zonal offices and if they are LIC agents then we will take appropriate action.”

About six months ago, Moneylife contacted a senior official at the Bajaj Allianz headquarters in Pune for an official response about an SMS, which we again received recently. At the time, he said, “We are investigating the case and will take appropriate action.” After six months, the SMS offer is still doing the rounds and this time we are told that the SMS just says Bajaj and not Bajaj Allianz, so they are not really sure about it and no one is picking the phone now. When we called the number (9840047516), it was answered by a person who spoke in broken English, saying he is based in Chennai. He did not understand Hindi. When we called again the following day, the same person said that if it is about the Bajaj Allianz scheme someone will call back. We tried to ask about the gold coin offer, but further conversation was not possible.

Is this a case of insurance company managements turning a blind eye to dubious marketing schemes set up by agents, or managements caught unawares as their policies are being grossly mis-sold by agents to susceptible customers? Are such combination plans allowed by IRDA? Insurance is simply a promise for tomorrow with no tangible product to hold against the premiums one pays. Then, why risk buying this from dubious agents selling dubious plans?



Bhujang Kulkarni

6 years ago

Misleading pamphlets are mostly distributed by LIC agents or so called LIC agents.
The LIC intelligence, if exists, should book such culprits.

nagesh kini

6 years ago

When people claiming to be LIC agents/distributors displaying LIC brochures, collecting cheques payable to LIC lay persons are bound to be taken in when they are promised more than normal returns and safety. It is for LIC to locate and nip the rot in the bud, when specific cases are brought to its notice. IRDA ought to act suo moto too to prevent such blatant mis-selling.

Prem panjwani

6 years ago

all this is happening with the pressure from insurance company specially from PVT sector to show the volume with IRDA about number of policies....since no agent have a long carrer with them and they mis sell and it is been tought to them to sell like this ... Since pvt sector do not have any good product compare to LIC and since they can not declare bonus or their profit is yet to be earned in books...they lure market with unethical ways of appointing non approved ways of marketing which IRDA do not recognise....hence image of insurance industry and agent is been effected...
By hook r crook way they need premium to underwritten in the books without any is misselling or overselling and money at risk of common investor because of these practice......

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Govt to allow 5 lakh tonnes of sugar exports

New Delhi: Food and agriculture minister Sharad Pawar on Wednesday said the government will allow sugar export of 5 lakh tonnes to gain from high global prices adding that the shipments won’t impact domestic retail prices, reports PTI.

Mr Pawar also announced the hike in levy sugar price for the ongoing 2010-11 season (October-September) at Rs18.47/kg, against Rs17.57/kg last season. The government buys sugar (known as levy sugar) from mills for supply via ration shops.

“With the prediction of good production and to take the advantage of good international prices, the government has already permitted exports against the pending ALS (Advance Licence Scheme) obligations,” Mr Pawar said at the 76th annual general meeting of Indian Sugar Mills Association (ISMA) here.

“In order to further maximise our return, the first tranche of export of around 5 lakh tonnes under the OGL (open general licence) will also be permitted,” he added.

On whether exports will have any impact on retail prices, Mr Pawar said, “I don't think. If production is more, it will not affect domestic prices.” At present, retail prices are ruling around Rs30-Rs31 per kg in the national capital.

The Department of Food and Public Distribution will work out the modalities of sugar export within 10 days, Mr Pawar said, adding that the ministry will ensure that mills get equal opportunity to benefit from the export.

“We appreciate that any export in near future will get rich dividend considering the international prices. This will help in giving good cane prices to the farmers,” he said.

Stressing that exports would be linked with production, the minister said the government will assess sugar output every month and thereafter will take a decision on allowing more quantity for export under OGL.

OGL is a permit the government gives to mills to export sugar without any restriction and conditions.

The government had earlier allowed the export of about 1.5 million tonnes of sugar through the Advance License Scheme (ALS) and imported stocks stuck at ports.

Under ALS, mills have to fulfil their export obligation of about one million tonnes of sugar by March, 2011 against the duty-free imports during 2004-2009 period.

Announcing the hike in levy sugar prices, the minister said, “The average all-India provision price of levy sugar will be Rs1847.05 per quintal as against last year's average Rs1757.50 per quintal. This will further help in boosting the liquidity for the mills.”

The government has pegged sugar production in the 2010-11 season at 24.5 million tonnes, against 19 million tonnes last year. However, the industry is expecting higher production of 25.5 million tonnes.

On decontrol of the sugar industry, Mr Pawar said, “The issue is under consideration of the government and has been discussed at the highest level.”

Pointing out that demand for sugar is increasing, the minister said that there is a need to increase sugarcane yield to at least 80 tonne per hectare from the current level of 67-71 tonnes.

On compulsory packing of sugar in jute bags, the minister said that the issue has been taken up with the textiles ministry and “it is hoped that an acceptable solution to the problem would be found.”

He, however, urged the industry to take steps to comply with the international norms on packing sugar in 50 kg bags.

Justifying his special attention to the sugar sector, Mr Pawar said, “I would like to emphasise that my services will always be available to this vibrant sector, which is the largest agro-processing rural industry in the country catering to around 50 million farmers and 5 lakh workforces and which encompasses around 7% of the rural population.”

In 2009-10, around Rs46,000 crore was paid to cane farmers and “this year also we expect an increase,” he said.

Mr Pawar said the interest of farmers and consumers will “always be overriding priority of my ministry” and asked the industry to reciprocate in shouldering its responsibilities. 


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