Insurance
LIC agents’ last hullabol for selling your “favourite” traditional products

Fear-mongering works well in finance. LIC offices and their agents are making last ditch efforts to push sales with display boards stating that your “favourite” traditional products are getting over.

You may have seen Life Insurance Corporation of India (LIC) agent offices putting up display boards stating that your “favourite” products like Jeevan Anand, Jeevan Tarang, Bima Bachat, etc are getting over and hence this is the time to make a buy. The limited time offers are always enticing for customers. LIC advertisements in print and TV are geared to ensure that customers bite the bait of buying the known than waiting for the unknown next year.
 

It matters little that new traditional products from 2014 will be better than the existing products. The prior deadline of 30th September was fabulous business for LIC with three times the monthly business for individual single premium and two times for individual non-single premium business when compared to monthly figures for pre-September 2013.
 

Read about the new changes in traditional products from January 2014 - LIC agents’ last hullabol for selling traditional products before service tax regime
 

LIC September 2013 figures show Rs2,153 crore business for individual single premium and Rs3,603 crore for individual non-single premium. The pre-September 2013 monthly numbers were approximately Rs700 crore for individual single premium and Rs1,500 crore for individual non-single premium. It is clear that LIC benefitted with  Insurance Regulatory and Development Authority (IRDA) previous deadline of 30th September to make way for traditional products compliant with new guidelines. IRDA postponed the deadline to 31st December, which gives LIC another opportunity to make another last push. The sales pitch, with service tax to be levied separately, also helped with increased business and will continue till the end of December 2013.
 

A sudden spike in life insurance sales would make one wonder if IRDA new guidelines for traditional products are good for customer or it is just agents’ mis-selling for own benefit. LIC advertisements actually undermine IRDA efforts to make traditional products better for consumers. ‘Make a quick sale’ seems to be the mantra as insurance companies belie the benefits that new guidelines for traditional products will offer.
 

It is unfortunate that many single insurance products are mis-sold as the consumer is made to believe that the corpus at end of the policy term will be tax-free. These products offer low insurance cover of 1.25 times the single premium and hence tax-free corpus is out of question and even 80C benefits will be minimal.
 

Insurance products give you deduction of up to Rs1,00,000 from taxable income under 80C, subject to the life cover being at least ten times the premium. If it is less than the minimum, the amount that can be claimed under Section 80C for tax savings reduces appropriately. For example, if you take a single premium insurance policy with life cover of 1.25 times, then the amount claimed under 80C will be only Rs12,500 for Rs100,000 premium paid. The tax benefit at the time of maturity is not applicable in this example.
 

So, why are some investors putting lakhs in single premium products like LIC Bima Bachat? Are these investors under impression that they can just show the returns from the product as tax-free? So, people just don’t put the corpus as taxable? No TDS also helps as there is no tracking. Taxable corpus just flies below the radar of IT department as tax-free life insurance corpus?
 

Usha Sangwan, first woman MD of LIC recently told Business Standard “Our blockbuster products that are launched every year had been closed-ended products. However, one particular policy - Bima Bachat - has been our evergreen blockbuster product with risk coverage and decent returns. So, we did not feel the need for any blockbuster product this year. We will be looking at launching a variant of this product.”
 

“Our performance in September was excellent. Earlier rules had said the new product regime would be implemented from October onwards, and September was supposed to be the last month in the old regime. In September, we had 91% market share in number of policies. We had 100% increase in business, despite volatility in the market. We collected Rs6,000 crore of new business premia for September. With old products being phased out, we are expecting a huge rush in December too.”

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COMMENTS

shivakumar A

3 years ago

What do you mean by Insurance Agents buy what they sell?
Do you mean to say that we buy from Private companies???
Please ask Top LIC Agents. As an Agent I applied for Rs. 1.20 Crore Life Insurance. But my proposal was postponed due to health conditions by LIC. I was having sugar problem, Kidney stone and Hypertension.

I am one of the TOP LIC Agent from Bangalore. 4 Times MDRT qualifier and Branch Topper.
But LIC postponed the proposals for 6 months.
Rule is for everyone unlike others. I am waiting for 6 months to complete. I am not interested to go to any other company. I may get policy for less premium but i don't want my nominees to suffer.

Dhaval Shahshikant Shah null

3 years ago

Article of monetife is Eye opener. Really good. I m IFA & A LIC AGENT.
The author is written absolutEly factful & truthful.
I agree that A big Term plan as pet ur capital need analysis + SIP OR RECURRING DEPENDS ON UR RISK TAKING ABILITY IS VERY GOOD SOLUTION FOR ANY ONE. I named as :TERM SIP. Now LIC also offer Online Term.plan shortly.
SIP IN MUTUAL FUNDS OR RECURRING IN POST OR BANK OR GOOD CO LIKE HDFC IS VERY GOOD COMBO BUT SORRY TO SAY BUT PEOPLE IN INDIA ONLY 5 % WILL CONTINUE SIP OR RECURRING FOR LONG TERM.
After 5 yr of Exp as IFA ; I CAN SAY still people not believe in Advisor but in Agents..So in.many cases v hav to follow the mass mania otherwise v hav to left our buisness & some other will catch ur cheese butter.

Dhaval Shahshikant Shah null

3 years ago

Article of monetife is Eye opener. Really good. I m IFA & A LIC AGENT.
The author is written absolutEly factful & truthful.
I agree that A big Term plan as pet ur capital need analysis + SIP OR RECURRING DEPENDS ON UR RISK TAKING ABILITY IS VERY GOOD SOLUTION FOR ANY ONE. I named as :TERM SIP. Now LIC also offer Online Term.plan shortly.
SIP IN MUTUAL FUNDS OR RECURRING IN POST OR BANK OR GOOD CO LIKE HDFC IS VERY GOOD COMBO BUT SORRY TO SAY BUT PEOPLE IN INDIA ONLY 5 % WILL CONTINUE SIP OR RECURRING FOR LONG TERM.
After 5 yr of Exp as IFA ; I CAN SAY still people not believe in Advisor but in Agents..So in.many cases v hav to follow the mass mania otherwise v hav to left our buisness & some other will catch ur cheese butter.

AJAY BIRENDRA SINGH

3 years ago

Agents of Life Insurance cos. it may be of any company is not promoting Term Insurance, especially LIC Agents never promote Term Insurance, thanks to private life insurance companies selling online term insurance, which is much cheaper than LIC.
Term Insurance and SIP in the mutual fund is best for investmet.
AJAY SINGH, NAGPUR

divya

3 years ago

I will tell you why people trust LIC.
1. they have seen how LIC behaves when presented with a claim on insurance.
2. they do not trust so called financial experts who inspite of their so called knowledge could not stop share market to decline that fast. People have lost lots of money in mutual fund and shares in the past so you have lost credibility.

I read an article that mutual funds have had worst year in returns this year even after markets doing well.
now why do I trust you when you say ditch lic, fd and invest with you

sivasankaran

3 years ago

WHAT IS IRDA DOING?CANNOT THE AUTHORITY STOP MIS-SELLING?IT APPEARS THAT THE AUTHORITY IS IN HAND IN GLOVE WITH THE INSURANCE COMPANIES IN LOOTING THE GULLIBLE COMMON MAN

REPLY

divya

In Reply to sivasankaran 3 years ago

both customers and agents are to be blamed for miselling. For example when you take a 15 year endowment policy always ask your agent to show it with a proof how much actual money would you have got had you invested in 1998

raj

In Reply to divya 3 years ago

Past returns do not mean much for future earnings. LIC bonus rates have gone down, but agent will never tell you that. Moreover, endowment of 15+ years will have better bonus than 15 year endowment. Will the agent guide properly?

Mahesh Krishnamurthy

In Reply to raj 3 years ago

I would always recommend/prefer a Term insurance to that of an endowment policy.
Would you agree Mr.Raj?
I have seen so many AGENTS not promoting Term Policy.

Swaroop C H

3 years ago

Thank you Mr. Raj for this timely article!

REPLY

raj

In Reply to Swaroop C H 3 years ago

you are welcome!

sunil bhagat

3 years ago

Another big selling point in Bima Bachat has been the instant loan facility of 63% of the premium paid. If u do so in 2nd yr it is 81%,and 93% if taken in the 3rd yr. The businessmen have taken to this as they can leverage the same in their businesses, besides getting money back every 4th yr beginning.
Ofcourse the final return is a big question

yogesh mahla

3 years ago

Frankly speaking i do not understand why people buy these policies which always give lesser returns than which can be achieved by shares/Mutual funds. I agree that everybody is not comfortable with equities but then there are other options like PPF/Recurring deposits. Insurance can be taken care by buying a term plan.

I sometimes feel that government should make buying term plan( i emphasize "only term plan" ,no ULIP or other fancy schemes compulsory for every earning member of the family. If we can have vehicle insurance compulsory then why not term plan.

Any enlightened member on this forum can clear my this doubt as i am not able to find a reason why it is not being implemented by government. Just imagine it can help so many poor families who face financial problems when somebody from there family who was the sole earning member is no more.

REPLY

divya

In Reply to yogesh mahla 3 years ago

It is not that simple , use rate function in excel to calculate for policies that are more than 20 year term. Remember all that amount is tax free and for a person in highest tax bracket it is a decent return.
key is not to put all things in same basket so use lic polcy as one part of your debt instrument.

raj

In Reply to yogesh mahla 3 years ago

Many people want something back if they don't die. Term plan is the best option, but is looked as waste of money if there is no death. Due to this, insurance cum investment is sold and bought even though the returns are low. Agent commission is important and hence insurance cum investment plans are sold heavily.

divya

In Reply to raj 3 years ago

a person needs to be wise while selecting products they buy.

you should not blindly trust any sales person.
Mutual funds agents and banks earn almost the same money but public is just aware of commission by lic agent.
most of them are actually poor lowly educated people. I had read this somewhere more than % lic agents do not even earn 50 thousand rupees per annum.

raj

In Reply to divya 3 years ago

that's another reason for not selling the term plan, which is best suited for insurance cover. Agent commission matters more than customer benefit. Customers end up with low insurance cover and low returns from insurance products.

DIPAK KESHAV DANDEKAR

In Reply to yogesh mahla 3 years ago

mr yogesh

i agree what you said on term plan. but my personal experience is that when i go for selling term plan. when i talk about term plan client says no i want something in return from the policy. this is my personal experience. irda should do it about term plan mandatory.

yogesh mahla

In Reply to DIPAK KESHAV DANDEKAR 3 years ago

Hello Mr Dipak,

You are 100% correct regarding the returns expected by people for money they pay for insurance. But that is the whole point when people cannot decide what is better for themselves then it has to be forced upon them. I am amazed this point is never discussed and projected by insurance companies. If this becomes compulsory then it will be good for insurance companies also.

sunil bhagat

In Reply to yogesh mahla 3 years ago

Dear Sir,
LIC of India is not interested in selling term plans. this i am telling u from practical experience as an LIC agent. Policy completion takes a lot mroe time and in case of medical problems the premium is scaled up tremendously. Even if completed we do not get the document for a long period of time in some branches.LIC is happy to sell endowmwnt and moneyback plans. The basic agent does not understand the concept of term plans in light of financial planning for the customer.

India ranks fourth in Bitcoin-mining malware infected systems

Bitcoin-mining malwares are rising in APAC with India coming at fourth place in infected systems

Bitcoin-mining malware is spreading and the countries most affected by it are from the Asia-Pacific (APAC) region with Japan at the top, followed by Australia, India and Taiwan at the 3rd, 4th and 6th position, respectively.

 

According to Internet security vendor Trend Micro, about 12,000 PCs globally were affected by Bitcoin-mining malware which were causing severe slowdown of PC systems. Trend Micro had detected three malwares called BKDR_BTMINE, TROJ_COINMINE and HKTL_BITCOINMINE which turned infected systems into a Bitcoin miner, making them virtual assets for the criminals.

 

"Bitcoin users have become the hot target for cybercriminals as Bitcoin transaction is permanent and has no reversal of charges. If you are the victim of credit card fraud, you can appeal to your bank to reverse the transaction and in many cases, they will. On the other hand, once your Bitcoin wallet is compromised by hackers there is no recourse to undo the transaction. In fact, there is no regulator or authority that Bitcoin users can appeal to if they fall victim to theft or fraud," says Dhanya Thakkar, managing director for India & SAARC at Trend Micro.

 

Executing malwares into the victims' computer to mine Bitcoin is a new type of cybercrime. Bitcoin mining, the process which creates new Bitcoin, is resource-intensive hence Bitcoin-mining malwares can slow down the infected computer due to the increased CPU load and subsequently raise power consumption.

 

To protect themselves from cyber threats, Trend Micro advised Bitcoin users to understand the way Bitcoin is being transacted and to manage it with the same caution and prudence that applies to real currency.

 

Besides using security software to filter malwares, Trend Micro also suggests Bitcoin users not to put all Bitcoin in a single wallet. They should divide their Bitcoin into income account for inbound transaction, and expense account for outbound transactions. For additional precaution, they should also consider managing all the wallets offline. Although Bitcoin is claimed to be "anonymous", the transaction records are still in public and it leave traces, Trend Micro said.

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SBI, Axis, ICICI and UCO Bank are the only ones charging for IMPS transactions

Would you like to save on mobile banking transaction charges? Then, you need to know that only four banks out of 59 banks charge customers for using the interbank mobile payment system and even NPCI charges just 25 paise per IMPS transaction from the remitter bank

State Bank of India (SBI), Axis Bank, ICICI Bank and UCO Bank are the only four banks among 59 banks offering mobile payment facilities that charge for the service. These banks charge customers anywhere between Rs5 to Rs25 each time they use the interbank mobile payment system or immediate payment service (IMPS) transaction. The other 54 banks offering IMPS facility do the interbank money transfer free of charge.  The banks are within their right to charge for the services, since the Reserve Bank of India (RBI) had left the decision on charges to the banks (Wake Up to Your Bank Charges). An email from an angry reader prompted us to investigate the matter for the benefit of readers. We find that the National Payments Corporation of India (NPCI), which introduced and manages IMPS transactions between banks, charges 25 paise per transaction from the remitter bank only. (http://www.npci.org.in/documents/IMPS_FAQsBankers.pdf )
 

The IMPS is a technologically advanced system that is very easy to use, cost efficient and time saving service which eliminates issues regarding money transfer. It is cheaper than the cheque clearing system.
 

So far, as many as 59 banks provide IMPS. Axis Bank’s IMPS outward funds transfer charges are Rs5 per transaction up to transaction of Rs1 lakh, Rs15 per transaction for amounts between Rs1 lakh to Rs2 lakh and Rs25 per transaction for amounts above Rs2 lakh. SBI charges Rs5 per transaction for remitting money through IMPS through its portal and UCO bank is also charging Rs5 per IMPS transaction.
 

A Moneylife reader pointed out to us that ICICI Bank’s outward IMPS charges are Rs5 per transaction. Yet, this is a better option than the time-consuming cheque clearing system. However, the reader, an account holder of ICICI Bank, said she would prefer to write a cheque instead of using the IMPS facility.
 

“It is penny wise but pound foolish, either customer spends Rs5 for transferring money through IMPS or customer does not spend anything by using a cheque. This is because banks provide certain cheque leaves every quarter free of cost. So why spend money for using IMPS?” she said.
 

It is interesting to know that Axis Bank, ICICI Bank, State Bank of India and UCO Bank which charges for IMPS services are part of the IMPS Steering Committee at NPCI.

NPCI, in collaboration with member banks had introduced IMPS that allow customers to make 24x7 instant interbank payments to individuals, or merchants via mobile phone, Internet or ATM. At the time of its launch in November 2010, a senior official of NPCI told Moneylife that IMPS would be offered free of cost and from March 2011 onwards  it would start charging 25 paise per transaction. (NPCI opens floodgates for mobile payments in India )
 

IMPS is restricted to interbank transactions, but can be used by anyone and from anywhere to make payments. One could pay the grocery bill to the shop owner through the mobile phone, provided both parties are registered IMPS users with their respective banks. Similarly, one could pay the fare to a taxi driver directly through IMPS. 
 

The RBI policy of forbearance (allowing bankers to decide charges themselves) with regard to service charges leads to the frequent hikes in banking service charges. Banks are charging money for almost every small transaction or service they offer. In the recent past, Moneylife has written about various charges levied on the customers by the banks.
 

RBI earlier said that technology has failed to reduce banking transaction costs. Technology must enable customer facilitation in terms of cost, time and convenience and it should be dovetailed to customer needs and expectations.
 

You may also like to read:

Wake Up to Your Bank Charges

Banks start charging money for SMS alerts, mobile banking

Banking Service Charges: Our online survey results

NPCI opens floodgates for mobile payments in India

Things you wanted to know about internet mobile banking but did not know whom to ask

What is the future of the credit and debit card payments system?

The payment processing industry-I

The payment processing industry-II

The payment processing industry-III

Virtual Money

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COMMENTS

Amit Kashyap

2 years ago

I simply don't understand the mindless charges put up by SBI. Recently I visited an ICICI bank ATM to withdraw cash from my SBI Debit/ATM card. due to unavailability of 100/- note in the ATM, the transaction declined. then I went to the SBI ATM and pressed for the required amount, but the transaction declined again with the caption that my account doesn't have the cash I was trying to withdraw. With surprise, I checked the last 10 transaction only to discover the I have been charged 17/- rupees for both the declined transactions.
One more issue I would like to share with the viewers. It happened a month ago. I went to deposit some cash in my account in a different branch of the same city and same locality. I deposited the cash through green channel in NCERT campus branch of SBI, whereas my account is in New Campus JNU branch of SBI. both the branches are in the same city and are located within 3KM. However, when I checked my account the deposited amount was 50/- lesser with a caption reading "Inter City Charges" displaying infront of the deduced amount. I was simply amazed with the fact that I have been depositing my checks in the same NCERT branch and had never been charged, then why they considered depositing of cash as inter city deposit?

Abhishekpy

3 years ago

Thats the problem with RBI, RBI in all his advise about service charges advises bank to charge customers "appropriately". and we all know how relative that term is.

RTGS/NEFT payment system requires an infrastructure which cost 1cr to 3cr and hence bank charging customer small fee per transaction can be justitied,.but i dont think IMPS requires any such infrastructure.

Suiketu Shah

3 years ago

Axis has a very poor perception in terms of quality of service in Mumbai.Pl also beware of Axis wealth management people.

arun adalja

3 years ago

icici bank is charging for neft transaction.

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