mutual fund and Insurance policies

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sunil

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Sep 12, 2006, 7:29:09 AM9/12/06
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Dear Fmsite,

Two private sector companies Aviva and Bajaj Alliance are indulging in un-fair trade practices. They floated lucrative financial schemes and forcefully linked them with Insurance, when there was no need for the same. They had to remain in the market of financial sector, so they floated the schemes. Now the insurance business is very competitive and the premium amount earned is so meager that they thought it was not sufficient for them to pull on. This is where their intension's deviated. They thought of means and ways to leach out more premium. The process adopted is very simple.


They approach a consumer either through sales personality with his pep talks,  or are being forced to purchase through their bankers. Aviv is operating through ABN Amro bank and Baja Alliance through Syndicate bank.  They will sell you financial instrument with Insurance coverage. Firstly while selling the instrument they will say that it is insured and your life risk is covered, but will never tell you that you will be paying insurance premium additionally. Then they will ask for Medical examination and say it is free. Once medical examination is conducted, the reports are kept secret. They will complete some paper formalities of which the poor consumer will not come to know. One fine morning he will receive the financial instrument and the insurance policy. It is then he will come to know of the hidden facts and the costs involved.

 

  1. They take the shelter of the reports and say that your reports are not normal and thus you will be charged extra premium.
  2. On reading the document carefully one comes to know that the premium to be paid for the  insurance cover will be charged extra.
  3. The premium will automatically deducted every month from the unit holdings from your investments. Thus your investments are getting reduced.
  4. The fine print further declares that there is administrative cost associated to this proposal. The administrative cost is as low as 24 % of your first time investment, and 2-3 % on additional investments year after year. So if you invest say 1 lac first year then you land up paying 24 thousand towards the administrative cost. So you actual amount left for investment is 76 thousand..

 

This is colossus and killing. It is cheating and dacoity at the end of the companies.

 

Those who raise a voice, are then obliged with the waiver of the additional loading, and if you are a cow, then you continue paying a higher premium and filling the coffers of these companies for the same set of services.

 
Another new concept has started. This is like a marriage bonding with the other institutions through their top bosses, like Banks etc. the banks are forcefully selling the instruments to their customers. The business is flourishing because to maintain the repo with the branch manager and keep his account in good condition, one needs to maintain and do what branch manager wants.

 
Well the business of ethics in India is going down the drains. Every where and in every field one is trying to earn a dime even if he has to speak lie, make some wrong commitments or force upon by influence. The money should come by hook or crook.

Just put your right hand on your heart and ask the question that is it right and justified.  Amongst us only(possibly) be some of the senior persons involved in such activities. We the management persons must have suggested these practices. Has our institutes taught such practices? I am sure not.

 

Today this is the big question we all need to answer as to why such activities are being encouraged and are getting prevalent in the company managements.  

Sunil Prakaash
samintl.vcf

Mayank Prakash

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Sep 12, 2006, 4:57:10 PM9/12/06
to sam...@gmail.com, fmsi...@yahoogroups.com, consume...@googlegroups.com
Dear Sunil,
 
While you raise some valid concerns, I think we need to separate out what are valid business practices/products from those that are fraudulent and amount to cheating. Financial products that combine investment and insurance have been around for a long time now. There is nothing unfair nor anything "forceful" about them. 
 
While selling anything by making false promises is fraudulent, I think your argument that companies are "forcefully selling them to their customers" is just not tenable. As long as the product and its sale process do not violate the law, I dont see this as an ethical issue on the part of companies selling them. As a consumer rights organisation, I think you should focus on helping customers become more aware, more demanding and assertive. Focus your efforts by using your innumerable consumer complaints to build pressure on our lawmakers to have stronger consumer courts, better fine print laws and make systemic changes. When companies start encountering larger numbers of aware customers and a stronger consumer protection framework, such things will die an automatic death. I also believe this is easier to do in the financial sector, compared to say FMCG, as we have mature and strong regulators in the RBI, SEBI etc. Sloganeering and using terms as "dacoity" and "cheating" deflect attention from the the real need of the consumer. If companies are indeed breaking the law on such a large scale, then they should be aggresively dealt with in court, not by appealing to the hearts of company managers. 
 
- Mayank
FMS F/T 2002
 


 
On 9/12/06, sunil <sam...@gmail.com> wrote:

Dear Fmsite,

Two private sector companies Aviva and Bajaj Alliance are indulging in un-fair trade practices. They floated lucrative financial schemes and forcefully linked them with Insurance, when there was no need for the same. They had to remain in the market of financial sector, so they floated the schemes. Now the insurance business is very competitive and the premium amount earned is so meager that they thought it was not sufficient for them to pull on. This is where their intension's deviated. They thought of means and ways to leach out more premium. The process adopted is very simple.


They approach a consumer either through sales personality with his pep talks,  or are being forced to purchase through their bankers. Aviv is operating through ABN Amro bank and Baja Alliance through Syndicate bank.  They will sell you financial instrument with Insurance coverage. Firstly while selling the instrument they will say that it is insured and your life risk is covered, but will never tell you that you will be paying insurance premium additionally. Then they will ask for Medical examination and say it is free. Once medical examination is conducted, the reports are kept secret. They will complete some paper formalities of which the poor consumer will not come to know. One fine morning he will receive the financial instrument and the insurance policy. It is then he will come to know of the hidden facts and the costs involved.

 

  1. They take the shelter of the reports and say that your reports are not normal and thus you will be charged extra premium.

  2. On reading the document carefully one comes to know that the premium to be paid for the  insurance cover will be charged extra.

  3. The premium will automatically deducted every month from the unit holdings from your investments. Thus your investments are getting reduced.

  4. The fine print further declares that there is administrative cost associated to this proposal. The administrative cost is as low as 24 % of your first time investment , and 2-3 % on additional investments year after year. So if you invest say 1 lac first year then you land up paying 24 thousand towards the administrative cost. So you actual amount left for investment is 76 thousand..

 

This is colossus and killing. It is cheating and dacoity at the end of the companies.

 

Those who raise a voice, are then obliged with the waiver of the additional loading, and if you are a cow, then you continue paying a higher premium and filling the coffers of these companies for the same set of services.

 
Another new concept has started. This is like a marriage bonding with the other institutions through their top bosses, like Banks etc. the banks are forcefully selling the instruments to their customers. The business is flourishing because to maintain the repo with the branch manager and keep his account in good condition, one needs to maintain and do what branch manager wants.

 
Well the business of ethics in India is going down the drains. Every where and in every field one is trying to earn a dime even if he has to speak lie, make some wrong commitments or force upon by influence. The money should come by hook or crook.

Just put your right hand on your heart and ask the question that is it right and justified.  Amongst us only(possibly) be some of the senior persons involved in such activities. We the management persons must have suggested these practices. Has our institutes taught such practices? I am sure not.

 

Today this is the big question we all need to answer as to why such activities are being encouraged and are getting prevalent in the company managements.  

Sunil Prakaash


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