Insurance agents are selling SBI ULIPs with assured returns
May 5, 2010
Even as the Insurance Regulatory and Development Authority (IRDA) is in a turf war with market regulator Securities and Exchange Board of India (SEBI), insurance agents are offering ‘assured’ market returns of more than 16% under unit-linked insurance plans (ULIPs), literally camping outside various SBI branches in Chennai.
Aniram Bhatt, a Chennai-based independent financial advisor (IFA) received the following SMS (supposedly) from SBI, “SBI Life: Just Pay Monthly Rs1,500 for 5 years, 20th year take Rs10 lakh Child Saving Pension Plan."
“When I called up the person (who sent me the SMS), he told me this is the minimum amount guaranteed by the bank. The market will be very good and you can get more than this. As per IRDA regulations, they are not supposed to guarantee more than 6% to 8%,” added Mr Bhatt.
An e-mail query sent to SBI officials remained unanswered till the time of writing this report.
According to the pamphlets being distributed in Chennai, under the ‘Mahaanand Scheme’, one has to pay Rs12,000 per annum for five years and one is assured a return of Rs99,719 in the sixth year and Rs12,04,995 in 20 years. Nowhere does this pamphlet mention that it’s a ULIP product and that the investment is subject to market risk.
The pamphlet printed in Tamil, mentions that no medical check-up is required. Under another pamphlet touting a ‘Unit Plus 3’ scheme, one has to pay Rs2 lakh premium per annum for three years and get assured returns of Rs13,37,777 in six years; Rs27,64,509 in 10 years and Rs1,70,88,012 at the end of a 20-year term. The lowest annual premium one can pay is Rs18,000 and the highest is Rs5,00,000. The scheme guarantees assured returns of 10 times the premium amount. As per the pamphlet, tax exemption is also available under Section 80C under the ‘Unit Plus 3’ plan.
According to sources, the minimum premium amount of the Rs18,000 scheme is widely sold by these agents to small investors with a systematic investment plan (SIP) option which guarantees Rs1,23,366 in three years; Rs2,55,812 for a 10-year term, and Rs16,29,291 in a 20-year term policy.
These pamphlets are being distributed outside various SBI branches in Chennai. The agents have put up makeshift tents outside these branches. The immediate targets of such products are obviously bank customers.— Ravi Samalad