Agents are luring customers through SMSs to buy insurance, using ‘gold’ baits. 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 investments

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. www.licofindiainsurance.com 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 www.mylicindia.com 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 that we again received recently. At the time, he said, “We are investigating the case and will take appropriate action.”

Six months later, the SMS offer is still doing the rounds and this time it simply says Bajaj and not Bajaj Allianz, so no one can be certain about what is on offer. 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 answered, saying that it is about the Bajaj Allianz scheme and 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? — Raj Pradhan