On 26th March 2015 I went to State Bank of India, Vikaspuri, New Delhi.
There I saw an old sikh couple being offered an insurance policy by an officer of the bank. Insurance policies are never a good investment product.
I asked this couple what is being offered to them by the Bank officer. They told me that if they pay Rs. 50000/- per years as insurance premium under the policy they will get guaranteed Rs. 1200,000/- at the end of 10 years. Besides this there will be lot of other insurance benefits. I calculated in my mind and I found the return to be extremely high.
I asked the bank officer. He confirmed that it is the offer he had given the couple. I asked him whether it is equity linked plan. He denied first. Then said it is growth plan. On further questioning he accepted that it is equity linked plan.
I asked about the guarantee part in the insurance scheme. He confirmed that there is guarantee that Rs. 12 lacs will be paid back to them after 10 years.
There was another lady sitting nearby. She was listening to all this. She also spoke of her experience. She said that she had taken similar policy and had suffered a loss. She did not get even the amount paid as insurance premium on maturity.
In view of Bank officer manipulating the scheme, the couple was confused and wanted to invest the money thinking that I must be wrong. How can a banker like State Bank of India make false statements like that. But when this lady also spoke they were terribly moved. They asked the officer straight questions. And with our support to the old couple, finally the bank officer accepted that there is no guarantee of the amount. The insurance premiums shall be invested in equity and whatever is the result of such investments, shall be paid on maturity. And it can be even less then Rs. 5 lacs.
On 28th March 2015 I confronted the Bank Manager of SBI Vikaspuri about the issue. Even the bank manager said that it is possible that the policy holder gets Rs. 12 lacs on maturity. But she refused to make a statement on the guarantee part of the deal. She kept saying that she has even helped policy holders get even higher amounts. I fail to understand what is the role of the Bank Manager in getting higher returns on an insurance policy.
May God reward such Bank Managers in most befitting manners.