“I felt like a con artist. It was like ripping the customer’s wallet open and burning his hard earned cash. If an insurance linked investment product earns my bank 10 times more revenue/commission as compared to a mutual fund or deposit, I have no choice but to sell it. It helps me keep my job and banks achieve their revenue targets 10 times faster”
– Confession Of An Ex-Banker.
An on-line survey conducted by Economic times in November 2015 showed that three out of five customers were mis-sold investment products by Banks. In fact, IRDA (Insurance Regulatory and Development Authority) will now hold banks accountable for investment advice they provide as complaints about mis-selling rise.
Haven’t you noticed? The moment you have a colourful bank balance, you are immediately contacted by target-hungry bank Relationship Managers (RM) who manage to push down your throat some kind of Insurance linked investment product. The problem for the investor begins thereafter. The first symptom is when the customer is stunned – the ‘deer caught in headlights’ syndrome – realising that the returns committed to him were only illustrations, with no concrete past track record and even if they do, the returns have been abysmally low, thanks to high charges. The second symptom is ‘Fuss gaya’ syndrome – here the investor realises that his money is stuck for a duration of at least 5 years or even 10 years with heavy surrender charges, and on top of that he has to pay the premium every year. Thereafter, you will notice your RM disappears more frequently than he reappears when you try to address this issue. There goes your hard earned money!
Here’s what you should do… firstly, except for medical insurance and pure life insurance which can be taken online with low premiums, avoid any other insurance linked investment. If it’s too late and you have already invested in it, please note that you have 15 days free-look period to terminate the policy and get complete refund of your money. If you have missed the window period and have been mis-sold a product, immediately inform the Bank grievance cell, RBI ombudsman and IRDA ombudsman.
Put your food where your mouth is, hence do your homework prior to investing. Understand the intrinsic nature of the product and cross-check with others. Investment with no past track record could be a new entrant disaster like Donald Trump. Your ignorance is the biggest weapon that bank relationship managers use against you. Investing with negligence is like going to war with a blunt knife!