Beware !! Another Fraud in the Air !!

Mr. Rajeev Kumar,  a Chartered Accountant, working with a leading Automobile company was worried about his insurance policy. He had bought an insurance-cum-investment plan from a company (say “K”) 3 years back with an annual premium of Rs. 24,000 p.a.

When he learnt that this policy is not going to help him for his future, he decided to surrender it. He had paid a premium of Rs. 72,000 in last 3 years. But to his great surprise, his total surrender value payable was just Rs. 33,000. He was shocked !! A loss of Rs. 39,000 in a “Guaranteed” product !! He was feeling cheated.

He decided to lodge a complaint with IRDA. He wrote a mail to IRDA with all the policy details.

Within few days, he received a call. The caller, Mr. Harish, claimed to be an IRDA executive and explained Mr. Rajeev that he will resolve his problem.

Mr. Harish told Rajeev that, all he needs to do is, transfer the money from company K to one of the three companies i.e. Company R, Company B and Company A. In fact, the way these options were told was also interesting. He said that Company R will pay 10% interest, Company B will pay 8.5% interest and Company A will pay 7.5% interest.

Like anyone else would do, Rajeev almost decided to go for Company R. However, some more sentences from Harish raised an alarm in Rajeev’s mind.

Harish said that these plans are exclusively in collaboration with IRDA. So you wont get these details on Company R’s website or their local office or from their local agent.

Rajeev realised that this doesn’t sound right. He immediately called up his financial advisor to find out if this was true. Not to his great surprise, he learnt that it was a fraud call. He immediately lodged an FIR against Harish for making a fraud call. Harish was also booked for using unauthorised sources to access Rajeev’s information from IRDA.

Rajeev’s prudence saved him. But being the favourite season of the mis-sellers, you are highly likely to receive such calls. Please bear following things in mind, when you receive any such call:

  1. IRDA is Insurance Regulatory and Development Authority. It never “suggests” or “recommends” any policy to policyholders. Neither it designs any plans in collaboration with any companies. Its job is to keep a watch on insurance companies and protect the interest of policyholders.
  2. Whatever money you have lost in one policy due to mis-selling, it is virtually impossible to recover it back. This is because, the policy document mentions that you have agreed to pay all those hefty charges and it bears your signature. Thus, you don’t really have a legal recourse to the money lost due to your ignorance.
  3. Treat any such loss as a learning which will prevent you from making mistakes in future. But if you try to recover that loss, such fraud calls will lure you quickly.
  4. Never ever mix investments and insurance. Buy only term plans for your life insurance needs. Look for pure investment products for your investment needs.
  5. Don’t get trapped by the word “Guarantee”. Investors have a tendency to pour in all their money, the moment they hear the word “Guarantee”. Understand the intricacies before you invest.
  6. Seek professional help to understand complicated products. Be willing to pay small professional fees than pay hefty hidden charges.

 We look forward to your feedback and comments on the above article. Please feel free to contact us on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)

Published by professorbajaj

Prof. Saurabh Bajaj is an Author, Mentor, Motivational Speaker and Wealth Planner. He has done his MBA from Narsee Monjee Institute of Management Studies (NMIMS) Mumbai, one of the top 10 management institutes in India. He holds the prestigious FRM (Financial Risk Manager) degree awarded by Global Association of Risk Professionals (GARP), USA. Till date, there are less than 15,000 professionals in the world, who have been honored with this degree. He has also been awarded CFGP (Chartered Financial Goal Planner) Certification by AAFM (American Academy of Financial Management). After his MBA, he joined J P Morgan, the second largest Investment Bank in the world. He has worked with J P Morgan as Risk Analyst for more than two years. Prof. Bajaj also holds an Advisory certification awarded by AMFI (Association of Mutual Funds of India). During his stint at Bombay Stock Exchange, he has handled Investment Management and Treasury operations of the BSE Corpus. He has set up an entrepreneurship venture in the field of Wealth Planning and Investment Consulting under the name “Nidhi Investments” and holds the profile of CEO. Prof. Bajaj sits on the Expert Panel of CAClubindia.com and MBAClubindia.com as Investment Expert. He is actively involved in investor education through his blog www.professorbajaj.com which has a readership from 78 Countries all over the world. His articles are also regularly published in caclubindia.com , mbaclubindia.com , totalca.com , charteredclub.com, bankbazaar.com and lawyersclubindia.com . He has been awarded the title of “Best Article Writer” from caclubIndia.com in Jan 2012 and has been selected amongst “Top 5 Technical Writers” from all over India in Feb 2013. He has been invited by various TV Channels like SPIN TV, CNBC TV18, UTV Bloomberg Etc for programs like "Expert Advice" , "What Markets Want ", "Budget Analysis" etc. He has been invited by Several organisations like Lions Club, Rotary Club, Agrawal Welfare Foundation, Rajasthan Mandal, Agroha Vikas Trust, Union MF, UTI MF, Arthamitra Gurukulam, Vidyalankar Institute of Technology etc for expert lecture on "Smart Investing", "Life is A Celebration", "Financial Freedom", "The Digital IFA" etc. He was ranked 8th Merit at All India level NMAT which got him selected for MBA programme at NMIMS, Mumbai. He did his MBA with Capital Markets as his specialisation. Soft Skills has become an inevitable part of every selection process and teaching learning process these days. The students from small towns and tier II cities, in spite of being talented and well equipped with technical skills, are seen struggling in the selection process. This is because of their lack of exposure to these soft skills. Mr. Bajaj has a zeal for training candidates to develop these skills and has been imparting the same on since last two years. This zeal and passion inspired him to set up his own firm called “Knowledge Circle” which aims to train candidates for soft skills. Till date, he has trained more than 5000 participants from over 220 organizations across various fields of soft skills. He has been associated with MSBTE (Maharashtra State Board of Technical Education) to conduct Soft skills training workshop for the faculties of Polytechnic Colleges in Entire Maharashtra (Mumbai Region, Pune Region, Aurangabad Region and Nagpur Region) since last 8 years. He has also been associated with ICAI (Institute of Chartered Accountants of India) for training CA Students on various topics related to Communications skills, Group Discussions etc. He was invited by Fr. Agnel Polytechnic College, Vashi for a motivational workshop for faculties. He was also invited by Vivekanad Polytechnic College for "Communication Skills and Email Etiquette" training for non-teaching staff. Apart from these, he has conducted “Capacity Building Soft Skills workshop for Faculties” at ITI Gunj, ITI Pusad, ITI Digras and ITI Umarkhed. This was the first ever soft skills workshop for faculties in the history of ITI’s in Vidarbha. He was also invited by Shivaji Education Society to conduct similar Soft skills workshops for the faculties and office staff of Shivaji Junior College Pusad, Shivaji High School Pusad, Shivaji Vidyalaya Belora and Shivaji Vidyalaya Bhojla. He has conducted training workshop on “Effective Presentation Skills” for the relationship managers of HDFC Mutual Fund, Andheri Branch, Mumbai. He has also been invited at College of Management and Computer Science, Yavatmal, College of Dairy Technology, Warud, B N College of Engineering, Pusad, B D College of Engineering, Wardha, College of Engineering and Technology, Akola, Dr.N.P.Hirani Institute of Polytechnic, Pusad etc. for the Guest lecture on “Developing Interview Skills”.

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