So you had an LIC endowment policy which you have surrendered and are now wondering if you have to pay any tax on the same or not.
Or, you have a pension plan from ICICI Pru, HDFC Life and others which was not making money for you. You were naive then to buy into it but not any more. Better to put it in a more rewarding investment.
But do you know, what is your tax liability on the same?
Have you seen Lage Raho Munnabhai, the movie?
Munna (played by Sanjay Dutt), in an attempt to impress the girl he is in love, reads a lot about Mahatma Gandhi. He reads so much on Gandhiji that he starts hallucinating. He sees Gandhiji talking to him and even offer his good counsel. In one of the high points, he even inspires Munna to take on a shrewd businessman using his favourite weapon – ahimsa or non-violence.
I loved the movie. I watched it with my friend Hemant.
Hemant was sure that he didn’t need health insurance. “This is a waste of money. I am fit and fine. I rather invest that premium money in stocks and get it to multiply. Why lose out on paying silly premium on a policy, which i will not make a claim on?” Hemant argued.
Before I could say anything, his phone rang and he excused himself to take the call. I was trying to form my argument to help him understand why it was important.
While I sat wondering I felt someone standing next to me. Surprisingly, I didn’t see anyone walk in. I wanted to ask who he was but he quickly put his hand on his lips.
Raj Narayan Singh was an icon. A man with humble beginnings, he worked hard to rise to a position of influence. He had a large happy family, a prominent social status and a solid reputation in the industry. He was constantly busy in fulfilling his duties towards each.
But God has strange ways. Raj Narayan suffered a heart attack and passed away immediately. All his dreams came unfolded. His 2 sons started to spar over dividing the family business and the personal estate of Raj Narayan. Raj Narayan’s younger brother too is claiming a share.All the dirty linen is being washed in full public view.
Unfortunately, Raj Narayan had left no document to ensure that after his demise the assets are passed on to the family members in a peaceful way and love in the family persists. The court cases have been filed and the battle seems to be a long one.
Does this read like a scene from a movie?
Well, it is not. It is the reality.
The world of insurance sales is murky and it gets proven every day. Here’s one more.
A reader recently emailed to me that his son had taken up amongst other insurance policies:
New Endowment plan with profit : Sum Assured 14.95 lakhs, started 2016, yearly premium is Rs. 40,836
New Endowment plan with profit : Sum Assured 8.55 lakhs, Table &Term is 814 & 30, started 2016, yearly premium is Rs. 27,067
It has been told by the well known agent that, this is a “Magic plan for retire & enjoy” which is a combination of LIC plans specially researched to meet the objective of securing a financially independent life assured and his/her spouse on retirement. and the net annuity will increase every yr. to take care of inflation approx. @ 9.00%.
It is relevant to point out a few words from the message:
First things first. I was not sure about the well known agent thing. As I replied with my observations, he mentioned to me again that the agent was MDRT, USA.
He did so multiple times suggesting that he considered it as some sort of an certified authority, in this case, in insurance.
It’s time to break the myth.
I met my ex-colleague Amit over coffee.
As we sipped coffee, I could sense that he wanted to share something with me but was holding himself back. When he called me up, he mentioned that there is something he wanted to discuss.
I started, “So, all OK with you Amit?”
He opened up. “Not really”, he replied.
“What happened?”, I was curious.
“My finances are not in the best shape. In fact, it could not be worse than this. I have too many problems”, Amit confessed reluctantly.
As far as I knew about Amit, he did not have a problem with income. In fact, he worked with a large company as a Sales Head and earned quite well. So, I was further curious to know what actually happened.
As the discussion went on we pinned down several problems, 9 to be precise. Many of these he didn’t even realise he had.
Now these financial problems can happen to anyone. Let’s see what they are and how best to avoid or come out of them.
The pressures of business can be huge and it can make you do things that bring serious damage to your reputation and credibility.
As you know, Max Life insurance is soon to be merged with HDFC Life insurance, leaving only the latter as the bigger company. I believe as a part of the mandate, Max Life has gone on an offensive to ensure that maximum active premium paying customers are transferred to HDFC Life. Who doesn’t want a fatter pot?
In the past 6 months of this pursuit, the insurance company has made my life difficult. I endured it so far. But this time what it doled out to me is appalling. I am worried as to how many customers might be falling for it.
As for you – beware!
Here’s the story.