How wrong saving & investment plan, could Decay your hard earned, saved Capital?

Let me share with you my personal experience. I started ULIP (Unit linked investment cum Insurance plan) saving plan of 3k quarterly with Aviva Life Insurance Company in August 2005 for 20 years tenure. I paid premiums for full 3 years (Approx. Capital Invested 37k plus tax as on year 2008) and then, I stopped paying premiums as Aviva have been levying, revising various monthly charges, that have not allowed my invested capital to perform and give positive returns with capital appreciation; instead invested capital have been negative through out the tenure. 

Free Policy look up period was 15 days as per terms. Terms were been superbly drafted in the policy document provided. Even if we read it carefully, a common investors like me and you cannot understand its long term implications, until we experience full long term and we see our capital getting lost month on month. 

Now, there is no single term protecting investors interest, normally insurance plans get lapsed once we stop paying premiums. But Aviva converted my policy to paid up, and charged heavy penalty of 13.6k for converting. And they could keep charging monthly, till my complete capital becomes ZERO. 

Since inception, my invested capital value has been negative, not even single month during the tenure it was positive, but Aviva has been charging monthly from balance units. (Approx. total charges 50k till date including paid-up penalty, and paid-up penalty clause is nowhere mentioned in policy document)

You want to know, what is current value? It's less than 3k and I have not withdrawn single unit till date. Even this 3k would get vanished in another 1 year or so, as they will continue to levy charges (hapta wasuli) without any obligation towards investors money. So in nutshell saving of 37k plus taxes; capital will be lost after staying invested for 18 long years as on 2023 and policy is till 2025.

I escalated matter with company officers, they are sending me signed policy copy and asking to read terms and conditions; mention free lookup period of policy was 15 days. Even I read again, I have lost my money, they have not lost anything, instead they made 50k on account of penalty and various charges. 

Other side, market has delivered at least 3-4 times average growth since then, if I had invested same amount in gold coins or bank FD or index or debt fund, current value could have been at least 2 to 6 times.

I got trapped with wrong company sales tricks; for me ULIP literally turned out to be "Utilization license for Investors Paise"

Such attractive, confusing investment plans are well designed to attract and utilize people money and grow insurance companies resources and reach. Whole ecosystem makes huge and attractive promotions, trap common investors, get our money, pump that in market to fund, inflate wrong companies IPOs & share valuations or corporate credits. 

Forget positive returns and capital appreciation as been shown in projections during sales of such plans, investors get hit, loose their capital, and you cannot trace sales executives, they are not reachable after few years, even you find you cannot fight. Banks, insurance, fund managers and intermediaries keeps on making money fooling, investors by these means. 

There is whole nexus of financial and insurance institutions, might have had been supported by few corrupt regulatory officials and political-administrative system then. Because I understood policy after loosing money, it protects only insurance company's interest and there is no single point that protects investors interest. And investors will have to run around grievances redressal ecosystem without any robust support mechanism or outcome after the mistake is been realized. 

Thankfully, my gut and conscious alerted me that time and I stopped paying further premiums, otherwise I can now imagine the magnitude & consequences. Also imagine; How many such investors must have got trapped? in this kind of white collared scam going around us.

My personal advise, do not get carried with advertisements, promotions of such institutions. Choose right products, instruments that would serve your investment plan and purpose. Also monitor it regularly. Because ultimate fact; all these institutions have nothing to loose, become BIG on Investors MONEY and they do not have any morale or obligation towards your investments.

Until you fully understand, do not buy these types of plans. If you need insurance buy only insurance. If you need capital protection, invest in safe debt, G-Sec or liquid funds, If you need to beat inflation, invest in new age, non-banking FD's, mutual funds SIP or SWP well researched schemes. 

Before investing, take advise from experienced and known experts. And still if you want to play gambles, choose volatile instruments like direct cash equity, F&O (be ready to loose, earn, loose huge but learn from mistakes, as I have been learning).

Out of my personal experience, I can say nor Insurance or investment instruments available in market are bad, its about your financial plans, goals, knowledge, interest and experience matters. You will have to gain knowledge about the subject, then gradually apply the strategies & techniques and track it regularly.

Parimal Shah

Business Partner - Financial Products

www.sharewale.com

There are many schemes available for investment and Insurance. If you are interested, please contact us right now. We will study, suggest safe and best scheme that will fit your requirements, give better returns and safeguard your investment.