I have been recently receiving “service”calls from ICICI
Prudential Life Insurance Company informing me that their Relationship Manager
wants to meet me to discuss about my existing policies with them. After couple of calls, I yielded to their
request to meet the Relationship Manager with the condition that it shouldn’t
be a sales call. They agreed and their
Relationship Manager met me yesterday morning.
A short introduction about my investment in ICICI Prudential
Life Insurance. I hold ICICI Prudential
Lifetime Pension plan with an annual subscription of Rs10,000 for the last 9
years.
The first question he asked on seeing me was if I am software
professional. I said no. I don’t know if
they are soft targets.
The meeting, a service call, started with the mention by the
RM that I should stop paying the premiums on my existing policy and should
invest in a new policy. The beautiful
reason given by the RM was that they have launched a new equity fund where the
NAV would be only Rs10 per unit compared to my scheme where the NAV would be
Rs78 per unit. I couldn’t believe what
he was saying the first time because this lower NAV is one of the oldest tricks
in the market place and I didn’t think ICICI Prudential would do this after so
many years. But he further emphasized
that I will get more units by taking a new plan. This is an outrageous suggestion because if
the equity markets perform well, the NAVs would move irrespective of the
current value.
Then RM told me that the new “Maximiser” fund option would
have portfolio changes every 15 days compared to portfolio changes in my old “Maximiser”
fund, which has 30 days. This is again totally
wrong information. Here, what he is
talking about his portfolio disclosure and portfolio changes. The poor guy doesn’t understand this
difference and tries hard to sell this as a unique feature of the scheme.
I told him politely that I am not keen on that idea and
happy continuing with my existing policy.
He tried hard to sell me this idea of lower NAV and frequent portfolio
changes but after sometime I had to cut him short. When
you stop premiums on the old policy and take up a new policy, then you end up
paying lot more charges. ULIP/ULPPs
being front loaded products would be able to produce returns only when you
stick on to them for longer tenures.
What really annoyed me is that ICICI Prudential Life uses a
service calls as an alibi to meet their old clients and encourage them to churn
products. This is nothing new in
Insurance industry but this happening in an era where mis-selling of financial
products by financial product distributors are being looked upon very seriously
by the regulators.
Secondly, the level of understanding the Relationship
Manager has with regard to his own company’s products are poor. He could never understand how the equity
market and returns function.
I am not sure how many thousands of gullible investors have
fallen prey to this gimmick of lower NAV and therefore higher units and
switched to newer plans. This is an outright
fraud. I know about ICICI Prudential
Life because I own a policy with them but there may be many other people like
this in the market.
This brings me to an important point of the need for
understanding financial markets and how your investments work. You need to spend time and energy to
understand them or you should consult a reliable Financial Planner/Advisor
before buying these kinds of products.
PS: All through the discussion I didn't disclose my profession and what I do for living, which is Financial Planning and Advisory services. But finally I told him about me and he was quite taken aback. Literally ran short of words. Not wanting to embarrass him any further, I let him go.
