What you need to know about insurance

Life Assurance Schemes or Assurance Scams?

What has been expressed in response to my article in the Sunday Times FT is the perfect text book representation of Life Assurance, and this is exactly what is being taught.

Consequently, what has been written is theoretically, free from errors, which the writer (Haris Salpitikorala) and those experts whose livelihood depend on it believe, but what I evinced and conveyed is the practical aspect of the Life Assurance business that is being carried out here. In other words, what actually happens in practice was what was accentuated and emphasized in my article.

In addition to the plight of the mother which was published my earlier article, I will give you two very recent cases regarding the Surrender Value component which the writer is trying to downplay.  I am also forwarding the documentary evidence in this regard to the media concerned.

Case No.1

This is the case of widows, whose sons are now married and have no known source of income for her to continue the payment of her life policy.
She paid a premium at the rate of Rs. 1,518 per month for 40 months without a break.  The total amount she had paid as premium was Rs. 60,720.  She, therefore, wanted to surrender the policy at this juncture.  The insurance company offers her Rs 7,974 as a surrender value.

Case No.2

Here is a case of a gentleman who lost employment because the institution he was attached to closed down and he too did not have any steady source of income to continue payment of his life policy.  He too had paid a premium at the rate of Rs 1,778 month upto July 2006 (final date of premium) - totaling a sum of Rs 85,344. He too wanted to surrender the policy.  The said insurance company offers him a sum of Rs 6,097 by way of surrender value.  And both these policies were sold giving the policyholders the impression that their medical bills would be settled. When I made representations on their behalf and intimated to them that there had not been a single medical claim - this is what they wrote to me " Dear Mr Nazim - I think one should not confuse charity with insurance. Le me remind you that had there been a claim on any one of the policies after a single premium was paid the full sum assured would have been paid. I do not understand your statement that not a single claims has been made."

The statement clearly proves that the policyholders had been duped into believing that their medical bills would be settled or the insurance company did not know what it covers under its life assurance policy.

Please tell me who is going to hold a life insurance - umbrella to these two unfortunate people? You be the judge. If you (the public) are so gullible and naive and want to be chiseled out of your hard earned money. I can do nothing about it.

However, it is my intention that in the midst of squabbles and bickering, the main purpose of my article should not be lost. The attention from the real issue should not be diverted. This is a national issue, where the ordinary man on the street, not the insurance expert, is confronted with.

It is my sincere hope and desire that the regulatory body being the IBSL, which already functions efficiently, takes the necessary steps to look into some of the general state of things and the combination of various circumstances at a given time, spelt out in my original article, which the public is facing and take the necessary steps to minimize or eradicate them altogether at the same time bringing it to the notice for the public for their protection against damage and injury as well as their guidance.

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