How to save yourself from fraud?

 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 plan is not going to help him for his future, he decided to surrender the plan. 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.

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.

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