Prudent Finvest

I had an interesting experience recently while arranging term insurance for a client. This person, who is in mid income range and does not have a graduation degree, was looking to secure his financial future and save for retirement. We recommended a combination of term life insurance along with mutual fund SIPs, thus securing insurance cover at low cost while also generating long term wealth through equities.

To my total bafflement, it seems insurance companies do not offer pure term plans to non graduate clients. I have no idea what does education level have to do with ability to buy term insurance when in fact it has to be purely a function of one’s financial worth and income level.

To make matters worse, every insurance company I tried to contact for this person proposed all kinds of value wasting and costly insurance cm investment plans such as money back and endowment kind of products which barely cover inflation, let alone create wealth for the client. Annual premiums on these policies would be almost 4 to 5 times that of a pure term plan, leaving very little money for long term equity investing.

I fail to understand the logic behind linking education level with ability to buy pure term plans when clearly what is best for such clients is a combination of term plan plus equity SIP.

Finally after going through all available proposals from every insurance company we could get hold of and despite best attempts by these companies to push their preferred products, we finally managed to secure a term plan with return of premium for this person. Now he has the necessary insurance cover along with enough allocation for equity SIP.

Now we could have very well made our life a lot easier by just going with whatever products suggested to us, but that’s not how we work at Prudent Finvest. We put client interest first and it gives me great satisfaction that we were able to create value for the client.

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