5 ways Senior Citizens can

avoid being mis-sold an

Insurance Policy
CA GOVIND M CHANDAK
To avoid being scammed out of their hard-earned money, here are
insurance products senior citizens should steer clear of at all cost.

1. Don’t buy
‘guaranteed
return’ policies

2. If mis-so
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CA GOVIND M CHANDAK
 1. Don’t buy ‘Guaranteed Return’ policies
❏ As 90% of Indians don’t work after retiring, they
don’t need a Life Insurance.

❏ Most unsuspecting seniors are sold ‘guaranteed

return’ plans, or traditional plans—a mix of
insurance and investment—as these offer a
maturity corpus at the end of the term.

❏ It doesn’t work for them because not only is the

term long, over 10 years, but the returns are
extremely low, around 5%.

❏ The premium, on the other hand, is very high.

❏ By the time they realise they have been sold the

wrong product, it’s too late.
CA GOVIND M CHANDAK
2. If you have already been mis-sold insurance
then what?
❏ If you realise you have been a victim of mis-selling
during the free-look period, return the plan.

❏ If however, this period is over, you can either make

it a paid-up policy or surrender it. For ULIPs, the
premium can be stopped before five years and the
policy lapses.

❏ The investment is shifted to a Discontinuance

Policy Fund, where it earns 3.5-4%, and can be
claimed after five years.

CA GOVIND M CHANDAK
 3. Don’t buy Insurance Products at the bank
❏ Senior citizens should avoid making investment
decisions at banks, where insurance products are
sold due to the bancassurance tie-ups with
insurance companies.

❏ Senior citizens are soft targets because they are

typically flush with post-retirement funds, are
looking to make investments, and are ill-informed
about investing avenues.

❏ Nothing is given in writing by the bank official.

Often, the policy document is sent after the
free-look period and the bank refuses to take
responsibility since the signatures are on the
document and there is no proof of mis-selling.
CA GOVIND M CHANDAK
 4. Don’t buy single premium plans

❏ The single premium ULIPs are usually mis-sold as

fixed deposits with higher returns and tax
advantage.

❏ For these, insurers keep the sum assured at 1.25

times the single premium for those below 45 years
and 1.1 times for those above 45 years.

❏ What this means is that for senior citizens, this

invariably breaches the requirement of the
premium being 10% of the sum assured for the
maturity proceeds to be tax-free.

CA GOVIND M CHANDAK
 5. Don’t buy ULIPs
❏ Since senior citizens are usually looking for
regular income after retirement, ULIP does not suit
them even though the maturity proceeds are
tax-free and the investment is eligible for Section
80C deduction.

❏ These have high costs that eat into the investment.

❏ Besides, they have a lock-in period of five years

before which you cannot exit them.

❏ For policies bought after 1 April 2012, if it is more

than 10%, only a maximum of 10% is eligible for
deduction under Section 80C, and the maturity
proceeds are added to income and taxed at
applicable rates. CA GOVIND M CHANDAK
 Conclusion

Senior citizens hard earned money should be

kept safe and for them Fixed Deposit in
nationalised bank is more suitable considering
recurring income option even though tax paid
the capital amount is much more secured !

CA GOVIND M CHANDAK
THANK YOU CA Govind M Chandak
JSG & Co.,
Pune(MH.),Khandwa (M.P) & Hyderabad (TS.)
+91 8888072889 / 020 25671007
cagmchandak@gmail.com