Please read the insurance terminology very carefully

Sanjay Matai

Sometime back I received an email from one of my acquaintances seeking my opinion on a particular insurance policy.

"Hi Sanjay,
Attached is the file sent by ****** who are selling this product. Pls advise if suitable. It gives 7.5% assured return, plus 6 to 10% additional, complete total amount is tax free. If ok, then i intend to invest about Rs. 2 lakhs p.a.
tks n regards."

On the face of it, it looked too good to be true. However, when I went into the details of the Plan, I realised that the terms used by the insurance company had a somewhat different connotation which required that you read the details very carefully. Otherwise you could totally misunderstand the product.

Now, this particular person is a well-informed investor. So I was wondering that if he could misunderstand the policy terms, then it would be too much to expect for an average investor to understand the policy and take an informed decision.

The policy required that he pay the premium for 7 years. Then he would get a