Suckered: 100% commissions with Kotak Smart Advantage plan

7 comments Written on January 25th, 2010 by
Categories: Suckered, ULIP

ULIP Advisors just do not know how to stop. Someone who harvested phone numbers from random sources calls me and says he’s from Kotak and selling me a plan that is (Hold your breath) NOT A ULIP. According to him it’s a plan where:

  • You can invest 20,000 rupees now and get Rs. 40,000 in three years.
  • How? You get a 100% bonus after three years in this policy
  • You don’t need to pay any further premiums

Unlike his usual bakras, I asked him for a document, and he sends me the Kotak Smart Advantage Plan.

Point 3 was him bullshitting, of course. It turns out that you have to pay premium for three years, and they give you a 100% bonus. Nice? BUT, and there’s always a BUT, you have to stay with the fund for another 17 years before you can see the money. You can’t withdraw more than 10% of the fund value in any year, and if you choose to surrender the policy before the 8th year, you can see surrender charges from 5% to 1%.

And for the first year, guess how much of your money gets invested? 0. ZERO. Zilch. Not a single naya paisa.

The document says:

The first year premium contributes towards guaranteeing you with the Assured Addition Advantage and is not allocated to the investment funds.

Yay! 100% commissions!

Or, the whole 100% “bonus” is just a load of bull. They take your money for three years, “remove” the first years premium and give it back to you as a bonus. That’s utterly misleading – what is IRDA doing, sleeping?

And why the heck are these products being bought? Please, if you get a call from Kotak advisors pushing this product as a “bonus”, please tell them to take a walk.

Update: Also see Ripul Gupta’s post at MoneyRaam about this plan.

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About the Author:
http://www.capitalmind.in
The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@gmail.com.

7 comments “Suckered: 100% commissions with Kotak Smart Advantage plan”

>Wow, even by the standards of insurance mis-selling, this is a whopper!

>At least they weren't lying with the name, this plan does give Kotak a smart advantage.

Rajiv

>90% of people do not do any research before buying these products (like i did not when i bought one 7 years back). i see lot of mails on asking advice on ulip plans on newsgroup i am part of (they do NOT ask "whether they should invest in ulip?" but they ask "which plan to choose from" between 2 or 3 they list).

>Deepak you need to document these separately, all these selling tactics and publish the collection

- Mr Dalal

>The most active tele calling is from kotaklife ..the best selling plan is kotak smart advantage …. but because of some smart bloggers we have learned to ask some few question ..
what is the CAGR of this Product ..
what is the IRR of this plan ..
What is the asset allocation and charges …
Even the floor manager cant answer that question …..

>dear all,
this is true because understanding ULIP is very difficult.
100% of your annual premiums are allocated( but 35% charges in the NEW name of policy admnistration charges
pay only 3 policy years (the truth is all charges are deductable from your fund value which in the next 2 years equals to the minium of one year premium and lapse your contract with the company).
term plans are NEVER promoted by any life insurance co. including lic because of very low commissions to the sales dept.
SO FAR IRDA DID NOTHING IN STOPING THE MIS SELLINGS EVEN BY NATIONALISED BANKS.
educate your self because this is your hard earned money.
sir/madam you can save TAX(truth is life insurance is for RISK covarage only)
thanks

>i also got a call that i have to pay premium of Rs 30,000 for 3 years. I will get interest and 100% bonus at the third year end.My total fund value will be 132000. This is kotal smart advantage plan.i think all this is misleading plan