by H.P.D.J. Pathirana in Wattala
(June 11, Colombo, Sri Lanka Guardian) Please allow me to relate a true story for the benefit of all who buy life insurance policies. I insured my wife in 1995 under a policy which covered 16 illnesses. My wife underwent knee implant surgery, incurring a total cost of Rs.200,000, but could not get a cent as reimbursement.
In a similar case a neighbour of ours was hospitalised for a heart ailment and could not get a cent either from this very same company, and so they stopped payment.
However, my wife survived the maturity period in April 2008, and expected to receive the amount we have paid i.e. Rs.400,000, plus an extra amount as bonus-accumulated benefits. However, we were surprised to receive a cheque for Rs.92, 000, plus Rs.150,000, which was paid in installments from 2001 to 2007.
There was no added benefit of Rs. 150,000 as indicated in the policy paid either. The company agent who sold this policy to us never divulged to us that in case the insured survived, on maturity she would receive only Rs. 242,000 as full benefits. The policy was for Rs.150,000 but they charged Rs.400,000 as total premiums from us, and paid us Rs.242, 000 in all.
With the rate of inflation today at around 28% how could an octogenarian and family like us exist with even the minimum comfort. I was expecting to invest this money in a fixed-deposit and live on the interest we would get thereby. But "beggars cannot be choosers" in this age where "Robbing Peter to Pay Paul" prevails and every minute a sucker is born.
Incidentally, way back in the 1950s, I bought a life policy for Rs.10, 000 — a big amount at that time — from National Mutual Life Assurance of Australia and on maturity I received Rs.10,000 plus a handsome accumulated bonus.
- Sri Lanka Guardian
(June 11, Colombo, Sri Lanka Guardian) Please allow me to relate a true story for the benefit of all who buy life insurance policies. I insured my wife in 1995 under a policy which covered 16 illnesses. My wife underwent knee implant surgery, incurring a total cost of Rs.200,000, but could not get a cent as reimbursement.
In a similar case a neighbour of ours was hospitalised for a heart ailment and could not get a cent either from this very same company, and so they stopped payment.
However, my wife survived the maturity period in April 2008, and expected to receive the amount we have paid i.e. Rs.400,000, plus an extra amount as bonus-accumulated benefits. However, we were surprised to receive a cheque for Rs.92, 000, plus Rs.150,000, which was paid in installments from 2001 to 2007.
There was no added benefit of Rs. 150,000 as indicated in the policy paid either. The company agent who sold this policy to us never divulged to us that in case the insured survived, on maturity she would receive only Rs. 242,000 as full benefits. The policy was for Rs.150,000 but they charged Rs.400,000 as total premiums from us, and paid us Rs.242, 000 in all.
With the rate of inflation today at around 28% how could an octogenarian and family like us exist with even the minimum comfort. I was expecting to invest this money in a fixed-deposit and live on the interest we would get thereby. But "beggars cannot be choosers" in this age where "Robbing Peter to Pay Paul" prevails and every minute a sucker is born.
Incidentally, way back in the 1950s, I bought a life policy for Rs.10, 000 — a big amount at that time — from National Mutual Life Assurance of Australia and on maturity I received Rs.10,000 plus a handsome accumulated bonus.
- Sri Lanka Guardian
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Most insurance policies are like that, And one word from my experience if you have a life insurance please pay your preimium from a bank draft because if u pay to the Agent that person may not put that money in the correct time.
I mean I lost my cousin to an accident who had a insurance in Asian Alliance for 10 laks and his mother gave the money to the agent. but the agent always deposit the money one month late taking interest keeping that money. Company does not take any responsibilty and we are fighting in the courts for 2 year to get some refund. So always pay your premium through bank then they cant cheat you out.
Life policies have two parts to it; the risk premium and the savings premium. The insurance companies will embed the risk cover premium to a savings portion when selling life policies. The return you get is only on the savings portion of the premiums paid.
The savings amount goes to a life fund, which is invested in tbills/bonds and return passed on to policy holders. The insurance companies charge a fund management fee, which could be as high as 5% at times.
If you want only to cover the life risk, then buy a ‘term insurance policy’, which pays only in the event of death within the policy period, but nothing upon maturity. But the premium is smaller than in a life policy as there is no savings amount built in. This you can save separately in a bank deposit, tbills/bonds or shares or even real estate and the return will be greater. But let me tell you, in Sri Lanka most insurance companies don’t sell ‘term policies’ as they will not then earn a return on the fund management activity.
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