Over promising Unit linked insurance policy returns


Many clients, students and friends call back saying “This xyz person offerred me 36% returns on life insurance policies” is it possible?

My answer has been “The fact that you are asking me shows you do not believe it”. After all you do not call me every day for every thing, do you? – is my jibe!

I once told a client “here is a mutual fund where you will get 40% return, SURELY, in 36 years time”. He was a little stunned and perhaps a little amused. So I told him a story.

Once a poor man was sentenced to death, unjustly, by King Akbar. He came running to Birbal for help. Birbal told him, please tell the king, “I can make your favourite horse fly in 2 years time”. The poor chap did not know what to say, but trusting Birbal he went off to tell the client as instructed by Birbal.

Birbal’s wife who was standing nearby asked Birbal “How will you save this poor man…will the horse fly?” Birbal’s reply was stunning. He said “Look I have asked for 2 years time. In this period there a few things that can happen:

1. This man can die of natural causes

2. King Akbar may die, and this guy may get pardon!

3. The horse may die or

4. The damn horse may fly!!

So similarly when i was telling the client that he will achieve 40% returns in 36 years time, the following things can happen:

1. The client may die during this period.

2. I will surely be DEAD by that time

3. The client may forget

4. The fund may actually perform!!!

So when clients ask you for indicative returns, promise them indicative returns over 40-50 years…but do not promise returns for 1-2 years!!

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