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The risk of getting insured

The risk of getting insured

Insurance continues to be missold despite industry's claims to the contrary and senior citizens are the softest targets as they don't understand the newfangled products.

Case Study: Rajendra Kumar Khosla Case Study: Rajendra Kumar Khosla
When Rajender Kumar Khosla developed cataract in one of his eyes, doctors advised him against too much strain.

Far from resting, the 74-year-old former property consultant was forced to negotiate the tricky terrain of a Delhi that was getting ready for the Commonwealth Games. As he trudged down the unpaved, broken roads of Connaught Place, the capital's central business district, you couldn't but pity him.

Rajender Kumar Khosla,
74 years, DELHI
CHEATED OF Rs 4.1 lakh
A bank executive obtained his personal details on the pretext of opening an account. She took signed cheques from him for investing in FDs, but used them to sell him insurance plans. Two pension plans for Khosla and his wife (annual premium Rs 50,000 each), a Ulip for Khosla (Rs 80,000) and three policies for their daughter (Rs 2.3 lakh).
Or wonder at the apathy of those who had forced the arduous struggle upon him. Khosla was fraudulently sold four insurance policies and two pension plans by a clutch of bank executives, who obtained his personal details on the pretext of opening a bank account.

They took signed cheques from him for investing in fixed deposits, but used them to buy insurance policies. The fraud took place in 2009, but Khosla discovered it only when he got the second premium notice for the policies this year.

"One of the bank employees wanted me to buy an insurance plan, but I refused because I didn't require one at my age. Then she wanted to sell me one for my daughter, but again I said no."

Not to be outdone, the femme fraudster latched on to the opportunity when Khosla said he wanted to invest in fixed deposits.

"She showed me forms for fixed deposits and took blank cheques from me," he says. These cheques were used to buy two pension plans for Khosla and his wife with an annual premium of Rs 50,000 each, a Ulip for Khosla with a premium of Rs 80,000 and three insurance policies for their daughter with a combined premium of Rs 2.3 lakh.

The fraudster had got the latter's details using the same modus operandi. "My daughter has not even met an insurance agent, let alone fill and sign an application form. They possibly forged her signature by copying it from her PAN card," says Khosla.

To be fair, Khosla's complaint to the insurance company was given a patient ear. After a detailed investigation, the company admitted that the three policies sold to his daughter were indeed missold.

"There are several giveaways in the application form pointing to the fraud," says Khosla. The company has promised to refund his money. But he won't be as lucky with the other three policies that are in his and his wife's names. Had he signed on these? "Yes," he says. Did he know they were insurance plans? "No."

"My daughter did not even meet the agent, let alone sign the form. Her signature was possibly forged by copying from her PAN card."
This argument won't hold much water because Khosla also underwent a medical examination arranged by the insurer. "But they told me it was for tax savings," he says. Has he ever undergone a medical test for a tax-saving investment? Khosla shakes his head, then sighs sheepishly.

To a certain extent, the victim is also to blame for this mess. Who in his right mind would give signed cheques to a total stranger? "Since she worked in the bank, I thought I could trust her," he says ruefully. That is not a good enough reason to trust anybody. It's an expensive lesson but one that Khosla will remember for the rest of his life.

However, there's a silver lining in this dark game of deceit and avarice. The fraudsters had also used the blank cheques issued by Khosla to invest in a slew of equity funds. The investments, made through SIPs starting in 2009, have now grown to a sizeable amount. It's heartening that Khosla will recover at least some of the losses he will incur when he surrenders his unwanted insurance and pension plans.

 Four Reasons to Blame the Victim
 Khosla could have spotted the fraud if it weren't for the following faux pas:
BLIND TRUST: Khosla is far too naive in his financial dealings. He gave signed cheques to a complete stranger and also signed on the ECS mandate form that allowed the fraudsters free access to his bank account. This is akin to tempting the honest to steal. Khosla is lucky it stopped at misselling.

RED FLAGS IGNORED: Before he was sold a Ulip, Khosla underwent a detailed medical check-up arranged by the insurance company. This should have alerted him that he was investing in a product other than a fixed deposit. He also signed on the application form without reading or questioning these.

INVEST AND FORGET: Khosla did not follow up on the reason he hadn't been sent the certificates of fixed deposits he had invested in. Nor did he check his account to find where the money was going. He woke up only when he received the premium notice nearly one year after the investment.

CLUELESS FAMILY: He had not informed his family about these investments. One should always maintain detailed records of all investments so that the other members of the family can take charge in case of an eventuality.