One of my friend called me to ask for my second opinion when he had these investment options offered to him.
First my friend was visiting his auditor ( Chartered Accountant) for some income tax advise. the Chartered Accountant suggested him to avail some good investment options from LIC ( pension plans).He also offered that it can be done through an LIC agent known to him.( His wife???)
Second my friend visited his bank to get a tax saving fixed deposit for his mom. The Manager of the PSU bank almost pleadingly forced him into buying a policy where he had to pay some amount annually for 5 years and after that he would get pension from the tenth year onward.
Last he visited a well known financial service provider for investing in an ELSS scheme.There he was lectured on the virtues of a pension policy from a private sector insurance provider.
In all of the cases, people were force selling him some insurance policies just for the sake of some hefty commission!
When the true RO (return on investment)was calculated for all of the schemes . it was less than savings bank interest currently being offered.
In none of the cases, the people selling these schemes were aware of the underlying securities in which the premium will be invested.
None of the parties who were selling these products had any true personal finance knowledge. All of them (except the Shattered accountant) were genuinely doing their job ( for what they were being paid for).
My friend at least had the guts to ask some basic questions and asked for a second opinion. if someone blindly makes an investment based on such random advises, they get tied to poor quality products due to their financial illiteracy.
God only can insure the investors from getting trapped by the insurance agents and insurance companies.
Happy New Year 2016 !