The following article was published in the Times Of India on October 4th, 1992 and I still have its paper copy in my personal collection (although it has turned yellow due to ageing). This was written by Nabendu Debsharma, which I believe is a pseudo name of the author. He used to write several articles about personal finance in the Times Of India and I have good collection of his articles. If you happen to know this author, please let me know his contact details. I would like to meet him or at least write to him. Thanks.
Here is the article. (All copyrights acknowledged.)
My spinster aunt wants to insure her cats!
A very laudable thought, I must admit. Except that nobody, but nobody, wants to insure these wretched creatures. GIC says that a cat cannot be insured for more than its earning power. That makes no sense to my aunt, who knows very well that her cats have only spending power.
Another insurer recommended replacement value. That also had no appeal to for my spinster aunt. Her cats are absolutely irreplaceable, she claims, though I know, and she knows too, that you can buy any number of these nasty creatures in Mahatma Phule market for peanuts, while a faithful nephew like me is invaluable. Yet she won't insure me.
Never mind. I can insure myself, I thought. So I went and tried to do it. I got the shock of my life !
First, I gathered that I was nearly too old. Anybody beyond the ripe old age of 40 has a very rare chance of getting any life insurance. Despite all the government propoganda, the insurance boys don't reckon on a life expectancy beyond 50 years.
Mind, I don't blame them. Look at all the smog around you. If that doesn't get you, the speeding Marutis will. If all that fails, there is always executive stress !
So they hum and haw and check your pressure and your sugar and your ECG and your weight and your abdominal measure and, what is worse, check all of these against what you had (foolishly) let the doctor record against your name in the halcyon days when you were young and sprightly and had taken out your first, your very first, insurance policy. It's no good explaining that every self-righteous Indian male does acquire a paunch with time and thereby the required degree of respectability. The doctors are sharks, they are, and no mistake!
Insurance is a game of total faith !
If your dad passed away at the ripe old age of 80, a target you do not desire, let alone expect, to achieve, you are still suspect if the old man had had a heart attack.
According to my insurance agent, 80, is a good enough age for your ancestors to cop it. I fully agree, for if my spinster aunt makes it to that age, I am sunk, under a pile of debt that I have built up in anticipation. At 80, any death should be due to "old age", says the Member of the Chairman's Club of LIC Agents. No need to state it on the papers, he assures me.
And yet, if you reach sublimation at 68 from a heart attack, you may be sure of two things. First, your insurance agent would have died already. Second, LIC would find out that your dad, too, had had a heart attack which you had failed to declare, so that your insurance is invalid. Tough luck on your starving wife and kids !
Does it matter to you?
I mean, at that time you would be in heaven, or hell, or purgatory, or in one of the seven levels of astral, depending on what you believe is going to happen to you when you croak. Would you really care what happens to your beastly wife and your abnoxious kids when you are in your deep ... yourself?
I guess not.
Yet, why do you take out insurance?
The prime reason is - a sense of responsibility, or, rather, a sense of guilt. Given the tax structure, and your well-disguised propensity to have a good time for yourself, you have had little scope to set aside a fortune for your progency, and their mother, to have a good time while you rot in hell after death. The minimum you can do for them, your wife has assured you, is to take out dollops of life insurance so that they can have Dollops by the litre while you soak in fiery coals.
Another (stated) reason is investment.
Now this is bollocks, as you all know. LIC pays an absolute pittance to its policy-holders. If you calculate the return on the money you have put by for years on your policy(ies), you'll find that you'd have had (almost) a better deal with the (liquidated) Bank of Karad !
There is yet another mug's game which the agents hook you into - the 'whole life policy'. It's quite simple - you keep paying, and you get nothing. When you die, your successors get it all. For you, there is sweet .... all !
So I told my spinster aunt - don't.
She got very annoyed, and threatened to cut me out of her, you know what. It was my duty as a faithful, and expectant (not in that sense!) nephew to guide her on the true path. But I failed, so I thought and reflected.
For a responsible father/husband, insurance is a must. Since the laws of the country will never allow you to make enough money to look after your family while you are alive, your only hope is that you will make it up for them by dying. Hence insurance.
As far as investment is concerned, just forget it. The latest laws still allow you a vestige of tax protection on the amount you spend on insurance premiums, but nowhere near what would be reasonably required to sustain your family in the case of your death, unless you have gone in for the mug's game. LIC does, magnanimously, hike its bonus from time to time, but it is still far, far short of what banks or Canfina or even Harshad would have paid you.
The basic reason for this state of affairs is - LIC is a monopoly. In an effort to protect the common man from getting ripped off by private insurance companies, the government has ensured that he gets cleaned out by the government itself. There is nobody to question or challenge what LIC pays to its policy-holders. You take it, or lump it. Since you and I are god-fearing and dutiful householders, we take it. Who are we to question the government?
All I wish is that while the government, via LIC, chooses to lighten us of our wordly loads by collecting hefty premiums, it would at least make the process user-friendly, involving less hassles, politer staff and fewer forms.
Or maybe LIC could start insuring cats, in which case my spinster aunt would set it right, soon enough!