Policy at a premium

This week we will discuss the most useless thing ever conceived by humankind after 24-hours news channels: Insurance.

Most of you who read the report about investors having lost around Rs.1.5 trillion due to insurance mis-selling would have doubtless smacked your forehead with your palm and muttered to yourself, ‘My god, why don’t they stop this scam?’ I concur wholeheartedly with you that we need to immediately end this terrible scandal of using billions and trillions in the Indian context.

It is very difficult for us normal Indians to wrap our heads around the concept of billions and trillions when the operative units here are lakhs and crores. So, in true spirit of journalistic enquiry, I asked a banker friend who had worked in America to explain how much would trillion rupees be in terms that we are more used to here, and his reply was truly revealing. ‘In India,’ he paused to mentally work out the numbers and said ‘that would be a humungous amount, man.’ Of course, this is the specialty of the MBA types: They explain to you the thing that you already know in ways that are totally incomprehensible.

Anyway, I really don’t know how they arrived at the figure of Rs.1.5 trillion as the loss suffered by investors.  Personally speaking though, I have a very simple and trusted method to calculate the amount that you as an individual investor may be losing every year through insurance.

This is how you work it out: Step 1: Take a calculator with some advanced features. Step 2. Ignore the advanced features — nobody needs them any more and, in any case, you don’t know how to use them. Step 3: Punch in the amount you pay every month as insurance premium. Step 4: Multiply this amount by the total number of months in a standard year. (Pause a bit to wonder whether leap year has an extra day or an extra month). Step 5. You will get a number on your screen. (Pro Tip: If it is in two digits, change the calculator. If it is in six digits, change the insurance agent). Step 6: Write the number you got on the calculator on a piece of paper and throw it in the nearest available dustbin.

As you can see, the whole exercise is pointless, but not so pointless as the idea of insurance itself.

There can be two possible reasons for buying (life) insurance:

1) It will get some money for the family in the event of an untimely demise.

This is a noble thought in principle, but a mighty stupid plan in practice as my friend who lost his dad recently found out.

Now, his dad was well-insured, and the task before my friend, who was sole issue to his father, had to prove the following to claim the insurance money:

A) His father was dead

B) The dead person was his father

C) His father had a son

D) The son was him

E) His father did not have any other son or a daughter

F) He was the nominee mentioned in the insurance paper

G) The insurance paper was original

H) The signature in the insurance was indeed his dad’s

I) While his father may have died, and while he may indeed be his son, and also that he may be his only son, further, he may be the legal nominee mentioned in the insurance paper, but where the hell is that proof that establishes he is indeed he?

No, I am not exaggerating. In India the one thing that is more difficult than to establish that a person is dead is to prove that the said person is indeed alive.

My friend is contemplating becoming a sanyasi, because that is the only profession left in this country that doesn’t involve any paper work.

I can already imagine some of you thirsting to ask ‘but what about health insurance?’ Well, the thing with health insurance is that it has evolved to a level where it covers all the ailments and diseases in the world, except the one that you actually come down with.  If for some inexplicable reason, you do manage to get some health insurance benefit —- I suggest that you write this down — the amount would not be sufficient even to cover the cotton and gauze cost.

So that leaves us with the second reason for buying insurance:

2) Many of us buy insurance because that is the only cover that we middle-class people have against insurance agents from showing up at our door. Even blood-thirsty hounds don’t work against them.

In this context, I would like to pass on a small piece of handy information to those reading this: If a long-lost friend or a relative calls up or turns up in your life quite unexpectedly, don’t be happy. Because lost friends show up only if he or she has become an insurance agent.

Anyway, all thing considered, if there is an insurance cover against insurance agents, I think I might change my policy.