The moment you are out of college and employed you will get a call from your relative about investing in life insurance. It could also be your batchmate who got employed as an insurance agent who is asking you to help him out.
It is a very real situation and problem. Most of us when we start out do not have a financial education to make the right investment decision. The only other approach is to take decisions based on trust. Trust which is very scarce these days.
Remember to balance your relations and your wallet. No relationship is worth giving out money. Most insurance sold by agents are whole life insurance which pay hefty commission.
Inherently such products are designed for the person who is selling the policy. They get high commission so much that they can create a living out of it just by selling few policies per month.
For the buyer it is opposite. There isn’t adequate return. You get around 4 to 5% return with a decade plus of investing. Such returns are really bad and most of the time you are better off investing in a fixed deposit.
The insurance cover is also very small when you compare to term life insurance with a similar premium. It will not adequately cover your insurance needs.
Here are a few tips on how to say no to your friend or relative trying to sell an insurance product.
Don’t say no upfront
Since you need to maintain your relations it is best if you give them a chance to pitch the product. In any given case if they are a good salesman they will keep calling up until you hear them.
It is the least that you can do especially if they are your batchmate just doing their job. Pitching to you would be a good practice for them and you can help them out at least with that.
Be polite
Let them explain the product to you in detail. Maintain a neutral tone throughout the conversation. Don’t interrupt or question them on negatives of the insurance product.
Remember they are just doing their job. Even if you know it’s a bad product mentioning that to them will only either demotivate them or can hurt your relationship.
Say you have EMI’s
Here is when you start to say no without saying no.
If you do not have much knowledge about financial products it would be difficult to say no based on the product’s merits.
You cannot say you will decide and get back later. They will keep chasing you until they have an answer from you.
It is best to say a no by giving an excuse that you already have EMI’s to pay and do not have surplus cash to invest.
You should either make a case that you do not have surplus to invest or you already have plans to invest your money elsewhere.
Already taken term insurance policy
From my experience this is the best way to say no. Just say this ‘ I already have a term life insurance from ‘x’ company worth x Lakhs/Crore and I am paying x premium’. Make sure the premium that you are mentioning sounds true. Check the premium online to make sure the amount makes sense.
Say that you have bought this online yourself without any agents involved. This should be the end of the conversation.
Lay down you investment plans
If you already have an investment plan, you can have discussion on that with your friend or relative.
You can also say that I am planning to buy a house and my priority would be to have enough down payment for the purchase.
Health and life insurance policy provided Employer
If your employer is already providing you health and life insurance, mention that.
Say your employer is providing enough insurance that is required and you do not need a top up. Be firm about this. Additionally you can say if I need to increase the cover employer already has the facility to increase it by paying a small premium.
This will ensure that you would not be bothered one or two years down the line.
Be informed
The most important thing is to be informed. Read about the type of insurance available in the market and choose what is best for you.
This is true for buying any investment products. Do not get into any product before completely understanding its pros and cons. Make time understanding this and it will reap you benefits throughout your life.
Life insurance is important for your dependents especially if you are the only earning member. It is a decision which should not be rushed. Take your time deciding and not to be rushed into it by your relatives or friends. I have seen many getting into horrible products because of their inexperience.
Hopefully these tips will help you navigate through the awkward situation of saying no to your relative or friend. I am sure one of these will work fine and you would not be bothered again.
Remember one thing: Do not mix insurance and investment. They are two separate products for two separate goals. It is important to understand the difference for your long-term financial health.
