Finance World

Episode 93: The Insurance Illusion — When Families Fall Victim to Over-Insurance Scams

Series: Broken by Burden: Financial Survival Strategies for the Troubled Mind

Date: 28-10-2025

🎭 A Safety Net That Was Never There

Characters:

  • Naveen Rao (42): A middle-class sales manager, eager to secure his family’s future but financially inexperienced.
  • Anjali Rao (39): His wife, cautious about finances, but trusts Naveen’s decisions.
  • Ritika Rao (12): Their daughter, whose education is the family’s top priority.
  • Mr. Joshi: A smooth-talking insurance agent who mis-sells multiple “investment plans.”
  • Satyam: Naveen’s colleague, who later helps him uncover the truth.

🌳 The Desire for Security

Naveen grew up watching his father struggle after a health crisis. He promised himself that his family would never be left unprotected.
One day, he attended a corporate seminar on “wealth and life security,” where Mr. Joshi — the agent — made an emotional pitch.

Mr. Joshi (confidently):
“Sir, do you want Ritika’s education and your family’s future to be secure no matter what happens? Our policies give both life cover and guaranteed returns.”

The word “guaranteed” hooked Naveen.

💸 The Insurance Trap

In less than a year, Naveen had purchased 5 insurance policies, paying a total premium of ₹1.8 lakh annually — nearly 30% of his salary.

  • Two “endowment” plans.
  • A ULIP plan with hidden charges.
  • Two small-term plans with overlapping benefits.

Anjali raised her doubts:

Anjali: “Naveen, are you sure we need this many? We hardly have money left for savings.”
Naveen (confidently): “These are investments, Anjali. We’ll get maturity benefits and life cover — it’s like saving and securing at the same time.”

⚠️ The Shocking Reality

Three years later, Naveen had paid ₹5.4 lakh in premiums, but when a sudden health emergency struck — Ritika needed an urgent appendix surgery — he tried to withdraw from one policy.

The insurance company informed him:

“Sir, your policy’s surrender value is only ₹85,000. The rest are administrative and agent charges.”

Naveen was stunned. He called Mr. Joshi in panic:

Naveen: “You said this was an investment! I’ve paid lakhs!”
Mr. Joshi (coldly): “Sir, all this was in the fine print. I only explained the key highlights.”

🗣 The Family Argument

That night, Anjali confronted Naveen:

Anjali (angry): “You didn’t listen when I asked! We could have saved in a simple bank FD or PPF. Now we’re stuck.”
Naveen (defeated): “I just wanted to secure us, Anjali. I didn’t know I was falling into a trap.”

They borrowed ₹60,000 from Satyam, Naveen’s colleague, to pay the hospital bills.

💔 The Aftermath

When Satyam reviewed Naveen’s policies, he shook his head:

Satyam: “These aren’t investments. They’re overpriced plans that benefit the agent. You should’ve gone for pure term insurance and invested the rest.”

Naveen realized he had been paying for illusionary security.

💸 The Financial Loss

  • Premiums paid: ₹5.4 lakh over 3 years.
  • Surrender value after cancellation: ₹1.2 lakh.
  • Loss due to mis-selling: ₹4.2 lakh.

🧠 Character Psychology

  • Naveen: A well-meaning father, but financially naive and easily swayed by emotional sales tactics.
  • Anjali: The cautious voice, ignored due to trust and lack of financial literacy.
  • Mr. Joshi: Represents the dark side of insurance sales — profit before ethics.

💡 What This Story Teaches Us

  1. Insurance is for protection, not investment. Mixing the two often leads to disappointment.
  2. Read the fine print. If returns sound “guaranteed and high,” it’s usually a sales pitch trap.
  3. Keep insurance and investment separate. A simple term plan + mutual funds/PPF would have secured Naveen better.
  4. Don’t overspend on premiums. Pay no more than 5–10% of your income on insurance.

🌱 Where They Are Now

Naveen cancelled three of his policies, accepting the financial loss. He now holds a single term insurance plan and invests in SIPs. Ritika once asked:

“Papa, why are you always worried about money?”
Naveen smiled faintly and replied:
“Because I learned the hard way that real security doesn’t come from trusting everyone’s promises.”

🔜 Next Episode Teaser:

Episode 94: The Reverse Mortgage Trap — When an Elderly Widow Signs Away Her Home Without Understanding
In the next episode, a 70-year-old widow, misled by an advisor, unknowingly enters a reverse mortgage scheme, risking the only house she calls home.

⚠️ Disclaimer:

This narrative is fictionalized but based on real cases of insurance mis-selling. Always consult independent financial advisors before purchasing policies.

Leave a comment

Trending