A popular advertisement in media which most of us must have seen says “There are some things that money can’t buy, but for everything else there is MasterCard.” Ask people in which category does human life belong and without a second thought they will agree that human life is priceless and no amount of money can compensate for the value of a human being. But insurance advisors/agents will differ. To arrive at the amount of insurance cover that a person should take they assign a monetary value to human life which they term it as Human Life Value (HLV). Through Human Life Value (HLV) we try to measure the economic value of a person. A person has different values like emotional value, social value, spiritual value, economic value etc. Human life value measures how much the person is worth in monetary terms. So what exactly is HLV?

It’s hard to miss the Aegon Religare Invest Maximiser Plan advertisement in media. The company claims that it is the cheapest ULIP plan available in the market. The company goes to the extent of saying that if someone is able to find a cheaper ULIP, the company will reward the customer Rs 1000. That is indeed very heartening to see, because lot of insurance companies levy a number of charges in a ULIP, which a common customer is not aware of. All these charges eat up money which otherwise would go into investments and generate returns for the customer.

So what is it that makes this ULIP different from other market linked insurance plans currently available in the market? The product brochure mentions “A product with a low premium allocation charge to help maximise your investment.” So let us see the charges in the plan:

It’s March, the tax planning season is at its peak and Ajay (person earning 6Lakhs pa working in an MNC) has started his yearly ritual of scouting for investments for saving income tax. Ajay tells his financial planner Pankaj that he is looking for an insurance plan which is very low on risks and will give good returns. Pankaj is a smart financial planner and tosses a question to Ajay which puzzles him.

Pankaj asks Ajay “Do you buy a general insurance product for your car which gives you car insurance plus returns at the end of the year?” Ajay says “Car insurance plans are meant for protection against risks like accidents and not for returns.” On hearing Ajay’s answer, Pankaj smiles and says “Bingo, you are absolutely right. Don’t you think the same applies to life insurance also? Returns should be best left to investment products and not insurance. Life insurance should be bought only to cover the risk of loss of life and remaining surplus money should be routed through investment products for superior returns. A person should not mix insurance and returns.”