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financial-frauds

Beware of Financial Frauds

Tulika Agrawal
Tulika Agrawal

Anybody holding life insurance policy must have received one or more call from some agent or broker in last 3-5 years, suggesting to surrender the current policy and buy new one with better features and better returns. Such practices are prevalent these days. These so called agents took appointment with investors on a pretense of KYC updation or to discuss their existing product. Once met, they lure them to take another life insurance product with higher premium or guaranteed 13-14% return Fixed Deposits of companies, whose name sound very similar to some prominent and credible company. They even have websites to show their credentials.

Many of investguru investors have shared their experience with us. Recently, a representative from a financial company contacted one of our investor. He suggested him to surrender his 10 year old life insurance policyfalsely telling him that the maturity amount of current policy is not tax-free. Also, he proposed himto invest the amount received with additional investment in another policy, which can generate higher returns, with final amount being tax free. Fortunately, that investor has contacted us to know our views on the same. On visiting the website of that Company, it was evident from its logo, which strikingly resembles Life Insurance Corporation logo, and misspelled data, that it is a fraudulent company with an intent to entice customers to buy their products.

These are nothing but ponzi schemes. Whenever there is a scheme with ‘High Returns’ and “Little or no risk” or “tax free returns”, we should be suspicious. Every investment carries some degree of risk and investments yielding higher returns usually involve more risk and volatility. One should be skeptical about an investment that generate overly consistent returns as every investment tend to go up and down over time.

Further, an investor should be very careful when doing private corporate deposits. In case opting for private FDs, make sure that the product has credit rating of AAA. Also, check at the site of credit rating agency to ensure the authenticity of information given.

By taking a cautious approach and not acting rashly, one can avoid being a victim of these prevalent frauds.

As always, your views and feedback on the above are welcome.

Happy Investing!

Tulika Agarwal
Co-Founder, Investguru

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