Mumbaikars must have seen this ad in some one-tenths of hoardings across the city. It did not mean much, but the ads meant something serious. “Ye choone se nahi failta”, “adhiktam logo ko hai”, and the like comments meant that there is something big coming up.

And so it was out a couple of days ago. KILB stands for “Kam insurance lene ki bimari”. It is a bimari for sure, and one that’s big enough to attract attention. Somehow I could not really link the ad to an insurance company, though I don’t yet know if they mean life or medical insurance. I wouldn’t be surprised if they deal in general as well. Its quite funny to realize that such stunts are being done to attract attention.

KILB’s latest ads talk about choosing the right amount of insurance. Assuming they are talking about life, my guess is that the right insurance should be determined by two factors: the future needs (like children’s education) and current income (which will determine the capacity to pay the premium). Yet in the plethora of options available to confuse the naïve customer, there right coverage is often not arrived in the correct manner.

Why should a customer take a kam insurance? Or not at all? There are so many factors governing this. At the very first, the common man has very little idea of actuarial sciences. And there are so many who are hooked on to insurance as an investment, with hopes that they will get some amount at the end of the policy maturity. It might go well for whose who are looking for security, rather than prosperity; and insurance companies are taking risk away from their lives. So the onus lies with the insurance agent, who is the first point of contact for the customer. The agents usually are paid bonuses according to the premium they can garner from the customer, and so they never encourage the term life insurance.

For those for whom their employers are paying the premium, they can rest easy; since the coverage is a multiple of their salary (and hence commensurate with their pay). But in spite of that, people go ahead and take insurance, calling it an investment! Like under coverage, over insurance does no good unless one knows that he might be gone in that year!!

The calculation of risk is not easy, and insurers take the fullest advantage of this information arbitrage to make money in the name of security cover!

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