In this edition of the reader story, SEBI RIA Ajay Pruthi’s client shares a story. As regular readers may know, Ajay Pruthi is a regular contributor at freefincal.
A few years ago, my financial awareness was limited. Like many people, I trusted my bank representatives to guide me toward products that would genuinely benefit me. When they recommended a guaranteed income plan for retirement, I didn’t question their intent or the numbers too deeply.
The proposal sounded safe and sensible: pay a high premium for 10 years and receive a steady income from the 11th year onward. I was shown illustrations suggesting returns of around 8%. It felt like a disciplined, long-term retirement solution, so I committed—despite the premium being substantial.
What I didn’t understand then was how these products are sold: commissions, targets, and illustrations that look attractive on paper but don’t reflect reality.
Over time, as I improved my financial literacy, I revisited the policy details. That’s when I realised: The income was partially guaranteed, but the overall returns were not.
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The “8%” was merely an illustration, not a promise (which they made verbally). Inflation would significantly erode the real value of future income.
Liquidity was extremely poor due to a long lock-in period.
Opportunity cost was massive compared to better investment options.
The bank representative who canvassed the policy didn’t mention any of these factors to me. He painted a rosy picture of “guaranteed returns better than bank FD.”
When I considered exiting the policy, I faced another shock: surrendering meant getting back barely one-third of the premiums I had paid. Walking away would mean accepting a loss of several lakhs.
Confused and stuck, I consulted Mr Ajay Pruthi, a fee-only Financial Planner.
After reviewing the policy and cash flows, he confirmed what I had begun to suspect: the product was unsuitable for my goal. Even under optimistic assumptions, the internal rate of return was far lower than what I had been led to believe.
He advised me to surrender the policy. But before surrendering, I should formally write to the insurance company and raise a complaint of mis-selling, he suggested.
I was hesitant. I didn’t expect anything to come out of it. But he egged me on, saying that I had nothing to lose since I had already decided to surrender the policy and take the loss. He said the company mis-sold the policy to me, and I have every right to raise a grievance. Solely based on his confidence,e I decided to try. I wrote a letter to the company, explaining what had happened and demanding reimbursement of my premiums. To be honest, I wasn’t expecting the company to respond positively. But they took up the matter and started an investigation.
A few days ago, I received a call from the bank manager. He tried hard to convince me that the policy was actually good, once again highlighting its “attractive returns” and suggesting that I was being misguided. When I didn’t agree, the conversation took an uncomfortable turn. I was told that the bank employee who had sold me the policy could lose his job, and that by pursuing this, I was risking multiple careers. It put me in a moral dilemma. I genuinely wasn’t sure if I wanted to continue.
I spoke to Mr Ajay again and shared what I was feeling. He calmly explained that this is a common pressure tactic used to get customers to withdraw their complaints. He also reassured me that no one would lose their job over this and that I wasn’t doing anything wrong by standing up for myself. That clarity helped. I decided to stay firm and let the process take its course.
I also informed the insurance company about this interaction with the bank. They acknowledged my concern and assured me that the investigation would be conducted fairly and impartially, independent of any pressure from the bank. After the review was completed, the company got back to me and reimbursed the premiums I had paid. The matter was resolved without further back-and-forth. It was a huge relief and confirmed that standing my ground was the right decision.
That decision saved me from continuing a long-term financial mistake and from locking more money into a product that would never meet my retirement needs.
This experience taught me some important lessons:
Guaranteed income plans rarely beat inflation.
Illustrations are not returns—always evaluate real IRR and cash flows.
Bank relationship managers are salespeople, not advisors.
High lock-in and low liquidity are red flags for investors.
A good financial planner can prevent irreversible damage.
Most importantly, I learned that questioning a product—even years later—is worth it. If something doesn’t add up, pause, seek independent advice, and don’t assume you’re stuck just because you signed on the dotted line. I’m sharing this so others don’t repeat the same mistake. When it comes to long-term financial security, “guaranteed” doesn’t always mean safe.
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