When consultants con prospective depositors into buying insurance

This happened in 2019 when the 35-year-old thought they had deposited VND50 million (around $2,130) in savings accounts.

Nga, 35, holds her two life insurance contracts in her rented room in Hanoi, April 11, 2023. Photo by VnExpress/Phan Duong

Then, one day, her landlord told her that her savings accounts were actually life insurance contracts.

Instantly alarmed, she rushed home to read the contracts only to discover she had to pay insurance premiums of VND50 million a year for 10 years, and any default would cause her to lose the money she had already paid.

She burst into tears.

She says: "If I had been told it was a life insurance contract, I would never have signed it. I don’t have that much money. Even when my child is sick, I don’t dare go to hospital."

"We constantly live in anxiety. My husband and I argue a lot."

Do Hong Son, a member of the Hanoi Bar Association, says what happened to Nga is far from unusual. Many people who take money to a bank to open savings accounts somehow return home with a life insurance contract.

The case of Thanh, 34, of HCMC, is a bit different. Initially he went to a bank branch and wanted to buy an insurance policy. The employee advised him to buy a life insurance policy, he yielded out of trust.

"I didn’t research thoroughly beforehand and so believed everything the agent told me," Thanh says.

He did not even check the documents sent to him.

It took him one year to realise that the policy was larger than what he had wanted, and he could only get back the money after 15 years and not 10 years like the employee had promised.

His money would be invested in securities, and information about his income and health had been falsified to ensure his policy would be approved.

A financial consultant suggested that Thanh should forget about the policy and reconcile to the fact he would lose the VND272 million (around $11,600) he had paid over four years. The consultant explained that since his information listed in the contract was incorrect, Thanh was unlikely to have any claim settled.

Meanwhile, he could look for other insurance products with similar terms and conditions but much lower premiums, he was told.

"Now I would rather open a savings account instead of putting my money in a life insurance product," Thanh says.

Last year insurance companies reported premium incomes of VND245.88 trillion, 15% higher than in 2021.

Banks were the most popular channel for selling their products, and they accounted for 20% of life insurance premiums and 14% of non-life premiums.

Son says people have to keep their eyes open.

Insurance contracts, like any other civil contract, are agreed upon by all sides before they are signed and take effect, and those who do not read or research comprehensively before signing the contracts are partly to blame for possible problems they face afterwards, he says.

"But undeniably, for most people, it is hard to fully understand terms and conditions of a contract. Not to mention the fact the contracts and documents are very long."

Nga and her husband have opted to keep paying the premiums despite having to work harder.

Their worry now is not being able to withdraw the money after 10 years or facing unexpected problems in the meantime.

"That money is all we have for our children’s future," Nga says.

*Names of some characters have been changed.