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Imagine buying your first vehicle based on a salesperson’s recommendation. You trust that the vehicle will perform, meet your needs and sustain over the long term. But soon, you realize that the vehicle doesn’t have the features you were sold. With complex terms and conditions, you may not be able to return or replace the vehicle without losing a chunk of your money. This is a pure case of mis-selling, which leaves a customer dissatisfied.
Similar instances occur when financial products are mis-sold, especially life insurance plans. It is a major setback for customers who have purchased a policy based on false or partial information. Being sold an unsuitable policy hence leads to grievances and post-purchase dissonance. To ensure greater transparency and lower instances of mis-selling, IRDAI has directed insurers to mandatorily provide clear policy-related communication to prospective customers. For instance, a mandatory directive issued by the regulator has instructed insurers to issue benefit illustrations based on two different assumed rates of return in a prescribed format. While the regulator plays an active role in safeguarding the interest of policyholders, here are four guide rails to help you make an informed decision:
1. It is often an over-enthusiastic seller who exaggerates features or promises attractive returns to pique customers’ interest in purchasing a life insurance policy. If the promise sounds too good to be true, it is advisable to get a second opinion. One can also undertake online research to double-check on the promised benefits. It is always important to fully understand the give-get proposition before committing to a life insurance policy.
2. Be cautious if at any time a seller tries to bundles life insurance with fixed deposits, locker, mutual funds or other financial instruments. The fundamental purpose of life insurance products is different, as they serve different needs and should not be bundled.
3. Life insurance covers varied types of product offerings, and hence one should be very clear of their future goals before investing in a life insurance instrument. It is better to research and gather information before you meet a seller to have an informed discussion, and choose the right life insurance that is mapped to your future needs.
4. The sum assured, premiums, policy terms and conditions and payout terms are crucial aspects of a life insurance policy. Buyers should not decide basis any exaggerate information that might have been provided to make the policy attractive. It is advisable to read the policy document carefully before making a purchase.
Further, one can follow these thumb rules in the policy-purchase journey to prevent mis-selling of policies:
• Ask the seller to illustrate all crucial aspects of the policy. Official illustrations from the company are best suited for such situations.
• Often customers skip the terms and conditions, but it is the most critical component when purchasing a policy. Hence, it is recommended to fill your own forms and thoroughly check the details before signing the policy.
• Do check if your policy requires a full-body medical test or intimation of any prior medical history. If the seller fails to share this information with the insurer, it can negatively impact the future claim process for you/nominee (claimant).
• Make sure to read the policy details and seek clarity by asking relevant questions that are not entirely comprehensible.
In case a policy is mis-sold, you can:
• Reach out to your insurer who can help with quick query resolution
• In case of any grievance, you can connect with the insurer via varied customer service portals including website, email, or WhatsApp
• You can also swiftly access policy through multiple DIY modules to easily modify details and file quick claims
Being mis-sold a life insurance policy can be a strenuous situation. With thorough measures from insurers, IRDAI and informed decisions from customers, mis-selling related grievances can be reduced. Upon realizing that you have been mis-sold a product, do immediately gather your documents and contact your life insurer independently to ensure the correct resolution to your concerns.
Manu Lavanya is director & chief operations officer, Max Life Insurance.
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