Mis-Selling of Insurance Products is Prevalent; Beware of It !

Mis-selling is very common in the insurance sector. It involves the selling of insurance products either by hiding facts or giving false information to the buyers. Normally, the agents/intermediaries lure customers with unrealistic benefits of the policy. Some agents succeed in convincing customers in such a way that they end up buying an unsuitable product. In most cases, exclusions under the policy are kept hidden from the buyers. And this is probably the most prolific reason why the insurance industry is stumbling in India after 15 long years the sector was opened for private players in the year 2000. Although the business has been booming for the sector since then the pace has been considerably low.

According to a survey, investors lost about Rs. 1.56 trillion over a span of seven-year that ended in 2012. Most insurance buyers have experienced mis-selling at some point. And, it’s observed that mis-selling has been the major roadblock in the growth of the insurance industry in India.

To make sure you’re not being misled by the agents, you need to be aware of a few things-

Educate yourself:

The main reason why insurance mis-selling is so common in India is the lack of insurance awareness. In order to purchase the right product, you need to understand your insurance requirements. Most people buy insurance products just for saving income tax, not for investments. So, it’s important to seek the help of an investment advisor or do thorough research over the internet in order to pick the right product with an adequate sum assured.

Read policy documents, fine prints:

‘Exclusions’is the part, agents don’t explain to you. This part explains the conditions in which the insurer does not provide protection. So, it’s very important for you to read policy documents before signing.

Cross-Check the benefits offered:

As some of the agents do practice luring customers with a range of attractive and unrealistic offerings, you need to cross-check the plan on the official website of the insurer or from the brochure of that particular plan.

Ask the agent for standard illustration:

Many agents do handwritten calculations that can be easily manipulated. Therefore, it is better you ask your agent for the insurer’s standard illustration of the plan you have chosen to buy. You can either visit the insurer’s official website to clear doubts or avoid misguidance.

Do fill-up the form yourself:

Don’t let the agent fill the form on your behalf, do it yourself. Do read policy documents- its exclusions, its benefits carefully; then fill-up the form. Being the policyholder, you should be aware of everything about the policy you are going to sign.

Do research before contacting the agent:

Some of the basic homework, that leads us towards choosing the right and wrong options for us. There are multiple insurance companies and every single company pushes their agents to sell the product, and from here the mis-selling of insurance products starts. So, if you want to avoid these things, then you should do some research about insurance companies and about their policies & plans as well. With, the help of research you will be able to understand the standard word of the insurance sector, and you will be able to understand the policies’ benefits and coverage also. Take the help of the internet, through it your research will be easy.

Consider your medical requirement:

Before buying the policy, you must know how much medical care you’ll require. If we buy something, then we know how we are going to take advantage of it. Well, in the same way, if the plan is fulfilling the medical requirement that we need, then it is good, otherwise, you may have to face problems later. And facing problems, after buying policy and paying all the premium is like a waste of money. As we know, mis-selling of policy is on-trend, and don’t fall into the trap of it. Once you consider your medical need, your search will be specified and in this situation, you never take the wrong policy cause they did not fulfill your need.

Take a look at the policy brochure:

Every insurance plan has a brochure, through which you can know about the policy much better than an agent. First, take that brochure, and give sometimes and read the brochure. It’s a bit lengthy process, but it’s another way to avoid the trap of mis-selling the insurance policy. Think about it, you want to buy a policy and your need is something more from the policy, but due to the mis-selling of insurance products, you get a different plan. Due to this, your needs will not be fulfilled and the problem will be in the form of a bonus. In the policy brochure, everything is given in full detail. Like as – about benefits, premium, coverage, and key features of the plan.

These are some exercises you should do while buying a life insurance policy.