Beware of Insurance Mis-selling: Safeguard Your Money and Future

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Beware of Insurance Mis-selling Safeguard Your
Money and Future
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• Case 1 Change of Existing Policy
• Mr. Birjus was having Insurance with ABC Life
  Insurance. He bought the policy in 2018 and has
  been paying regular premiums. One day, he
  received a telecall. The caller introduced
  himself as the Relation Manager of ABC Life
  Insurance and asked whether he was satisfied with
  his existing policy. Birju trusted the caller
  because he had all the personal details. Later,
  the caller informed us that the plan was not
  doing well and the company had decided to
  discontinue the plan and upgrade to a new plan
  with superior features. All money from the
  previous policy will be credited to the new
  policy. Moreover, a bonus and agent commission of
  Rs 5 lakh will also be awarded if Birju decides
  to invest Rs 1 lakh in a new policy. The offer
  was very lucrative and Birju agreed immediately.
• The proposition was straightforward, seemingly
  tailor-made for Mr. Birju. An inquiry about his
  existing policies drew an assurance that they
  were of no concern. The telemarketer outlined an
  intricate planhe said that Mr. Birju has to pay
  Rs. 1 lakh yearly for a decade, promising Rs. 25
  lakhs as a death or maturity benefit with an
  option to cancel after a year. Mr. Birju was
  lured by the plan and thus became the victim of
  insurance mis-selling.
• Mis-selling comes in various formssometimes,
  customers struggle to grasp the policy due to its
  complex structure. In this case, he was persuaded
  to purchase the policy despite already owning
  insurance. He was trapped in that he could
  terminate the policy after three years and
  reclaim the premiums paid and accrued benefits of
  the existing policy.

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What is Insurance Mis-selling?

• Insurance mis-selling happens when someone is
  convinced to buy an insurance policy they might
  not really need or understand. This can occur
  because the salesperson provides wrong or
  misleading information to make the sale. As a
  result, the person might end up with a policy
  that doesnt match their needs or financial
  situation. Its like buying something that
  doesnt quite fit or works for you just because
  someone convinced you its a good idea.
• Insurance is a subject matter of solicitation
  which means that insurance needs to be sold on
  its merits and should not be sold through
  allurements.

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• Whats the Motive Behind Insurance Mis-selling?
• Like any other product, the seller gets a
  commission, and such fraud callers are interested
  only in commission. They try to misguide
  customers for the first 30 days so that the
  freelook period expires, and the commission is
  released after the freelook period.
• How Does It Impact The Customers?
• Mis-selling has far-reaching consequences for
  customers. Firstly, it leads to financial losses
  as the money paid in premiums is wasted when the
  promised advantages fail to meet the customers
  needs. Secondly, when the customers family, who
  should rightfully benefit from the policys
  offerings or a specified amount, is left without
  reliable support in the long term due to the
  policys failure to deliver as promised. This
  situation can make them despair, especially if
  they lack financial assistance following the
  breadwinners demise.
• Both situations are daunting for anyone,
  especially considering the emotional and
  financial impact. When hard-earned money is
  invested in policies that dont fulfill their
  intended purpose, it undermines trust in
  financial systems and disrupts plans for a secure
  future.

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• Government Role in Insurance Mis-selling
• IRDAI, the regulator, has taken many steps to
  curb such malpractices and IRDA has various
  control systems to curb mis-selling like
• Grievance escalation matrix and appointment of
  Nodal Grievance officer at each Insurer
• IGMS system of IRDA
• Freelook period
• Verification call
• IRDA has an ambitious plan of achieving a 5
  penetration in GDP and which is possible only if
  a favorable system is created.
• Furthermore, the concept of a standardized script
  has been integrated into all insurance policy
  aspects, encompassing benefits, services, and
  essential disclosures. This guideline should be
  communicated clearly to each insurer and agent,
  emphasizing strict adherence to the script for
  enhanced customer understanding of policy
  details.
• It sure does sound like a very lengthy process
  and since a lot of technicality is involved, many
  of us decide not to go after the insurance
  company. But do not worry! Insurance Samadhan is
  here to help you.
• Insurance Samadhan constantly seeks the best
  interest of the policyholders so that nobody
  loses their hard-earned money.

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• Bottom Line
• Insurance mis-selling can cause problems for
  people. It happens when sellers give wrong
  information or convince you to buy something you
  dont need. This can hurt your money and your
  familys future. But you can fight back. If you
  have a problem, tell your insurance company and
  they will check. If they dont help, you can talk
  to Insurance Samadhan. We will help you.
• Original Source - https//www.insurancesamadhan.c
  om/blog/beware-of-insurance-mis-selling-safeguard-
  your-money-and-future/