Misselling insurance plans is a common issue that many consumers face. The dishonest practice is often adopted by the seller when they are soliciting insurance. This practice typically involves selling insurance policies unsuitable for the prospective buyer’s needs or offering policies they did not seek. Additionally, sellers may leave out crucial details about a policy or purposely describe it as a product that an individual needs urgently. However, individuals can avoid becoming victims of misselling by keeping their eyes and ears open for the warning signs and asking the right questions when approached by an insurance seller.

Important questions to ask your insurance seller

Ask- the seller to explain the policy

Prospective buyers should ask the seller to explain every feature of the policy, accompanying benefit, policy clause, exclusion, and waiting period in detail. This will help them understand whether the insurance suits their protection goals and ensure that the seller understands their financial standing and requirements. One should note that multiple plans can fall under a single category but have different benefits and clauses. This is why it is recommended to cross-check and clarify with the seller before signing the policy document.

Ask- about the cost

Intending policy buyers should ask about the initial insurance cost, including its premium and additional charges. In addition, they must ask about the payment schedule to understand if the policy is a single-pay or regular-pay plan. 

Ask- about the coverage’s scope and limitations

Insurance coverage is a crucial parameter when buying a policy. This makes it imperative to ask questions about the coverage, particularly which risks are covered and excluded. Similarly, they must ask about the surrender value and if such a benefit applies to their chosen plan to understand whether the lure of high returns applies to them.

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Ask- for a product brochure or its website link

In case an individual suspects misselling or a deal that’s too good to be true, they should ask for the policy brochure or link to the product page. It helps cross-check the product specifications and determine whether a seller is trying to lure with unrealistic rewards. 

Attend Insurer’s call

Before the policy issuance and after the policy is issued, the insurer will call to check the facts and explain the product again. Individuals should listen to them carefully and ask questions right away. This is a recorded call and shares facts to help one decide if the product is suited for them. Individuals can also cancel the product if they don’t find it suitable by informing the telecaller.

Warning signs to check to avoid misselling

  • When the seller approaches them with the promise of offering an interest-free loan on a life insurance policy and promises the premium amount will act as EMI, they should verify the claim with the insurance company. While insurance companies allow loans against some policies, those are rarely interest-free. 
  • Sellers who intend to mis-sell do not clearly explain the product or its features in detail and purposely avoid queries about coverage, exclusion, payment, or waiting period. In such a case, it is best to avoid purchasing a policy from them. 
  • When the seller offers a policy whose benefits seem unrealistic and too good to be true, individuals can verify the claims on the company website or schedule an in-person visit to the insurance company.
  • If the seller is offering the policy and insists on only having telephonic discussions, it might be a warning sign. Setting up an in-person meeting to help avoid mistrust.
  • If the seller markets a single-pay product that offers higher returns than fixed deposits or savings accounts, individuals should step back and reconsider the purchase. Insurance offers financial protection in the event of mishaps, and they are usually regular pay policies.

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The responsibility to clarify doubts lies with the prospective policy buyer to ensure they are not a victim of misselling. In case an individual has already become a victim of misselling, they can take advantage of the 15-day free-look period to reconsider their purchase decision and apply for cancellation. Subsequently, they should report to the insurance company for a refund. They can also raise a complaint with IRDAI’s Bima Bharosa for redressal, but if that does not work, they can choose to contact the Insurance/Banking Ombudsman or seek assistance from the consumer court.

This article has been written by Shilpa Arora, COO and Co-founder at Insurance Samadhan. Views expressed above are personal opinions of the author.