To avoid such a situation, as a buyer be aware of the ways in which insurance can be mis-sold to you while buying a policy. Note that, all agents might not want to mislead you, however, keep your eyes and ears open while buying a policy as many policyholders have been misled and mis-sold.
With the COVID-19 crisis spreading fast, more and more people are being aware of healthcare costs and are looking to opt for health insurance policies for themselves as well as their families. Not only health, but people are also looking at life insurance policies to safeguard their family. Even though there are lakhs of well-intentioned brokers and agents that sell insurance in India, according to experts, most are seen making fake promises to get their way.
As most customers in this sector have limited knowledge, therefore they look up to agents who will help them choose policies that are suitable for their needs and lifestyle. But at times rogue agents take advantage of such a situation and sell insurance by misrepresenting facts and painting a distorted picture of the features of an insurance policy.
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To avoid such a situation, as a buyer be aware of the ways in which insurance can be mis-sold to you while buying a policy. Note that, all agents might not want to mislead you. However, keep your eyes and ears open while buying a policy as many policyholders have been misled and mis-sold in the past.
Industry experts suggest policyholders should always ask questions while buying a policy, read the proposal and final document carefully before signing off, and be aware of the promises made to them.
Here are some of the common ways policy is mis-sold to investors:
Policy benefits not explained: There are instances when policy benefits are not been explained clearly, and policyholders do not understand the policy at all that they have bought. Know that there is something wrong when your agent has not explained to you the policy benefits and features accurately, and you are unclear about them.
Additionally, there are agents who distort and exaggerate features and promise false returns to make their policy look attractive. Know that as a policyholder you are paying a premium for getting and keeping an insurance policy. Hence, you should be aware of the benefits, and it should be explained to you in advance.
Premium payment: Agents exaggerate the benefits of a policy, and tend to give misleading information on premiums. The insurance company is liable to honor its side of promises made in the product and pay the sum insured or reimburse claims, till the policyholder pays his/her premiums correctly, on time and for the full tenure of the policy. However, in the case of life insurance, if the full term is not completed by the policyholder, the claim process changes. The insurance company, in that case, could also charge or deduct some charges.
Promise of better returns: Agents often say that insurance policies give better return than FDs. However, it is not true. Experts say this is one of the most common ways of miss-selling insurance. For instance, comparing an insurance policy with investments like FD and saying it is a safer investment option and gives better returns than an FD, are fake promises.
Know that a life Insurance policy, in general, offers protection in case of the untimely death of the policyholder to the surviving family members, in the form of sum assured. The sum assured is provided after the policyholder has paid the due premiums. Additionally, some policies provide other benefits such as money back, maturity benefit or amount payable in between the term of the policy. Generally, these policies do not offer higher returns than fixed deposits.
Claim procedure: In case of health and accident insurance policies, at the time of selling a policy, the agent should clearly state under what circumstances can a policyholder make a claim, what type of claim is payable and what is not. Fraud agents give policyholders an impression that anything and everything is covered under an insurance policy, which is not true. Hence, to avoid being mis-sold a policy, it is better to ask under what circumstances and conditions are claims not payable.
For instance, in the case of a health insurance policy, many ‘exclusions’ might get added to your policy. Know that certain hospital claims might not be payable, OPD treatments might not be included depending on the type of the policy, there may be a longer waiting period for certain diseases, or your claim could also get rejected in some cases. Hence, before signing a policy read the policy document carefully and understand the clauses.