Mis-Selling Of Life Insurance Policies – Beware!

Everyone wants to secure their future and take care of their loved ones. Buying a life insurance policy is one way to do that. On paper, it seems straightforward: pay premiums, get financial protection, and have peace of mind. But in reality, life insurance can feel complicated.  

There are many types of policies, each with different benefits, terms, and conditions. Sometimes, the details are not explained clearly. Other times, only part of the information is shared. This can lead people to buy a policy that might not suit their needs, and this practice is known as mis-selling. 

In this guide, we will explain what mis-selling is, how it can happen in life insurance, and how to spot it. We will also share practical steps to take if you think you were mis-sold a policy, so you can make informed choices and avoid unnecessary stress.

What does Mis-Selling Life Insurance Mean?

Mis-selling happens when a product is sold with incomplete or misleading information. In life insurance, this means a policy is sold without fully explaining the benefits, risks, or terms. As a result, the policy may not meet your needs, and you might end up paying for something that doesn’t really protect you. 

It’s not limited to any specific type of insurance. However, life insurance is particularly vulnerable because policies are complex, and people rely on agents to guide them. Mis-selling can happen when risks are not clearly explained or misleading information is shared to convince someone to buy a policy. 

Tips to Avoid Being Mis-Sold a Life Insurance Plan

By staying alert to these tactics, you not only protect yourself from being misled but also gain clarity on how to choose a life insurance policy that genuinely matches your financial goals.

There are several ways life insurance can be mis-sold:

1. Ask for the standard illustration:

First and foremost, ask the agent for a standard calculation of the plan. Many agents tend to offer a handwritten calculation, which can be easily manipulated. Hence, it is better to ask an agent specifically for the company’s standard illustration of your selected insurance plan to avoid any misguidance. You can carry out calculations on the company’s website as well.

2. Clarify doubts:

Understand what has been included and excluded, the surrender policy, the grace period, etc. Take some time to clarify all your doubts. It is advisable not to buy any plan in a hurry.

3. Filling the form yourself:

Many agents offer to fill out the insurance form on your behalf. Later, they would just ask for your signature. This does reduce your work but may lead to ambiguity and confusion. To fully understand the policy, it is better to read all the details and then fill out the form yourself. You should be completely aware of the documents you are going to sign.

4. Insurer Calls:

To avoid mis-selling, Shriram Life and various other insurance companies call the consumer to ensure that they have understood all the terms of the plan. Here you can clarify all the doubts. If you are still unconvinced, you can return the policy.

5. Evaluate excessively fascinating products:

Some of the agents try to lure with unbelievably charming products. There are high chances that the agent might be offering a few unrealistic rewards. It is better to cross-check the product on the website or brochure of the insurance plan.

6. Check the medical requirements:

While buying a life insurance plan, do check whether there is any requirement for your medical details. It is seen that some agents skip providing medical details, as it leads to a delay in buying. However, it is one of the most important parts that directly impacts the claim settlement process.

7. Check the plan name:

While filling the form, do check the policy name and confirm whether it is the same one that you have selected. There can be many plans under a single category, each with its specific benefits and clauses. Thus, make sure that you have checked the name in order to avoid any confusion.

How do you know if the Life Insurance was Mis-Sold to you or not?

You might have been mis-sold a policy if:

1. You’re unclear about the policy terms: You don’t fully understand the benefits, exclusions, surrender rules, or grace periods.
2. Promises seem too good to be true: If the agent highlighted rewards or returns that sound unrealistic, it could be a red flag.
3. Hidden charges appear: Fees or premiums not clearly explained at the time of purchase.
4. Pressure to buy quickly: If you were rushed into making a decision without reviewing the documents.
5. Incomplete documentation: Missing or unclear policy documents.

What Steps to Take if You Were Mis-Sold a Life Insurance Policy?

If you think a policy was mis-sold, follow these steps:

1. Review Policy Documents: Go through all documents carefully. Identify terms or conditions that were not explained.
2. Contact the Insurer: Call the company to clarify your concerns. Agents may be able to explain the terms or fix mistakes.
3. File a Formal Complaint: If the insurer doesn’t address your concerns, submit a complaint to the grievance redressal team.
4. Approach the Insurance Ombudsman: If the issue is still unresolved, the Insurance Ombudsman can help resolve disputes.
5. Seek Legal Advice: Consult a legal professional if you want to explore further action.

Can You Claim the Life Insurance if You Were Mis-Sold?

Yes, there are options:

1. Cancel the Policy: You can return the policy within the free-look period. Usually, this is 15 days for offline purchases and 30 days for online or distance marketing policies.
2. Get a Refund: You may get a refund of premiums paid, with deductions for any costs already incurred.
3. File a Complaint: If cancellation or refund is not possible, lodge a complaint with the insurer or the Insurance Ombudsman.

Take Charge of Your Life Insurance Decisions

If you’re unsure about how to choose a life insurance policy, start by comparing different plans, checking claim settlement ratios, and ensuring all terms are transparent. Life insurance is an important tool to protect your family. If something feels unclear, reach out to your insurer or file a complaint. Acting early ensures your policy truly serves its purpose and gives you peace of mind.

Disclaimer: This information provided is intended for general informational purposes only. For personalised recommendations, please consult a certified insurance professional.