For far too long, the mis-selling and misrepresentation of insurance policies has been a tough challenge for both investors and insurers alike, making the former more and more weary of buying insurance from the latter.
There have been numerous attempts to protect the interests of investors, as is evidenced by the recent Insurance Laws (Amendment) Ordinance 2015, passed by the Rajya Sabha, which holds insurance companies responsible for mis-selling by its agents. This law has created provisions for levying penalties ranging from 1 crore to 25 crores for various violations, including mis-selling and misrepresentation.
Though the days of caveat emptor (buyers beware) are behind us, with companies being held more and more accountable, it is still prudent to learn a few ways to protect yourself from fraudulent selling. Here are 5 suspicious sentences that should alert you to think twice and ask again before you commit.
Life insurance is a long-term commitment with long-term benefits. If anyone tells you that insurance is a short-term plan or a way to make a quick buck, you should know that this is a farce.
Giving an advisor a signed form without reading it is like handing them a blank cheque. If your advisor is persistent about not wanting to ‘inconvenience’ you with the details, be careful. It is better to fill the insurance form yourself not only so you can provide accurate information, but so you can know exactly what you’re signing up for.
All insurance policies are available to everyone (subject to underwriting decisions). There are no special policies, so if you’re being told you’re being given preference, don’t take it at its face value. Investigate what you’ve done to deserve this status, and don’t accept it until you are a hundred percent convinced.
Insurance companies have standard illustrations for depicting expected returns from endowment or ULIP policies. Ask for these official illustrations in case your agent shows you handwritten or back-of-the-envelope calculations. Though these may seem more personal, they can be misleading or inaccurate, both of which are equally damaging.
Life insurance companies generally reach out to policyholders to explain the terms of the policy and to check if the buyer is satisfied with the purchase experience. Along with this, there’s usually 1-2 stages of phone call verification. If you aren’t receiving these regular check-ins, it’s possible your policy isn’t as official as it should be.
Mis-selling can have a long-term impact on the financial future of you and your family. Always do enough research about your policy before you buy it- whether it’s online searching or just reaching out to trusted family and friends. To simplify the overall process, buy an insurance policy online, and above all, remember to read between the lines.
"Knowing yourself is the beginning of all wisdom"- Aristotle -
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