Any agent selling insurance products has the duty to act in the best interests of their customer. This means that the product should fit your circumstances and enhance your situation rather than take away from it. Ensuring that you are given all essential details of a policy when it is introduced to you is one way to keep up the camaraderie between insurance providers and customers. If an agent fails to intentionally serve in the best interests of their customer, they may be guilty of mis-selling their insurance policy.
What is insurance mis-selling?
When an insurance policy is claimed to be other than what it is, not broken down in its completeness to a customer, or sold to the client outside of this target audience intentionally by an agent/intermediary, this is called mis-selling of insurance policy. Insurance mis-selling is, unfortunately, rather common for ULIP plans but it is also seen in the case of other products. Mis-selling insurance is illegal but catching them as soon as possible is an essential action to be taken.
How can life insurance be mis-sold?-
Examples of life insurance being mis-sold include:
● Being told or being persuaded by an agent/intermediary that you have to surrender your life insurance cover prematurely
as there are no other options. Not only is this untrue, as there may be other options, but helping your coverage grow is also essential to building up a corpus that can help your dependents in case of an untimely death. Taking out your cover prematurely, especially when the situation does not demand this, may not help you reap all of the benefits of your policy. On surrendering their corpus prematurely, one loses the savings one wants to create for themselves, or their family’s life goals. And Also, the benefit of life cover to protect the family financially is terminated.
● Not being explained the terms and conditions of your policy in detail.
There are multiple clauses to any kind of insurance policy and knowing when and how you can claim your life insurance is valuable before you buy your insurance. If your insurer or their agent/intermediary has skipped the terms and conditions by not sharing them with you, or not briefing you on them, you may consider this to be a form of mis-selling.
● Being given incorrect advice on the best type of product or service for you or being sold more than you require.
Let's assume that an insurer informed you about different life insurance options but only detailed ‘whole of life’ insurance —which is a full coverage and relatively more expensive form of life cover. They did not offer a ‘term’ cover as another option for you. Whole life insurance will offer a payout no matter what age the policyholder perishes at while term cover will pay out its lump sum if the loss occurs within a certain duration that is fixed at the time the policy is bought. Whole life insurance premiums are usually higher than term life premiums for the extent of coverage offered by these plans. If your provider failed to elaborate other affordable options are available to you, especially when those options may be more suitable to your needs, you have been mis-sold by the insurer or its intermediary.
1Can I claim compensation for life insurance mis-selling?
Yes, if you have been mis-sold life insurance or even a ULIP plan (which comprises life coverage) for that matter, and have adequate proof of the same, you have the grounds to claim compensation for the same.
What can I do about mis-sold life insurance?
If you believe you have mis-sold a policy, revisit and scrutinise your paperwork carefully and keep an eye out for any added costs/lack of services/contradictory information for your insurance that you may have unknowingly signed. Once you are confident you were mis-sold a life insurance you may start by:
- Gathering an inventory of reasons that explain how you have been mis-sold a life insurance policy.
- Compiling together all evidence that can support your claims including things like emails or text messages between you and your agent/policy provider, pamphlets that market the policy in a deceptive manner, false claims or reviews on the insurer’s website, and more.
Keep all these documents at your disposal since you will likely be complaining to the company or insurer that wrongfully sold you the policy.
Insurance mis-selling is malpractice that can be nipped in the bud if policyholders are scrupulous about what they are buying. Check out the range of life insurance options at Bajaj Allianz Life Insurance Company Website to find a policy that fits your needs.