Mis-selling is very common in insurance sector. It involves selling of insurance products either by hiding facts or giving false information to the buyers. Normally, the agents / intermediaries lure customers with unrealistic benefits of the policy. Some agents succeed convincing customers in such a way that they end up buying an unsuitable product. In most of the cases, exclusions under the policy are kept hiding from the buyers. And this is probably the most prolific reason why insurance industry is stumbling in India after 15 long years the sector was opened for private players in year 2000. Although, the business has been booming for the sector since then but the pace has been considerably low.
According to a survey, investors lost about Rs. 1.56 trillion over a span of seven year that ended in 2012. Most insurance buyers have experienced mis-selling at some point. And, it’s observed that mis-selling has been the major roadblock in the growth of insurance industry in India.
To make sure you’re not being misled by the agents, you need to aware of few things-
Educate yourself- The main reason why insurance mis-selling is so common in India is lack of insurance awareness. In order to purchase a right product, you need to understand your insurance requirements. Most people buy insurance products just for saving income tax, not for investments. So, it’s important to seek help of an investment advisor or do thorough research over internet in order to pick right product with adequate sum assured.
Read policy documents, fine prints – ‘Exclusions’ is the part, agents don’t explain to you. This part explains the conditions in which the insurer does not provide protection. So, it’s very important for you to read policy documents before signing.
Cross-Check the benefits offered- As some of the agents do practice of luring customers with a range of attractive and unrealistic offerings, you need to cross-check the plan on the official website of the insurer of from the brochure of that particular plan.
Ask the agent for standard illustration- Many agents do handwritten calculation that can be easily manipulated. Therefore, it is better you ask your agent for the insurer’s standard illustration of the plan you have chosen to buy. You can either visit insurer’s official website to clear doubts or avoid misguidance.
Do fill up the form yourself – Don’t let agent to fill the form on your behalf, do it yourself. Do read policy documents- its exclusions, its benefits carefully; then fill up the form. Being the policyholder, you should be aware of everything about the policy you are going to sign.
These are some exercises you should do while buying a life insurance policy.
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