Life Insurance - Mis-selling

Going through a life insurace policy document is a tedious task for many individuals. Understanding the complicated terms and conditions often puts many off. Reema Jain (name changed), however, made an effort to decipher the fine print as soon as the documents were delivered to her.

The 55-year-old home-maker spotted certain discrepancies in the policy bond and brought them to her agent's notice during the 15-day free-look period. Soon, she realised that the agent had deliberately entered misleading details and she alerted the life insurance company immediately. Despite acknowledging the mistake orally, the company is yet to do anything about it or refund the premium.

Kruti Devi (name changed) had filed for a claim after her husband's death. The claim was denied on the grounds that "material facts" were not disclosed. Worse, the company took almost a year to arrive at this decision.

According to statistics released by the Insurance Regulatory and Development Authority (Irda), complaints related to misselling, policy-related matters and claims form a large chunk of the total grievances. Sure, one can always approach the IRDA via its grievance redressal cell or ombudsman offices if the company fails to address the concerns.

However, the sad truth is: in several cases people have to deal with such unpleasant situations because they were a bit casual while buying the policy. For instance, most people bought tall claims made by their agents and bought unit-linked insurance plans earlier, only to repent later. Similarly, some let their agent fill their proposal form, and found out later that some omissions or commissions (willful or otherwise) resulted in rejection of their claims.

Mis-selling of policies

"The most common customer complaint received is that of 'mis'-sale," says Metilda Stanley, senior vice-president, customer relations, HDFC Life. The distributor promises eye-popping assured returns when no such assurance is given by the insurance company. All you have to do is to begin with filling up the proposal form yourself and provide accurate information. Next, go through the policy documents carefully when they are delivered to you. "

All companies send a copy of the proposal form along with the policy document. The answers given in the proposal form need to be checked and in case there is some wrong information, he/she should bring the same to the notice of the insurance company and get the records corrected," adds Stanley.

After going through the documents in detail, if you feel that the policy cannot serve your purpose, you can cancel it during the initial 15-day free-look period. Again, there have been cases where agents withheld policy documents, delivered to them, until the 15-day period elapsed to prevent such cancellations. However, remember that your cancellation request cannot be turned down citing expiry of the free-look. It starts from the day you receive the policy, and not from the date of policy issuance.