Have you been mis-sold a life insurance policy? Mad about it? Trying to reclaim your lost amounts? You are not alone.....
Life insurance products have tax benefits. This makes them very valuable to you and countless others in India. So when do you invest in tax saving products like life insurance? At the last minute?
Insurance agents know that anything (including life insurance) bought in a hurry means that you would not pay attention to details (fine print). Just sign on the dotted line and buy the life insurance and your tax problems are taken care of.
Insurance agents get a commission for selling life insurance products. Insurance agents sell life insurance policies which give them a higher commission rather than a policy which caters to your needs and gives them a lower commission. Insurance agents mis-sell you a life insurance policy to pocket a high commission.
Insurance agents have to sell a fixed number of life insurance policies each month to achieve their target. If the agents do not achieve their targets then their managers cannot achieve the targets set by the top management.
Insurance Companies tend to look the other way to the misdeeds of their agents in order that targets are achieved. This emboldens insurance agents to mis-sell life insurance policies.
Two in one benefits
Insurance agents know to spot and exploit greed. They sell you insurance cum investment products such as endowment life policies or Ulips which have a very high premium in the initial years and fetch agents a high commission.
Never mix insurance with investments. A life insurance policy needs to cover you across your working life and a term life policy (pure insurance with no survival benefit) is a must have policy. These policies have low premiums as they have no investment benefits.
Your life is covered by the term insurance and you can invest the difference in premium (instead of a costly life endowment policy) in an equity mutual fund (if you are an aggressive investor) or a fixed deposit (if you are conservative).
Misselling of Life Insurance Policy:
Do not allow the insurance agent to fill the form
The insurance agent tells you that he will fill the form himself and you just have to sign on the dotted line.
The insurance agents do not have your best interests in mind. He/She is interested only in selling the life insurance policy. Your claim is of no consequence to the life insurance agent and is your headache.
If you are a smoker the agent advises you not to mention it or if he fills the form himself he does not mention it. This results in your claim being rejected by the insurance Company.
Free look period
All life insurance policies and health insurance policies which have a term of over 3 years have a free look period.
You can cancel the life insurance policy within the free look period of 15 days (Similar to a free trial) if you are not satisfied with the terms and conditions mentioned in the policy document.
Remember: The free look (15 days) period starts at the time you receive the policy documents .The onus of proving the date of receipt of the policy document is in your(policy buyers) hands.
If the insurance agent fails to mention the free look period then you need to be careful of such an agent.
Promising too high a return
Insurance agents sell life insurance policies with a promise of doubling your money in a couple of years trying to exploit your greed.
Insurance agents sell Ulips promising you a high return on your investment along with an insurance cover but do not mention the risk involved with purchasing the Ulip life insurance policy.
You need to ask the insurance agent :
An insurance agent should provide you (prospective policyholder) a customized benefit illustration which explains guaranteed and non-guaranteed benefits in the life insurance policy.
IRDA specifies that the Guaranteed and non guaranteed benefits mainly (return on the investment you have made) is 4% and 8% and an insurance agent cannot promise any return he wants.
If the agent promises you too high a return on the life insurance policy then you need to be careful of being mis-sold a life insurance policy.
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