Insurance Misselling and Prevention: Protecting Yourself from Insurance Scams

Understanding insurance misselling:

When someone sells a good or service by lying about or hiding important facts about it, they are misselling it. This usually leads customers astray. These ways of selling aren't right, and the person who does them could face legal action, fines, or even loss of their job. Misselling also happens in the insurance business, and customers often say that companies hide information when they sell insurance policies. Insurance claims are turned down when this kind of incomplete information is given.

Taking action against insurance misselling: Here are some tips that can help stop people from being lured by fake policies, false information, and insurance companies from being dishonest and bad at their jobs:

When buying insurance, it's important to ask questions and get more information about the policy's details, what it covers, what it doesn't cover, and what other coverage options are available.

Decision: Don't make snap decisions, because choices you make quickly may be ones you later wish you hadn't made.

Carefully read the documents: It is also very important to know what to do in an emergency and what paperwork is needed for a claim.

Research the insurance company: Be wary of insurance plans that offer returns that are too good to be true, and carefully look into the benefits, costs, and alternatives of the product.

Online purchases that are clear: Buying directly from insurers or reputable aggregators can make online purchases clearer and get rid of the need for middlemen.

Use safe ways to pay: Finally, always choose safe ways to pay, like checks or trusted websites, and make sure you know who you're sending money to before you send it.

What should you do if someone missells you an insurance policy?

If someone sells you the wrong life insurance policy, don't worry—you can cancel the policy within a certain amount of time as the policyholder. You can also file a complaint against the company with the Insurance Regulatory and Development Authority of India (IRDAI). This is the government agency in charge of insurance policies and is part of the Ministry of Finance. Susheel Tejuja, the founder and managing director of PolicyBoss.com, says that most of the time, the policyholder finds out about misselling either when they get the policy document and see that the promised benefits are missing, or when they make a claim and find out the truth. As proof of misselling, Tejuja strongly advised gathering all evidence, such as all emails and messaging-based communications, and filing a complaint with the insurance company.

Consumer rights in insurance misselling cases:

"A policyholder can file a complaint of misselling for a health or life insurance policy, including ULIPs, within 15 days of the date they bought the policy due to the free-look period," he said.

Nilesh Parmar, COO and CTO of Future Generali India Life Insurance Company, says that customers can use Free Look Cancellations (FLC) during this time if they have a good reason, and the industry handles them with the care they deserve. Additionally, they can use the insurance company's Grievance Redressal Cell to get their problems solved. "If resolution is not reached through the insurer, individuals can take their complaint to regulatory bodies like IRDAI or use Ombudsman services to get justice," Parmar said. "This protects all of the consumer rights in a complete way," he added.

Legal recourse for insurance misselling:

"To deal with these problems, rules have been put in place that include a simpler sales process, need- and goal-based advisory services, pre-issuance calling procedures, simple language policy documents, welcome calling, and pre-issuance video calling (PIVC). The IRDAI has also come up with the idea of a Benefit Illustration to show policyholders what benefits are guaranteed and what benefits are not. Despite these rules and good intentions, people should stay alert and fully understand the rules to avoid falling for these kinds of unfair sales practices," Nilesh said.