Understanding Insurance Misselling: Insurance Misselling Have you ever fallen for a product’s deception by an insurance provider by withholding crucial information? If this has occurred, you have been deceived through misselling.
Misselling occurs when an individual offers a product or service for sale through deception or the omission of critical information, frequently leading consumers astray. Such immoral selling practices may subject the perpetrator to legal repercussions, financial penalties, or professional disapproval.
Misselling also affects the insurance industry, as clients frequently accuse providers of concealing information when offering insurance policies for sale. Such incomplete information results in denials or rejections of insurance policies.
Although safeguards, checks, and balances exist to prevent misselling, it is individuals’ awareness of the practice that will prevent them from becoming victims.
“Customers must maintain vigilance, remain informed, and exercise caution to avoid misselling,” advises Tarun Mathur, co-founder and chief business officer of Policybazaar.com.
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Here are some suggestions from Mathur that can assist the insurance industry in preventing malpractice and misselling:
Cross-examination and interrogation: It is vital to inquire about policy details, exclusions, inclusions, and additional coverage options when purchasing insurance.
Avoid making hasty decisions, as such decisions may result in subsequent remorse.
Read documents with care. Additionally, knowledge of emergency procedures and claim documentation requirements is vital.
Conduct thorough research on insurance companies that make unrealistic return claims. Investigate product benefits, costs, and alternatives with great attention to detail.
Online purchases that are conducted directly with insurers or reputable aggregators can enhance transparency and eradicate the influence of intermediaries.
Utilize secure payment methods: Lastly, verify the beneficiary before completing payments and give priority to secure payment methods, such as checks or reputable online platforms.
What steps ought one to take in the event of becoming a target of misselling?
If misrepresented, you can cancel a life insurance coverage within a certain timeframe. You can also complain to the Insurance Regulatory and Development Authority of India (IRDAI), which oversees insurance products under the Ministry of Finance.
PolicyBoss.com’s Founder and Managing Director, Susheel Tejuja, says policyholders usually find misselling when they receive the policy document and see no advertised benefits or when they file a claim and discover the problem.
Tejuja advised gathering all messaging-based and email proof of misselling and submitting a formal complaint with the insurance firm.
“A policyholder may file a misselling complaint regarding a health or life insurance policy, including ULIPs, within 15 days of the date of purchase, during the offered free-look period,” said.
Nilesh Parmar, COO & CTO of Future Generali India Life Insurance Company, said clients can exercise Free Look Cancellations (FLC) within this timeframe by providing a sufficient rationale, and the sector handles the request with thoroughness. Additionally, the insurer’s Grievance Redressal Cell can settle client complaints.
“If the insurer is unable to resolve the issue, individuals are granted the alternative of appealing to regulatory bodies like IRDAI or seeking redress through Ombudsman services,” Parmar stated. This protects consumer rights fully.
“In response to these challenges, we have implemented regulatory measures such as a streamlined sales process, advisory services tailored to your needs and objectives, pre-issuance calling procedures, policy documents in simple language, welcome calling, and pre-issuance video calling (PIVC),” said.
The IRDAI also created Benefit Illustration to notify policyholders of assured and non-guaranteed benefits. “To avoid falling prey to such incongruous sales practices, individuals must maintain vigilance and have a comprehensive understanding of the policies in place, notwithstanding the positive efforts and regulations in place,” Nilesh said.
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