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Mis-selling of Insurance Policy – What to do when you are a Victim?


Mis selling of insurance policies in India: Do you know that in our country most of the people invest driven by emotional pressure and not by their requirements? Many may not accept the fact but let me clarify in detail. In our society people starts investing much before they understand the meaning or requirement of that investment. Let’s see an example on what is mis selling of insurance and how it happens.

Suppose Sharma Ji is our fictitious character here. One day morning, Sharma Ji’s neighbour Gupta Ji (an Insurance agent) came to visit him. He told him that, as Sharma Ji is turning towards 30 so he should think about his future savings. And immediately he has offered him an insurance policy which will give him some XX amount / year after 30 years. That means, Sharma Ji will just have to spend some YY amount / year only.

Before Sharmaji could ask anything, Guptaji offer him the form and tell him that there is nothing to worry as Guptaji will take care of everything. And after that he left. Later Sharma Ji discussed the same with his wife and she replied that they have to do that as Gupta Ji is their neighbour and helped them in tough days. So at the end of the story, Sharma Ji started his investment in some product which he didn’t know about, with a return which he has not verified and can’t do anything now as he has no other choice, otherwise Gupta Ji will mind!

Like this, there might be many such examples in our society where people are emotionally forced to do insurance policies in the name of investment. Not only this, some people even fraud others in the name of investment. And by the time they realize, they are too late as they can just surrender the policy and loose the money. Even some of them continue that policy which is a huge burden as in the long run it may give only 3-4% return.

Reasons of mis-selling in insurance and how to prevent it?

There are many reasons of mis selling of insurance products from both the ends. But I would say due to lack of interest, knowledge and social /emotional pressure, people mostly fall in to such traps. Let’s check out few causes in detail which are happening in our day to day life.

1. Our society is conservative in nature, so many people feel that instead of rejecting the policy and hurting the agent’s emotion, it’s better to accept the policy to maintain a good relationship. But this is not at all justice with your plans and dreams. This will only help the insurance agent to earn commission.

2. Every agent has to achieve a target number of policies to safe her/ his job. For that pressure, they often lure people by providing false promises or showing false data to attract people.

3. Many people are so lazy that they thought it’s fine if I follow what someone else is doing and invest accordingly without realizing that the other person is doing everything as per her/ his need or s/he is also being fooled by someone else. At the end of the day both will be victim of mis selling of insurance product.

4. Insurance agents are very smart and well trained. They will represent a policy in such a way that many people think that with a small investment they are going to get a huge money and they get very impressed by the presentation and believe that without analysing or investigating about the same.

You should learn the basic questions to ask before subscribing to an insurance policy. Now a days everything is available on internet so where is the problem?

5. And last but the most useful thing that I have mentioned in many of my articles that, ‘Don’t mix insurance and investment together.’ Insurance companies are selling most of their policies to people by telling that they will get investment benefits as well. People are also believing them and thus the market has grown bigger.

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First you should realize that investment is different than insurance. In case any insurance policy is made in such a way to provide investment benefit then you should understand that something is going to get compromised as company will not give you the benefit from their pocket. Generally ULIP policies are the most selling ones, with the concept of investment + insurance to attract customers.

Where to file a complaint against mis-selling of insurance policy?

So if you think that you are holding a policy or multiple policy which has been sold to you by providing false promise or some other false return information, then this section is for you. In such a case there are some ways to do the same.

But the fact is, you have started the policy after discussing with the agent and also filling required documents. So at the time of subscribing the policy, you were completely agree with what you are going to do. Means it’s a kind of too late for you to save your money. But still there are some ways which you can use in such situations.

In every insurance policy form document, there is one clause with which you can register a complaint describing the situation in which you have subscribed the policy. In such a case you have to be ready with the facts why this policy is not useful for you and how you became a victim of mis selling of financial products by showing some false facts. If you can provide some genuine proof then there is a chance to get some justice else try your level best.

Next you can also inform the same to IRDA. Before that you should follow the first step and then only inform IRDA. You can also read the IRDA guidelines to prevent misselling of insurance policies.

To complain online, please go to the IRDA website ( On the right hand side, you will see a link for ‘online registration of policyholder complaints’. Click on that and it will take you to “IGMS” or the Integrated Grievance Management System’, through which you can register your complaint.

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The last option is, you can stop paying the premium and surrender or cancel the policy. This way you might control further loss or damage.

Whenever you spend some money, always ask few question to yourself like: whether this policy will provide you the return as you are expecting, are you really ready to do a policy now etc., so that others can’t take advantage of your weakness. Also it is of utmost importance that Govt. take all the necessary actions for increasing awareness about insurance in our society.

So why do you think mis-selling of insurance policy is happening in India? Please feel free to share your experiences if any. Also don’t forget to share this article with your friends and help them to be aware about mis selling of insurance products.

Mis-selling of Insurance Policy – What to do when you are a Victim?
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  1. Saurabh Saurabh

    Hi santanu, a policy agent sold my mother (aged 68) one policy for tax saving, saying that she would be the proposer and my life will be ensured. After paying premium for two years he realised that he made a mistake that my mother was not shown as proposer instead it was on my name only. Moreover instead of my signature he made my to forge my signature in the form. (My mother and i live in separate cities). In the whole process i was not consulted. Now i want to recover the two installments that have been made and close the policy. How should i proceed and where to complain?

  2. Ashok B Ashok B

    Dear Santanu,

    I am in the same situation like the above person. Have paid 3 premiums of Rs.100000 each upto July,2015.

    Should I keep paying premium, surrender the policy or wait for it to mature without paying further premium?

    waiting for your opinion

    • Hi Ashok, I think this decision you have to take as per your financial need.

  3. Shantunu Shantunu

    I have hdfc classic assure life insurance ,which gives bonus each year,

    I pay 99,999 per year as premium,already paid 3 year premium

    willl have to pay 7 year in total of 10 years of policy maturity period
    Sum assured -6,54,800

    should I surrender this policy ? or should continue ?

    it gives 80c benefits as policy started before 2012 april.

    I have no idea what is bonus is all about, at the end of maturity .will I get 650k +total bonus ?

    • As you paid 3 premiums, I think it is better to come out of this policy and put your money in a better investment scheme for long term.

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