Health insurance is supposed to cover costs during health crises. But, in India, trouble often starts not during hospital visits but way before—when the policy is purchased.
A major issue often overlooked in the insurance world, is health insurance mis-selling.
People discover they were sold the wrong insurance plan after their claim faces rejection, unnecessary delays, or large deductions. By the time this happens, the financial and emotional toll is already significant.
Also read: Why Health Insurance Claims Get Rejected in India – Part 1
This article talks about health insurance mis-selling, how you can spot it, and what actions to take if you think you’ve been targeted.
Health insurance mis-selling happens when someone sells a policy by giving wrong, unclear, or false information. This might happen on purpose or just because an agent or advisor didn’t do their job.
It’s not always about someone trying to commit fraud. Often, mis-selling includes things like:
• Promising unrealistic benefits
• Keeping quiet about policy limits or conditions
• Selling plans that don’t fit the buyer’s needs just to make a sale
In the end, people get stuck with insurance that doesn’t match what they require.
These are some everyday examples of how mis-selling happens:
Agents often assure buyers:
• “All illnesses are covered the first day”
• “This plan has no restrictions”
• “You’ll get cashless claims”
But the truth is that most insurance plans outline waiting times, conditions, and exclusions in their documents.
Some agents skip details about waiting periods for pre-existing health issues. Buyers think they’re covered. Later, insurers deny claims because the required waiting time wasn’t fulfilled.
Companies often sell health insurance as if it’s a savings or investment plan. They highlight the tax benefits and returns instead of focusing on the actual coverage it provides.
Health insurance isn’t an investment or savings plan. It’s meant to offer protection.
Sometimes agents or brokers ask customers to port their existing policy to another insurance company without any valid reason.
They may say:
• “Premium is lower there”
• “Service is better”
But they don’t explain the possible risks such as fresh waiting periods, loss of continuity benefits, or new underwriting conditions. Porting should be a thoughtful decision, not a sales tactic.
Quite often agents ask customers to discontinue their existing policy and purchase a new one.
This can be risky because:
• Waiting periods may restart
• Pre-existing disease benefits may get affected
• Long-term policy advantages may be lost
Switching policies without proper understanding can cause serious issues during claim time.
Many policyholders are not informed about the free look period.
The free look period allows customers to review the policy document after purchase and cancel it within a specific time if they are not satisfied.
When agents do not inform customers about this right, policyholders lose the opportunity to correct mistakes early.
You can also read: Difference between Life Insurance and Health Insurance
Sometimes customers honestly disclose their medical history and other details to the agent.
However, the agent may fail to record all information correctly in the proposal form.
Later, during claim processing, insurers may treat this as non-disclosure and reject the claim — even though the customer had shared the information at the time of purchase.
Continue reading in Part 2, where we discuss warning signs, claim impact, and what you can do if you’ve been mis-sold.
