You buy an insurance policy based on the representations made by a third party

Such as:

“this plan will provide guaranteed returns”

“you can withdraw the funds anytime you want”

“this is essentially an investment with insurance thrown in”

Later on, reading your policy documents, you discover that the representations don’t actually reflect the underlying policy.

This leaves you with one burning question: was my insurance mis-sold?

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What Is Insurance Policy Mis-Selling?

Essentially, insurance policy mis-selling covers situations where an insurance product has been misrepresented, misunderstood or misrepresented in any way that may result in the customer’s losses.

Issues could include:

  • Benefits
  • Returns
  • Charges
  • Coverage
  • Exclusions
  • Policy Duration
  • Surrender Conditions

Any other material information regarding the said insurance product.

It is important to note: merely being dissatisfied with the policy you have bought does not constitute mis-selling. The documents and terms of the sale are crucial in determining this.

Common Examples of Possible Mis-Selling:

1. A Projected Return Was Presented As Guaranteed

It is important to note the difference between a guaranteed and a projected/illustrative benefit. Always refer to the document to know what your policy guarantees.

2. The Policy Was Presented As An Investment

While you might have wanted to invest your money and get a good rate of return, always remember that you should understand all the insurance components, charges, conditions and other elements that come with it, including its duration.

3. Surrender Conditions Were Not Discussed

While agents might have made you believe that you can simply withdraw your funds anytime you want, policies usually have specific terms and conditions governing surrenders and withdrawals

4. Material Conditions Were Not Clearly Spelled Out

It is quite common for customers to only look at the benefits that the policy offers but not the fine print. Exclusions, charges, waiting periods, conditions and restrictions should always be taken note of. Read the documents to know what applies.

What Is Not Automatically Mis-Selling?

A policy is not necessarily mis-sold simply because:

  • You later regret buying it.
  • The return was lower than expected.
  • You found another policy you prefer.
  • You did not read the policy documents.
  • Your financial circumstances changed.

The key question is:

Was the product represented accurately when it was sold?

How Can You Check For Possible Mis-selling?

The first step to determining whether or not you may have been a victim of mis-selling is to go through your documents. Retain a copy of the following:

  • Policy document
  • Proposal form
  • Benefit illustration
  • Brochure
  • Receipts for premium payment
  • Copies of any emails, messages or verbal representations made by the agent regarding the sale of the said insurance product.

Next, make a simple comparison of the verbal representations made by the agent and the terms and conditions of the policy as stipulated in your documents.

What you were told What the policy says

  • Return Actual benefit
  • Premium Actual Premium
  • Duration Term of Policy
  • Guarantee Guaranteed/non-guaranteed
  • Withdrawal Actual withdrawal conditions
  • Charges Policy Charges

You can also request for ECS insurance mis-selling assistance if you need help navigating the process.

Why Is the Proposal Form Important?

The proposal form contains information that was provided by you at the time of purchasing the policy. It may come into play if any of the following information under the proposal form becomes an issue of contention during grievance resolution:

  • Medical Information
  • Existing Policies
  • Personal Information
  • Occupation
  • Financial Information
  • Any other declarations

Hence, make sure that you retain a copy of your proposal forms for reference.

What Should You Do If You Suspect Mis-selling?

1. Write down what happened

Be specific.

2. Collect your policy documents

Especially the proposal form and benefit illustration.

3. Identify what exactly the issue is:

 I was told X, but the policy says Y.

4. Keep evidence

Save relevant emails, messages and written communications.

5. Raise the complaint via the proper channels: 

Make sure to explain the issue to the relevant insurer/intermediary grievance channel.

6. Escalate if necessary: 

If your grievance is not satisfactorily resolved, applicable grievance mechanisms may be available.

IRDAI’s “Bima Bharosa” system allows policyholders to register complaints and track their status.

IRDAI – Policyholder Protection and Grievance Redressal

Bima Bharosa

Final Takeaway

Insurance mis-selling is often not a matter of regret over a purchase, but rather whether the product was represented accurately at the time of the sale. If you suspect that your insurance policy was mis-sold, ensure that you go through your documents and compare them against what you were actually told. 

If you need assistance reviewing a possible mis-selling situation, Eternity Claim Solutions can assist you in reviewing the documents, identifying the issue and navigating the grievance process.

Think your insurance policy may have been mis-sold? Talk to our experts.