Have you been mis-sold an insurance policy with a higher premium?

Insurance policies are meant to provide financial protection and peace of mind during uncertain times, but unfortunately, some unscrupulous practices have tarnished this. Many policyholders have fallen victim to mis-sold insurance policies, forcing them to pay extra premiums for coverage they neither wanted nor needed.

In this article, we will highlight a real-life case of mis-selling, where a policyholder was deceived into purchasing an insurance policy with inflated premiums. We will also discuss how to protect yourself from falling into this trap and what steps you can take if you have fallen victim to mis-selling.

In the quest for financial security, insurance policies offer a safety net against life's uncertainties. However, not all insurance transactions are transparent and ethical. Instances of insurance mis-selling, where policies are deceptively misrepresented, have become more common than ever.

Let’s look at this recent case of mis-sold insurance policy

DHFL Pramerica Life Insurance Co. Ltd. v. Mr. Satya Mondal

The case involves an insurance policy mis-selling incident where the insurance agent deceived the policyholder by promising a one-time premium policy of Rs.3,50,000/- with easy loan availability of amount Rs. 40,000. Upon receiving the policy papers, the complainant discovered it was not a one-time premium policy but rather an annual premium for 15 years.

When the policyholder requested cancellation and a refund, the insurance company refused, claiming that he failed to do so during the free look period. As a result, the policyholder took legal action. During the proceeding, the court concluded that the policy terms and conditions were not adequately explained to the complainant, making it a clear case of mis-selling.

The insurance company was instructed to refund the complainant a sum of Rs. 3,32,500/-, which is 5% less than the amount paid to them, along with compensation of Rs. 5,000/- 

The court also declared that failing to comply will result in the accrual of simple interest at a rate of 9% per annum on the above amounts right from the date of the order until the full amount is paid. 

How to protect yourself from mis-selling of insurance policy?

To shield yourself from the consequences of mis-selling of insurance policy, keep in mind the following steps:

Read the Fine Print: Always read the policy documents carefully, paying close attention to the terms, conditions and any hidden clauses that might affect your coverage.

Fill out the insurance form yourself: Always fill out insurance forms yourself to avoid any discrepancies. Also, double-check the policy name to ensure it matches your selection before making a purchase.

Conduct Thorough Research: Avoid purchasing insurance policies solely based on promises made by agents. Instead, take the time to thoroughly review and understand the policy terms before making a decision.

Be aware of the free look period: It is important for policyholders to be aware of the specific free look period offered by their insurance company and to act within that time frame if they wish to exercise this option.

What you can do with a mis-sold insurance policy

If you have already fallen prey to mis-selling of insurance policy, you have certain rights and options to address the issue:

File a complaint: You can register a complaint with the IRDAI or the Insurance Ombudsman and provide them with all the relevant details so that they might offer a resolution or investigate the matter further.

Convert the policy to paid-up: If you discover false promises or misrepresentations in your insurance policy after having paid the premiums for some time, you may choose to convert the policy into a paid-up policy.

Seek Legal Advice: You can consult with insurance experts who can help you understand your rights and suggest the best course of action for your specific situation.

Conclusion 

All the above processes may be a bit complicated and lengthy. Consulting subject matter experts in the field can greatly help in achieving a favourable outcome. They can provide guidance and support regarding various insurance products, policy-related queries and help resolve issues related to mis-selling or other insurance-related concerns.