A Stitch in Time: Decoding the insurance mis-selling menace

In the case of life insurance policies, there’s a very high chance of one opting for a scheme not suited to his or her needs or getting influenced by insurance agents.

In this episode of A Stitch in Time, Money9 spoke to Vinay Sah, the insurance ombudsman for Maharashtra to understand the nuances of insurance mis-selling and how to avoid falling into such traps.

“Mostly single premium policies are sold as a FD or even RD or a PPF promising fantastic returns. Even unit linked policies are sold as FDs. People are promised double their money in 3 to 5 years. They exploit the gullible nature of customers,” said Sah.

Several insurance policies are sold with benefits undefined or undeclared at the stage of inception.

So, how to prevent such mis-selling?

Fraud insurance policies are always sold when there is lack of awareness and attention to details. Such communication lacks authenticity and talks in thin air.

“One must look at two aspects before buying any policy — how is it bought and what are the preventive measures related. Fraud policies are usually sold on phone or mail. Attractive interest rates promised on such policies are either verbal or jotted on a blank paper,” said Sah.

Watch the entire video for the full interview: