How Insurance Policies are Mis-Sold?
Nowadays a lot of people are experiencing this kind of misselling and Fraud where the telecaller poses to be from Bajaj Finserv or leading lending banks.
The customer is offered an interest-free loan or loan at a very low interest. The general target segment for such fraud callers is small businessmen/ people looking for loans.
The fraud caller suggests the customer to buy an insurance policy. They inform the customer that the loan will be a multiple of the premium paid. The scheme is attractive and flawless to the common men who are generally ignorant about insurance policies.
So, if you need a loan of 10 lacs, you will be asked to pay a premium of Rs 1 lacs annually for 10 years. So, if you ask why the bank will give a loan?? They will tell you that the insurer gives a bonus on the policy and the entire bonus will go to the bank as the policy lapses. They will also convince you that if something will happen to you the bank can recover from the policy.
Now the question which remains unanswered here—What if the customer stops paying the premium, how will the bank recover the loan?? Of course, this is not a full-proof scheme but as a customer, we look at the greener side of what we are getting and at what cost.
So many people fell into the trap of getting an easy loan without much documentation!!
When you agree to this scheme, they will send you a link to the insurance company and will ask you to pay the premiums which of course you will gladly pay since the link is authentic.
The Insurance company in an attempt to curb such fraud practices, calls their customers and asks explicitly that if they are being sold the policy for a loan. An alert customer may stop the transaction at this point and understand that this may be misselling but many still proceed to buy the policy. The seller will tell you that you need not tell the insurer about the loan, you just tell them it’s a long-term policy for tax and personal goals so that you may get the policy smoothly. Insurers may not issue if the policy is for loan mortgage.
Once the policy is issued, you will be told that the loan will be disbursed in a few days and you keep waiting. Depending on the education background more policies are sold in name of GST on loans or File charges or sometimes in need of a guarantor. They may also come back to you that the loan approved has increased and will show you a cheque too.
Some customers are trapped into selling multiple policies.
Will you get a loan?? A big No
In this way, the agent has earned a huge commission out of your money and if you do not continue the policies the entire money is forfeited by the company.
What precautions you should take?
- Meet the agent or set up a video call to understand the offerings
- Ask for product brochures and written documents on mail
- When the insurer calls you, please answer to their questions correctly. This is for your own benefit. Do not rush through the call
- Read the document after receiving the same, if you feel something is wrong visit the branch or call customer care and apply for free look cancellation
What can be done if you have fallen trap??
Take immediate action and inform the company by visiting the branch and submitting a complaint letter. You may also write to the company
You can write to IRDA with details of your complaint or may call their helpline numbers
You can approach the Insurance ombudsman if you do not get any favorable response from the company and IRDA
You may approach the court of law.
There are clear guidelines available on filing the complaint and the same should be followed. Right representation of the complaint is important for early resolution and here Insurance Samadhan helps you to file your complaint at various levels in the insurance language which is understood by all levels.
I believe now you know How Insurance Policies are Mis-Sold?