Unsuitable Insurance Policy Mis-sold to a Customer

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We live in the present while securing the future of ourselves and our families. And this is the reason why we purchase a life insurance policy. If you let your policy lapse, then you will deceive the main purpose of buying it.

Life insurance policies like endowment and ULIP, come with a lock-in period. If you default premium payments within the lock-in period, all your premium will be forfeited and you will no longer be able to enjoy the benefits of the policy.

If your policy lapses after the lock-in period, then you will receive a reduced amount at the due time.

So it is better to purchase a life policy that suits your requirements and is according to your income level/budget. Never buy an unsuitable policy.

However, some fraudulent people will coax you into buying an unsuitable insurance policy. They will misrepresent the facts like you can stop making premium payments and still be able to get a refund of the already paid premium.

Unsuitable Insurance Policy Mis-sold to a Customer

Read how a person was misguided by a fake caller and bought an unsuitable insurance policy:

Gautam: Good afternoon, Ma’am. Am I speaking with Savita Ji?
Savita: Yes.
Gautam: Savita Ji, I am calling from XYZ insurance company. Do you have a life insurance policy?
Savita: No and I don’t want it.
Gautam: Ma’am, please listen to me once. It will be your decision to buy a policy or not.
Savita: Okay.
Gautam: Ma’am, I have a type of life insurance policy that will provide you with a combined benefit of insurance coverage as well as savings. You will get a lump sum on the maturity date or your family will receive the amount in case of occurrence of an unfortunate event.
Savita: But no one gives you anything for free. You must have an ulterior motive to sell me this policy. Wait, I don’t even recall your name.
Gautam: My name is Gautam. I don’t have any ulterior motive. I am calling you to help you. You know after covid we have understood that anything can happen. Our lives, our health, our job, nothing is permanent. Therefore, insurance is very important. You must at least have an endowment policy.
Savita: I agree with you. After covid, everything has changed. I worry for my old age as well as my family’s future. I work in the private sector, I won’t get a pension in my old age. How will I afford my livelihood? On the other hand, God forbid, if something happens to me, what will happen to my kid’s future?
Gautam: That is why I am advising you to purchase an endowment policy. In case of unforeseen demise, your family will get a predetermined sum assured that will help to secure your kid’s future. Also, during the policy tenure, if nothing happens, then also you will receive the amount as a maturity benefit.
Savita: Can you tell me how much security will me and my family will get?
Gautam: Yes ma’am. You have to pay an annual premium of Rs. 1 lakh for eight years and the sum assured will be ten times of the annual premium.
Savita: ONE LAKH? No, no, no. I don’t want to buy the policy.
Gautam: But ma’am, at the time of maturity or death, the company will pay ten times the premium.
Savita: No, I don’t want to buy it.
Gautam: Ma’am wait. Listen to me once.

Also Read:  Mis-selling and Fraud in Insurance Policy and the legal perspective to it

(Savita disconnects the call. A week later, Savita received another call)

Insurance Samadhan

Sakshi: Good afternoon ma’am. I am Sakshi from XYZ insurance company. My colleague called you a week before. Am I right?
Savita: Yes.
Sakshi: Ma’am Gautam told me everything. I do believe that it would be really good for you to buy an endowment policy.
Savita: But the premium is Rs. 1 lakh. I have too many expenses. I don’t want to buy such an expensive policy. For me, it is an unsuitable insurance policy.
Sakshi: Ma’am, you need to understand that the policy will give a lot of benefits. It will not only give you the sum assured at the time of maturity or death, but it will also pay out in case of critical illness. In addition to this, the income tax act gives an exemption from tax on premium payments and maturity or final death payout. You just need to pay a premium for 8 years and will get 10 times the annual premium. Think about it again.
Savita: But I don’t think I will be able to pay the premium amount for 8 years. For me, one lakh is a huge amount.
Gautam: Ma’am you don’t need to worry. I advise you to purchase the policy. After 6 months, if you feel that you won’t be able to pay the premium money, then you can stop paying the premium.
Savita: But what about the Rs. 1 lakh that I’ll be paying for the first premium?
Gautam: Ma’am, the company will refund your 1 lakh.
Savita: Seriously?
Gautam: Yes ma’am
Savita: Ok then, when can I visit your insurance company to buy the policy?
Gautam: umm…Ma’am, technology has advanced. Now you don’t need to physically visit us. You can buy the policy on a call too.
Savita: But…how will I read the terms and conditions? And you must be needing my signatures too.
Gautam: Ma’am, the policy document uses technical words. That’s why I have already told you about the policy. There will be no need to waste your time reading the documents. And for signatures, you will receive an OTP to confirm the sale of the insurance policy. You just need to make the payment to the insurance company and share the OTP with me.
Savita: Okay then, send me the link to make payments.
Gautam: sure Ma’am…Both the link and the OTP have been sent to you. Please make the payments within 48 hours.
Savita: Hold on…I have paid the amount and the OTP is ****.
Gautam: Thank you, ma’am.

Also Read:  Protect Yourself from Insurance Mis-Selling

Here, Savita did not want any insurance policy but was misguided by the callers to buy one. She was informed that if she is out of money then she can stop making premium payments and the company will make a refund. She became a victim of insurance mis-selling.

However, if a policyholder fails to pay the premiums within the grace period, then the policy lapses. As a result, the policy will no longer be in effect and the premium already paid will be forfeited by the insurance company. The policyholder will not be able to enjoy the policy benefits and also he will not receive the already paid premium.

Things to Remember:

  1. Ask for the details of the agent. Verify them with the insurance company.
  2. Always visit the insurance company and discuss the terms and conditions of the policy.
  3. Only purchase those policies which are suitable for you. Never buy an unsuitable insurance policy whose premium you won’t be able to pay.

If you were misled by someone into buying such a policy, and are unable to get your money back, then contact Insurance Samadhan.

Insurance Samadhan has resolved more than 14,500 complaints related to insurance. Insurance complaints include insurance mis-selling, claim rejection, delay in claim settlement, etc. Contact us to get samadhan for your insurance-related issues, we’ll be happy to help you.

Click on the below links to read some cases resolved by Insurance Samadhan:

Cashless claim rejection

Mis-selling in a life insurance policy

Health Claim Rejection amid Covid-19

Click here to register your complaint with Insurance Samadhan

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Insurance Samadhan

Shailesh Kumar

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