Insurance Buying Tips: Beware of Attractive Promises from Insurance Agents, or You'll End Up Losing Money

Insurance Buying Tips: Want to avoid being sold a mis-sold insurance policy? It's crucial to recognise the signs of mis-selling, identify false promises, understand hidden charges, and know the truth behind words like "guaranteed." Learning simple ways to choose the right insurance is easy for everyone. Understand IRDAI regulations, the importance of the free-look period, and essential questions to ask before signing. Be aware and protect your money.

Insurance Buying Tips: Are you planning to buy an insurance policy for yourself or your family? Has an agent from a company contacted you by phone or in person? Are they exaggerating the benefits of the insurance policy? If so, be cautious. This is because you might be about to buy a mis-sold insurance policy. There's only a fine line between a wrong policy and a mis-sold policy. It's not easy to detect. But if you want to identify it, knowing some tips is crucial. Let's learn about those tips.

Keep an Eye on the Policy Selling Method

A mis-sold insurance policy often looks perfectly fine at first glance. The agent is confident, the product is regulated, and the promises seem attractive. The real problem isn't with the product itself, but with the way it's sold. This includes false promises, not matching your goals, and hiding important terms and conditions. Therefore, it's crucial to identify the truth before buying a policy.

How is the policy being sold?

If an agent is pressuring you to buy the policy quickly, that's the first warning sign. This includes statements like "you have to buy it today," "the offer is ending," "the rules are changing," etc. Such things are said to prevent you from comparing and thinking carefully. A good insurance product will still look good even after you've had a couple of days to think about it. If there's a genuine deadline, you have the right to ask for a written circular or document related to it.

Ask a direct question: What will this policy do for me?

Many mis-selling incidents occur because the customer's objective isn't clear. If you need protection, you should look at protection-first products like term insurance. If you need investment, you should look at investment-first options. Be wary when a single policy is presented as covering everything – insurance, investment, tax savings, retirement, and children's education. Complexity is often a way to hide drawbacks.

It's crucial to uncover the real costs.

Most regrets stem from costs that weren't clearly disclosed upfront. If the policy has an investment component, don't rely on verbal return projections. Always ask for an official benefit illustration. Make sure you understand what happens if you stop paying premiums. What are the surrender values ​​in the third and fifth years? How much money will you actually receive after all charges are deducted?

Be wary of words like "guarantee" and "assurance."

Insurance policies may offer guaranteed benefits, but these are subject to strict conditions, including timely premium payments and maintaining the policy for a long period. In market-linked investments, any kind of guaranteed return is impossible. SEBI regulations mandate warnings on return claims for this very reason. If someone says something is "guaranteed," understand that you're not being told the whole truth.

Is suitability being assessed?

A proper sales process involves asking you about your dependents, existing coverage, debts, goals, investment horizon, and risk tolerance. Both IRDAI and AMFI expect that the product matches the customer's profile. If the conversation immediately jumps to forms and signatures, understand that suitability is being treated as a mere formality. Utilize the Free-Look Period

According to IRDAI regulations, you get a free-look period of at least 15 days (and 30 days for online policies) after receiving the policy document. But don't use this as an excuse to sign it in a hurry. Read the document carefully, as surrendering the policy later may result in significant deductions.

Disclaimer: India Employment News does not provide any recommendations for buying or selling in the stock market. We publish market-related analyses based on information from market experts and broking companies. However, please make market-related decisions only after consulting with certified experts.