Whenever an insurance company or its intermediary tries to sell you a policy, look at the offer with suspicion. Tell them that you will not go by verbal assurances and that you want all policy details in writing. Also get the representative to give you an undertaking (endorsed by the insurance company) that if the policy issued is at variance with the promised policy, then it would automatically stand cancelled and you will be entitled to a full refund along with interest (including penal
Buy from only those who are willing to accept these terms and sell the policy. Or else, you may well end up being a victim of some of the highly deplorable and unethical practices perpetrated by the insurance industry to sell their products.
The magnitude of this problem can be gauged from the fact that complaints of such “malpractices at the point of sale” constituted 32 per cent of the total number of consumer complaints received against life insurance companies (by the regulator as well as the industry) in 2011-12.
And these included complaints of sold products turning out to be quite different from what was promised or requested, single premium policy issued as annual premium policy or vice-versa, refund not paid despite rejection of the policy during the free-look period, misleading information about the surrender value, term of the policy altered without the consent of the buyer and tampering of proposal or related paper, including forgery.
JR Chatterjee: A sales manager of a life insurance company approached my wife with a proposal to invest in a “smart” money-back plan, which he said, required my wife to pay R50,000 per year for three years. At the end of the three-year term, she would get back a guaranteed sum of R2,10,000, which meant a clear profit of R60,000 with additional benefit of free life cover for R6 lakh for herself or spouse or a child. My wife issued a cheque of R50,000 and since it was lunch time, he
collected copies of birth certificate and got my wife to sign on the blank form saying he would fill it up and send the policy document without any delay.
The Policy Document issued, however, was for Life Subh Nivesh Endowment Plan. The term was for 10 years and not for 3 years as shown in the brochure. There were many other discrepancies as well. The company never bothered about our letters sent within the stipulated time and afterwards said it could not change the policy as our request had not come within the free look period. What do I do?
The insurer has to give you the promised policy. If you don’t get what you want, complain to the insurance regulator. The Insurance Regulatory and Development Authority (IRDA) can ensure this and also take stringent action against the insurer.
If the regulator fails to do that, you have the consumer courts to protect your rights.
The insurance company, through its sales manager, has violated several regulations of the IRDA, the most notable among them being the Insurance Regulatory and Development Authority (Protection of Policy Holders' Interest) Regulation. It has also violated your rights under the Consumer Protection Act — it has indulged in an unfair trade practice, resulting in not just financial loss, but also mental harassment and agony to you. Worse, even when you complained, the insurer did not rectify the wrong done. The consumer courts take a serious view of such attitude. So lodge a complaint before the consumer court, seeking not just compensation, but also punitive damages.