7 Tips to Identify Mis Selling of Insurance Products & How To Avoid Them
Are you holding a bad insurance policy and want to get rid of the same? Do you know that in our country a huge number of insurance policies are sold without sharing proper information about the product. And another interesting factor is that people are also not aware what they are purchasing and how the investment is going to meet their requirement.
This is called mis-selling of a financial product. Although everyone is looking to invest money to get high interest and want to listen or read the same review from every financial product. But my dear friend, every financial product has its own meaning and they have created to provide specific benefit only as per your financial goals.
In this article, I will share few facts and cases where one can trap into a mis-selling of insurance products. You can be aware to avoid such scenarios to protect your money and also invest in proper financial products as per your financial goals.
Tips To Avoid mis selling of insurance products | Mis selling of financial products
I would say, the miss-selling of any kind of financial product is mainly happening due to the lack of knowledge of buyer about the product. As a seller, everyone will try to sell their products saying positive reviews only, but you should know what you are going to purchase and why.
Here are few cases I feel one need to think and take care while buying insurance policy next time.
Is buying insurance mandatory with Bank products like Locker, Loan etc
I have seen many places that people are complaining about their bank, asking for a insurance plan when they went for a loan or opening a bank locker or any account. This is one of the common practice generally banks do to force sell insurance products. But you need to understand clearly that your bank can’t force you to buy an insurance product to open any kind of account or product. Just ask the why this is required.
Are you buying insurance products to save income tax
Tax saving period or during the end of every financial year, every insurance company or bank is trying to attract tax payers by launching many insurance policies of types endowment plans or UILP plans to save income tax. In fact mostly people got into this insurance trap during that time only. Without realizing anything, they just buy any of the policy to save income tax and got into the financial trap. I am receiving many mails asking for how to surrender the policy after paying 1-2 years of premiums as they have purchased the same to save income tax only. But now they realized that the return is not so good and they want to come out of the policy.
Are you too much dependent on your insurance agent
I have seen many people who are solely depending on insurance agents advice only and not at all interested to know where to invest. Do you know whether your insurance agent is advising you the good policies or not? In many cases only endowment policies, ulip plans, money back policies and single premium payment plans are having some high commission structure and almost every agent is trying to sell those polices only to make money.
Are you not investing in Stock Market due to high risk on investment
Many people think that investing in stock market is not at all possible for them due to the risk factor and the tension of monitoring them always. Do you know that you can invest in mutual fund in SIP way to minimize the risk for long term? There are also many balanced fund for low risk profile investor which can give better return on investment compared to typical deposit schemes or insurance products. Due to this kind of negativity about stock market from various experiences of peer group many people settle down with simple insurance policies only.
Do you know what is the policy is all about you are going to buy
Do you know what is the policy you are purchasing and what is the purpose of this plan? E.g. even if you are planning to save money for your kids future, why are you buying child plans? Any agent may come and convince you with some data to show how an insurance plan can secure your child future. So, read the policy clearly and try to understand how the return will be calculated and is that really worth to meet the educational expenses after the certain period?
Do you find it boring while filling insurance application form
I have seen many people trust their agents like anything or in other ways many agents are convincing their customers saying that they will fill up the form as it could be tedious. They simply do that on behalf of the customer to impress them and win their trust. In such a case, if they input some wrong data, your family may have to face a insurance claim rejection in case of your unfortunate death. So fill up the form your own only with 100% accurate information.
Have you checked any medical test is required to buy the policy
These days medical check ups are mandatory for many insurance plans specially for term insurance plans with high sum assured value. In case you are not aware, then your agent may skip the check up to speed up the process. Where as per the actual process, insurance company should verify the details first. In such a case, you may buy the policy but it could face a claim rejection due to missing medical test in future. You may ask in that case how the policy is issued to the person? I think in our country this kind of things are happening very easily, and you can only can stop that by involving 100% while buying any financial product.
o, what do you think about this topic. Do you think you are a victim of mis-selling of any financial product? What you had done after that or what is the learning in that case? I think you can write a simple comment below and share your experience or any learning here with our readers.