Dummies' guide to STOP insurance mis-selling

Turn the table on unscrupulous agents selling policies you don't need.

Did you know that most of the life insurance policies that the agents push your way are not what you need? The long-term fallout of this is that, both the customers and the companies themselves suffer because of wrong selling decisions. Everybody knows the importance of life insurance policies in the life of an individual.

However, this does not mean that all that glitters is gold. Companies need to take into account individual scenarios and then push the appropriate products and not sell simply for the heck of it!

The most prominent cases of mis-selling occur when someone is buying a Unit Linked Insurance Plan (ULIP). In a ULIP, the money invested in by the policyholder in the form of premiums is directly invested in to funds of his choice. These funds provide returns to the policyholder basis the market stock market performance.

With stock market movements being volatile, and returns fluctuating this caused an erosion of investor money and took away with it the confidence of people.

Before someone buys a ULIP they should know that ULIPs, that such products are not the most suited one's for the faint hearted or those investors who are risk averse. Things such as this are usually not mentioned by insurance agents when they sell ULIPs to consumers, consumers need to be more efficient while investing there monies and need to be more pro-active in doing research before they are investing in any such market linked products.

The onus lies with the customers to become aware of their needs and understand when an agent is trying to dupe you by pushing their sales.

Here is how you can thwart their intention and come out unscathed from the process. 

Take your time

Many times one finds customers pushing the agents to hurry up the process and complete the formalities since they need to be on their way. This is exactly what the insurance agent wants. Remember they stand to gain a lot through successful selling of policies and the less you take the time to go about it, the better.

For example if you go for a policy with regular premium structure, an agent can get about 7 to 30 per cent of first year premium amounts and this is no mean sum by any standards.

So, if you want what is good for you and thwart mis-selling take your time to go through the fine print and miss your bus if you have to!

Never feel obligated

Many times it so happens that your friend or family may recommend an insurance agent or company to you. This creates an obligation to do business and saying no may seem like bad etiquette.

But is getting saddled with a policy that you do not want in the end worth it! Or are you better off without one. The final decision is yours to take.

Do not undermine the strength of your relations with loved ones. It may withstand the shock of your policy denial but your finances may not, in case you accept!

Do not miss out the facts

Mis-selling of policy occurs by dangling peanuts that the customers jump for it without a second glance at the underlying trap. Therefore always look out for the catch and this can prevent you from making any long-term commitments where the insurance companies and their agents are the only beneficiaries.

For example discount on premium amounts and tax exemptions are incentives, which agents dangle before the clients. Remember you may be missing out the bigger picture in your hurry to clinch small and often worthless gains.

Use the breathing period

Did you know that most insurance policies give you a fifteen-day period for free look? During this time, you can gauge its feasibility and decide whether it is for you. Instead of being saddled with insurance cover that you least want, you can thwart mis-selling by opting out well within time.

Knowledge is power. The only way to thwart mis-selling bid is to do your homework. When you are in a mood to go for a sturdy life insurance cover, why not study regarding it on the online medium. Here you can compare the various options available and the pros and cons in relation to each one.

Once you are ready, do not wait for an agent to come but call them instead. This puts you at an advantage and it is you in charge for a change. Remember not all agents are out there to rip you off your hard-earned money but remaining on the alert from such unscrupulous ones never hurts!