When purchasing an insurance policy, it is important to make informed decisions based on your needs and budget. Unfortunately, some insurance agents may use unethical tactics to mis-sell insurance policies that may not be suitable for you or your family. These tactics can be difficult to spot, especially if you are not familiar with the insurance industry. Let’s know the various tactics that insurance agents may use to mis-sell policies and avoid falling victim to fraudulent practices.

We have often heard the disclaimer “Insurance is the subject matter of solicitation”. Therefore it is absolutely mandatory for the seller (agent/broker) to explain each and every aspect of the policy that he/she proposes to sell.

Selling under false promises is totally unsolicited.

How insurance agents mis-sell policies: Various to watch out for

Some agents/brokers use sneaky tactics to mis-sell insurance policies that aren’t the best fit. Here are the numerous tactics that insurance agents use to mis-sell policies.

  • Insurance agents may omit important details about a policy, such as exclusions, restrictions, or hidden costs to make it seem more attractive to potential customers.
  • Citing incorrect premium paying term viz. Selling a regular premium policy as a single premium or flexible premium policy.
  • Selling policies to gullible prospects assuring loan / bonus / medical benefits/ gold coins / mobile towers and more, upon purchase of a certain insurance policy.
  • Forging the proposal form, thereby giving out incorrect or false information to the customer.
  • Some insurance agents may use sales tactics to force customers to make hasty decisions without giving them enough time to understand the policy terms and conditions.
  • Selling an insurance policy when the customer is actually asking for a Fixed deposit – a common practice that Banks resort to.
  • To attract customers, some agents may make unrealistic promises about the coverage. They may also misrepresent the risks associated with an investment policy.
  • Selling ULIPS without explaining the associated risks properly.
  • One of the common mistakes made by insurance agents regarding mis-selling of insurance policies is that they exaggerate the benefits of a policy and misrepresent its features to make it seem more valuable than it really is.
  • Some agents may try to sell customers unnecessary policies such as add-ons which may not be suitable for their needs and budget.

Conclusion

It is important to be aware of these tactics and READ the policy documents before making a decision. If you feel that an insurance agent has mis-sold a policy to you, report it to the insurance company immediately. Also, seeking the advice of subject matter experts can be helpful in making informed decisions when buying an insurance policy.