Mis-selling of insurance policies has become more prevalent nowadays, causing stress for the policyholders. In this blog, we have discussed a case of mis-sold insurance policy, the key strategies to minimise the risk, and how to protect yourself.
In the case of Mr. Alok Darsan Chatterjee vs. ICICI Prudential Life Insurance Co. Ltd., the complainant (Mr. Alok Darsan Chatterjee), a senior citizen, purchased an insurance policy for his grandson, believing it to be a one-time premium paid policy. However, upon receiving the policy documents, he discovered it was a term policy requiring yearly and half-yearly premium payments. The complainant raised objections and requested corrections from ICICI Prudential Life Insurance Co. Ltd. However, they did not respond.
The complainant filed complaints with the Vigilance department, the Commissioner of Police in Kolkata, and the Consumer Affairs department, seeking redressal but received no resolution. Eventually, the complainant filed a formal complaint before the consumer forum.
The opponent party, an insurance agent from ICICI Prudential Life Insurance Co. Ltd., contested the case by presenting a Memorandum of Understanding claiming that the policy had been corrected and the complainant had no grievances against them. They requested the Forum to dismiss the case.
Another ICICI Prudential Life Insurance Co. Ltd. insurance agent involved in the case contested by denying involvement with the disputed policy and argued that the complainant had purchased two other policies for his son and daughter-in-law through them, which were still in effect.
After thoroughly reviewing the evidence and arguments, the Forum found that the opponent party had deceived the complainant by mis-selling the insurance policy. The first agent from ICICI Prudential Life Insurance Co. Ltd. corrected the policy only after a long delay. The agent also pressured the complainant to purchase additional policies to get the original policy corrected.
As a result, the Forum ruled in favour of the complainant and ordered the agents to pay Rs.5,000 each for harassment, mental agony, and monetary loss. They were also directed to pay Rs.3,000 each for adopting unfair trade practices. The insurance agents were given 30 days to make the payments.
Strategies to avoid becoming a victim of mis-selling of insurance policies:
- Avoid Aggressive Sales Pitches: Don’t be swayed by insurance agents pushing products for their commissions. Assess your investment needs independently, even if the agent is a friend.
- Understand Before You Invest: Never buy an insurance policy you don’t fully comprehend. Take time to research and ask questions. Many policyholders fall victim to wrong insurance policies due to a lack of understanding.
- Read the Document Thoroughly: Before you buy insurance, make sure that you read all the insurance documents and terms and conditions in depth. Once done, make a checklist of all potential risks, returns, lock-in periods, regulatory approval, and exceptions to prevent yourself from buying the wrong insurance policy. If you find that the insurance policy doesn’t match your needs, make sure to cancel the policy within the free look-up period to prevent further complications.