A life insurance policy is essential to ensure the protection of your loved ones in case of an unfortunate incident. You have the choice to select from various insurance plans. However, before buying a policy, you need to be aware of misselling of life insurance.
What is misselling of a life insurance policy?
When the insurance agent does not mention all the details regarding the policy or sells a policy that does not meet your needs, then you have become a victim of misselling. Additionally, when the agent convinces you to sell the present policy that you hold with his company by mentioning that it does not meet your needs, and makes you buy a new policy from his company, it is known as misselling.
Why does the misselling of life insurance policies happen?
There are various reasons behind the misselling of life insurance policies. A few of these are illustrated below.
- Tax benefits
Many people invest in a life insurance policy at the last moment to save tax. Agents are aware about this and they know you would not get into the in-depth details of this policy at this time. This is why they mis-sell the policy and take advantage of the situation.
This is a huge reason behind a mis-sold life insurance plan. Every agent receives a commission on selling insurance products. They earn a higher commission by selling high-value policies. Hence, an agent will only try to increase his commission and not look for a policy that fits your needs.
The marketing industry works on targets. An insurance agent will have a specific number of policies to sell each month and if they do not achieve the target set by their management, they could face slack from the senior executives. This is when you become a victim of a mis-sold life insurance policy.
How is misselling done?
Misselling is done by intentionally hiding information from you or by selling you the wrong policy. You need to ensure that you fill the application form yourself and do not allow your agent to do so. Remember that the agent will not have your interest in mind and he only aims to sell the policy by any means. Lastly, all insurance policies that have a term exceeding three years come with a ‘free-look period’, wherein you can choose to cancel the plan within 15 days if you are not satisfied with its features and other terms and conditions.
Before you sign on the dotted line, you must read the policy documents very carefully. Additionally, you need to consider your requirement before you decide on a policy. You can easily compare the products online and ensure that you are making the right decision. Do not trust everything that the agent has to say and understand the terms and conditions of the policy thoroughly. If you are alert and aware of what you want and what you are getting into, you will be able to get the right policy as per your needs. Always pay attention to the policy documents and keep your requirements in mind when you speak to an agent and finalize a policy.