I did not realise how big is the menace of mis selling till I spoke to a few bankers. Given the aggressive targets that these kids have, misselling has reached enormous heights. I would dare say that almost all the selling is mis-selling unless it is term insurance!! Not sure how many people in the industry will agree with this. What with so many salesmen, trainers, …etc. saying that there is NO misselling I have no clue what are the numbers!
We clearly have to stop blaming the agent for the misselling. The life insurance products are poorly designed. If all the commission is paid up front, there is no incentive at all for the agent to keep the policy alive. The product structure has to include a far more uniform commission, a retention bonus (for the customer and the agent), penal clawback provisions,….etc. A detailed feedback should be collected from the client and this document used for keeping or removing agents. Or even incentivising them.
When a customer buys a policy other than a term policy, the chances are he is buying a wrong policy. It is as simple as that. If the client MUST buy a ULIP he/ she should at least be able to break up the costs, know the hidden costs (brokerage and amc charges for e.g.) etc. A person who can do all that can always go for a Term + mutual fund combination….why ULIP?
Mis-selling is riding a bicycle! It does not matter whether it is the mistake of the car, the truck, or the pothole, the guy to get hurt is the cyclist!! So the victim is always the cyclist! So the policy holder will be found holding the baby and for a long time. If you have already bought a ULIP please pay the premium for the minimum period – mostly 3 years, but sometimes 5. In 5 years time, hopefully you will get what you ‘invested’….but even if you do not, just jump to the land! You will be wet, but not drowned!!
There is no great redressal system for you once you have bought an ULIP…so even though Insurance companies have their own redressal system but these redressal system are manned by their own employee so will they come out in favor of the consumer? No. Never.
The Insurance Regulator has ( like all regulators) spoken the language of the biggest player – the LIC. However, have they added much value to the policy holder?
Your guess is as good as mine….
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