Precautions to Avoid Mis-selling in Insurance

Q: What precautions you should take to avoid mis-selling in insurance?

1. If you receive a call related to unclaimed bonuses or bonus cancellation of your insurance policy, do not respond to the call. 2. Each insurance company has a helpline number, call them to confirm. In 100% of cases, it is fraud because bonus is not distributed like this. 3. Never make payments to anyone except to your insurance company only where you have a policy. No other insurance company is ever authorized to settle bonuses.

Q: What to do if you are a victim of such mis-selling?

1. Inform your new insurance company about such fraud and mis-selling. Explain the whole scenario to them. Show the call recordings (if saved), SMSs/ emails received related to the conversation, and the transactions. 2. Cancel your ECS mandate by writing a cancellation letter to the insurance company. Please note that your bank is not authorized to cancel ECS mandate given to an insurance company.

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Mis-selling in insurance is a big problem faced in the insurance industry. Hundreds of people fall into the trap set by the callers who claim to be an employee of insurance companies/ government. They will try to misrepresent the facts and mis-sell an insurance policy to you. They may inform you that a bonus cancellation request has been made from your end and if you do not raise an objection to it, then the insurance agent and the local branch of the insurance company will proportionately distribute the bonus among themselves. To raise an objection, you need to pay a certain sum of money. It is a trap!

What precautions you should take to avoid mis-selling in insurance?

If you receive a call related to unclaimed bonuses or bonus cancellation of your insurance policy, do not respond to the call.
Each insurance company has a helpline number, call them to confirm. In 100% of cases, it is fraud because bonus is not distributed like this.
Never make payments to anyone except to your insurance company only where you have a policy. No other insurance company is ever authorized to settle bonuses.

What to do if you are a victim of such mis-selling?

Inform your new insurance company about such fraud and mis-selling. Explain the whole scenario to them. Show the call recordings (if saved), SMSs/ emails received related to the conversation, and the transactions.
Cancel your ECS mandate by writing a cancellation letter to the insurance company. Please note that your bank is not authorized to cancel ECS mandate given to an insurance company.

Also Read: Do Not Fall into the Trap of Insurance Scam

Read how a telle-caller trapped Sanskar into insurance mis-selling

Karan: Good morning. Am I speaking with Mr. Sanskar?

Sanskar: Yes

Karan: I am Karan, calling from GBIC, a Government of India body to handle bonuses on lapsed insurance.

Sanskar: Yes.

Karan: Sir, have you given your consent to your agent to collect the bonus on lapsed policy?

Sanskar: Bonus cancellation? What bonus are you talking about?

Karan: Sir, your lapsed policy has an accrued bonus. We were informed that you have authorized your agent to collect a bonus.

Sanskar: I am not aware of any bonus. I want to object to bonus cancellation. I want the bonus.

Karan: Sir, GBIC has authorized ABC Insurance Company to handle the account of all lapsed policies. If you want to change your instructions then call Mr. 420 on number 99999999.

(Karan made a call to MR. 420)

Sanskar: Mr. 420, GBIC has asked me to call you about a change of my bonus mandate.

420: Sir let me verify the details. Ok, your details are okay. Now you need to open an account with ABC Insurance Company to collect a bonus of Rs 1.2 lakh, I shall send you a link where you need to pay Rs 30,000, This is an account of ABC Insurance Company.

Sanskar: Ok. Is it necessary?

420: Yes Sir. You have to pay online. I’ll send you a payment link. But first, tell me your PAN number and Aadhaar number.

Sanskar: ok…wait…I’ll find my cards…yeah..My Aadhaar number is **** **** **** and PAN number is **********.

420: Thank you, Sir. I have sent the payment link. Please make the payments within 48 hours.

Sanskar: Hold on..I’ll pay it right now….I made the payments..oh, I received an OTP too.

420: Sir, please tell me the OTP. It will confirm your objection to bonus cancellation.

Sanskar: Sure. OTP is ****.

420: Thank you, sir.

Sanskar: When will I receive the bonus money?

420: Sir, the amount will be transferred within 2 months.

Did Sanskar Receive Any Bonus?

No, Sanskar did not receive the bonus. It was a fake call from a person who pretended to be an employee of an insurance company. The caller gave fake information about bonus cancellation. Sankar trusted his words and paid an amount believing that the payment would help stop the bonus cancellation. Instead, he unknowingly bought an endowment policy and became a victim of mis-selling in insurance.

Also Read: Insurers can’t repudiate claims by citing existing medical conditions: SC India

If something similar happens to you, contact your insurance company. If you need help, you can approach insurance Samadhan.*

Insurance Samadhan has resolved 14,500+ insurance-related complaints. These complaints include claim rejection, delay in claim settlement, mis-selling and fraud in insurance.

*Insurance Samadhan is a private organization and has no association with IRDA or any Government body.