Getting Life Insurance Right: How Tech, Clarity Can Help Combat Misselling

Life insurance is a key pillar of financial security, offering peace of mind and protection for loved ones.

- Sandip Goenka

Life insurance is a key pillar of financial security, offering peace of mind and protection for loved ones. Yet, many end up with policies that don't match their real needs. Often, the focus shifts to savings or investments over essential protection, leading to confusion, high premiums, disrupted financial plans, and a gradual loss of trust in insurance.

To address these concerns, the Insurance Regulatory and Development Authority (IRDAI) and the finance ministry have been pushing for responsible sales practices. A recent advisory urged financial institutions to focus on customer-centric solutions and improve transparency. For customers, being informed and proactive is key to making better insurance choices.

Understanding and navigating misselling

Mis-selling usually falls into four key categories. One, customers may be sold products that don't match their financial goals, risk appetite, or protection needs. Two, misrepresentation happens when benefits are overstated, risks downplayed, or key details left out. Three, sales are often driven by commissions over customer interest. Lastly, exclusions, surrender charges, and other key terms may be omitted, leaving customers unaware of conditions that affect their coverage.