Whatever I am sharing in this post will be of what I had experienced while buying an online term plan for myself. I decided to buy additional life insurance based on my further insurance need.
So what is misselling? Investopedia defines misselling as “The ethically questionable practice of a salesperson misrepresenting or misleading an investor about the characteristics of a product or service. In an effort to make a sale to a potential customer, a financial product salesperson could leave out certain information or describe a financial product as something the investor urgently needs, even though sound financial judgment would come to the opposite conclusion.” However, in case of my experience there was no salesperson involved, as I was planning to buy it online. So how I can judge that someone is misselling me?
As I said earlier to fill the gap of my life insurance need, I applied for XYZ’s online term plan. Process was smooth as I applied online and paid the necessary premium. I got a call from XYZ support team to undergo a medical test. Accordingly, I visited the test centre along with necessary documents and finished the test. After few hours of testing, I got a call from that medical test centre stating that all results were fine. Still, they need to get the signature of Cardiologist about my TMT (Treadmill Test). I felt happy because of all good results, which automatically claim that I am HEALTHY. I again received one more call on same day afternoon from the same testing centre. This time they said that I had some minor problems in heart, so what to do? I counter questioned them “how the result has now been, with minor issues in heart?” They replied that Cardiologist found some issues and he was about to write his report. I said OK; let him write as his findings. After a few minutes, I again got a call from the same centre. However, this time they offered me something unethical. They said if necessary, they might replace the report of any healthy person with mine. This replacement will correct the issues mentioned by a Cardiologist in my original health report and XYZ insurance company will easily accept it without any loading. In addition, they promised me that they had such healthy person who was ready to undergo testing in my name. I just need to pay some extra money. If I paid around Rs.1, 000 to Rs.2, 000 then the results was as per XYZ underwriting requirement. If not paid, then the results were defective original health report with some health concerns mentioned by a Cardiologist.
So now if I rejected the testing centre offer, then I might face the premium loading by insurance company and, if accepted the offer then everything will be a smooth sail. However, I finally opted for a first one. Result as usual, expected from the XYZ insurance company. They loaded the premium to around 60% and reduced the sum assured of 40%. Therefore, for me they offered a lesser sum assured than what I proposed and higher premium of what I already paid. As the offer seems to be too costly, I rejected it and got the paid premium back to my account with deduction of medical test cost.
After this incident, I searched for next suitable insurance product for me. This time I searched through a site (which provides comparative results only after you provide your email id along with phone number). Finally, I bought insurance from another company called ABC. However, after a few days I received a call from a person who claimed that he represents the above said site. He asked me whether I bought the policy or not. I replied with positive. Then his interest raised manifold and asked me about policy details like sum assured and premium. Finally, he asked me the policy number.
I surprised why he need all these data. He said that if we provide all these details, then his company would help me in future relate to policy service like nominee change, address change, revival or during death claims. I inquired how they could help. He answered that they keep data with them and I am free to contact them whenever I have any problems with the insurance company. Actually, he was not concerned about providing service to me. However, the intention was different. It was to claim to the insurance company that I bought the policy only after comparing from their site. Therefore, in return insurance company will give commission to this site.
Now do you still feel ONLINE TERM INSURANCE products are agents free? There may not be the direct agent, but there are so many such hidden agents, who may fool you in one way or another. Therefore, I still feel that term insurance not fairly priced.
This above whole story explains that, apart from agents there are a few others who are ready to sell anything for the sake of money. Such few medical centres or doctors appointed by insurance companies are the biggest threat to the insurance industry. However, sadly no one noticed it. I know a few doctors appointed by insurance companies who provide medical test without even knowing the proposer or actually meeting proposer. Agents will provide all required data and doctors just fill the form and give it back to the agents. In some cases, few agents who do wonderful business have such doctors’ forms in their offices. These agents take a signature of the proposer on to be signed medical forms by doctors while taking the signature on the proposal form. They give the same to doctor and doctor in return will give the report claiming that all is well with life proposer.
Also, beware if such insurance comparison sites insist you buy any particular product. Because the first thing they are not covering all existing insurance company products. The second thing they may push you to buy a particular product with which they have tied up.
So in above case do I qualify for misselling? Yes, I qualify if I have not understood the risk involved in adjusting for immediate gains. The moral of my true story is that, take care of everything you do while buying online term insurance. Any negligence or thinking of benefiting in the short-term may cost your financial dependents in the end.
Image courtesy of [ Stuart Miles] at FreeDigitalPhotos.net
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View Comments
Dear Sir,
I have applied for term insurance just before two days of my birthday with Bajaj Allianz (Smart Protect Goal) went through the entire process, after the medical done they made my policy status as "POSTPONED for 6 months due to medical reason HIGH HbA1c" and returned my premium. As per my understanding policy could have been issued with some loading in premium but they chose to postpone, is it just because they want me to pay the higher premium + loading amount as birthday was already passed and one more year added in my age by now, can that be the intention of insurer.
(I am physically fit with no health issue, no alcohol no smoking, 31 year old. with sometimes there is some variation in sugar level that can be counted under prediabetic)
Dear Rajesh,
It is completely the underwriter's decision, which we can't assume as per our terms. Hence, rather than waiting why not you knock different insurers?
I have been regularly following your blogs for my financial decisions as far as possible. Why do you discourage accidental death cover or critical illness riders on term insurance plans? i=You mentioned you get a better deal elsewhere from general insurers, can you please elaborate on the same, please?
Dear Swarup,
Life Insurance is required for you for a limited period. However, accidental and critical illness is required for you throughout your life. The second aspect is as you mentioned if you buy them as standalone policies, then you will get better features than addon as riders.
Sir, my wife is self employed, but cannot produce necessary income proof if needed. Should I take term plan in her name ? I'm a 44 year old government employee. Now both we have separate term plans from aegon, but plan to shift to maxlife. Kindly advice.
Dear Ravikumar,
What is the issue with Aegon?
A lot of issues sir. Actually my first term plan is from them. When I planned to enhance my coverage, of course due to low premium I again preferred aegon. This time I took for my wife also. She is running a coaching centre. But from the very beginning matters were not very smooth. We both underwent medical and policy issued. My address and phone number were different in the policy soft copy.(of some other Ravikumar from Chennai). Initials of my wife's name were different. To correct all these , I sent and sent a lot of emails. They said they corrected my wife's initials in their records. But still I get SMSs and emails with wrong initials. But they didn't correct my details. They demanded me to upload fresh ID copies to correct phone number etc. I refused. I still pay the premium every month without fail. But all messages go to other Ravikumar. Email ID is correct. My wife got a printed policy document. But I didn't. When asked, they told me that, they need not give customer a printed copy according to latest IRDA guidelines. When I notified them that my wife got policy document, they totally refused such a thing. They said they have not sent any policy document since 2015. But these are not the reasons for my anger. When I called them in their official number, one officer ( I won't name him) told me that I cannot ask about my wife's policy. They refused to answer my queries. My wife should call them personally. I couldn't understand why. All these are 'a never heard case' according to me from a private firm.
Dear Ravikumar,
It is so sad that you underwent so many bad experiences. Also, thanks for sharing your experience. Let others can look over this before jumping.
Thank you sir for your kind words
Dear Sir,
I am planning to buy a online term insurance plan for Sum Insured 1 crore, but I haven't come across any person (online / offline) who could share experiences one has of claim settlement. Could you please guide if it is better to buy the term plan from the Govt Insurance Companies like LIC at higher cost or buy it from well known private companies like Max Life at a much lesser premium for the same Sum Insured. Also please let me know how much help is provided by the online aggregators (websites showing comparison of term plans from different companies) of these term plans if the term plan is purchased through them.
Regards,
SANKET
Sanket-To me all insurers are equally good and bad. Online aggregators act like insurance agents. Hence, the decision must be YOUR'S but not their.
Dear Basavraj,I had bought a SBI term insurance which expiry was on 22 April 2015, then I bought new term insurance policy of HDFC click to protect plus on 13th May 2015,but I informed to SBI life insurance only on phone calls, didn't send them email, will it creat any problems in future for claim?
Nilesh-You no need to inform to SBI for your future insurance buying. Even from now onward whatever you buy is not matters to both SBI and HDFC. However whenever you buy insurance in future never forget to inform about your EXISTING insurance of SBI and HDFC to new insurer.
I am sorry but why does one need to inform one company about insurance taken from another company? and what happens if I dont inform?
Dear Rahul,
It is because to arrive at the how much human life value is actually required. It is a mandatory disclosure.
Hi,
I am 24yr old with annual income Rs 10Lac. Planning to buy TERM PLAN worth Rs 1Cr for 40yr.
Option :-
1) HDFC click 2 protect plus Rs9439
2) Max life Rs 7130
Kindly suggest which one is good as I am planning to purchase without any extra rider.
Also should I add rider over these term plan or should purchase a separate health insurance for critical illness from Religare insurance.
Regards
Abhishek
Abhishek-To me both are good. You already decided to buy without rider then why asking? Go ahead without riders.
Hi dear sirs, I am planning to buy Lic specifically Lic policy for my husband 53 with good returns and premium max up to may 100000 / can u suggest me which plan should I go which will satisfy his needs , he smokes , occasionally drinks has BP and sugar
Neela-May I know the meaning of GOOD RETURNS? Based on that I can recommend you the product.
Hi,
Very nice article.
I am a diabetic type 2 and thyroid. I am taking medicines and both of them are in control.
1) Can you please advise am i eligible for term insurance.
2) If yes, can you advise any insurance companies that provides insurance to the people who have illness.
3) My wife is a housewife. Can i take term insurance for her. If yes, let me know the best policies for house wife.
Chandrasekhar-I can't say whether you are eligible for Company A or Company B. Because it is purely depends on company's decision. However, first try to apply. Let us see the result. You wife not required any term insurance. Don't buy it on her name.
i went for ULIP option of 65 lacs cover and med tests were done. the lab said all is ok. Than after a week i was told to have TMT. The TMT was done and i was told again the TMT report is normal at the lab itself, i had declared that i am a light smoker and moderate drinker. after a week i was told that i will get the policy but with with 84000 / year extra premium... i am not abe to understand as they are saying that its underwritten due to my lifestyle.. is this normal?
Sukhet-I can't say what went wrong to increase the premium. Because it purely depends on insurance company and the underwriter's decision.
My father is 63 years and mother is 58 years old.
want to get a family floater and super top up plans for both of them, taking total cover to around 10 lac.
Shall i go for united india insurance or any better company is there.
Please suggest.
Sujit-Please go ahead.