Cancel Life Insurance Policy During the Free-look Period..!

Most of us have purchased at least one life insurance policy we have regretted later. Either the premium was more than what we were told, or returns were not as projected. 

The problem of mis- selling is so rampant that even the regulator has addressed the issue in its latest monthly journal. 

There are some steps that customers can take to avoid buying a policy that does not meet their requirements.

One common complaint is with regard to the frequency of premium payment. Customers are told that the policy is a single premium but it turns out to be a multiple premium product. 

Check Insurance Policy Document..!

Another problem is when you are sold a policy bundled with a loan product, like a home loan. In such a case, make sure the policy is a term life policy and not a savings product.

Mr. Amit Roy, Chief Distribution Officer, Aegon Religare Life Insurance, said, “Look at the premium you paid and check if it is the same mentioned in the policy paper (bond). Similarly, while signing the loan documents, check the insurance policy document too. Since you are creating an asset while buying a loan (home in this case), do not get into another savings product, which will only add 
to your liability.”

Policy holders must also check if the maturity date and age of the insured mentioned in the policy document match. 

For instance, if the policy term is 10 years and the Policy holder’s age in the document is 45 years, then, at the time of maturity if the Policy holder’s age does not match the maturity age, the claim could be repudiated.

Sometimes the Policy holder agrees to buy one particular product, but the agent while filling up the form chooses another one because it offers higher commission or / to avoid medical tests. 
Often Policy holders pay 2 or 3 premiums before they realise it. One should also check the benefit illustration to know how much of the premium goes towards charges.


Free-look period ..

“Insist that the product name, your age & policy term is filled up in front of you. Or use the verification call and free-look period to cancel the policy if it does not match what the agent told you. That is why it is important to preserve copies of benefit illustration and product features,” Roy added.
Another big problem is the product-need mismatch. Most people buy insurance to save income tax, and in the process end up paying Rs. 25,000 as premium for an insurance cover of only Rs. 2.5 lakh, whereas the same premium could have bought the consumer a Rs. 2 crore term plan. 

Mr. Manish Shah, co-founder and chief executive, BigDecisions.com. said, "Customers often buy products to maximise tax savings and returns rather than sum assured. To avoid this there should be better communication between the buyer and seller” 

That is why today most companies have a suitability matrix profile and agents are supposed to sell only those products that match the customer’s profile, pointed out Mr. Sujoy Manna, Vice President (Products), HDFC Life.

“An agent is supposed to sell a policy only after doing a need-based analysis. For this, he must ask questions related to the customers’ investment objective, time horizon, income, existing investments and risk preference. If, for instance, you require money after 10 years, then the agent should not sell you a policy that matures in five years,” he said.

If you are not sure consult someone before you buy the policy, said Mr. Suresh Sadagopan, a certified planner.

“Insurance companies may train agents to do need-based selling. But who can verify if it is happening at the ground level? Customers must do due diligence before buying an insurance policy.” he said.

Src; BS

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