| Beware of insurance mis-selling at banks |
 Rucha Biju Chitrodia, TNN
These days, you may walk into a bank for a fixed deposit and leave with an insurance product as well. But what if the policy turns out to be not what you had bargained for?
According to a senior banking ombudsman official, mis-selling of insurance products is known to occur at branches of some private sector banks. Consumers must know that mis-selling is not restricted to anonymous tele-banking executives , mentioned earlier in these columns.
Even regular executives at a bank branch could sell a product that may fall short of promises. Aggressive marketing is a reality in bancassurance — the official term for selling of insurance products by banks.
| |  Says the official: "We have some complaints where customers have been sold unitlinked life policies without being told that these involve more than a one-time premium . When they learn about the fact during renewal and choose to opt out, they barely recover 40% of the amount they originally paid.''
In one instance, a consumer had shelled out Rs 50,000 as premium. When, after a year, he learnt that he would have to pay the amount annually over three years, he decided to withdraw.
The consumer got just Rs 20,000. The problem, the official says, is that customers sign up for policies without reading the documents . As they have an existing relation with their banks, they enjoy a certain degree of comfort, which makes them sign up without asking too many pertinent questions. | What is more unfortunate is that because the documents are signed, the banking ombudsman can do little. "The documents are signed and every form is properly filled. Also, customers are allowed a look-in period of 15 days to return the policy, but they don't. Besides, these products have the approval of IRDA. We are not in a position to help,'' the official says.
S B Mathur, secretary-general at Life Insurance Council , says a bank customer is usually well-informed , but may still be a little careless about going through the terms and conditions of a policy. "Even in the forwarding letter , if you find something wrong, you can cancel it... That's the problem, you can take the horse to the water, but cannot make it drink,'' says Mathur, admitting that there may be "aberrations' ' in the sale of unit-linked policies.
| | |  "We are talking of a total of approximately 30 crore life policies as on March 31, 2009. About 5 crore policies were added only last year,'' says Mathur, adding: "this immense growth was seen in a year of economic slowdown. It cannot be ruled out that some mis-selling may have been involved. On the whole, though , the parameters indicate a positive improvement in the quality of sales process.''
The sectoral watchdog had set up a committee to draft recommendations for the bancassurance model. IRDA officials, though, refused to comment on the progress of the initiative.
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