How Insurance Agents Mis-Sell Policies

Mis-selling is one of the most pervasive problems in Indian insurance. Agents earn commissions on sales — creating incentives that do not always align with your interests.

Type 1

Verbal Promises Not in the Policy

An agent tells you the policy covers OPD, or that there is no waiting period for your pre-existing condition — none of which is in the actual policy document. At claim time, none of these verbal representations have any legal standing.

Rule: The only thing that matters is what is written in the policy document. If an agent makes a specific promise, ask them to show you the clause. If they cannot, the promise means nothing.

Type 2

Selling the Wrong Product for Your Needs

A senior citizen sold a policy with a 30% co-pay when they needed comprehensive coverage. A family sold inadequate sum insured for their city. These are common mis-selling scenarios.

Protect yourself: Always research the product independently before purchasing. Read the Customer Information Sheet provided with every policy. Use the free-look period to review and return if unsuitable.

Type 3

Premium Hiding and Future Increase Concealment

Agents sometimes show only the first-year premium without disclosing that premiums increase significantly with age, or that the initial premium is discounted and will normalise at renewal.

Ask specifically: What will my premium be at age 50, 60, 70? Request a premium illustration for the entire tenure before purchasing any long-term health policy.

What To Do

How to Report Mis-Selling and Seek Redressal

Use the free-look period — 30 days from receiving your policy document — to review and return the policy for a full refund. After the free-look period, file with your insurer's GRO, then IRDAI's Bima Bharosa portal, and finally the Insurance Ombudsman.

Evidence: Keep all written communications with your agent. Get key representations in writing via email or WhatsApp — these can be used as evidence in mis-selling complaints.

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