Read an article today in an leading newspaper regarding the mis selling of insurance policies. but there are many questions that are left unanswered !!!!!!!!!
The article was revolving around ULIP's and its disadvantages to the investors .One topic that is stuck to my mind is misselling by the insurance advisors . What is misselling according to the editors ????????? Misselling simply means misrepresenting the features or characteristics of a financial product to the investor. It is usually done to increase sales. Misselling leads to losses in insurance industry which indirectly leads customer dissatisfaction and huge number of complaints filed on insurance every year. The statement which is contradictory is " not all agents are well versed with all the features of insurance product nor are they aware of the financial needs of the clients. " So what is the editor trying to say an MBA Finance or an expert in finance should become an insurance advisor and sell insurance . The IRDA syllabus includes fundamentals of Agency law ,Functions of Agent ,Legislative and regulatory matters etc . An insurance advisor while selling insurance does talk to the customer about his financial needs. Every coin has two sides . Similarly there are some advisors who may missell a product. But thats a part and parcel of every industry. But its wrong to say all insurance advisors missell. The editor contradicts his own statements . As earlier said an advisor should be aware of client's financial needs present and future . As future is uncertain and we all come across situations in our lives where we require large amount of money to get out the situation with minimal loss.
Almost all financial experts say a good investment requires a perfect blend of risk and safe investments which are FD's and ULIP's . But both have its advantages and disadvantages . Its not correct to compare the best insurance plan with FD . With FDs you deposit a lump sum of money for a fixed period ranging from a few weeks to a few years and earn a pre-determined rate of interest. In ULIPs you invest money regularly and after a period of time you will receive the lump sum amount. The return on ULIPs will be normally greater than the return on FD. ULIPs not only provided life cover, but also brought in a lot of transparency in the way the policyholders' money is invested. Example if i ask which is that one disease that you or your family members would never like to suffer from . The most common answers are Cancer or AIDS. Now if there is a vaccine in the market which can prevent you and your family from such dreadful diseases would you buy it???? You would not even give a second thought ??? ULIP's work as such vaccine .
And as said by the editor the insurance contract has the option of free look period that gives a window of 15 days to the policy holder to file for an termination of policy in case he finds that the product inappropriate or has been missold . Now the question that arises is when the policy document is delivered to the client which contains even the smallest of the details possible and with the option of free look wherein the entire premium amount paid adjusted for stamp duty is refunded in such cases where does the misselling and mis guiding the customer arise ???????
The article was revolving around ULIP's and its disadvantages to the investors .One topic that is stuck to my mind is misselling by the insurance advisors . What is misselling according to the editors ????????? Misselling simply means misrepresenting the features or characteristics of a financial product to the investor. It is usually done to increase sales. Misselling leads to losses in insurance industry which indirectly leads customer dissatisfaction and huge number of complaints filed on insurance every year. The statement which is contradictory is " not all agents are well versed with all the features of insurance product nor are they aware of the financial needs of the clients. " So what is the editor trying to say an MBA Finance or an expert in finance should become an insurance advisor and sell insurance . The IRDA syllabus includes fundamentals of Agency law ,Functions of Agent ,Legislative and regulatory matters etc . An insurance advisor while selling insurance does talk to the customer about his financial needs. Every coin has two sides . Similarly there are some advisors who may missell a product. But thats a part and parcel of every industry. But its wrong to say all insurance advisors missell. The editor contradicts his own statements . As earlier said an advisor should be aware of client's financial needs present and future . As future is uncertain and we all come across situations in our lives where we require large amount of money to get out the situation with minimal loss.
Almost all financial experts say a good investment requires a perfect blend of risk and safe investments which are FD's and ULIP's . But both have its advantages and disadvantages . Its not correct to compare the best insurance plan with FD . With FDs you deposit a lump sum of money for a fixed period ranging from a few weeks to a few years and earn a pre-determined rate of interest. In ULIPs you invest money regularly and after a period of time you will receive the lump sum amount. The return on ULIPs will be normally greater than the return on FD. ULIPs not only provided life cover, but also brought in a lot of transparency in the way the policyholders' money is invested. Example if i ask which is that one disease that you or your family members would never like to suffer from . The most common answers are Cancer or AIDS. Now if there is a vaccine in the market which can prevent you and your family from such dreadful diseases would you buy it???? You would not even give a second thought ??? ULIP's work as such vaccine .
And as said by the editor the insurance contract has the option of free look period that gives a window of 15 days to the policy holder to file for an termination of policy in case he finds that the product inappropriate or has been missold . Now the question that arises is when the policy document is delivered to the client which contains even the smallest of the details possible and with the option of free look wherein the entire premium amount paid adjusted for stamp duty is refunded in such cases where does the misselling and mis guiding the customer arise ???????
