Why are so many people victims of Insurance misselling?

Blame yourself!

Almost everyone knows someone who has bought a policy and has regretted it. Sometime back I had conducted a quick, informal 5-question survey that threw up some interesting results.

Almost all of those who were surveyed, knew the person who had helped them purchase (usually their agent); most of them could remember the premium commitment they had made, somewhat lesser numbers were unaware of the details of the product they had purchased (those who scratched their heads and came up with vague replies like LIC or Money-back or ULIP were marked as people who could not remember details). A few cavaliers could not name the company they had purchased from (Customers of LIC were honorable exceptions when it came to remembering the company).

I summoned up the courage to ask them the final question: if they knew enough about payment schedules and bonus rates and fund apportionment and claim repudiation ratios. Replies were fairly colorful; suffice to say that the survey wound up at that spot.

We all know why we buy. I can say with a fair degree of certainty that it is almost always never for the right reason. Why is it that when we pay that first few thousands as premium we do not find out what we are getting into? If we buy for the wrong reasons and then cannot even remember what we bought, can we be called victims of misselling?

Think of the time you purchased your last smartphone, or television, or when you planned your family vacation. Remember how you had agonized over the choices, pored over the details, asked your friends, compared on the internet and generally made life hell for those around you? Now think of the time you plunked down the first premium for your insurance.

If you feel that this only applies to you, pause, you are in good company. Our inability to do a little research before we buy insurance is widespread in the population. Industry captains, smart entrepreneurs, government clerks, you name them, and they are in the list. It is obvious that an agent will spot this advantage and move in. Can you then blame him for selling you a dud? The fact is we cannot escape the responsibility of our own inaction.

This does not in any way condone the behavior of an agent who mis-informs and makes a sale. At our end, a little research, however, goes a long way. You can still oblige your tax advisor, or your friend, or save tax or whatever else is your reason for buying. But there is no reason for you to not make an informed decision on buying Insurance.

Amit Kumar