Mis-selling is one of the most common complaints in India’s insurance industry. It happens when a buyer ends up with a product they didn’t fully understand, or one that doesn’t match what they were told. Knowing how it happens is the best way to avoid it.
The Most Common Forms of Mis-Selling
The most frequent mis-selling patterns in India include: presenting a ULIP (unit-linked insurance plan) as a pure investment product while downplaying or not mentioning the insurance component; selling endowment or money-back policies as fixed deposit alternatives; misrepresenting the returns on investment-linked products; not clearly explaining exclusions, waiting periods, or surrender charges; and bundling insurance with bank loans or credit cards as if it were mandatory.
Why It Happens
Commission structures in the insurance industry are heavily weighted toward first-year sales. An agent or bancassurance representative earns significantly more commission from selling a ULIP or endowment plan than from selling a simple term policy. This incentive structure, while regulated by IRDAI, still creates situations where the product recommended is the one that pays the highest commission rather than the one that best fits the customer’s need.
Your Rights as a Policyholder
IRDAI mandates a free-look period for most insurance policies — typically 15 to 30 days from receipt of the policy document. During this period, you can cancel the policy for any reason and receive a full refund (less certain administrative charges). This gives you time to read the actual policy document and compare it to what you were told. If they don’t match, free-look cancellation is your protection.
How to Protect Yourself Before Buying
Before signing: ask for the policy document or key fact sheet in advance, not just the brochure. Ask specifically what the exclusions are. Ask what happens to your money if you stop paying premiums in year 2 or year 3. Ask for the claim settlement ratio of the insurer in writing. Any reluctance to answer these questions clearly is a signal worth paying attention to.
If You’ve Already Been Mis-Sold a Policy
If you believe you were mis-sold an insurance product, you can file a complaint with the insurer’s grievance officer, then escalate to the Insurance Ombudsman if not resolved, and finally approach IRDAI’s Bima Bharosa portal. IRDAI has been actively strengthening its mis-selling monitoring — particularly for investment-linked products ,as part of its broader consumer protection agenda in 2025 and 2026.
Draco Insurance operates as an IRDAI-registered advisor with an obligation to give unbiased advice. We don’t have commission incentives that push particular products. Visit dracoinsurance.in or call +91 7064106417.
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