Agents need to get buyers' declaration

MUMBAI: Come October, life insurance agents will have to obtain a declaration from life insurance buyers stating that the buyer has fully understood what he is buying and is aware of the kind of returns to expect. This move puts the onus of proving that a policy has not been mis-sold on the agent.

Industry officials say that in India buyers typically ask an agent to show them policies which offer a good deal without going into the product literature.

Unscrupulous agents take advantage of this attitude and sell policies by misleading prospects about the kind of returns they can expect. Most of the misleading promises are not a part of the signed illustration, and therefore, it is difficult to nail an agent for mis-selling.

The new guidelines will now require an agent to prove that a policy has not been mis-sold by obtaining the declaration. Normally, agents give an indication of the kind of returns to expect showing illustration tables based on fixed rates (6% and 10%) prescribed by the regulator.

However, even these rates are not guaranteed by insurers and the tables are just supposed to serve as a guide for customers, stressed HDFC Standard Life Insurance MD and CEO Deepak Satwalekar.