Don’t Be a Victim of Mis-Selling

The insurance industry has lately been rife with cases of mis-selling and scams have now extended to other financial and investment products as well. Many people may not be aware that they’re being scammed until a considerable amount of money has been taken from them.

Why Mis-Selling Occurs

Problems with awareness are a major factor in mis-selling practices and this affects both customers and insurance agents. In the case of customers, minimal knowledge about the ins and outs of insurance can make them vulnerable to attack. Insurance is a complex subject plus it is usually replete with jargon that often confuses customers.

Now there are insurance agents who inadvertently represent unauthorized insurance providers or even dubious companies. They are tricked into doing so because in most cases, some of them aren’t particularly well-versed in insurance and financial matters. This can be attributed to insufficient training or sometimes, no training at all.

Most mis-selling scams are coursed through agents because they have an existing client base and those looking to make easy money can be easily talked into pushing a product that’s unsuitable or illegal in exchange for higher compensation.

Products Being Mis-Sold

There are many types of products being mis-sold and among the top are Payment Protection Insurance policies or PPI. PPI is designed to cover your loan payments should you be unable to repay them due to an accident, illness or unemployment. PPI in itself isn't a bad thing but if it is sold to you under deceptive circumstances then you have been cheated. Agents usually sell this policy to people below 18 years old or older than 65 – those who have no possibility of claiming on the policy because PPI has age restrictions. Also, agents will typically fail to disclose all details relevant to the policy such as total costs, terms and conditions applicable and so on.

Annuities or retirement pension funds are also mis-sold. Dishonest insurance agents usually prey on elderly people who are easily talked into over-worrying about their insurance cover. They are then sold variable annuity which is expensive, offers low return on investment and are imposed potentially steep taxes.

What You Can Do

Insurance is one of the most important investments that you will be making in your lifetime and it is imperative that you be discerning and extremely careful when dealing with insurance providers. Insist on being shown a complete set of credentials and proper identification when speaking with an insurance agent. To verify if the agent indeed is affiliated with a particular company, call the establishment and ask about that agent.

Do a background check as well on the insurance firm – is it registered and accredited by industry regulators? If possible, check for performance history and financial stability by inquiring at third party organizations such as Standard and Poor’s.

Be firm when asking the agent to discuss all policy details. You must insist that he disclose all important information. How much will the policy cost you in total? What is and isn't covered by the policy? What are the terms and conditions? What are the risks involved in taking out this cover?