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Published in Mint on Oct 13 2016, Written by Abhishek Bondia

I was promised double returns with additional benefits after 3 years, over the phone, while buying an insurance policy. But when I asked for the returns after 3 years, the company denied it as the documents I had signed did not promise it. They are not even considering the call recordings of the conversations I had with their representatives. I don’t want double returns but I do want the company to compensate. Can you tell me the process to take this up with the Insurance Regulatory and Development Authority of India (Irdai) or an ombudsman? Is there a chance that I can get some compensation?

—Francis Mascarenhas
It is imperative for you to conclusively prove that you were mis-sold insurance. Unfortunately, your position is considerably weakened because you appear to have the signed proposal form and documents that do not mention the high returns.
The proof could be a paper record or conversation recording that explicitly mentions high returns. The insurers are not obliged to share their recordings with you unless directed by Irdai.

If you have some evidence, the first course of action should be to escalate the issue to the insurer. All insurers have grievance redressal forums on their websites. If you are not satisfied with the outcome of this, then file a complaint with the ombudsman. This is a long process that can take over a year for a hearing. But the ombudsman is pro-customer and reasonable. If your case is valid, it is likely that the ombudsman will favor you.

If you do not have any evidence of mis-spelling and the insurer rejects your case, then you could consider continuing with the plan if it is a unit-linked insurance plan (Ulip). These can be surrendered after 5 years at no cost. If you have bought a traditional participating insurance plan, then surrender is very expensive. You will need to compare the costs of surrendering versus holding it for the policy term.

I’m 40 now and underwent an angioplasty to insert a stent in January 2015. In March 2015, I applied for a term plan of Rs75 lakh, which was rejected on health grounds. Although I had submitted all the medical details required by the company, no medical test was done and the policy was rejected. I have rejoined work, although the medication continues. The doctor said that it was a preventive surgery. Can I contest the rejection of my policy? If yes, then whom should I approach? Can I apply for a lesser amount? Can insurance companies be made to entertain these kinds of cases? I am ready to pay a higher premium.

—Awanish Rupak
Unfortunately, insurers are not obliged to issue you life insurance. It is completely their prerogative whether or not to sell you life insurance. If an insurer perceives a risk to be unfavorable, it can decline the cover. You have no legal recourse. You may evaluate three alternatives to get life insurance coverage.
First, apply for a lower sum assured, around Rs25 lakh, with a low policy term of 10 years. The mortality risk is lower and you may be issued insurance. Second, explore coverage through group schemes. Under a group scheme, such as one offered by employers, individuals with low sum assured are not individually underwritten.
Third, buy an individual personal accident plan. This will pay a large sum assured to your family if you die due to an accident. These plans do not require a medical check or declaration, so you should be able to buy this fairly easily. Sum assured of Rs75 lakh can easily be bought as a personal accident cover.
But this will not insure you for natural death.

I read your article about the insurance-linked scam and it was really informative. I am being contacted by an agent from a web aggregator for a unit-linked endowment plan.

They are asking me to invest Rs6 lakh each year for 5 years and then let it be invested for 15 years. This will give an interest rate of 15% and a sum assured of Rs30 crore. Can you advise if this is correct and if I can invest?

This is not true. Insurers illustrate interest rates between 4% and 8%. A 15% return is not allowed. Even if 15% were possible, the returns you describe are too good to be true. Stay clear of such schemes.