1.What is a Bad Insurance Policy?
Did your last insurance policy assure you only insecurity after you bought it? Do you feel that the insurance policy which you have just taken does not serve your purpose? Or, is it that the policy does not give all that your advisor promised you it would, while selling the policy? If this is so, then you need not despair, help is at hand. The fine print in insurance policy documents can be devastating at times for some policyholders, but recourse to such problems is now available.
Insurance policies are long term commitments. They require due diligence in the form of timely annual premium payment. If it so happens that after having taken the policy it turns out to be something other than what you had bargained for then you need to act swiftly. Timely action will ensure that you do not have to continue with the policy if you really do not need it. There is no need to continue paying the premiums and regret your decision.
2. Recourse during the Free-look in Period:
Any policy can be terminated within 15 days from the receipt of the policy document if the holder of the policy finds it unsuitable for his purpose. The insurance company will then refund the premium amount after deducting the proportionate amount for the period of cover, the cost of conducting medical checkup and the stamp duty paid towards the policy.
3. Recourse through Grievance Redressal:
Policy holders also have other options for their grievance redressal. They can lodge a formal complaint with the insurance company. Usually, all such companies have a definite hierarchy for addressing customer complaints. It is likely that the policy holder’s problems are not resolved at the first level, they can then take it up at the next higher level, if even then suitable action is not taken then the policyholder is within his rights to approach the highest level for alleviation. It is however likely that the policy holder will encounter a lot of resistance from the insurance company simply because he or she is going against the tide.
However, perseverance and the will to pursue the complaint can save the policyholder from monetary loss and the unsavory option of carrying on with a bad policy.
4. Recourse through IRDA:
Sometimes insurance companies fail to settle the issue of policy surrender in a manner which is acceptable to the policy holder. In such cases, the customers can seek assistance from the Insurance Regulatory Development Authority (IRDA). The IRDA has an Integrated Grievance Management System in place which helps in resolving the complaints of customers.
5. Recourse through Insurance ombudsman:
In case where the Integrated Grievance Management System fails to provide an acceptable solution, the customer can escalate it to the level of the insurance ombudsman who is an arbitrator of sorts. If, even the ombudsman fails to satisfy the customer, legal recourse is the next level and the policy holder can approach the consumer court.
6. Recourse through Alternative Routes:
Many a time the policy holder may be reluctant to follow the grievance redressal route, they would rather opt to take recourse of other options available. Premature surrender of policy is such an option. Converting the policy into a partly paid up-policy would also be an option which can be explored by the customer.
Which form of redressal is best suited for the purpose will be decided by the terms and conditions, the period of time elapsed from the date of taking the policy and of course the type of policy. The policy type could be a traditional plan, a money back policy or an ULIP.
7. Good Investment Policy
Pursuing the complaint till the last frontier, if necessary, requires resoluteness, besides lots of time, energy and even money. It is often that customers give up hope before an amicable solution is reached but it is worthwhile to remember that this could be the most appropriate move under the situation as against the despairing alternative of having to carrying with the policy and face sufferings
The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at email@example.com