Long-standing irregularities in the sale of insurance products in India have only recently come to light, revealing how ordinary families have been affected and why regulatory authorities have failed to address the issue for years.
For decades, a “quiet” financial malpractice has persisted across India’s economic landscape. Regulators were aware of the problem, yet no effective action was taken. The true scale of the issue becomes apparent only when it hits individual households, disrupting normal lives and jeopardising financial security.
In a modest three-bedroom home in Thakurpukur, South Kolkata, Meera Das (name changed) recounted how she and her husband purchased two insurance products that were ultimately unsuitable for them. Today, their savings of ₹1.2 million are tied up in policies they barely understood.
Meera recalled the moment complications began, in January 2023, shortly after she retired from a government job and her husband also stepped down at the age of 60. With a cautious approach to finances and hopes of a peaceful retirement, they started the year optimistically.
Her husband initially visited a local State Bank of India (SBI) branch merely to seek advice on where to invest their retirement benefits. Meera was unwell at the time, and perhaps for that reason, a branch assistant manager later visited their home.
“He explained the policies, but I did not understand much,” Meera said. “We simply trusted what he told us.” She assumed the product functioned like a secure fixed deposit. Though her husband hesitated regarding the second product, the bank officer assured them that their retirement benefits would be sufficient to meet all premium instalments.
A veteran private-sector banker with over twenty years of experience, speaking on condition of anonymity, said, “Once a relationship is built with a customer, they stop reading the paperwork. If I am your relationship manager for two or three years, you trust me completely. What I say is taken at face value.”
Case Examples of Insurance Mis-selling
| Name | Age | Retirement Year | Investment Type | Savings Locked (₹) | Primary Cause of Issue |
|---|---|---|---|---|---|
| Meera Das | 60 | 2023 | Two insurance products | 1,200,000 | Reliance on salesperson’s assurance |
| Anurag Sharma | 58 | 2022 | ULIP policy | 850,000 | Unaware of investment risk |
| Radha Mehta | 62 | 2021 | Pension plan | 1,500,000 | Did not read documentation thoroughly |
Analysts warn that such malpractice can result in long-term financial losses. Customers often place complete trust in bank or insurance officers and do not review documents in detail. As a result, many find their savings and retirement plans severely compromised.
India’s insurance regulatory authority, IRDAI, has been aware of these irregularities, but effective oversight has remained limited for years. Experts point to a combination of low financial literacy among consumers and aggressive incentives for sales personnel as factors perpetuating this problem.
Meera’s experience is far from isolated. Similar cases are occurring nationwide, gradually undermining the financial security of ordinary families. Regulators must now act decisively to prevent further economic harm.
This growing issue highlights the urgent need for vigilance and consumer education before ordinary citizens’ financial futures are jeopardised.