- Seniors Sold Long-term Covers
- Complaints Rise Across India
- A Pattern of Mis-selling
Article Today, Hyderabad:
Insurance mis-selling has emerged as a serious concern in India’s banking sector. Retired individuals and senior citizens appear particularly vulnerable. In several reported cases, customers say bank officials presented insurance products as fixed deposits or safe savings plans. However, the documents later revealed long-term life insurance policies with distant maturity dates.
The Kolkata Case
One such case involves Meera Das from Kolkata. After retirement, she invested Rs. 12 lakh through a public sector bank branch, believing it to be a fixed deposit. The product turned out to be a life insurance policy maturing in 2046. By then, she would be 85 years old. According to the family, bank staff did not clearly explain the tenure or lock-in conditions. The savings now remain tied to a long-term policy.
Sales Targets and Commissions
Industry observers point to commission structures as a key driver of mis-selling. Agents and relationship managers often receive high upfront commissions in the first year of policy issuance. Therefore, the incentive to prioritise sales over suitability increases. Internal targets within banks add further pressure. As a result, long-term insurance products are sometimes promoted aggressively to elderly customers who may not benefit from them.
Multiple Policies for Seniors
In Uttarakhand, an 82-year-old man was reportedly issued multiple life insurance policies within a short span. Family members allege that he did not fully understand the digital verification process. Such cases have raised questions about due diligence and ethical sales practices. Banks and insurance companies maintain that customers sign consent documents. However, critics argue that informed consent requires clear explanation of risks and tenure.
Nationwide Complaints
Data from grievance platforms indicate a rise in complaints related to unfair business practices. In 2025, more than 26,000 complaints were reportedly filed under mis-selling categories. In addition, insurance grievance portals registered over 2.5 lakh consumer complaints. Analysts note that many policyholders discontinue premiums within five years, leading to financial losses due to surrender charges. Companies, meanwhile, retain a portion of the premiums.
Regulatory Response
Regulatory bodies have acknowledged the issue. Earlier committees, including those set up in 2009 and 2015, flagged concerns about aggressive sales practices. The Insurance Regulatory and Development Authority of India has issued guidelines on disclosure and free-look periods. Recently, the Reserve Bank of India proposed draft norms to strengthen consumer protection in bancassurance channels.
Government Warning
Finance Minister Nirmala Sitharaman has publicly cautioned banks against mis-selling. She described the practice as unacceptable and harmful to trust in the financial system. The government has urged institutions to ensure transparency and suitability assessments before selling insurance products.
Structural Concerns
Experts argue that reform must address incentive design. They suggest spreading commissions over the policy term rather than concentrating them in the first year. In addition, mandatory disclosure in simple language could reduce confusion among senior citizens. Public reporting of complaint data may also improve accountability.
Trust at Stake
Insurance products serve a critical role in financial security. However, when mis-sold, they can erode lifetime savings. Therefore, restoring confidence requires stricter oversight and ethical sales conduct. As complaints continue to surface, the focus now shifts to enforcement and consumer awareness.
Bolloju Ravi, Senior Journalist
