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Are misleading insurance advertisements dead and gone?

IRDAI intends to kill the deceptive, ambiguous, confusing and fallacious advertising by the insurance companies. Its Master Circular on Insurance Advertisements aims to do so.

Given human greed and intense competition to get business, this definitely is not going to be easy. Will IRDAI succeed in its mission?

What is your opinion about it?

To make an assessment...
... let's see what Do's and Don'ts has IRDAI prescribed for the Insurance Advertisements.

Objective
IRDAI aims to achieve three objectives via these regulations on advertisements:
a. Protecting your interests as a policy buyer
b. Enhancing your level of confidence in the sales material
c. Encouraging fair business practices

What all insurance advertisements and sales material should DO:

1.  Be clear, fair and honest.
2.  Provide legible information and conveniently accessible.
3.  Lucid and understandable.
4.  Prominently specify 'Life Insurance Coverage' to indicate that it is an "insurance" product [My Name Is Insurance And I Am Not An Investment].
5.  Clearly mention the underlying conditions and costs for Guarantees, if any, in the policy.
6.  Equity-Debt asset allocation in ULIPs to be put up on the website at least every six months.
7.  Disclose all the underlying assumptions.
8.  Mention that "past performance" is not an indication to future performance.
9.  Include details such as nature of policy, product, risks, exclusions, costs, charges, minimum requirements etc. 
10. Display ratings / awards from independent agencies only and clearly identified.
11. At least 10% of the total space earmarked for mandatory disclosures.
12. Such mandatory information to be clear, conspicuous and legible.

insurance-advertisements-mislead
WARNING: Is the offer "special" for you; or for the insurance company. Think!

What all insurance advertisements and sales material should NOT DO:

1. Any significant statement or warning not to be obscured or disguised in any manner.
2. Brand names of the policies not to use words that create false sense of security.
3. Use of logos, symbols etc. similar to others' products barred, so as to avoid any confusion.
4. Benefits available, only under exceptional circumstances, not to be highlighted.
5. Favourable tax treatment not to be highlighted without the warning that tax laws are subject to change.
6. Not exaggerate company's claim settlements.
7. Not highlight the benefits without stating the risks and limitations involved.
8. Not offer any "unapproved" reward points, discounts, rebates, etc. either directly or through any third party.

When using the internet:

1. Ensured that all the relevant information can be viewed by the policy buyers.
2. Provide option to unsubscribe in all the emails sent.
3. Obtain undertaking from the policy buyers for having read the policies features, terms & conditions, disclosures, etc.
4. Helpline number mandatory, to resolve policy buyers' queries.
5. Hard copy of all necessary details to be provided, if requested.

[Must Read : IRDA And RBI Sleep Even As People Get Swindled, Conned And Cheated]

When using the telephone:

1. Refer to the Do Not Call Registry before making any call.
2. Do not intrude upon the privacy of the person to whom calling.
3. Seek permission before making the sales pitch.
4. Preferably licensed intermediaries to make cold-calls for promotion.
5. Importance of financial need analysis to be emphasized. 
6. Provide reference on how to access the detailed information before closing the call.

When advertising Special ULIPs

ULIPs that have 0% and 100% (or more) allocation have been categorized as Special ULIPs. Thus, they require additional disclosures.

1. Where the allocation is 0%, the benefit illustration should have the following declaration in bold capital letters :
“I ALSO UNDERSTAND THAT NO PART OF MY FIRST YEAR PREMIUM WILL BE INVESTED IN UNIT LINKED INVESTMENT FUNDS”.

2. Insurance companies should not issue any specific advertisement for policies with 100% (or more) allocation. Further, the benefit illustration should have the following declaration in bold capital letters :
 “I ALSO UNDERSTAND THAT WHILST ___% OF MY FIRST YEAR PREMIUM WILL BE INVESTED IN UNIT LINKED INVESTMENT FUNDS THERE ARE CHARGES DURING THE FIRST POLICY YEAR AS GIVEN IN THE BENEFIT ILLUSTRATION”.

Aforesaid guidelines on Insurance Advertisements apply to all insurers (i.e. Life Insurers, Non-Life Insurers and Health Insurers) and also the insurance intermediaries.

In my opinion, the guidelines themselves are rather ambiguous, vague and quite general in nature. There is a lot of scope for clever mis-selling

Moreover, in my personal experience of over 20 years, few people read such brochures and ads. Still fewer understand what is contained in them. They are solely guided by their (misplaced) faith 
(a) in the insurance policies in general, and
(b) in what the agents tell them.

Therefore, my warning... BUYER BEWARE... Don't Trust Your Bank, Insurance Co. Or Mutual Fund...Or Your Agent

Still, for the good of all the policy buyers, let's hope and pray for the success of this initiative by IRDAI.

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Ignorance is like a SIGNED BLANK CHEQUE... anyone can MISUSE it.

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