Insurance agents need to get buyers'' declaration of informed consent

Starting October, life insurance agents will have to obtain a declaration from life insurance buyers stating that the buyer has fully understood the terms of the policy being bought, and is aware of the returns to expect. This policy shift puts the onus of proving that a policy has not been mis-sold on the agent.

Industry officials say that in India most buyers just ask an agent to show them policies that offer good returns, without looking properly at the terms and conditions, or the fine print.

Unscrupulous agents take advantage of this attitude and sell policies by misleading prospects about the kind of returns they can expect. Most of the promises are nowhere on the signed illustration, and it is difficult to nail an agent for mis-selling.

The new guidelines will now require an agent to prove that a policy has not been mis-sold by obtaining the declaration.

Normally, agents give an indication of the kind of returns to expect showing illustration tables based on fixed rates (6 per cent and 10 per cent) prescribed by the regulator. But insurers do not guarantee these rates, and the tables are just supposed to serve as a guide for customers.