Editor’s Note: Knowledge Is Power

After several years of financial awareness activists highlighting the scourge of insurance mis-selling in India, the authorities finally seem to have paid heed. In recent months, the problem has been highlighted by Finance Minister Nirmala Sitharaman. Even financial regulators, including the Reserve Bank of India, the Securities and Exchange Board of India, and the Insurance Regulatory Development Authority of India, have taken note.

According to the Irdai annual report 2024-25, grievances filed under “Unfair Business Practices” increased to 26,667 in FY25 from 23,335 in FY24, a rise of around 14 per cent.

As authorities wake up to the systemic problem, embedded deep into how insurance is bought and sold in India, the road to resolution has at least started getting paved.

In the meantime, what do consumers do? Wait for the problem to solve itself or take matters in their own hands? Deeply entrenched systems and practices can’t change overnight, so customers have no option but to resort to the latter, at least for now. And the biggest tool they can use to counter it is financial awareness.

Disturbingly, that metric, too, inspires little confidence. According to the World Economic Forum’s (WEF) Global Retail Investor Outlook 2024, released in March 2025, only 27 per cent of Indian adults are currently considered to be financially literate, which is roughly half the figure for the UK and the US.

It is imperative to make an effort to become financially aware. You would need to read the multiple-pager forms and addendums if you really want to know what you are buying into. Delegating the work to the distributor (who may sometimes not be aware themselves or may be driven by commissions or targets rather than your needs) is not the best idea. Even artificial intelligence (AI), which is becoming increasingly popular in India for financial advice, cannot solve the problem. According to the WEF report, more than 50 per cent of investors in India, China and the UAE are open to the idea of delegating portfolio allocation decision-making to AI-enabled assistants.

How well you know a product can give you satisfactory results and peace of mind. One, if you are not happy with the features of a product, you would have the option to research further and choose one that is more suitable. Two, even if you find a product lacking but can only afford that, you would be prepared for the consequences such as out-of-pocket expenses in case of health insurance. Three, you would not over-expect and get caught by surprise when it matters most. After all, insurance is something that protects you and your family in times of need, and you would want it to work, as expected, at that crucial juncture.

Like Benjamin Franklin, one of the Founding Fathers of the US, said in the 1750s, “An investment in knowledge pays the best interest.” That holds true even today. Knowledge is the power that will ensure a smooth financial life.