Sold A Life Policy As An FD? Here Is How To Challenge Insurance Mis-selling

A person may walk into a bank branch to place money in a fixed deposit, drawn by the promise of safety and a known return. The surprise may come only after the documents arrive: the transaction is not a Fixed Deposit (FD) at all, but a life insurance policy requiring premiums for several years.

The difference is significant. A life policy may offer protection or savings-linked benefits, but it can involve a much longer commitment. Leaving it midway may mean receiving far less than the premium already paid.

Read the policy document closely. Check the policy type, annual premium, premium-paying term, policy term, maturity value, surrender conditions and the free-look clause. A customer who has just received the policy should not wait for verbal assurances from a branch official. A written cancellation request to the insurer is essential.

Free-Look Window Is The Fastest Route

A new policy comes with a free-look window, allowing the buyer to review its terms and seek cancellation. The precise period and permitted deductions must be checked in the policy wording. The complaint should state that the customer sought an FD and was not informed that an insurance policy was being issued.

Send the request by email or another traceable channel, and retain proof of delivery. Write to both the insurer and the bank when the policy was sold at a branch. Ask for an acknowledgement and a written response. Do not rely only on telephone calls, even where a relationship manager says the issue will be sorted out, according to a recent report by Mint.

Build A Record Of The Sale

A mis-selling complaint turns on evidence. Preserve the policy bond, proposal form, payment receipt, bank account statement, brochures, emails, messages and any recordings of sales calls. These can show whether the product was presented as a deposit, whether the premium commitment was disclosed and whether the documents include declarations that the customer did not understand or did not make.

Customers should also seek copies of the proposal form, benefit illustration and call-verification records, where applicable. These may reveal a mismatch between the sales pitch and the product eventually issued.

Escalate If The First Complaint Fails

If the insurer does not resolve the issue within 30 days, or the reply is unsatisfactory, the customer can approach the Insurance Ombudsman, subject to applicable conditions. A complaint concerning the bank’s conduct can also be raised through the bank’s grievance process and, where appropriate, the Reserve Bank of India (RBI) Ombudsman.

The case becomes harder once the free-look window has passed, but it is not necessarily closed. Keep the complaint focused on the central issue: the product was sold without a clear explanation of its nature, premium obligation and consequences. The sooner this is recorded in writing, the better the chance of relief.

FAQs

1. What should I do if I discover that a policy sold by my bank is not a Fixed Deposit?

Read the policy document immediately and submit a written cancellation request to the insurer during the free-look period. Also write to the bank and retain proof of submission.

2. Can I cancel an insurance policy that was mis-sold as an FD?

Yes, cancellation may be possible during the free-look window, subject to deductions specified in the policy. The complaint should clearly state that you intended to invest in an FD, not buy insurance.

3. Where can I complain if the insurer or bank does not resolve my grievance?

Escalate the complaint to the insurer’s grievance cell first. If there is no satisfactory response within 30 days, you may approach the Insurance Ombudsman; complaints about the bank can also go through its grievance system or the RBI Ombudsman.