For over a decade, Unit Linked Insurance Plans (ULIPs) have faced a tarnished reputation, particularly for policies issued prior to 2010. High charges during this era diminished customer benefits and contributed to ULIPs’ negative image.
Fear of the “Life Insurance” Name
The negative legacy of early ULIPs has cast a long shadow on the entire life insurance sector. Even though ULIPs were investment-focused, the term “Life Insurance” often triggers fear and aversion among customers.
New Concerns in the Industry
While the wounds of the past are slowly healing, new issues are emerging within the life insurance industry, particularly among leading players. These concerns need attention to ensure fairness, transparency, and customer-centricity.
Exit Barriers: Forcing Offline Policy Closures
One major issue is the practice of compelling policyholders to close their policies in offline mode, despite the digital age. Customers are unable to exit policies online, and they are forced to visit the company’s office for closure, opening doors for sales pitches on new policies.
Deceptive Tactics: Killing Policies Early for Fresh Sales
Executives discourage customers with policies less than five years old, attempting to replace them with new, supposedly more beneficial policies. Customers are misled into stopping premium payments before the mandatory five-year period, incurring penalties and unfavorable returns.
Raising Awareness and Urging Change
These practices create barriers and lead to resentment towards life insurance. To foster trust and customer satisfaction, the industry should prioritize customer-centricity over self-interest. Regulators like IRDAI must intervene promptly to protect the credibility of life insurance and customer interests.
A Ray of Hope: Term Insurance
Notably, these issues do not apply to term insurance policies, the purest form of life insurance. Term insurance offers excellent financial protection at attractive prices, ensuring the financial security of one’s family.
In conclusion, addressing these unfair practices is crucial to prevent further damage to the reputation of life insurance and ULIPs. The industry must shift towards customer-centricity to regain trust and attract new policyholders.