Beware! The insurance policy you are buying could be fake - How to stop loss, identify the genuine article

Have you recently got a call from a person promising you to provide an insurance plan for a relatively low premium? Well, it could be a trap and you need to be very careful before paying. The Insurance Regulatory and Development Authority of India (IRDAI) recently warned the general public against cyber insurance frauds. IRDAI urged people to not to fall for fraudulent insurance offers particularly when buying insurance policies online.

As most people are stuck at home during the lockdown, they are buying insurance plans online, a trend that is being misused by the fraudsters.

"There are occasional reports of fraudsters offering insurance with unusually low premium from fake entities through online/digital mode. The public are hereby cautioned not to fall prey to such offers,” the statement from IRDAI said.

What should interested buyers do?

The customers should look to buy policies from reliable sources. IRDAI lists down following entities:

1.    Insurance Companies registered with IRDAI

2.    Insurance intermediaries who can solicit business and are registered with IRDAI.

3.    Insurance agents duly appointed by Insurance Companies.

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How to verify insurance agents?

It is also important for the customers to verify the insurance agents before agreeing to buy a policy. The list of insurance agents appointed by individual insurers can be verified from the respective insurers.

"The customer should take due care and verify the genuineness of the website and the genuineness of the insurer, intermediary or agent before making any online payment," IRDAI said. 

For further information, customers may visit IRDAI consumer education website - policyholder.gov.in/.

In another major move, IRDAI said that in cases where unit-linked policies mature and fund value is to be paid in lumpsum, life insurance companies may offer settlement options in accordance with Regulation 25 of IRDA (Linked Insurance Products) Regulations, 2013.

"This onetime option is regardless of whether such option exists or not in the specific product. The Life Insurers however have to exercise all due care and diligence to explain clearly the possible downside risk of continued fluctuation of fund value based on daily NAV and clear consent has to be obtained from the policy holder," said the circular dated April 4.

The relaxation is allowed for unit-linked policies maturing up to May 31, 2020, it said.