Online Insurance Policy Traps: Prevent And Protect Yourself From Loss

With an increasing number of consumers taking to the internet to purchase or renew insurance policies, complaints of mis-spelling or manipulative selling called ‘dark patterns’ in the online world, have been on the rise, as per a LocalCircles report. Mis-selling of insurance policies, such as life, health, motor, property, or any other insurance, is a common occurrence. People often fall for the words of insurance agents and don't read the full document during the consideration when the policy can still be returned without inflicting any financial loss. The matter becomes more complex and riddled with faux procedures when one turns online for end-to-end policy purchase.

“Buying life insurance online is popular due to the convenience and efficiency it provides. Online platforms allow you to compare policies, premiums, and coverage options directly from the insurance company's website,” Anup Seth, Chief Distribution Officer, Edelweiss Tokio Life Insurance said.

“However, online insurers may not offer the same level of customer support as advisors. This leaves questions or concerns about policy typically addressed via email or chat which is not suitable for all customer needs,” he added.

A recent survey by Local Circles, a consumer engagement platform, found that around 61 per cent of people who purchased an online insurance policy experienced a subscription trap in the last 9 months. The platform made it difficult for consumers to cancel their policy afterwards due to the widespread use of deceptive practices known as "dark patterns" by online insurance platforms. 

The survey talks about practices that are designed to manipulate and mislead consumers into making purchases that are based on false advertisements.

Common signs of fraudulent insurance websites or offers

From exceptionally higher returns to suspiciously flexible premium waivers, there are various tell-tales of a fraud insurance policy scheme.

“Consumers in India must remain vigilant against common online insurance policy traps. This included misleading policy details, hidden terms, automatic renewals, and inadequate coverage limits,” Sharad Bajaj, COO of Insurance Dekho - an insurtech company said.

Look out for warning signs: Fraudulent insurance websites often exhibit clear warning signs, including lack of security (no HTTPS), unprofessional design, absence of contact information, unrealistic offers, and missing licensing details. 

Policy Vigilance: ‘By being aware of these red flags and taking the time to thoroughly review policy documents, consumers can protect themselves from scams and ensure they are purchasing legitimate insurance coverage,’ Bajaj said.

Online vs Offline: Which Is Better?

Both online and offline methods of buying life insurance offer financial security. However, it is necessary to assess the pros and cons of each mode and make a sound decision according to your individual preferences and suitability.

Convenience: Buying insurance online is often very convenient and mostly effortless. If you are not rushing through, you can even take your time comparing multiple policies online that are similar yet offer varied benefits.

Customisation Per Your Need: “Unlike on-site policy purchases, online insurance policies might have limited customisation options, making it challenging to tailor the policy to your specific needs,” Seth said. Despite being generally safe, online purchases require careful attention to the features being selected to avoid misunderstandings.

Advisors For One-On-One: ‘For those who prefer a more personalised approach and policy customization, working with an advisor may be better,’ Seth said. Advisors help navigate policy complexities, provide customized options, and answer all questions.

Be mindful of these factors before you make the purchase:

Compare Before Purchase: The Internet provides you with a buffet of options. But it is also a place full of ‘dark patterns’. The insistent websites can shroud your judgment and pull you into a subscription trap. Therefore, one must compare at ease before making payment for any insurance policy.

“To compare online insurance policies effectively and avoid traps, consumers should read the full policy details, including coverage limits and exclusions,” Bajaj said.

Read Customer Reviews: You should use multiple comparison websites to get a broad view and verify information on the insurers' official websites. Also, don’t forget to read customer reviews.

Consulting independent insurance advisors can also provide valuable insights if you face too many confusing options. It’s better to be safe than to hurry while buying an insurance plan.

Are There Any Extra Charges? You should be mindful of renewal terms to avoid unexpected charges. Also, make sure that the insurer is not charging you for any option you didn’t give your consent for. Make sure to read policy documents to avoid this. And don’t hesitate to ask questions.

How should You report suspected fraudulent insurance activities?

If you suspect fraudulent insurance activities, promptly report your concerns to the insurance company’s fraud department or customer service. If needed, provide detailed information and any supporting evidence to your claim. 

‘Consumers should contact their local insurance regulatory authority or fraud bureau to file a formal complaint. Keeping records of all communications and reports is essential for any follow-up investigations,” Bajaj informed.

You should seek clarification from the insurer's customer support on any points that are unclear and consider consulting an independent insurance advisor for expert guidance. Moreover, using online resources such as glossaries and FAQs can also help in comprehending complex terms and conditions.

Protect Your Personal Financial Information!

“To protect their financial information when purchasing insurance online, consumers should use secure websites (look for "https" in the URL) and avoid public Wi-Fi for transactions,” Bajaj suggested.

Password Protect: You should create strong, unique passwords and enable two-factor authentication if available.

Regular Updates: Keep your devices updated with security software and regularly monitor your accounts for suspicious activity. This can help you keep your information safe under regular scrutiny.

Beware of the Button Method: If you receive a bill even though the website claimed that the product was free, you should check whether the provider observed the button method. Check if they informed you just before the end of the ordering process that payment was required and prompted you to click on a button to confirm your order. Mostly they leave a check mark that can compromise your data. Do not click all options, see what is necessary and what isn’t.

Remember!

You should make it a norm to seek clear and precise information about insurance products and their benefits. “Understand your risk tolerance while choosing products that are suitable for family needs,” Seth said emphasising on ensuring tailored insurance purchases.