I approached my bank to invest in a fixed deposit after being promised attractive returns and a regular annual income. However, I later discovered that I had actually been sold a life insurance policy with a large premium commitment. I immediately requested cancellation but was repeatedly assured that the matter would be resolved, yet no action was taken. I was never informed that I was purchasing insurance, and I have recordings of conversations that support my claim. What options do I have?
Name withheld on request
Cases where insurance products are sold under the guise of fixed deposits or investment schemes constitute one of the most common forms of mis-selling. Insurance and fixed deposits are entirely different financial products, and a customer must always be informed about the nature of the product being purchased, its benefits, risks, premium commitments and surrender conditions. If an insurance policy has been issued without informed consent or through misrepresentation, the policyholder has the right to challenge the transaction.
The first step is to collect and preserve all available evidence. This may include policy documents, written communication with the bank or insurer, application forms, premium receipts and any call recordings or messages that demonstrate the promises made during the sale process. Such evidence becomes extremely valuable in establishing that the policy was sold on false representations.
Per RBI’s 15 June circular, customer consent alone is not enough; lenders must demonstrate the product was sold to meet an actual need.
The policyholder should then submit a detailed complaint to the insurer’s grievance redressal mechanism, clearly stating that the intention was to invest in a fixed deposit, not to purchase an insurance policy. The complaint should highlight the discrepancy between the promises made during the sale and the actual terms contained in the policy documents. If there were procedural lapses, such as absence of verification calls, incorrect declarations, or failure to assess affordability and suitability, these should also be brought to the record.
If the insurer fails to provide satisfactory relief, the matter can be escalated to the insurance ombudsman or banking ombudsman. The ombudsman examines whether the customer had given informed consent and whether the insurer can demonstrate that the product was sold transparently and in accordance with regulatory requirements.
Courts and ombudsman authorities have consistently held that insurance contracts must be based on informed consent. If the evidence shows that a policyholder was induced to buy insurance while believing it was a fixed deposit or another investment product, the sale itself may be treated as defective. In appropriate cases, the ombudsman can direct cancellation of the policy and refund of the amount, thereby providing relief to the aggrieved customer.
Policyholders should remember that insurance products cannot be forced upon customers through misleading promises. Transparency, suitability and informed consent are fundamental principles governing insurance sales, and any violation of these principles can be challenged through the available grievance mechanisms.