Insurance company’s misleading messages

The annual premium on one of my life insurance policies is due on June 11, 2014. Since premium is paid annually, there is a grace period of 30 days, which means I can pay the premium on or before July 10, 2014 without any penalty of any sort.

On May 21, 2014, the company sent me a Premium Payment Reminder by email, stating:
Your next premium of Rs. 12000.00 for Insurance Policy no. 1234567 is due on 11/06/2014. Experience the benefits of paying online on our website.

It’s easy, effortless and you get an instant acknowledgement for your payment!

What’s more, while paying online you can set up standing instructions on your credit card to debit your future premiums on the due date.

How will this help you?
• You save time – no need for travelling to our branch or keeping track of due dates
Avoid late charges
Enjoy uninterrupted policy benefits
Setting up standing instructions is absolutely free of cost and does not require any documentation

Today, June 04, 2014, the company sent me an SMS stating:
Premium of Rs. 12000.00 for our Company policy no. 1234567 is due on 11/06/2014. Do not wait until last moment! You can pay now to continue to enjoy policy benefits. For cheque pick up, SMS PICKUP 1234567 to this number. Ignore if paid.

Both the Premium Payment Reminder and the SMS should have explicitly mentioned the Grace Period of 30 days. They did not do this. Instead, they give the impression that 11.06.2014 is the last date for paying the premium to avoid late charges and to enjoy uninterrupted policy benefits.

In my opinion, these communications have been cleverly worded to mislead me into believing that the last date for paying the premium is 30 days earlier than the actual last date. Assuming my Savings Account pays interest @ 4% per annum, interest for 30 days on Rs. 12,000.00 is Rs. 40.00. If the company collects total premium of about Rs. 24,000 crores per year, and if 50% of their policy holders pay premium 30 days earlier because of these misleading communications, the company stands to gain Rs. 40 crores. (The actual cost of finance for the insurance company is much more than 4% per annum.)

More importantly, the words “enjoy uninterrupted policy benefits” and “pay now to continue to enjoy policy benefits” give the impression that the policy will lapse if premium is not paid by June 11, 2014. This could cause tremendous stress to the policy-holder receiving the SMS on June 4, 2014.

Last year, for another policy with the same company, I had received over a dozen similar reminders by email, SMS and phone call till the day I paid the premium. I had complained about this in an email to the company’s Customer Care Department, but all I got in reply was an email stating, “This is with reference to your concern pertaining to the policy number 01234567.
We apologies for the inconvenience caused due to SMS recive to you, we hereby inform you that your premium payment for an amoun of Rs.10000/- has been received by us on D/M/2013 and the same has been applied towards your policy.” (I have reproduced the email as I received it, without any editing.) I realized that the Customer Care Department had chosen to ignore the fact that I was complaining about the distress caused to me.

This time, I intend keeping a record of every email, SMS and phone call received till the day I pay the premium. Then, I will take up this matter with the insurance company, not with the Customer Care Department, but at the senior management level. I want to insist that any Premium Payment Reminder, whether by email, SMS, phone call, letter or any other method should necessarily mention the Grace Period explicitly.

Before doing so, I want to know:
1. Do you think this matter should be taken up with the insurance company? Or is it too trivial a matter?
2. Is there any point that I have missed out?
3. Is there any better way of getting this matter resolved?

I would like to get as many opinions as possible. Hence, please reply to these questions. Further, if you think this matter is really important, please circulate this post by reblogging or by sharing on Facebook and/or Twitter and/or other social media with a request to reply to my questions.

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12 thoughts on “Insurance company’s misleading messages

  1. This is gross mis-selling by the insurance company. Suggest you file an on-line complaint with the Insurance Ombudsman.You don’t even have to visit. Just fill in the complaint on-line attach proof/evidence. The Company will be taken to task.
    To avoid hassles suggest you issue instructions for ECS debit of the premium, whereby the premium will be debited on or before the grace period.

    In case of difficulty, approach MoneyLife Insurance Help Line, cc to me.

  2. This is how they bluff the lay man into early payments. For your information even Vodafone does the exact same. Mails, SMS & ph. calls to let you know the bill has to be paid. I’ve discussed this matter with their junior level staff & they just laugh it off saying these are from call centers & not Vodafone directly. On top of all that they inform me every time that my credit limit is Rs.10,000:00.Now I just ignore and pay whenever I get the time. You have every right to take the matter further.

  3. You have every right to take the matter further.
    File a complaint and see what happens. It would work out better if you know someone in the Insurance business.. A friend or lawyer you trust to help you with it.

    All the best!

    • Thank you, Pixie. I will take up the matter with the insurance company. If they do not respond satisfactorily within 30 days, I will complain to the Insurance Ombudsman. Nagesh Kini, who has commented first on this post, has assured to help me if needed.

  4. I wasn’t aware about the grace period in case of my premiums. My agent did not tell me explicitly. It is when she wanted me to take another policy and I refused saying how I do not have extra money, she then told me that 30 days grace period is there so I can pay the due premium 30 days later and can start a new policy now…
    So yes, the companies and agents send out such misleading information.

    As for your questions:
    1. Most people would not even realize that they are being misled. Now when you have explained so clearly, the matter doesn’t seem trivial to me.
    2. I do not think you have missed out any point.
    3. I think you tried the first option to get it resolved by complaining to the customer care executive. Since it did not work out you have the right to take it forward and the steps that you decided upon seems appropriate..

  5. Wait a minute…. So when the insurance company sends you these SMSes and Email alerts, they are actually lying to us (or hiding or mis-communicating) about the last day?
    Wow!!! And here we are, stressing out to ‘pay on time’.

  6. I am happy to read this, since i have been receiving reminders two months in advance for the bike which I purchased last year. I refused to bother myself, because I know that there is one month grace period and there is no need to hurry. You have done the right thing, I will say go ahead and complain.

  7. Pro, you must take it up with company and share with us what you hear in response. This is really awful, now that I understand how this all works! Will be sharing this post with my husband too who anyway has his own sagas about dealing with a particular insurance company for his vehicle policy. Thanks for making us aware of how this game is played!

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