Families Trapped by Insurance Mis-Selling

For decades, India has struggled silently with a widespread financial scandal: insurance mis-selling. Though regulators were aware of the problem, meaningful action remained absent, leaving countless families to bear the consequences.

The issue only becomes tangible when it strikes someone’s household, disrupting their sense of financial security. For Mira Das (name changed), a retired government employee in her sixties, the reality arrived unexpectedly.

On a humid afternoon in Thakurpukur, South Kolkata, Mira recounted how she and her husband were mis-sold two bundled insurance policies, locking away ₹12 lakh of their life savings in products they neither understood nor intended to purchase.

“It started in January 2023,” Mira recalled. “I had just retired after nearly forty years of government service. My husband and I were cautious, hoping for a calm retirement.”

Her husband initially approached their local branch of the State Bank of India (SBI) to seek guidance on investing their retirement benefits. Mira, unwell at the time, could not accompany him. The assistant branch manager subsequently visited their home, explaining the policies. “I honestly did not understand anything clearly,” Mira admitted. “We simply trusted whatever he said.”

The couple assumed the products were as safe as fixed deposits. Her husband hesitated with the second policy, but the manager reassured them that his pension could easily cover the instalments.

Industry insiders say such trust can become perilous. A senior private-sector banker, speaking anonymously, noted: “Once a relationship develops with a customer, they stop reading documents. If I’ve been your RM for two or three years, you trust me. Whatever I say, you accept it.”

The financial repercussions can be devastating. Families are often tied into long-term policies with complex clauses, penalties for early withdrawal, and opaque investment structures. A survey of affected households across Kolkata, Mumbai, and Delhi reveals the scale:

Experts argue that persistent regulatory inertia allowed such mis-selling to flourish, with routine audits and consumer complaints often ignored. For families like Mira’s, the experience is more than a financial loss—it erodes trust in institutions they once relied upon.

Without robust enforcement and transparent customer education, the silent crisis of insurance mis-selling in India will continue to trap retirees and ordinary families in financial limbo, often when they are least equipped to recover.