In a bid to ensure that advertisements by insurance companies are not misleading, industry regulator IRDAI (the Insurance Regulatory and Development Authority of India) has issued a circular titled ‘Insurance Advertisements’, whereby it has released some do’s and don’ts for insurance companies to comply with.
IRDAI has asked insurers to make certain that advertisements of insurance products do not convey a fabricated sense of security to attract customers, and are, hence, clear and not misleading.
The notification said, whatever be the mode of communication, all insurance advertisements should ensure that communications are clear, fair and not misleading for the customer.
To present the information legibly and in an accessible manner, IRDAI said insurers should use material and design, including paper size, color, font type, and font size, tone and volume. To curb misleading ads, IRDAI added that the mandatory disclosures should also be in the same language as the language used in the whole advertisement. The circular also said the names of insurance products or benefits should not be used in terms or phrases that convey a fabricated sense of security.
Similarly, in the case of communications through the internet, insurers have to ensure that the recipients of the message or the viewers get the opportunity to see the full text of the relevant key features. This includes terms and conditions, relevant key features or any other applicable risk information, that a customer should be aware of, and should not be hidden away in the body of the text.
The regulator also said it may be difficult for many to understand and evaluate the in-depth details of various insurance products. Hence, it is of utmost importance that insurance companies make the publicity material relevant, fair and in simple language. This will enable informed decision making on part of the policyholder about whether or not to buy a specific insurance product.
If you are opting for a new policy, here are some tips to consider before buying a policy;
- Buy insurance for things that you actually need and that helps you maintain your existing standard of living. Don’t opt for insurance policies that will severely strain your finances. Start with the basics such as health, life, car, and then you can always add coverage later.
- Know from your insurance provider what the policy doesn't cover. It is better to know about exclusions in advance than discovering them after the damage has been done.
- Bundle several policies with one insurance provider. This way you can find more value in bundling several policies with one insurance provider, who offers multiple products.
- Review your insurance needs on a yearly basis, as the need for insurance evolves, with time. For instance, you may have new risk exposures, for which you need to get cover for.
- Try to minimize risk and prevent loss. It is suggested that to minimize risk, avoid making small claims, which will help you stay protected for a longer period of time.