Buying an insurance policy – harder than it seems!

This is the story of an online term insurance plan. For those of you who don’t know, a term insurance plan is one where you pay premium every year and get paid a lump sum in case of your death (you don’t get anything back if you don’t die, so this is not a saving policy unlike most other life insurance policies). So these are much cheaper than regular life insurance. When these are bought online, you save the cost of a broker/insurance agent in between and the companies pass on the saving to you, so these policies are still cheaper. For someone like me who has drastically reduced cash inflow in the hope of a future cash flow, a term insurance plan is an important guard against the vagaries of life during this interim period.

A few months after I arrived in India last year, I applied for an HDFC Life Term Insurance plan, click2protect. I told them upfront that since I have come back from US recently, I will not have any income proof in India except a running bank account. The call center agent who discussed this with me and helped me fill out the form assured me that this proof will suffice, and proceeded to charge the first year’s premium with the promise that policy will be issued soon. This small act of trust on an agent’s words became a curse. After 2-3 weeks and a medical test, they (actually their automated systems who didn’t understand any response) started pestering me with demand of ‘income proof for last 3 years’. When I asked them to cancel my policy request and refund my money, that went in some other tangent with no results. After 4 months, ~30 emails, ~50 phone calls, and ~20 repeats of same information again and again to different people in written and verbal form, I finally got my money back, thoroughly frustrated with the way a well-known brand like HDFC Life behaved with me.

So I waited for a year to get at least 1 year’s IT return. Couple of months back, when I received my acknowledgement from IT department, I applied for Aviva’s online term life insurance plan. I filled up online form partly, and a call center agent promptly called up and offered to fill up the form for me. I mentioned my HDFC Life experience to her and asked her if 1 year statement will suffice. She assured me it will, so I agreed to get my form completed, and was charged 1 year premium. They scheduled a health check, which didn’t happen and wasted my time because the hospital didn’t know I had an appointment at that time! So they scheduled again, did part of it at my home, and this was finally completed.

And the inevitable happened again! The lady who was talking to me till now disappeared and automated systems – phone calls, emails and SMSes – started pestering me with the demand of 2 years IT return, and no one was willing to listen that I don’t have these documents. Someone did listen eventually and responded with a note saying that even though I had asked for 1.5CR cover, I will be offered 50Lac cover. They didn’t say it, but I assumed this was because I didn’t give them proof for the years before last.

This was too little coverage for me, so I asked them to cancel this policy request and refund the money (by now I was quite good at this!). Then the nasty surprise: I was told that they will refund, but will deduct the money for the cost of medical checkup! They kept quoting a phrase from their T&C (terms and conditions) which talked something about ‘change in the premium amount is not a ground for asking policy cancellation’. I kept saying this is a change in coverage amount and their terms and conditions doesn’t talk about this, but they refused to listen, and also refused to get someone to give me a satisfactory answer to why they can’t issue me a 1.5CR policy, or refund my entire money.

So after 2 months and a few emails and phone calls (much less than HDFCLife experience), I was back to the original state: no policy. Additionally, I was down by about Rs. 3000/- L

A few questions arise:

  1. Why do they need income proof anyway? They claimed it is govt. regulation. When I think logicially, it doesn’t make sense – they can take away the cover when I can’t pay my premium, so I wonder what good is income proof. They did mention that typically they give cover equivalent to about 15 times your annual salary, which again is strange – is that the price of a life? They refused to consider proof of income from US, I wonder why if all they need to do is figure out my life’s worth.
  2. Why are their systems so rigid that they can’t handle even a slight deviation like my case? To be fair, Aviva was much better overall in terms of turnaround time, HDFCLife experience was a horrible and totally unresponsive one.
  3. How come they can get away with their sales agents claiming it is possible to issue a policy with a certain set of document, only to get their back end system reject the claim, that too with so much of drama and waste of time? How come they don’t get sued/penalized more often?

I had told them I would go to consumer forum if they deducted it, but they didn’t care. So now I am getting ready to do so, it should be another interesting experience, worth writing about.

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