In a welcome move to reduce the level of mis-selling in the life insurance industry, HDFC Life has started a new initiative called "Most Important Document" (MID). The MID is a one page document which contains questions on the key elements of the life insurance policy that the customer is signing up for. The customer is supposed to fill up the details here (which demonstrates understanding of the policy features) and sign a declaration acknowledging that he (s) has understood the product features in detail.
In theory, this is a very good move. The only problem that we see happening is that the agent will be filling it up in most cases and the customer will only sign at the end. Key features document of life insurance policies have always been there, but most customers never bother to read it and set themselves up to be mis-sold. Our opinion is that insurance buyers are mostly lazy and have a resistance towards understanding their policies as they feel it is complicated, and this is something which the insurance sales force has exploited through the years.
We hope that this initiative actually helps in reducing mis-selling, and does not end up being just a news item that earns the company brownie points from the regulator.
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