Mis-selling of financial products is rampant in India. The single biggest mis-sold product is life insurance. People get ripped off by bank relationship managers (RMs), and by insurance agents. The Insurance Regulatory and Development Authority of India (IRDAI) has for long been a spectator. But last month it released a consultation paper proposing some sectoral reforms. We will discuss the IRDAI proposals in this episode.
But before that, three datapoints that exemplify the sheer scale of insurance mis-selling. One, commissions can consume up to 80% of your first year premium on some policies. Two, from 2022-23 to 2024-25, insurance premiums grew by only 28%, but commissions grew by 125%! Three, just 48%, or less than half of all new policies survive into the sixth year — what the industry calls ‘persistency rate’. A persistency rate of 48% means, more than half the time, when people buy a life insurance policy, they surrender it within five years, after having paid one or more premiums — this is personal wealth destruction on a massive scale.
Why is this happening, and will IRDAI’s proposed reforms make a difference? All this and more in the second episode of Pocket Money, with business columnist and author Vivek Kaul.
Host: G Sampath
Producer and editor: Jude Weston
Do mail your personal finance queries and dilemmas to: pocketmoney@thehindu.co.in.
Published – October 23, 2026 04:45 pm IST
