By Sai Mani Kumar – Based on Real-Life Observations and Ground Research
Over the past few years, while interacting with hundreds of families and individuals across rural and urban areas, I’ve come across a shocking pattern: Insurance is one of the most misused and misunderstood financial products in India.
While the right insurance can protect your family and secure your future, the wrong one can drain your savings and leave you with nothing in return. Unfortunately, many insurance agents are not just untrained they’re trained to cheat.
1. Targeting the Vulnerable
Insurance agents are often trained to target less-educated, low-income individuals, especially those in rural areas. They create a sense of urgency and temptation “If you don’t act now, you’ll miss out” to push policies that the person doesn’t even need or fully understand.
These agents know that the customer likely won’t be able to continue paying premiums after the first year. But that doesn’t matter to them. Why? Because:
The company and the agent already got their first-year commission
They won’t remind you when the second premium is due
You forget or can’t afford it, the policy lapses
Two years later, when you realize and try to continue, the agent says, “It’s expired, you’ll have to take a new one”
Now that you’re older, the premium is higher, and the agent gets new commission again
This cycle repeats and it’s pure exploitation.
2. Misleading Health Insurance
Health insurance is another space where mis-selling is rampant. Agents show policies with cheap premiums, but they don’t tell you the full truth:
There’s a co-payment clause (you pay part of the bill)
Many common diseases aren’t covered for the first few years
You’re admitted, and then discover that room rent limits or exclusions apply
Or worse, they try to show a healthy person as unhealthy just to sell a new plan with higher premiums
I’ve personally heard of cases where agents falsely declared health issues just to get more commission by issuing a fresh policy. The customer had no idea until later.
3. Fake Titles, No Knowledge
Many people today introduce themselves as “financial planners” or “risk consultants”, but when you dig deeper, they haven’t even completed basic graduation. They’re neither certified nor trained to advise on money matters, yet they’re selling financial products to vulnerable families.
This has now become more like a network marketing business than a professional advisory field. Targets are set. Bonuses are rewarded. More focus is given to closing sales than protecting lives.
4. Wrong Policies, Wrong Cover, Wrong Advice
A common trend is pushing money-back policies that don’t even beat inflation, or suggesting low-term cover that isn’t enough for the family. People end up buying what sounds good not what is actually good for them.
Some policies are promoted only because they give agents more commission, not because they’re the best option for the customer.
5. Insurance Has Become the New Network Marketing
Insurance selling today looks less like professional financial advisory and more like network marketing.
New agents are onboarded with motivational speeches, targets, and incentives, not proper training or client-first ethics. There’s constant pressure to “close the sale” and “earn rewards”, whether or not the client needs the product.
Every agent is made to bring in more agents under them
Focus is more on commission chains than customer benefit
Even if the client doesn’t benefit, the agent and upline earn their cut
It’s no longer about protecting lives it’s about recruiting, selling, and hitting numbers. This is a major reason why mis-selling has become so common.
6. Agents Never Talk About Inflation — But It Destroys Your Returns
Let’s say you’re promised ₹1 Crore on maturity after 30–40 years. Sounds like a dream?
But what is ₹1 Crore worth after inflation?
Example 1: 30 Years Later at 6% Inflation
₹1 Crore today will feel like just ₹17.4 Lakhs
Example 2: 40 Years Later at 6% Inflation
₹1 Crore today will feel like only ₹10.28 Lakhs
So the dream of “buying a luxury car” or “building a house” with that money vanishes. This is one of the biggest deceptions in traditional policies — no one explains the real value of money over time.
Insurance should protect your future but for many, it’s becoming a burden due to mis-selling, misguidance, and network-style commission models.
Let’s change that by staying aware, asking the right questions, and choosing protection over persuasion.
Sai Mani Kumar
Founder | SMK Financial Solutions
Empowering you to make smart financial decisions