Mis-Selling: Warning Signs to Watch For

Good advice starts from your needs; a sales push starts from the product. (How to tell them apart.)

Buying insurance usually means dealing with someone paid, at least in part, to sell it. That is not sinister — most advisers do right by their clients — but it pays to recognise the handful of tactics that signal a sale being run for the wrong reasons.

Watch for pressure to decide today, before you have had time to think or compare — genuine needs rarely expire overnight. Be wary of promises of high "guaranteed" returns, which protection products cannot reliably deliver. Be cautious if the adviser pushes you to switch or replace a policy you already hold, since each replacement can reset charges and earn fresh commission — the problem is the push to switch, not switching in itself. Notice if you cannot get a clear, plain answer about fees, charges and what you would get back if you stopped (the surrender value). Two newer tactics are worth naming: selling on the latest trend or hot product, and playing on your fear of missing out or of regretting it later. Against any of these, ask one grounding question: how does this compare with simply buying term insurance and investing the rest in low-cost funds? An adviser unwilling to make that comparison is telling you something.

The deepest red flag is advice that never really asks about you — your dependants, your debts, your existing cover — but moves quickly to a specific product. Sound advice works in the order this pillar has stressed: name the risk, size the need, then choose a product. A pitch that starts with the product has the order backwards.

If you notice these signs, slow down. Ask for everything in writing, take it away to compare, and remember that you can always say you need time. The right product will still be there tomorrow.

Illustrative example: six warning signs

The checklist gathers the warning signs — pressure to sign, "guaranteed" returns, being pushed to replace a policy, vagueness on fees and surrender value, your needs ignored, unwanted bundling, chasing the latest trend, playing on regret, and a refusal to compare with buying term and investing the rest. Spotting even one is reason to pause before you commit.