‘Rise in early exits from life policies points to misselling’

Life insurance policyholders are increasingly cashing out early, with surrenders now surpassing maturity payouts, according to the RBI’s Financial Stability Report. This trend, particularly driven by private insurers, signals potential policyholder dissatisfaction and mis-selling concerns. Soaring distribution costs are further exacerbating the risk of agents pushing unsuitable products to meet acquisition targets. Regulators are now exploring reforms to ensure better product suitability and benefit illustrations for consumers.