IRDAI has imposed a Rs 1 crore penalty on Canara HSBC Life Insurance for mis-selling a non-linked, non-participating deferred annuity plan to an 88-year-old through Canara Bank. The product's approved entry age was 30 to 80. The buyer was 88. The policy carried a premium of Rs 2 lakh a year for four years, a total commitment of Rs 8 lakh, and the regulator found the annual premium equalled about 20% of the customer's self-declared annual income of Rs 10 lakh, according to reporting by Outlook Money and Livemint.

What exactly went wrong

  • Eligibility: the plan's entry age ended at 80; the buyer was 88, with the daughter shown as the annuitant.
  • Suitability and affordability: no proper financial assessment, and no documentary proof of the customer's capacity before the bank completed the sale.
  • Verification: the tele-verification call did not establish that the customer understood who would receive the annuity or the premium obligations.
  • Documentation: inconsistencies in the proposal form, including a mismatch in geographical details.

What IRDAI directed beyond the fine

The order is not only a penalty. IRDAI directed Canara HSBC Life to audit every policy sold to customers above 75 through Canara Bank over the last three financial years, identify eligibility, suitability and disclosure violations, and strengthen oversight of corporate agents and proposal-form controls.

Why this matters to you

A signature and a payment do not make a sale appropriate; the insurer and its bank partner must show the product suited you. Senior citizens are now the explicit focus of enforcement: the retrospective audit of sales above age 75 is a template other insurers will be measured against. If an elderly parent or relative was sold an annuity or a high-premium product through a bank branch, the product's approved age band and the premium-to-income ratio are the first two things to check.

What to do

  • Ask the insurer, in writing, for the product's approved entry age and the free-look status of the policy.
  • If the buyer was outside the approved age band, or the premium clearly exceeded affordability, raise it as mis-selling.
  • Use the insurer's Grievance Redressal Officer first, then bimabharosa.irdai.gov.in, then the Insurance Ombudsman. Keep every ticket number.
  • If a bank sold the product, tell the bank's corporate-agent desk in writing as well; the audit obligation runs through the corporate agent.

Watch next

Whether IRDAI converts the Canara Bank audit into a broader standard for bank-led sales to senior citizens, and whether other insurers face similar orders in the coming quarter.