According to Associate Professor of the Department of Public and Municipal Finance of the Plekhanov Russian University of Economics Meri Valishvili, this is another step of Bank of Russia to protect the rights of consumers of financial services and prevent misspelling, unfair sales of complex and risky financial products.
The new rules stipulate that life insurance contracts can only be concluded with qualified investors, that is, individuals with the necessary knowledge and experience to make investment decisions. Unqualified investors will be able to conclude a life insurance agreement only after passing a special test that will confirm their ability to assess risks and make informed decisions. Exceptions to this rule are possible only in a limited number of cases, which will be clearly spelled out in the legislation.
According to Valishvili, life insurance often becomes a tool for misselling - unfair sales by banks. Instead of standard and safe financial instruments, such as deposits, clients are offered riskier and more complex products, such as investment life insurance (ILI). Bank employees do not always thoroughly and clearly explain all the risks associated with such products to clients.
As a result, clients who do not have a sufficient level of financial literacy may purchase a financial product that does not meet their needs and capabilities. They may not receive the expected income, or in some cases even lose part of their savings.
Photo courtesy of public sources