Per Sh. RakeshKapoor, President
The complainant had taken an insurance policy from the OP which was valid for a period of 20 years. The premium amount of Rs. 3000/- each was payable half yearly. It is alleged by the complainant that she had paid the premium of the policy for a period of four years but due to some unavoidable circumstances she could not pay the premium of two
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half yearly installments. She ,however,received a cheque for Rs. 9000/- from the OP which was encashed by her as she was not aware of the reason for the receipt of the said cheque and thought that it was on account of bonus. Later on, it was revealed to her that the policy had been closed. She was advised to return the cheque for a sum of Rs. 9000/- and furtherto pay a sum of Rs. 6000/- for the revival of the policy. Accordingly, she had issued twocheques,onefor Rs. 9000/- and the other for Rs. 6000/- which was dulyencashed by the Ops. However, she received a telephonic message from the OP informing her that the policy cannot be revived. She was asked to receive back the cheque for Rs. 6000/-. The complainant has alleged deficiency in service and has, therefore, approached this forum with the present complaint.
The complaint has been contested by the OP who has filed a written statement. It has denied any deficiency in service and has claimed that the complaint is false and frivolous and is liable to be dismissed.
Para 3 of the preliminary submissions of the written statement is reproduced as under:
3.the facts stated below substantiates the fact that the said grievance of the complainant is ill founded and frivolous:
1) That the complainant had applied for issuance of insurance policy namely Aviva Easy Life Plus Unit Linked Policy as o as to provideinsurance cover as well as investment plan by submitting a proposal form no. NNU13776271 dated 16.12.2008.
At the time of filing of the proposal form, the sales representative / insurance agent
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of the OP had explained all the features of the policy to the complainant and also provided “ Key feature Document” explaining the features and the terms of the policy. That after going through the documents and being satisfied with all the features and terms of the policy, the complainant had entered into the contract of insurance with the OP. It is submitted that the complainant in the proposal form dated 16.12.2008 under the head “ Declaration& Authorization”, has confirmed therein that she has been explained and she has understood all the details of the policy. Therefore, it is crystal clear that the complainant was aware and had accepted each and every term of the policy including , the premium payment terms and at this stage cannot claim ignorance of the terms of the agreement between the parties.
c) It is submitted that complainant was issued an Aviva Easy Life Plus Unit Linked Policy No. AEL2273651 commencing on 23.12.2008 with a sum assured as Rs 60,000/- for a premium payment term of 20 years; and last premium was to be paid on 23.6.2028. the policy documents which are approved by IRDA were dispatched through Overnite Courier with AWB no. #500323656 on
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24.12.2008 and delivered on 26.12.2008. It is pertinent to state herein that a copy of the proposal form and the policy schedule has been filed by the complainant along with the complaint. A copy of the POD and proposal form is annexed herewith as Annexure R-3 (colly).
d) At the time issuance of the policy, the complainant was provided with the policy documents including the policy schedule, first premium receipt , standard terms and conditions, copy of the proposal form and the right to reconsider notice. That according to right to reconsider notice the policy holder can cancel the policy within fifteen days from the date of receipt of the policy documents (‘Freelook Period’) if he/she disagrees with any of the terms and condition of the policy. In case of cancellation within free look period the policy holder is entitled to refund of the premium amount subject to nominal deductions. However, the complainant did not opt to cancel the said policy but continued the same. It is stated that no objection was received from the complainant during the Free Look Period; therefore the terms of the policy are strictly binding upon the complainant. The copy of policy documents including key feature document, standard terms and conditions and the right to reconsider notice are annexed herewith as
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Annexure R2 which is already annexed by the complainant in its complaint.
e) It is submitted that the terms relating to the regular payment of the premium and consequences in case of non-payment of the premiums are clearly mentioned in the Standard Terms and conditions appended to the policy documents and the policy holder is bound by the Standard Terms and conditions. It is stated that the regular payment of premium is the sole responsibility of the policy holder (i.e. the complainant). It is pertinent to submit herein that a policy gets lapsed when premium payment is not received within certain timeframe and grace period also expires (as per the terms and conditions of the policy). In such an event, risk cover along with rider benefit ceases.
f) It is stated that the terms relating to regular payment of the premium as per policy terms despite premium reminder notices send by the OP and duly received by the complainant. It is further submitted that the complainant is fully aware of the fact that the aforesaid insurance policy is governed by the terms and conditions contained therein. It is stated that as per the terms of the policy the customer is obliged to pay the premium amount due on or
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before the due date and in case he/ she fails to do so then the policy lapses as per the terms and conditions of the policy. The OP had regularly informed the complainant about the status as well as the due dates of the payment of premium. However, the complainant failed to pay the premium amount on the due dates towards the aforesaid policy despite Premium Reminder Notices/ Telephonic reminders sent by the answering respondent and duly received by the complainant.
g) it is further submitted that as per the Article 2 of the Standard Terms and conditions of the insurance contract/ policy if the policy holder has paid regular premium due for the first three consecutive policy years, but has thereafter at any time failed to pay the regular premium due from its due date within the grace period specified in Article 2.c (i), the policy shall remain in force for the full risk cover for 2 consecutive years from the due date of the first unpaid regular premium, during which period (i.e. reinstatement period), the policy may be reinstated surrendered. Thereafter, it is stated that due to non-payment of the premium of the aforesaid policy went into early lapse mode.
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Thereafter as per the terms and conditions of the said policy , a reinstatement period i.e. 2 years was available however the deductions in the said policy were continued to be deducted as insurance coverage was available with the policy holder. It is submitted that thereafter, due to extremely negligent conduct of the complainant the policy status further changed to auto foreclosure on 24.1.2012 as the complainant did not chose to reinstate or surrender the policy and therefore policy and all available benefits were terminated and the policy was auto foreclose on 24.1.2012 as the complainant did not choose to reinstate or surrender the policy and therefore policy and all available benefits were terminated and the policy was auto foreclosed on 24.1.2012 and consequently a refund cheque for an amount of Rs. 6000/- after calculating, the refund amount as per the terms of the insurance contract/ policy was sent to the complainant along with letter dated 27.1.2012 on 31.1.2012 vide Blue Dart Courier with AWB no. #43852350931 and delivered on 1.2.2012, and the same has admittedly been received by the complainant. It is pertinent to state herein that Refund Cheque received by the complainant has been encashed by the complainant. It is pertinent to note that on acceptance and encashment of the auto foreclosure cheque
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amounts to full and final payment against the said policy and nothing is due and liable from the OP by the complainant hence the said complaint is liable to be dismissed on this ground alone. It is also pertinent to submit that in the case a policy is auto-foreclosed as per terms of the policy of the refundable amount is calculated in accordance with Article 5 (b) of the policy. However on 27.3.2012 , reinstatement request was received from the complainant and the complainant had deposited the outstanding premium of Rs. 9000/- to the OP. On receiving the request, the OP had requested the complainant to provide the auto foreclosure amount which was sent earlier by the insurance company and had been encashed by the complainant but the complainant had not provided the same and thereby the request for reinstatement period was eventually declined by the company on non receipt of the said amount and refunded the reinstatement period was eventually declined by the company request amount paid by the complainant on 6.6.2012 vide blue dart courier AWB#43904931932 dispatched to the mailing address of the complainant.
h) That apparently the OP has acted within the terms and conditions of the policy and has not committed any act that would amount
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todeficiency in service and / or unfair trade practice, therefore, present complaint being frivolous is liable to be dismissed with exemplary costs.
The OP has claimed that it was justified in returning the surrendered value of the policy in question and refusing to revive the policy. It has justified its action of closing the policy and has referred to the terms and conditions under which it had acted . It has claimed that the complaint is false and has no merits and is liable to be dismissed. It has prayed accordingly.
We have heard arguments advanced at the bar and have perused the record.
On behalf of the OP an affidavit has been filed by Sh. Watan Kumar Bhajanka , its constituted attorney. Sh. Watan Kumar Bhajanka in his affidavit has corroborated the defence of the OP and has asserted that the OP had acted in accordance with the terms and conditions of the policy. Para 9 of his affidavit reads as under:-
9. I state that as per the Article 2 of the standard terms and conditions of the insurance contract/ policy if the policy holder has paid regular premium due for the first three consecutive policy years, but has thereafter at any time failed to pay the regular premium due from its due date within the grace period specified in Article 2.c I, the policy shall remain in force for the full
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risk cover for 2 consecutive years from the due date of the first unpaid regular premium, during which period (i.e. reistatement period),the policy may be reinstated / surrendered. I state that due to non-payment of the premium the aforesaid policy went into Early Lapse mode. Thereafter, I state that as per the terms and conditions of the said policy, a reinstatement period i.e. 2 years was available, however, the deductions in the said policy were continued to be deducted as insurance coverage was available with the policy holder, I state that admittedly the Policy holder failed to pay the renewal premium and therefore the lapsed on account of non receipt of policy premiums. Further I state that the policy holder did not deposit the premium even during the ‘grace period’ and due to further non receipt of renewal premium, on 24.1.2012 the status of the aforesaid policy changed to “Auto Foreclosure”. I state that accordingly, the policy get terminated and an “Auto Fore Closure Value” amount of Rs. 6,000/- being the first year premium as per terms of the insurance contract/ policy was due to the complainant. I state that after completing necessary formalities Auto –Fore Closure Value amount of Rs. 6000/- was sent to the complainant along with letter dated 27.1.2012 vide blue Dart Courier airway bill #43852350931, and delivered on 01.2.2012, and the same has admittedly been received by the
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complainant. It is pertinent to state herein that Refund Cheque received by the complainant has been encashed by the complainant. I state that acceptance and encashment of the auto foreclosure charges amounts to full and final payment against the said policy and nothing is due and liable from the OP by the complainant hence the said complaint is liable to be dismissed on this ground alone. I state that the averment of the complainant that she was not aware rather she was expecting that the said cheque is for the amount of Bonus is a rather far-fetched and frivolous story hence strongly denied. I stated that on 27.3.2012 a reinstatement request was received from the complainant and complainant had deposited the outstanding premium of Rs. 9000/- to the OP. I state that the answering respondent being considerate towards the welfare of its customers, informed the complainant that taking due cognizance of the complainant’s request and as a gesture of goodwill, had decided to reinstate the complainant’s policy and further requested the complainant to submit certain documents including a written consent letter, the surrender refund cheque, outstanding premium amount and the declaration of good Health form at the nearest branch office of the answering
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respondent company. The complainant was informed that post completion of above formalities, the answering respondent company would immediately proceed further with the reinstatement of the policy. I state that the reinstatement premium amount cheque furnished by the complainant bounced and further that the surrender refund cheque has been encashed by the complainant. Therefore, I state that the request for reinstatement was eventually declined by the company. I state that the OP refunded the reinstatement request amount paid by the complainant on 6.6.2012 vide Blue Dart Courier AWB # 43904931932 dispatched to the mailing address of the complainant. I state that the OP is thus discharged from all its liability towards the above mentioned policy. I deny that the cheque for Rs. 6000/- was deposited in the branch office of the OP and encashed by the answering respondent from the complainant’s account as alleged. Complainant is put to strict proof of the same. I state that the complainant is deliberately trying to mislead this Hon’ble Forum so as to obtain favorable orders. I state that in the case a policy is auto –foreclosed as per terms of the policy the refundable amount is calculated in accordance with Article 5 (b) of the policy. The relevant clause 5 (b) is reproduced herewith as follows.
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Surrender Value & Auto foreclosure:
a)After the completion of the first three Policy Years, the Policy may be surrendered by the Policyholder and a Surrender Value shall be payable provided the Regular Premium due for more than one Policy Year has been received by us. The surrender value will be equal to the value of units pertaining to Regular Premium less the surrender charge on units pertaining to Regular Premium as mentioned in the schedule plus the value of units pertaining to top up premium and additional regular premium, if any.
b)If after the policyholder has paid regular premium for atleast 3 policy years, the surrender value of units pertaining to regular premium becomes equivalent to the regular premium paid in the first policy year, then the policy shall automatically terminate and we shall send the policyholder a notice of termination and pay the surrender value calculated in accordance with Article 5(a).
We have perused the terms and conditions of the policy as referred to by the OP and we are in agreement that the policy purchased by the complainant had gone into auto foreclosure mode. We further agreed that the complainant was entitled to the surrender value and the policy could not be revived. The Ops had acted in accordance with the terms and conditions of the policy and there was no deficiency in service on their part. We, therefore, see no merit in this complaint which is hereby dismissed.
Copy of the order be made available to the parties as per rule. File be consigned to record room.
Announced in open sitting of the Forum on.....................
