IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM
Dated this the 17thday of March, 2022
Present: Sri. Manulal V.S. President
Smt. Bindhu R. Member
Sri. K.M. Anto, Member
C C No. 180/2019 (filed on 30-10-2019)
Petitioner : M. Mathai,
S/o. P.M. Mathai,
MoorthiPuthanpurackal,
Athirampuzha Post,
Padinjattumbhagamkara,
Athirampuzha village,
Kottayam. 134
(Adv. Kurian George and Adv. P.S. Joseph)
Vs.
Opposite Parties : 1) LIC of India
Rep. by its Divisional manager,
Divisional Office,
Jeevan Prakash,
P.B. No. 609, Nagampadom
Kottayam – 1.
(Adv. Annie C. Kuruvilla)
2) Joseph Lukose,
Reg. No.6070,
Chingammanayil house,
Kottumuri, Athirampuzha P.O.
(Adv. AmalaTreesa Antony and
Adv. MinuMerin Thomas)
O R D E R
Sri. Manulal V.S. President
The case of the complainant is as follows:
Brief facts relevant for disposal of the case are that thecomplainant had taken a life insurance policy named ‘JeevanSaral’ which was effective from 3-11-2008 from the firstopposite party. The complainant had taken the policy believingthe words of the second opposite party who is the agent of thefirst opposite party that at maturity of the policy thecomplainant would get Rs.5 lakhs including the bonus.Complainant had paid Rs.6000 as quarterly premium and paidtotal amount of Rs.2,40,00/- towards premium for 10 years.Later, on 9-8-2018, the OP informed the complainant that thepolicy had become mature and demanded to collect Rs.79486/. According to the complainant though he paid allpremiums without any fault for 10 years he had lost Rs.1,60,540 from the amount paid by him as premium to theopposite party. It is further alleged that the opposite party haddenied the interest and bonus to the complainant. It is allegedin the complaint that without his consent and knowledge thefirst opposite party has recorded in the policy that the maturityamount is limited to Rs.61000/- According to the complainantthe said jeevansaral policy has withdrawn by the first oppositeparty as the same was against the public policy. Hence thiscomplaint is filed for return of premium amount of Rs.2,40,000/-with interest and bonus and for compensation.
Upon notice first opposite party appeared before the commissionand filed version. Inspite of the receipt of notice secondopposite party did not appear before the commission .Hence thesecond opposite party was set ex-party.
The complaint was resisted by the first opposite partycontending that being a literate government servant complainantavailed the policy after fully understanding the terms andconditions of the policy. For availing ‘JeevanSaral’plan, thecomplainant paid Rs.6,000/- as quarterly premium for a periodof 10 years and paid Rs.2,40,000 as premium for whole period.
This policy had unique feature having different sum assured andthe maturity sum assured. The death sum assured was Rs.5,00,000/- (250 times of monthly premium) and the maturitysum assured was Rs.61180/- together with loyalty additionpayable after the date of maturity of the policy. The risk of thedeath benefit commenced on 3-11-2008 and the maturity datewas 3-11-2018. As per the terms and conditions of the policythe death benefit sum assured is payable only on the death of thepolicy holder during the term of the policy while maturity sumassured is payable on the date of maturity. Death sum assuredand maturity sum assured are clearly shown in the policy issuedto the complainant. JeevanSral policy was introduced to coverhigh death benefit at low premium irrespective of the age andterm. But the maturity sum assured is depending on the entryages and term of the policy. The maturity sum assured has beencomputed by the insurance actuaries based on several factor likemortality, expenses etc and hence it decreases with increase inage at entry. The maturity value is less than the policy premiumpaid in respect of jeevansaral policy in case the policy istaken at higher ages. As per the terms and conditions of thepolicy the complainant is entitled for maturity sum assured ofRs.61180 and loyalty addition of Rs.24,472 on the date ofmaturity.
The premiums collected will be split into risk premium andsavings premium. Risk premium is fully used for covering riskand savings premium is used for investing for maturity benefits.Risk premium will be higher for ages and the same will be lessfor lower ages. And hence the maturity benefit will be less forthe age of 50 and more for age of 25 from the same monthlypremium and term. The premium has been given by thecomplainant to cover the risk for a given period and the insurerhas covered the risk for that period. So the complainant cannotbe asked to refund the premium for the period for which hehad covered the risk. It is further submitted in the version thatif the second opposite party induced him to take the policystating anything against the terms and conditions of the policyhis act would be ultravires and for such unauthorised acts ifany, the first opposite party is not at all responsible. The firstopposite party either expressly or impliedly has not made any statement, representation or promised other than what is shown in thepolicy. There is no deficiency in service or unfair trade practiceon the part of the first opposite party.
Complainant filed proof affidavit in lieu of chief examinationand got marked exhibit A1 to A6. C.D. George who is the Manager (L& and Hp) is examined as Dw1 and exhibit B1 to B7 weremarked from their side.
Points for consideration.
- Whether there is any deficiency in service or unfair tradepractice from
the side of the opposite parties?
2. If so what are the reliefs and costs?
Point number 1 and 2 together.
There is no dispute on the fact that the complainant had availedlife insurance policy named “Jeevansaral with profit” from thefirst opposite party. Exhibit A1 policy document proves thatthe period of the policy was 3-11-2008 to 3-11 2018.Admittedly complainant had paid quarterly premium of Rs.6000for a period of 10 years. There is no dispute on the fact that hehad paid a total sum of Rs.2,40,000/- as premium for the wholeperiod. According to the complainant though he had paid Rs.2,40,000/- as premium on maturity of the policy he had receivedonly 79486. On perusal of exhibit A2 which is the letter issuedby the first opposite party to the complainant on 9-8-2018 we cansee that the first opposite party offered Rs.61180 as basic sumand Rs.24,472/- as int. Bonus /La to the complainant.
According to the complainant he had suffered a loss of Rs.1,60,540/- from the amount paid by him as premium to theopposite party and the said policy has been withdrawn by thefirst opposite party as it was against the public policy .
The first opposite party contended that policy had unique featurehaving different sum assured and the maturity sum assured. Thedeath sum assured was Rs.5,00,000/- (250 times of monthlypremium) and the maturity sum assured was Rs.61180/-together with loyalty addition payable after the date of maturityof the policy. On perusal of exhibit A1 we can see that it wasrecorded in that document that maturity sum assured as Rs.61180 and the death benefit as Rs. Five lakhs. According to thefirst opposite party the maturity sum assured is depending onthe entry ages and term of the policy and maturity value is lessthan the policy premium paid in respect of jeevansaral policyin case the policy is taken at higher ages. Exhibit B3circularregarding the jeevansaral policy proves that maturity sumassured for 10 years at the entry age of 60 is Rs.3059 for thebasic monthly premium of Rs.100. In the case in hand thecomplainant has opted for a quarterly premium of Rs.6000/-and hence the monthly premium is Rs.2000/-. Thus the maturitysum is Rs.611809(3059x 2000/100). On perusal of exhibit B4we can see that loyalty addition is calculated on the basis of1000 maturity sum assured for a term of 10 year and annualpremium band starts from 20,001 to 50,000 is Rs.400/-.Hence the loyalty addition for maturity sum of Rs.61180 is Rs.24472(61180x400/1000). There is no error in calculation madeby the opposite parties in maturity sum assured and loyaltyaddition.
Though, the first opposite party contended that this policy hadunique feature having different sum assured and the maturitysum assured no evidence was adduced to show that the featuresof the policy was duly explained to the complainant. On areading of exhibit A1 policy document we cannot see anystatement regarding the important aspect of the policycondition.
The learned counsel for the opposite party relied on Ext.B7 judgement which is reported in IV (2008) CPJ 156 NC. In this case, the Hon’ble NCDRC held that insurer cannot be asked to refund the premium for the period when he had covered the risk. She further relied on a judgement of Karnataka State Consumer Redressal Commission is appeal No.17 of 2017 (The Divisional Manager, LIC Vs.Arjun).
Ongoing through the above said judgements, we see that there was a manual typing error regarding the maturity value. The fact of the above decision is different from the case in hand.
In an identical case which is reported in II (2020)CPJ167NC (Chief/Sr/Branch Manager, Lic Of ... vs Dr. Abhoy Banerjee)Hon’bleNational Commission has held that
7. “ The complainant is a doctor by profession. The proposalform is hand- written. It is seen that there was no consensus adidem when the policy was issued. No prudent person will investRs.1,58,532/- to get Rs. 59,064/- in return. The Hon’bleSupreme Court in the case of Life Insurance v. Asha Goel,III (2008) CPJ 78 (SC) observed the following:
The contracts of insurance including the contract of lifeassurance are contracts uberrima fides and every fact of materialmust be disclosed, otherwise, there is good ground for rescissionof the contract. The duty to disclose material facts continuesright up to the conclusion of the contract and also implies anymaterial alteration in the character of the risk which may takeplace between the proposal and its acceptance.
The date of commencement of the policy was 28.04.2005. Theyearly premium payable was Rs. 14,412/- and the period ofinsurance was for 11 years. So, the complainant paid a totalpremium of Rs.1,58,532/-. It is displeasing to note that inspiteof paying so much, the OP said that the actual maturity sumassured was Rs.59,064/-. The District Forum has erred in notholding the OP liable. It is unacceptable to any insured toreceive lesser amount on maturity or term. Beforehand, if theinsurer (LIC) had explained such factum to the proposer, hewould never have opted to get any insurance policy. This primafacie shows that there was no ‘consensus ad idem’ which thepolicy was taken.
8. In the instant case, it appears that the complainant was justallured by the insurance agent with rosy picture of policyreturns. The complainant was paying regular annual premium ofRs.14,412/- under presumption that he will receive certain goodreturns on maturity, but he was put into vacua and in thespineless condition. It is just unfair.”
It is the duty of the first opposite party to state each and everygoverning terms and conditions of the insurance policy required to be mandatorily mentioned in unequivocal terms inthe policy so as to enable the policyholder take a decisionregarding continuance / discontinuance of the policy within thefree-look period.
It was the duty of the first opposite party to prove beyond allreasonable doubt that the complainant was taken into confidenceabout the important features of the policy. We cannot believethat , whether any person of reasonable prudence would agree toinvest Rs.2,40,000/- for getting a meagre sum of Rs.61180/- inreturn.
As exhibit A1 policy did not exhibit true picture, therewas no opportunity for the complainant to foresee the iniquitousdesign of the first opposite party. Of course, this is not the wayhow the Insurance Companies should treat policyholders.
On the basis of the forgoing discussion, we hold the firstopposite party is liable for deficiency in service under section2 (1) (g) as well as committing unfair trade practice as definedin section 2 (1) (r) of the Consumer Protection Act, 1986.
Therefore we allow the complaint and pass the following order
1. We hereby direct the first opposite party to pay Rs.2,40,000/-ie.the total premium amount to the complainantwith interest of 9% from 03-11-18ie.the date on whichthe policy got matured till realization. It is made clear thatif any prior payment has been made to complainant then the oppositeparty shall pay the remaining amount to the complainantwith interest.
2. We hereby direct the first opposite party to pay Rs.20,000/- as the compensation to the complainant for themental agony and hardship caused to him use to thedeficiency in service and unfair trade practice on the part ofthe first opposite party.
Oder shall be complied within 30 days from the date ofreceipt of this order, failing which the compensationamount will carry 9% from the date of this order tillrealization.
Pronounced in the Open Commission on this the 17th day of March, 2022
Sri. Manulal V.S. President Sd/-
Smt. Bindhu R. Member Sd/-
Sri. K.M. Anto, Member Sd/-
Appendix
Witness from the side of opposite party
Dw1 – C.D. George
Exhibits marked from the side of complainant
A1 – LIC’s JeevanSalar policy No.394276389
A2 – Statement of premium from LIC
A3 –Letter dtd.09-11-18 from LIC to petitioner
A4 –Letter dtd.26-08-19 from office of insurance ombudsman to petitioner
A5 -Letter dtd.14-10-19 from office of insurance ombudsman to petitioner
A6 –Letter from Ombudsamn dtd.03-02-20 and Award
No.IO/KOC/A/LI/0297/2019-2020
Exhibits marked from the side of opposite party
B1 –Copy of proposal form
B2 – Copy of policy bond (No.394276389) issued by 1st opposite party
B3 – The circular regarding the jeevanSaral Policy with Maturity calculation
chart
B4– Copy of valuation report dtd.23-08-17 issued by LIC
B5- Copy of complaint before the Insurance Ombudsman
B6 – Copy of award No.IO/KOC/A/LI/0297/2019-2020
B7 – Copy of order of the case no.IV(2008) CPJ 156 (NC) – LIC Vs.Siba
Prasad Dash
By Order
Assistant Registrar
