Punjab

Ludhiana

CC/20/132

RanjitKaur - Complainant(s)

Versus

M/s Aegon Life Insurance Co.Ltd - Opp.Party(s)

Pankaj Katia Adv.

03 Oct 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:132 dated 11.08.2020.                                                         Date of decision: 03.10.2023.

 

Ranjeet Kaur d/o. Harvel Singh, r/o. H. No.207, Ward No.9, Jogi Basti, Dharamkot, Moga-142042. (Nominee in the instant policy).                                                                                                               ..…Complainant

                                                Versus

1. M/s.Aegon Life Insurance Co. Ltd., through its Managing Director having its registered office at Building No.3, Third Floor, Unit No.1 NESCO-IT Park, Western Express Highway, Goregaon (E), Mumbai-400063.
2. M/s. Aegon Life Insurance Co. Ltd. through its Manager having its office at Kunal Tower, The Mall Road, Rakh Bagh, Koh-E-Fiza, Ludhiana-141001.                                                                                                                                                                      …..Opposite parties 

Complaint Under section 35 of the Consumer Protection Act.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Manjeet Singh, Advocate.

For OPs                          :         Sh. V.S. Mand, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                In brief, the facts of the case are that the father of the complainant Sh. Harvel Singh (hereinafter called as DLA) purchased a Life Insurance Policy under Aegon Life Term Insurance Plan for a sum of Rs.23,50,000/-  vide policy No.180814827450 for a period of 19 years commencing from 04.09.2019 to 03.09.2037from opposite party No.2 in which the complainant was a nominee. The DLA paid the premium as per premium schedule and also submitted proposal form filled by the representative of the opposite parties. The complainant further stated that the life assured died on 19.02.2020 and she submitted claim with opposite parties by submitting all the required documents. She also visited office of opposite party No.2 but she was told that her case is under process and insurance amount shall be released to her. The complainant shocked to receive repudiation letter dated 12.03.2020  stating that the policy of LA has been cancelled on the ground of concealment of fact that the LA was holding other life insurance policies at the time of opting for the instant policy.  The complainant further stated that most of the insurance claims on account of death of LA have already been released by the other companies. According to the complainant, some of the polices were more than 4-5 years old. The complainant also sent a legal notice dated 04.05.2020 upon the opposite parties. The opposite parties vide their reply dated 12.03.2020 upheld the repudiation. The complainant further stated to have suffered mental tension, agony, harassment etc. due to deficiency in service and unfair trade practice on the part of the opposite parties for which she is entitled to compensation. In the end, the complainant has prayed for issuing direction to the opposite parties to release the insured amount on account of death of life assured along with interest as well as compensation of Rs.5,00,000/- and litigation expenses of Rs.1,00,000/-.

2.                          Upon notice, the opposite parties filed joint written statement and by taking preliminary objections, assailed the complaint on the ground of maintainability of the complaint, suppression of material facts by the complainant; lack of jurisdiction and cause of action. The opposite parties stated that the DLA availed total 22 life insurance policies from different companies for a sum assured of about Rs.4,62,28,345/- within a short span of 5 years i.e. since 2014-2019 without having any sufficient income to pay the premium for all these policies. Even the DLA did not disclose the other policies availed by him and he further availed policies worth Rs.38,68,297/- after obtaining the policy in question worth Rs.23,50,000/-. However, the LA expired within 17 months of the insurance policy in question. The detail of the policies availed by the DLA are reproduced as under:-

Other Policy No.	RCD	SA	Policy Status	Company Name
2930093	09-Jun-14	2500000	Proposal declined	Exide Life Insurance Company Ltd.
45QH758639	12-Aug-14	2500000	Proposal declined	SBI Life Insurance Company Ltd.
51759378	28-Aug-14	1000000	Null & Void (Insurer initiated cancellation of contract)	Reliance Life Insurance Company Ltd.
17058367	29-Aug-14	3517500	Proposal Declined	HDFC Standard Life Insurance Company Ltd.
51814132	18-Sep-14	375000	Inforce	Reliance Life Insurance Company Ltd.
51856650	28-Oct-14	500000	Inforce	Reliance Life Insurance Company Ltd.
1GPZ034380	16-Oct-15	2500000	Proposal declined	SBI Life Insurance Company Ltd.
19639141	31-Dec-15	5025640	Inforce	ICICI Prudential Life Insurance Company Ltd.
20251286	19-Sep-16	4021579	Proposal declined	ICICI Prudential Life Insurance Company Ltd.
330578363	16-Nov-19	2500000	Withdrawn/Not taken up	Bajaj Allianz Life Insurance Company Ltd.
9100132404	02-Jun-17	2500000	Proposal received/pending for U/w	Canara HSBC OBC Life Insurance Company Ltd.
517400177551	28-Jun-17	5500000	Proposal declined	Aegon Religare Life Insurance Company Ltd.
307040485	09-Jul-17	700000	Inforce	Max Life Insurance Company Ltd.
3655536	15-Nov-17	512679	Inforce	Exide Life Insurance Company Ltd.
1443278	24-May-18	157650	Proposal declined	Future Generali India Life Insurance Company Ltd.
1443311	24-May-18	2200000	Proposal declined	Future Generali India Life Insurance Company Ltd.
22586776	18-Jun-18	1000000	Inforce	PNB MetLife India Insurance Company Ltd.
5334587410	19-Jul-18	3000000	Inforce	SBI Life Insurance Company Ltd.
180814827450	04-Sep-18	2350000	Inforce	Aegon Religare Life Insurance Company Ltd.
53251239	11-Sep-18	368297	Inforce	Reliance Life Insurance Company Ltd.
3911640	21-Dec-18	1000000	Proposal received/Pending for U/w	Exide Life Insurance Company Ltd.
400237469E	08-Jul19	2500000	Proposal received/Pending for U/w	Life Insurance Corporation of India

 

The opposite parties further averred that from the above said table, the following gets clarified:-

1. Total sum assured applied for across the industry = 4,62,28,345/-
2. Sum assured with Aegon = Rs.23,50,000/-
3. Sum assurd prior to the subject policy = Rs.4,00,10,048/- (Non-disclosure)

• Policies in force = Rs.1,44,63,319/-
• Policies declined at Proposal Stage by other insurance Companies = Rs.2,53,96,729/-

4. Sum assured post the subject policy = Rs.38,68,297/-

The DLA mentioned that he had an annual income of Rs.4,50,000/- from business and as such, he was eligible for availing policies worth Rs.90,00,000/- as per his age at the time of proposal in accordance with Company’s Underwriting. The opposite parties further averred that the DLA availed policies worth Rs.54,63,619/- more than the eligibility amount which was communicated with status as informed by other companies at the investigation stage of the claim and the policy holder had availed policies worth Rs.1,63,96,729/- more than the eligibility amount which was communicated with status as policy declined at the proposal stage by other companies at the investigation stage of the claim. Moreover as per financial underwriting norms, DLA Harvel Singh was eligible for underwriting insurance risk cover, which is reproduced as under:-

Annual Income (Source ITR-14-15)	Rs.4,50,000/-
Age	56 yrs
Income Multiplication	20 times
Financial Eligibility	Total income Factor as per the age of Life Assured = 4,50,000/- x 20 times = Rs.90,00,000/-

In this manner, the DLA was not entitled for any insurance coverage as per underwriting guidelines and policy in question was procured by playing fraud with the opposite parties and as such, the repudiation of claim was totally justified.  

                   Under the column Facts of the case, the opposite parties have stated that they received a duly filled online proposal form for undertaking risk on the life of Mr. Harvel Singh and on the basis of the same, the policy No.180814827450 was issued on 04.09.2028, the details of which are reproduced as under:-

Policy Number	180814827450
Policy Plan	Aegon Religare iTerm Plan
Policy Status	Repudiate
Life Assured	Harvel Singh
Owner/Proposer	Harvel Singh
DOB	08.07.1962
Sum assured	Rs.23,50,000/-
Proposal Date	28.08.2018
Risk Commencement/Issuance date	04.09.2018
Premium	Rs.23,071/-
Total Premium Paid	Rs.23,071/-
Premium Frequency	Annual
Date of death	19.02.2020

 

The opposite parties further stated that they received claimant statement form, informing that the Life Assured expired on 19.02.2020. Since the LA expired within 2 years of policy issuance, the claim fell within the category of early claim. Therefore, they conducted an independent investigation to ascertain the genuineness of the claim and came to know that 22 life insurance policies were obtained by the DLA from different companies for huge sum assured of Rs.4,62,28,345/- within a short span of 4 years, out of which policies worth Rs.4,00,10,048/- were obtained before proposing the policy in question and the policies worth Rs.38,68,287/-  were obtained after obtaining policy in question for Rs.23,50,000/-.  As such, taking into consideration of provisions of Section 45 of the Insurance (Amendment) Act, 2015, the opposite parties rightly repudiated the claim  vide letter dated 12.03.2020  in respect of the policy due to non-disclosure and suppression of material information by the DLA regarding the previous policy details.

                   On merits, the opposite parties averred that as per their investigation, it was revealed that the availed policies were out rightly rejected at the proposal stage itself on the ground of tampered ITR, policy exceeds eligible insurance limit and non business/earned income was seen, which shows that the DLA was habitual of not disclosing the material facts/details. The opposite parties have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                In support of her claim, the complainant tendered her affidavit Ex. CA in which she reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the copy of insurance policy, Ex. C2is the copy of death certificate of Harvel Singh, Ex. C3 and Ex. C6 is the copy of letter dated 12.03.2020 issued by the opposite parties, Ex. C4 is the copy of passbook of Harvel Singh, Ex. C5 is the copy of legal notice dated 04.05.2020 and closed the evidence.

4.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RA of Sh. Ajinkya Deshmukh, Assistant Vice President – Legal, authorized representative of  the opposite parties along with documents Annexure-1 is the copy of proposal form, Annexure-2 is the copy of welcome letter, Anenxure-4 is the copy of email, Annexure-5 is the copy of letter dated 12.03.2020 and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written reply along with affidavit and documents produced on record by both the parties. We have also gone through the written arguments submitted by the complainant.

6.                The complainant, being daughter and nominee of DLA Harvel Singh, has raised a grievance with regard to repudiation of death claim and cancellation of the life insurance policy. Admittedly, DLA was a holder of Aegon Life Term Insurance Plan Ex. C1 for a sum assured of Rs.23,50,000/- having a validity of 19 years commencing from 04.09.2018 to 04.09.2036. A yearly premium of Rs.23,071/- was payable. LA has obtained this policy by submitting an application form Ex. C1 along with proposal form Ex. R1 wherein he has answered the relevant questions with regarding to holding of earlier insurance policies in the column of insurance details, as under:-

          Section 5: Insurance History

1. Are there any insurance policies or proposals on the Life to be assured issued or submitted or pending with Aegon Life Insurance or any other insurance company (including policies which are surrendered/lapsed/submitted for revival or reinstatement)

 

No

Plan Name

Policy/Proposal Number

Name of the Insurer

Sum Assured on base plan Number

Rider sum assured except Accident Riders

Months & Year of issue

Current status of policy including any claims for living benefit

 

2. Have any of the proposals for the life assurance on the Life to be assured ever been declined/postponed/dropped or accepted with modified terms.

If, yes please give details.

 

 

No

Plan Name

Policy/Proposal Number

Name of the Insurer

Sum Assured on base plan Number

Rider sum assured except Accident Riders

Months & Year of issue

Current status of policy including any claims for living benefit

7.                Acting upon the information so received by the opposite parties, the insurance policy was issued and the policy documents Ex. C1 were sent to the registered address of the DLA. However, the DLA expired on 19.02.2020 i.e. within 17 months from the date of issuance of the policy. The opposite parties on receipt of claim settlement form, construed it as ‘early claim’ and  initiated an independent risk investigation. After careful scrutiny of the information and documents, it transpired that DLA had concealed material facts pertaining to his existing insurance policies prior to applying the present policy. The opposite parties declared the policy nu and void ab-intio vide letter dated 12.03.2020 Ex. C3 and C6 = Annexure-5 and premium amount was forfeited. The operative part of the said letter is as under:-

“We refer to proposal for policy number 180814827450 dated 28^th August 2018 and the declarations purported to be made by you therein, on the basis of which the above referred policy was issued.

Policy No.180814827450 came into effect from 04^th September 2018.

In consonance with Section 45 of the Insurance Act, 1948, the company had conducted investigations.

However, we regret to state that, during the risk investigation carried out by the Company, it is established that you had concealed material facts pertaining to your Existing Insurance Policies prior to applying with us. As referred herein below:

Other Policy No.	RCD	SA	Policy Status	Company Name
2930093	09-Jun-14	2500000	Proposal declined	Exide Life Insurance Company Ltd.
45QH758639	12-Aug-14	2500000	Proposal declined	SBI Life Insurance Company Ltd.
51759378	28-Aug-14	1000000	Null & Void (Insurer initiated cancellation of contract)	Reliance Life Insurance Company Ltd.
17058367	29-Aug-14	3517500	Proposal Declined	HDFC Standard Life Insurance Company Ltd.
51814132	18-Sep-14	375000	Inforce	Reliance Life Insurance Company Ltd.
51856650	28-Oct-14	500000	Inforce	Reliance Life Insurance Company Ltd.
1GPZ034380	16-Oct-15	2500000	Proposal declined	SBI Life Insurance Company Ltd.
19639141	31-Dec-15	5025640	Inforce	ICICI Prudential Life Insurance Company Ltd.
20251286	19-Sep-16	4021579	Proposal declined	ICICI Prudential Life Insurance Company Ltd.
330578363	16-Nov-19	2500000	Withdrawn/Not taken up	Bajaj Allianz Life Insurance Company Ltd.
9100132404	02-Jun-17	2500000	Proposal received/pending for U/w	Canara HSBC OBC Life Insurance Company Ltd.
517400177551	28-Jun-17	5500000	Proposal declined	Aegon Religare Life Insurance Company Ltd.
307040485	09-Jul-17	700000	Inforce	Max Life Insurance Company Ltd.
3655536	15-Nov-17	512679	Inforce	Exide Life Insurance Company Ltd.
1443278	24-May-18	157650	Proposal declined	Future Generali India Life Insurance Company Ltd.
1443311	24-May-18	2200000	Proposal declined	Future Generali India Life Insurance Company Ltd.
22586776	18-Jun-18	1000000	Inforce	PNB MetLife India Insurance Company Ltd.
5334587410	19-Jul-18	3000000	Inforce	SBI Life Insurance Company Ltd.
180814827450	04-Sep-18	2350000	Inforce	Aegon Religare Life Insurance Company Ltd.
53251239	11-Sep-18	368297	Inforce	Reliance Life Insurance Company Ltd.
3911640	21-Dec-18	1000000	Proposal received/Pending for U/w	Exide Life Insurance Company Ltd.
400237469E	08-Jul19	2500000	Proposal received/Pending for U/w	Life Insurance Corporation of India

 

Section 5: Insurance History

1. Are there any insurance policies or proposals on the Life to be assured issued or submitted or pending with Aegon Life Insurance or any other insurance company (including policies which are surrendered/lapsed/submitted for revival or reinstatement)

 

No

Plan Name

Policy/Proposal Number

Name of the Insurer

Sum Assured on base plan Number

Rider sum assured except Accident Riders

Months & Year of issue

Current status of policy including any claims for living benefit

 

2. Have any of the proposals for the life assurance on the Life to be assured ever been declined/postponed/dropped or accepted with modified terms.

If, yes please give details.

 

 

No

Plan Name

Policy/Proposal Number

Name of the Insurer

Sum Assured on base plan Number

Rider sum assured except Accident Riders

Months & Year of issue

Current status of policy including any claims for living benefit

 

Had this information been provided to us before issuance of this Policy, we would have declined the insurance cover upfront and would not have issued the above policy at all. Hence in terms of the policy contract and the Declarations made in the Proposal Form, we are satisfied that the company has been misled into issuing the Policy, hence the Policy Number 180814827450 is hereby declared Null and Void ab-initio and the premium stands forfeited by the Company.”

8.                Perusal of record shows that DLA stated to have been died on 19.02.2020 i.e. after about 17 months from the issuance of the policy. Death certificate of DLA is Ex. C2. It is pertinent to mention that DLA was born on 08.07.1962 and at the time of obtaining the policy he was aged about 48 years and at the time of death, he was about 46 years of age. The complainant did not elaborate any facts and circumstances leading to natural death of DLA in a comparatively younger age nor any affidavit of herself or of any attendant was produced in whose presence DLA breathed his last. Even no medical document was brought on record to show that DLA was taken to some hospital before he was declared dead or brought dead. The complainant was required to dispel suspicious with regard to “natural death” of DLA. The opposite parties in their written statement specifically provided the details of the previous multiple insurance policies held by the DLA and have specifically pleaded the execution of well planned external fraud by the complainant or DLA but the complainant did not opt to file any rejoinder to the contents of the written statement. Even in her affidavit, the facts which were specifically in the knowledge of the complainant were not divulged raising a serious doubt with regard to bonafide of the claim.

9.                It is evident that the repudiation in the present case was within the two years from the commencement of the insurance cover which leads to invoking of Section 45 of the Insurance Act, which reads as under:-

“Section 45

(1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

(2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

Explanation I. -For the purposes of this sub-section, the expression "fraud" means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy: -

(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

(b) the active concealment of a fact by the insured having knowledge or belief of the fact;

(c) any other act fitted to deceive; and

(d) any such act or omission as the law specially declares to be fraudulent.

Explanation II. -Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

(3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer:

Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.

Explanation. -A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

(4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

Explanation. -For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

(5) Nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”

 

10.              It is settled proposition of law that the contract of insurance is based upon the principle of  ‘Uberrima Fides’ and both insurer and insured are under legal obligation to provide the correct and authenticated information at the time of the policy. The information regarding holding of earlier prior insurance policies, age, proof of income and medical history are some of the criteria which are to be disclosed truthfully by the proposer. In the present case, the opposite parties had sought intimation from the DLA with respect of previous multiple policies which was not disclosed and suppressed the material facts.

11.              In its judgment Satwant Kaur Sandhu Vs New India Assurance Co. Ltd. Civil Appeal No.2776 of 2002 decided n 10.07.2009, the Hon’ble Supreme Court of India has held that if there was clear suppression of material facts in regard to the health of the insured, the insurer was fully justified in repudiating the insurance contract. The Hon’ble Supreme Court of India has further held in Reliance life Insurance Co. Ltd. and others Vs Rekhaben Nareshbhai Rathod in 2019 (2) R.C.R. (Civil) 909 that two months prior to policy obtained from appellant insured obtained policy from another company and this fact was not disclosed by the insured. Repudiation was made within two years period from commencement of insurance cover. The proposer was aware of contents of form that he was required to fill and disclosure of material for assessment of risk which was being taken by insurer which entitled the insurer to repudiate the claim.  

13.              As a result of above discussion, the complaint fails and the same is hereby dismissed. However, there shall be no order as to costs. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.

14.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

                             (Monika Bhagat)                        (Sanjeev Batra)                                                Member                                      President         

 

Announced in Open Commission.

Dated:03.10.2023.

Gobind Ram.