Final Order/Judgment

Debasis Bhattacharya:- PRESIDING MEMBER

 The instant case filed under section 35 of the Consumer Protection Act 2019 emanates from the grievances of the complainants arising out of alleged non-receipt of ‘guaranteed return’ against a Life Insurance Policy under the name LIC Bima Account-II (Plan No.806) initiated with The Life Insurance Corporation of India (hereinafter referred to as OP LICI in general as OP 1 i.e. Branch Manager of Chinsurah Branch of LICI and OP 2 i.e. Divisional Manager of Howrah Divisional Office of LICI, belong to the same organization).

The brief facts of the case is that on the basis of the complainant’s proposal, OP 1 issued ‘Life Insurance’ Policy under the name LIC Bima Account (Plan No.806) bearing No.496090229 with a ten years term with sum assured of Rs.1,50,000/-. It is claimed that the OP LICI guaranteed to pay maturity benefits viz. ‘guaranteed return’ @6% on the policyholders fund and additional interest as per declaration of the Corporation.

The complainant claims to have paid all the yearly premiums @ Rs.15000/- per year to the OP against the said policy and the policy ultimately was matured on 26.02.2021. At this point the complainant claims on the basis of his own calculation that he was entitled to get an interest amount of Rs.60,709.65 and tentative additional interest of Rs.50,000/- on maturity of the policy.

The complainant expresses grievances over the issues that i) the OP did not inform him whether any additional interest was declared by them and ii) maturity proceeds was paid to him to the extent of Rs.1,50,858/- only which was inclusive of interest component of Rs.858/- only.

Reportedly, the complainant visited the office of the OP 1 for pursuing the ‘guaranteed return’ against the said policy but the OP causing ‘harassment’ showed indifference towards the issue. In spite of proper service of legal notice on the OP, the situation remained unchanged.

Considering the same as deficiency in service, the complainant filed the complaint petition seeking direction upon the opposite parties to pay interest amount of Rs.60,709.65, additional interest of Rs.50,000/-a sum of Rs.20,000/- for mental and physical harassment and to pay Rs.10,000/- towards cost of litigation.

The complainant along with his petition has submitted copies of the relevant documents related to the policy viz. premium receipts, medical reports, the policy advice itself, legal notice dispatched to the OP etc.

The opposite parties, belonging to the same organization contested the case by filing elaborate rebuttals in their written version, evidence on affidavit and brief notes of argument denying therein most of the allegations leveled against them. The OP has submitted an exhaustive date wise transaction statement incorporating therein transaction type, premium balance, interest on premium balance, additional interest, mortality charges deducted and closing balance.   

    In view of the above discussion and on examination of available records, it transpires that the complainant is a consumer as far as the provisions laid down under Section 2(7)(ii) of the Consumer Protection Act 2019 are concerned.

One of the opposite parties, at the time of institution of the complaint had a branch office within the district of Hooghly. The claim preferred by the complainant does not exceed the limit of Rs.20,00,000/- Thus this Commission has territorial as well as pecuniary jurisdiction to proceed in the instant case.

The OP clarifies in their written version and evidence on affidavit that under the said plan the regular premium paid by the policy holder is subjected to deduction of charges and the balance premium, net of charges is credited to the policy holder’s regular premium account. Regular premium account in terms of the conditions of the policy earns guaranteed annual interest @6% p.a. for the period till the policy is kept in force. The interest amount is calculated on day to day basis on the balance of policyholder’s account after deduction of all due charges. Monthly charges are recovered every month from policyholder’s account as long as the policy is kept in force. In the process, the sum total of premium balance was Rs.1,06,649.04 and interest on premium balance was Rs.44,208.81.

The exhaustive transaction statement shows how periodical interest was accrued on the premium balance of the account holder, and how mortality charges were deducted from time to time.  

Materials on records are perused.

It transpires that the complainant under a wrong notion considered the Life Insurance Policy as a regular term deposit of a bank. The complainant does not appear to have appreciated the fact that the policy in question carried a life cover of the policy holder. To provide life cover to the policyholder a fee under the name ‘Mortality Charge’ is imposed and this charge increases as the policyholder ages.

Unlike bank accounts, which have a straightforward interest system and few deductions, return-based insurance plans come with a plethora of charges. The final amount is the premium after deduction of charges. Interest is applied on this amount. Balance is the amount added to the account of the policyholder at the end of each year. LIC’s Bima Account generally charges 27.5% of the premium paid by the policyholder for the first year and 7.5% in the second.

Declaration of additional bonus is the absolute prerogative of the Corporation and there cannot be any compulsion in this regard. The Corporation may or may not declare additional interest/bonus depending on the status/position of their business.  

Mortality charges are the amount charged every year by the insurer to provide the life cover to the policyholder. It can otherwise be called the cost of insurance. It is the amount charged for the guaranteed sum assured which is paid on premature death of the policyholder. OP appears to be quite transparent in this matter by furnishing the transaction statement as mentioned before.

Considering the facts and circumstances of the case this District Commission is of the view that there was neither any negligence nor any deficiency of service on the OP LICI’s part and the complainant was paid off the justified and legitimate dues on maturity of the insurance policy.  

Hence, it is

                                        ORDERED

that the complaint case no. 114/2021 cannot be allowed on contest  and the same stands dismissed with no order as to costs.

 Let a plain copy of this order be supplied free of cost to the parties/their Ld. Advocates/Agents on record by hand under proper acknowledgements/sent by ordinary post for information and necessary action.

The final order will be available in the respective website i.e. www.confonet.nic.in.