By Smt. Padmini Sudheesh, President: The case of complainant is that the respondent Corporation had issued a Life Insurance Policy to the complainant on 10.3.83. As per the policy, the complainant had to pay Rs.169.30 as quarterly premium. The total premium paying term of the policy was limited to 20 years. The complainant paid Rs.13,544/- till 10.12.02. The Corporation has paid Rs.1250/- on four occasions and he had accepted Rs.5000/- in that account. The tenure of the policy was completed and the complainant surrendered the policy on 1.6.06. As per the policy when he surrendering the policy he is eligible to get the remitted amount along with the vested bonus after deducting the amount he had accepted on four occasions. But the respondents failed to do so and issued a letter dated 7.6.06 in which the surrender value is shown as Rs.9986/- only. The respondents informed the complainant that they will give only Rs.9986/-. So the complainant was caused to send a lawyer notice on 25.8.06 and the respondents by accepting the letter sent a reply stating untrue matters. The complainant is entitled to get the amount he had remitted after deducting Rs.5000/- and also an amount of Rs.8544/- which is shown in the letter issued by the respondent along with vested bonus Rs.18,810/-. The act of respondents in non-payment of this amount resulted deficiency in service on the part of respondents and this complaint is filed. 2. The respondents filed counter stating that the Corporation had issued a policy numbered 071342177 on the life of the complainant. The 20 year anticipated whole life policy with profits (Plan 85) was issued with date of commencement 10.3.83. The mode of payment of premium was quarterly and the quarterly instalment payable was Rs.169.30. The total premium paying term of the policy was limited to 20 years and the policy will continue even after the premium payment term of 20 years, as it is a whole life plan. The insurance cover will also be available during this period. The sum assured under the policy is Rs.10,000/-. The Corporation has paid 1/8th of the sum assured on four occasions of Rs.1250/- each. The averment in the complaint that the policy has matured is denied. The fact that the premium payment term of the policy is over does not mean that the policy has matured. The policy is a whole life policy and would continue even after the premium paying term of 20 years. The averment that the complainant surrendered the policy on 7.6.06 is denied. He applied for a surrender value certificate and has not surrendered the policy. The claim of complainant that he is eligible for the amount of premium paid and vested bonus under the policy after deduction of the amount of Rs.5000/- paid to him is baseless and denied. The complainant has conveniently and deliberately ignored the fact that he has enjoyed life insurance cover for the period of 20 years upto the premium term has been enjoying insurance cover for the period thereafter. The premature closure or surrender of policy is a premature exit from contract and the premium paid cannot be claimed in full as the respondent Corporation has shouldered the burden of providing insurance cover to the complainant right from inception. The sum assured offered under the policy would have been payable in case of death of the life assured even after paying the first premium. The complainant cannot allege deficiency in service just by challenging the validity of the quotation for surrender value in proceedings before this Forum for the reason that the matter is contractual in nature and elaborate questions of fact and law are involve. The complainant’s claim for vested bonus in full will also stand as cash value of such vested bonus alone will be payable on surrender of the policy. As per the policy condition on guaranteed surrender value the cash value of any existing vested bonus alone will be payable. If the intention of the Corporation was to pay the entire bonus accrued on the policy at any point of time before maturity or death, then the concept of cash value would not have been incorporated in the condition of the policy for guaranteed surrender value. The total amount of vested bonus is to be paid only on death of the policyholder and in case of any premature surrender of the policy only a portion of such vested bonus is to be paid. As on 7.6.06 the guaranteed surrender value under the policy works out to Rs.7935/-. This is as per the policy condition on guaranteed surrender value. The total vested bonus under the policy as on 7.6.06 is Rs.18,810/-. As per the special surrender value booklet of the Corporation Table 2A is to be applied for getting the surrender value factor under Plan 85. For age 63, the surrender value factor works out to 41.94. As the complainant is also eligible for an interim bonus of Rs.110/-, he is eligible for a cash value of vested bonus amounting to Rs.7935/- only. As on 7.6.06 the paid up value under the policy is Rs.10,000/- as all premium for the 20 years premium paying term have been paid. To this paid up value the total bonus of Rs.18,920/- will have to be added before applying the surrender value factor and the surrender value as on 7.6.06 works out to Rs.12,129/-. The Corporation can consider payment of Rs.12,129/- as surrender value as on 7.6.06 instead of Rs.9986/- ie. without deducting an amount of Rs.5000/- which is already paid to the complainant. The complainant is not eligible for any other amount and there is no deficiency in service on the part of respondents. Hence dismiss the complaint. 3. The points for consideration are: (1) Is the complainant entitled to get the amount claimed? (2) Other reliefs and costs. 4. The evidence consists of oral testimony of PW1 and Exts. P1 to P6 and Exts. R1 to R8 on the part of respondents. No oral evidence adduced by respondents. 5. Points: This complaint is filed to get an amount of Rs.27,354/- along with interest as per the policy issued to the complainant vide policy No. 071342177. It is stated by the complainant that the policy had terminated and he had surrendered the policy on 1.6.06 and he is eligible for an amount of Rs.8544/- as paid up value and an amount of Rs.18,810/- as vested bonus. So he is eligible to get an amount of Rs.27,354/-. The respondents filed a detailed counter and described in detail the amount entitled by the complainant. They stated that the complainant’s claim for vested bonus in full will not stand as cash value of such vested bonus alone will be payable on surrender of the policy. They also submitted that as per the policy condition on guaranteed surrender value the cash value of any existing vested bonus alone will be payable. According to them, the total vested bonus as on 7.6.06 is Rs.18,810/- and this is not disputed by the complainant. As per Ext. R3 the table given is to be applied for getting the surrender value factor. For age 63, which is the age of the insured, the surrender value factor works out to 41.94. As on 7.6.06 the guaranteed surrender value under the policy comes to Rs.7935/-. According to the respondents, the complainant is also eligible for an interim bonus of Rs.110/-. So the total bonus will come to Rs.18,920/-. The cash value of bonus will be Rs.7935/-. The paid up value under the policy was Rs.10,000/- as on 7.6.06 and to this paid up value the total bonus of Rs.18,920/- will have to be added before applying the surrender value factor and the surrender value as on 7.6.06 works out to Rs.12,129/-. The Corporation stated that they can deduct an amount of Rs.5000/- which is already accepted by the complainant in four instalments at the rate of Rs.1250/- but they are not deducting that amount and they are ready to give an amount of Rs.12,129/- to the complainant. So according to the respondents, the complainant is eligible to get only Rs.12,129/- and not Rs.27,354/- as claimed by the complainant. 6. The complainant is examined as PW1 and Exts. P1 to P6 are marked on his part. During cross-examination it was asked about the surrender of the policy and he answered, he doesn’t know. He deposed that he is unaware about the calculation of the surrender value. All these facts are stated in the policy and the complainant is bound to know the terms and conditions of the policy. Since it is a contract both parties are bound to know all the terms and conditions of the contract. He stated that along with the policy an additional list is attached and in which it is stated that the cash value of any existing vested bonus additions will also be allowed. But he is unaware of the calculation of cash value of existing bonus. During re-examination it is made clear that there is a table No.85, 86 attached with Ext. P1 showing the guaranteed surrender value. The table states that “This policy can be surrendered for cash of the premiums have been paid for at least three years. The minimum surrender value allowable under the policy is equal to 30% of the total amount of the within mentioned premiums paid excluding the premiums for the first year and all extra premiums and/or additional premiums for Accident Benefit that may have been paid, provided that if a portion of the sum assured had become payable or had been paid on the life assured surviving the stipulated date(s) from the date of commencement of the premiums prior to the date(s) of such survival shall be excluded for calculating the surrender value. The cash value of any existing vested bonus additions will also be allowed”. But in the list attached to Ext. P1 the mode of calculation is not fully described. The respondents are bound to issue all the papers with regard to the terms and conditions of the policy and issuance of Ext. P1 only is not sufficient. The amount calculated by the respondent is true as per the records produced by the respondents. But there is no averment on the part of Corporation that they have intimated the complainant about Exts. R3 and R4. On the basis of these documents they have calculated the amount and as per the contract the complainant is entitled to get only the amount stated by the respondents. According to the respondents they are ready to pay Rs.12,129/- without deducting the amount of Rs.5000/- which is already paid to the complainant by 4 instalments at the rate of Rs.1250/-. This view of the respondents can be appreciated. But at the same time they are bound to inform the complainant about the calculation of the amount by supplying Exts. R3 and R4 to all the persons who are taking this kind of policy. The entire complications were arisen only because of the mode of calculation. It is a deficiency in service on the part of respondents and the complainant is entitled for compensation also. 7. In the result, the complaint is partly allowed and the respondents are directed to pay an amount of Rs.12,129/- (Rupees twelve thousand one hundred and twenty nine only) with interest at the rate of 12% per annum from 7.6.06 till realization and Rs.5000/- (Rupees five thousand only) as compensation with costs Rs.500/- (Rupees five hundred only) to the complainant within a month from the date of receipt of copy of this order. Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Forum, this the 17th day of March 2010.
| | HONORABLE Rajani P.S., Member | HONORABLE Padmini Sudheesh, PRESIDENT | HONORABLE Sasidharan M.S, Member | |
