KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

C.C. No. 156/2015

JUDGMENT DATED: 06.08.2020

PRESENT : 

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN              : PRESIDENT

SRI. RANJIT. R                                                                              : MEMBER

COMPLAINANT:

Adith Suresh (minor), ‘Anugraha’, Thavakkara West, Kannur-670 001 represented by his next friend his mother Geetha. 

                                (By Adv. P.V. Midhun)

                                                Vs.

OPPOSITE PARTIES:

1. The Managing Director, ICICI Prudential Life Insurance Company ltd., Unit No. 1A & 2A, Raheja Tipco Plaza, Rani Sah Marg, Malad (East), Mumbai-400 097.
2. The Manager, Kannur Branch, ICICI Prudential Life Insurance Co. Ltd., 2^nd Floor, Down Town Complex, Talap, Kannur.

(By Adv. R. Suja Madhav)

JUDGMENT

SRI. RANJIT. R: MEMBER

The complainant is a minor who is represented by his next friend, mother, wife of late Sureshan T.V.  Late Sureshan is the proposer of the life insurance policy issued by the opposite party insurer and the insured of the policy is the minor complainant.

2.  The case of the complainant, in brief, is as follows: The opposite party issued a policy certificate ICICI Pru Wealth Builder VIN 105L with policy No. 17099534.  The life assured is Master Adith Suresh, the complainant, aged 5 years, and the proposer of the policy is late Sureshan, father of the complainant.  The sum assured is Rs. 30,00,000/- and the annual premium is Rs. 3,00,000/-.  The date of commencement of the policy is 30.10.2012.  Mr. Sureshan, the proposer, has paid the premium of Rs. 3,00,000/- each on 30.10.2012 and 30.10.2013, thus the total premium paid is Rs. 6,00,000/-.  While so the proposer Sureshan was afflicted with cancer and he died on 18.02.2014.  The complainant alleged that the agent                Mr. Janardhanan Kappattu had advised late Sureshan and his wife that if anything happens to the proposer (Mr. Sureshan) the company will compensate the life assured with the sum assured i.e; Rs. 30,00,000/- along with the total premium amount paid by the proposer.  After the death of the proposer Mr. Sureshan, the complainant represented by his mother approached the opposite party by submitting a claim form through the agent. The agent had filled up the claim             form and received the signature of the complainant and submitted it before the opposite party.  Then the mother of the complainant personally approached the 2^nd opposite party.  But they denied the claim by stating lame excuses.  Thereafter she sent a legal notice claiming Rs. 41,00,000/- as aggregate amount of the sum assured  in the policy, premium paid and Rs. 5,00,000/- for mental agony and suffering.  It is further alleged that as per clause 4(3) of the terms of the policy, there is a rider and under the plan insured amount will be offered subject to the regulator’s prior approval.  The proposer of the policy is the rider of the policy himself.  As per the conditions of the policy if the proposer is affected with critical illness and died due to that illness, the remaining premium will be waived. Complainant is entitled to get the sum assured i.e; Rs. 30,00,000/- and also the amount paid as premium i.e; Rs. 6,00,000/- and Rs. 5,00,000/- as compensation for difficulties, pain and sufferings caused to the complainant.  Thus he claims total amount of Rs. 41,00,000/- as compensation.

3.  Notice was issued to the opposite parties and opposite parties 1 & 2 filed joint version raising the following contentions.  In the present case the subject policy is taken by the proposer Mr. Sureshan on the life of the life assured i.e; Adith Suresh and therefore only the life of the life assured is covered and the benefit shall become payable only in the event of death of the life assured.  In the present case the life assured is still alive and the proposer of the policy has expired. Hence no amount is payable on the death of the proposer/policy holder.  Life assured is a person whose life is covered under the insurance contract, whereas the proposer is a person who proposes the insurance policy, i.e; who offers or suggests for consideration or acceptance of the insurance policy.  Thus the death benefit becomes payable only on the death of the life assured, i.e; the person whose life is covered and not on the death of the proposer, i.e; the person who has proposed for insurance cover on the life of the life assured.  Here the proposer had declared Master Adith Suresh (complainant) as the life assured.  Hence the opposite party company is not liable to pay any amount on the death of the proposer Mr. Sureshan.  The company had undertaken the risk on the life of the assured and not on the life of Mr. Sureshan.  There is no deficiency of service or negligence on the part of the opposite parties and the complaint is filed to harass and gain undue advantage from the opposite parties.  Opposite parties further raised the contention that the policy in question is a unit linked policy and since the money of the complainant has been invested in share market which is for speculative gain and that speculative investment matter doesn’t come under the purview of the Consumer Protection Act.  Hence the present complaint is not maintainable.  That as per the proposal form the deceased proposer had given clear mandate to make his son Master Adith Suresh as the life assured.  The terms and conditions of the policy document clearly states that benefit under the subject policy is given to the proposer or nominee on the death of the life assured.  That due to non-payment of renewal premium due on 30.10.2014 the subject policy is in discontinued stage, wherein the fund value has been transferred to the discontinued policy fund after deduction of applicable premium discontinuance charge.  The discontinued fund value shall be paid at the end of the 5^th policy year subject to a minimum guarantee of the interest applicable under clause 5.2 of the terms and conditions of the policy.  In the present case the complainant has demanded the sum assured as well as the rider benefit as per clause 4.3 of the terms and conditions.  Sum assured and the rider benefit are payable on the death or critical illness of the life assured and not of the proposer.  In the present case the deceased proposer never opted for any rider and his plan was composed solely for the life cover, i.e; payment of the sum assured on the death of the life assured.  There arise no question of compensation and relief because in the present case the life assured is still alive and the proposer of the policy has expired.  Hence no amount is payable on death or any rider benefit under the policy is payable.  The policy is currently in a discontinued stage and the fund value shall become payable only after the lock in period of 5 years.

4.  Evidence in the case consists of oral testimony of minor complainant’s mother as PW1 and Exts. A1 to A7 marked on her side.  Documents produced by the opposite parties are marked as Exts. B1 to B4, on consent.

5.  Heard the counsel for both parties.  Based on the pleadings the following issues came up for consideration.

1. Whether the complaint is maintainable?
2. Whether there is deficiency in service on the part of the opposite parties?
3. Whether the complainant is entitled to get compensation from the opposite parties?
4. Whether the complainant is entitled to get discontinued fund value with interest?

6.  Point (i):- The learned counsel for the opposite parties raised the question of maintainability of the complaint on the ground that the policy in question is a unit linked policy and the premium amount paid by the complainant is invested in the share market which is a speculative investment and speculative investment does not come under the purview of the Consumer Protection Act.  The learned counsel placed reliance on the decision of the National Commission in Ramlal Aggarwala Vs. Bajaj Allianz Life Insurance Co. in support of his contention that complaint is not maintainable.  The point to be determined is whether the investible premium under the unit linked policy which the complainant has taken is invested in units which is exposed to capital market, a speculative business and thus it will come under the purview of commercial transaction or not.  This Commission in a similar case has observed that the predominant feature of unit linked policy is the insurance cover which is dependent on human life and mere existence of additional investment factor cannot convert ULIP into mutual fund.  It has a mandatory insurance cover and forms a vital inseparable part of every ULIP.  Unlike share or mutual fund scheme the linked products are naturally linked with life of policy holder.  There are two components of ULIP one is the insurance component wherein risk of life insurance portion vests with the insurer and the other is investment component wherein risk lies with the investor.  This establishes that conclusively ULIPs are combination products and the investment component needs to be registered and regulated by SEBI.  It needs to be also kept in mind that the guideline issued by the competing regulator IRDA is sufficient to hedge out investment risks.  Further it has been said that ULIP has a mandatory insurance cover which forms a vital and inseparable part of every ULIPS. The Hon’ble Supreme Court in the matter of Madhav Hari Joshi Vs. Divisional Manager, LIC &anr. held that not refunding money paid for equity linked plan results in loss the benefit of an escalation in his investment value and complainant is entitled to be compensated for loss of benefit of escalation in his investment value. In the light of the above discussions the transaction cannot be considered as a commercial transaction and hence we find that the complaint is maintainable before this Commission. 

7.  Points (ii) & (iii):- For the sake of convenience these points are considered together.  In the present case it is admitted that the subject policy is taken by the proposer Mr. Sureshan on the life of the life assured Master Adith Suresh. Therefore only the life of the life assured is covered and the benefit shall become payable in the event of the death of the life assured.  In the present                   case the life assured is still alive and hence no amount is payable on the death of the proposer.  It is well settled that the life assured is a person whose life is covered under the insurance contract and the proposer is a person who proposes the insurance policy i.e; who offers or suggests for consideration or acceptance of the insurance policy.  Thus the death benefit becomes payable only on the death of the life assured and not on the death of the proposer.  In the policy document it is clearly mentioned that Master Adith Suresh is the life assured.  Hence the opposite parties are not liable to pay any amount on the death of the proposer. The terms and conditions of the policy document clearly states that benefit under the subject policy is given to the proposer or nominee on the death of life assured.  Hence it is on the death of the life assured and not the proposer of the policy that, the sum assured becomes payable. In the complaint it is alleged that opposite parties did not give much importance to clause 4.3 of the policy conditions.  Clause 4.3 of the policy conditions states about the rider benefit.  He alleged that the proposer of the policy is the rider of the policy. This affirmation of the complainant is made out of sheer ignorance or wilfully made in an attempt to hoodwink others. The complainant is seeking rider benefit which he has not opted.  The rider benefit for the critical illness is payable only when the policy holder had opted for the same.  Admittedly the deceased proposer has opted only for basic death benefit under the plan and not opted for any rider benefit and hence no benefit become payable. In any case the benefit shall become payable only in the event the life assured is having any critical illness and succumbed to death and not the proposer.  There is no negligence or deficiency in service on the part of the opposite parties in rejecting the claim of the complainant.  Hence there arises no question of compensation. The life assured is still alive.  Hence no amount is payable on the death of the proposer. 

8.  Point (iv):- Admittedly the policy is currently in discontinued stage and the fund value becomes payable after the lock in period of 5 years.  As per IRDA (Treatment of Discontinued Linked Insurance Policies) Regulation 2010, Clause 7, Obligation of an insurer on discontinuance of a policy is stated.  It states that where a policy is discontinued, only discontinuance charge may be levied by the insurer, and no other charges by whatsoever name called shall be levied.  As per this policy premium discontinuance charge if the annual premium is more than Rs. 50,000/-, if two premium is paid then the discontinuance charge is 4% of annual premium or fund value on the date of discontinuance subject to a maximum of Rs. 5,000/-.  As per clause 5.2, if the policy is not revived within the period described in clause 8.4, the life insurance cover and the rider cover, if any, shall cease.  At the end of the period, the fund value including the top up value if any shall be transferred to the discontinued policy fund after deduction of applicable premium discontinuance charge.  Thereafter no other charges shall be deducted other than the fund management charge of 5% per annum from the discontinued policy fund or such other charges as the regulator may permit.  At the end of the 5^th policy year the discontinued fund value shall be paid.  Admittedly the policy is not renewed.  Therefore at the end of the fifth policy year the discontinued fund value after deducting the discontinuance charge is to be paid to the complainant.  In the present case the maximum discontinuance charge for the policy having annualized premium of Rs. 3,00,000/- is Rs. 5,000/- and thus for the fund value of Rs. 6,00,000/- the maximum discontinuance charge deductible is Rs. 5,000/-.  Thus the complainant is entitled to get Rs. 5,95,000/- from 30.10.2017, the fifth policy year, with interest.  We fix interest @ 9% per annum. 

In the result, the complaint is partly allowed.  The opposite parties are directed to pay the complainant Rs. 5,95,000/-, the discontinued fund value, with 9% interest from 30.10.2017 till payment.  Parties to suffer their respective costs.

JUSTICE K. SURENDRA MOHAN         : PRESIDENT

                                                                                                                                                                           RANJIT. R    : MEMBER

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APPENDIX

  I      COMPLAINANT’S WITNESS:

                   PW1  - Geetha M.

 II      COMPLAINANT’S EXHIBITS:

A1     - Policy certificate

A2     - Copy of Colonoscopy Procedure Report dated 18.09.2013

A3     - Copy of death certificate

A4     - Copy of statutory legal notice dated 29.06.2015

A5     - Copy of legal heir certificate dated 24.01.2015

A6     - Copy of reply notice dated 27.07.2015

A7     - Copy of application form 

III      OPPOSITE PARTY’S WITNESS:

                                      NIL

 IV     OPPOSITE PARTY’S EXHIBITS:

B1     - Copy of letter sent by Mr. Sureshan to opposite party

B2     - Copy of proposal form

B3     - Terms and conditions of policy

B4     - Copy of reply notice dated 27.07.2015

JUSTICE K. SURENDRA MOHAN         : PRESIDENT

                                                                                                                                                                             RANJIT. R    : MEMBER

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