THE CONSUMER DISPUTES REDRESSAL FORUM, KOZHIKODE.

C.C. 309/2012

Dated this the 1^st  day of April, 2016

(Smt. Rose Jose, B.Sc, LLB.                      :  President)

                                                                    Smt.Beena Joseph, M.A                             : Member

                                                                    Sri. Joseph Mathew, MA, LLB                  : Member

ORDER

Present: Joseph Mathew, Member:

            This petition is filed under Section 12 of Consumer Protection Act, 1986.

            Petitioner filed this petition for getting an order directing the opposite parties to reconsider the excess surrender value deducted and to declare that the surrender charges deducted pertaining to his three numbers of insurance policies are null and void and to return the actual amount deposited with profit.

            The case of the petitioner is that, he had taken three types of Unit Linked Insurance Policies of the opposite parties during the year 2006 having No.s NLG 1213227 for Rs.3,00,000/-, LLG 12348171 for Rs.75,000/- and RSG 1380096 for Rs.1,62,000/- respectively. The mode of payment for all these three policies are in annual basis. The opposite parties assured him that he can surrender these policies after completion of 3 years and will get double amount with full profit. Believing these assurances he had purchased these policies as an investment.

            After completion of 3 years he had approached the opposite parties for surrendering these policies but they have offered only 1/3 of the amounts deposited. In Policy No. NLG1213227 he had invested Rs.3,00,000/- but he will get only Rs.1,28,081/-, in Policy No. LLG 12348171 though the investment is Rs.75,000/- the return is only Rs.23,000/- and in the 3^rd Policy RSG 1380096, the investment is Rs.1,62,000/- but he will get only Rs.1,17,019/-, and for which they have issued a cheque also. The petitioner submitted that though the opposite parties have assured huge amount while surrendering these policies after 3 years, now without any legal basis they have sanctioned less than half of the amount he invested. The deduction of such a huge amount as surrender charge is against the rules and regulations of IRDA of India. The said act of the opposite parties amounts to unfair trade practice and also deficiency in service on their side and that caused heavy financial loss, mental agony and other hardships to him. On 07/03/2012 he had issued a lawyer notice to the opposite parties to reconsider the deduction of excess surrender charges and to return the full amount with profit which they are bound by law, but instead of paying the amount they have sent a reply containing false and frivolous contentions.

            Hence this petition is filed to direct the opposite parties to reconsider the excess surrender value deducted by them and to declare the said act as null and void. Also to direct the opposite parties to return the actual value deposited along with profit in these three policies and also cost of the proceedings to the petitioner.

            The opposite parties in their version admitted the purchase of the said three policies by the petitioner but contended that this petition is not maintainable under law or on facts of the case. It is submitted that after duly deliberating the terms and conditions of the Life Long Unit Linked Plan vide the Key Feature Document, the petitioner had filled and signed the 3 numbers of proposal forms for the said No. s NLG 1213227, LLG 12348171 and RSG1380096. It is also submitted that these policies are not only market linked but also covers life insurance risk hence the sum assured is also applicable in the said policy which means if during the policy enforcement period if anything unpleasant happens to the policy holder the nominee will get the sum assured. Here the sum assured for the 1^st policy is Rs.10,00,000/- 2^nd policy Rs.2,50,000/- and the 3^rd policy Rs.4,05,000/- respectively. As such the opposite parties are under the risk of payment to the nominee of the petitioner all the benefits stipulated in these policies if anything unpleasant happens to the petitioner during the policy period.

            It is further contended that as a Unit Linked Policy there is a factor of risk in this policies. Profit or loss depends on the fluctuations in the share market. It is stated that all these facts are clearly stated in the terms and conditions of the policy ie. “Investment risk in the investment portfolio is born by the policy holder.”

            Moreover all the 3 policies selected by the petitioner are lifelong policies but he had paid only 3 regular premiums in all these policies and failed to continue with the payments as per the policy conditions. So the 1^st policy lapsed on 02/03/2009, the 2^nd one lapsed on 29/05/2009 and the 3^rd one lapsed on 17/11/2009. In the 3^rd policy the period of reinstatement is 2 years from the first unpaid installment. If the policy lapses, charges would be deducted as per the terms and conditions. The 3^rd policy was terminated as on 17/11/2011 and as such surrender value of Rs.1,17,019/- as on that date was sent to the petitioner and was received by him also.

            All the policy documents contains a notice on ‘Free-Look’ whereby the policy holders have a right to reconsider their decision to purchase the policy within 15 days of receipt of the policy document in case they does not agree to the terms and conditions of the said policy. It is also clearly stated in that conditions that the returns indicated in the illustration are only indicative and are not guaranteed. The petitioner had signed the proposal form after fully knowing all these facts and hence he is estopped from making allegations that there are excess surrender charges in the said policies.

            All the acts they have done are based according to the guidelines of the IRDA regarding surrender clause, forfeiture clause, what happens if the policy lapses etc. The lawyer notice issued by the petitioner is properly replied. Hence there is no unfair trade practice or any deficiency in service on their side. No loss has been occurred to the petitioner due to any of their acts. The petitioner is not entitled to get any of the reliefs sought for in the petition and hence prayed to dismiss the petition with their cost.

The points for determinations are:

1. Whether there is any unfair trade practice or deficiency in service on the part of the opposite party?
2. Reliefs and cost if any?

Evidence consists of the affidavit filed by the petitioner, Ext. A1 to A3, B1 to B9 and deposition of PW1.

Point No. 1:  The allegation of the petitioner is that, he had purchased the policies based only on the representation made by the agent as well as the authorized officers of the opposite parties that he can surrender the same and get double amount with full profit after completion of 3 years. But when he approached the opposite parties for surrendering the said policies, they informed that he will get only 1/3 of the amount he invested. They are deducting huge amount as surrender charges which is against the rules and regulations of IRDA of India and hence unfair trade practice and also deficiency in service on their side.

But it is to be kept in mind that the insurance policy is a contract between the insurer and the insured. Like any other contract the presumption is that both the parties are having full knowledge regarding terms and conditions of the contract before signing the same until otherwise proved. Once signed both the parties can act only as per the terms and conditions of the agreement and are bound by the same. The statement of the petitioner that he was unaware of the terms and conditions and the opposite parties have not provided the same before signing the proposal form or along with the policy document is not acceptable or admissible because as a literate customer it is the duty of him to demand for the terms and conditions of the policies which he had opted if the same was not provided, and to sign the proposal form after going through it. The opposite parties are providing a Free Look period of 15 days from the date of receipt of the policy document to all the customers for studying the details regarding the policy and if they are not satisfied with the terms, they can very well return the policy and can get the amount back during that period. The petitioner has not opted for this also.

The opposite parties have produced the “Standard Terms and Conditions” with regard to these 3 policies which they claimed to have been sent to the petitioner along with the policy document and that was marked as Ext. B3, B6 and B9. A perusal of these Exhibits would show that a detailed narration of all facts with regard to the concerned policies ie. the surrender clause, what happens if the policy lapsed etc. is there in that document.

Another fact is that the said policies were Unit Linked Policies and this was admitted by the petitioner also. In Unit Linked Policies a risk element is there, means profit or loss depends on the fluctuations in the share market. So at the time of surrendering policy if the market is dull that will reflect in the fund value, and that is not any fault of the opposite parties. In such circumstances the only remedy is to wait for a boost in the market. Moreover it is also stipulated in the policy conditions that ‘Investment risk in the investment portfolio is born by the policy holder.’

Further it is to be noted that the said policies are not only market linked but also covers life insurance risk, means if anything unpleasant happens to the policy holder during the validity period, the opposite parties are liable to pay a huge amount –the assured amount- along with all the benefits stipulated in the concerned policies to the nominee of the insured even when only one installment has been paid. The opposite parties have to consider this risk factor also. In this regard the decision taken by the Hon’ble National Commission in LIC of India Vs. Anil Tadkalkar 1 (1996) CPJ (159) NC is apt to quote here. It is held that “Moreover we have not been able to understand how the complainant can claim refund of all the premia paid by him during the period of the policies remained alive and the LIC had covered the risk. If during this period the complainant had died (an event which did not occur) the insurer ie. LIC would have had to pay the full amount due under the policies even though only some fraction of the permia would have been realized by that time by the insurer. Hence on cancelling the policies the complainant is only entitled to the surrender values of the two policies. It is immaterial what circumstances prompted him to cancel the policies.”

Considering all the facts stated, perusal of documents and relying on the decision of the Hon’ble National Commission above cited, we are of the view that the issuance of cheque for an amount of Rs.1,17,019/- ie. Surrender value as on the date, to the petitioner in Policy No. RSG 1380096 at its termination due to non-payment of annual installment is only according to the terms and conditions of the policy and hence no unfair trade practice or deficiency in service can be attributed against the opposite parties in this regard. Point No. 1 found against the petitioner.

Point No. 2:  In view of the findings in Point No. 1, the petition is liable to be dismissed and the petitioner is not entitled to get the reliefs sought for in the petition.

In the result, the petition is dismissed without cost.    

Dated this the 1^st day of April, 2016

Date of filing: 19/07/2012

SD/-MEMBER                             SD/-  PRESIDENT                      SD/- MEMBER

APPENDIX

Documents exhibited for the complainant:

A1. Letter sent to the opposite party

A2. Lawyer notice sent to the opposite party

A3. Reply received from the opposite party

Documents exhibited for the opposite party:

B1. Key Feature Document

B2. Proposal Form

B3. Standard terms and conditions

B4. Key Feature Document

B5. Proposal Form

B6. Standard terms and conditions

B7. Key Feature Document

B8. Proposal Form

B9. Standard terms and conditions

Witness examined for the complainant:

PW1. Kunhammed Koya (Complainant)

Witness examined for the opposite party:

 None                                                                                                                       

Sd/-President

//True copy//

(Forwarded/By Order)

SENIOR SUPERINTENDENT