Life Insurance : Courts will come to the rescue only of a diligent consumer

You are a person in your fifties and have taken a life insurance policy with an annual premium of Rs.5,00,000/-. You wanted the policy to mature over a period of four years and when you approached the insurer after four years for the maturity benefit, you were in for a shock of your life – the insurer states that the policy you had taken was for life and not for four years and in order to have the full benefits of the policy, you need to pay premium for another thirty three years. Yes, you heard it right. Thirty three long years @ Rs.5 lakhs per annum, because the policy you had taken was a ‘Life Long Policy’ (Read a whole life policy). In case of a pre-mature payment, he offers a paltry amount of Rs.10 lakhs, half the amount of what you had paid so far.

You fume, feel cheated and appalled at the way the insurer had treated you;  aggrieved,  you move the consumer forum with a plea that you had been enticed into taking the policy and, already in the fifties, you were not foolish enough to agree to pay the huge premium for thirty seven more years.

The insurer retorts that you had not only signed the proposal to that effect but are also bound by the terms and conditions of the policy, which, if not agreeable to you, could have revoked the contract and taken back the premium within the ‘free-look period’, i.e., the cooling-off period of 15 days as per the IRDA Regulations, which you had failed to do.

You promptly deny that the free-look period of fifteen days could not be availed as the policy document was not at all received by you all these years.

And this is what the Hon’ble National Consumer Disputes Redressal Commission, New Delhi, had to say regarding your submissions:

1. The proposal, duly signed and submitted by you, was only for purchase of the ‘Life Long Plan’ and you had clear knowledge about the same ;

2. It was not your case that it the proposal was filled in by some other person ( Never mind. Even if you were to show that it was only the agent who had filled in the proposal, it may not cut much ice because it is a well settled law that an agent, while filling up the proposal on behalf of insured (policyholder), acts as an agent of the policyholder and not that of the insurer. Courts have taken a liberal view in such cases only where it was established that the proposer was an illiterate and that too sparingly);

3. It was rather unimaginable that you continued to pay premium for four years without even insisting the insurer to issue the policy for such a long time.

Moral of the story: Please take time to fill up the proposal yourself; and make sure that you understand the questions and what you are upto; go through the terms and conditions of the policy document carefully. If you are not satisfied with the terms of the policy, inform the insurer of the same in writing under proper acknowledgement within fifteen days from your receiving the document.

Counterpoint: The free-look period of fifteen days, as per the IRDA (Policyholder Protection) Regulations, would commence only from the date of receipt of policy document by the insured. Assuming that the insured did not complain about the non-receipt of policy document, was it not incumbent on the insurer to send it to the life assured under due acknowledgement? Is the onus not on the insurer to prove that the policy document was received by the insured? And if the insurer fails to establish the receipt of the same by the insured, is the latter not entitled to relief?