Chandigarh Consumer Disputes Redressal Forum has levied penalty of Rs 50,000 and litigation costs of Rs 10,000 on a private insurance company for indulging in unfair trade practice towards a Jalandhar resident who earlier resided at Chandigarh.
President of the Forum PD Goel and Member Rajinder Singh Gill have maintained that if a complainant does not pay the premium after first year of the policy, her policy will lapse in respect of her life risk cover. However, the units purchased from the amount of her first premium, viz. 23,700 units cannot be forfeited automatically.
The complainant is entitled to the fund value of those units after deducting necessary charges, held the Forum.
The Forum has directed the insurance company to pay the full value of the balance units to the complainant after deducting the necessary charges, if any, at the current market price. The insurance company has been directed to supply to the complainant the details of deductions, if any, made by them.
The order was delivered by the Forum following a complaint made by Charan Kamal Kaur, a resident of Jalandhar. In her complaint, Kaur stated that she purchased the company’s Life Long Unit Linked plan in 2006. She stated that the company painted a very rosy picture of the plan to her, and she invested Rs 6 lakh as single premium in it.
Later, Kaur learnt that the policy had lapsed without any value, and she was not entitled to any benefits. After making persistent enquiries, she was told by the company in July 2010 that the policy was not a single premium policy but an annual payment policy.
Kaur alleged that the company never sent her any notice amount payment of premium, which amounted to deficiency in service.
In its reply, the company stated that a minimum of three annual installments were required to be paid by the complainant to claim any surrender value. The company added that four years after the commencement of the policy, Kaur could not claim that she was not aware about its correct features.
After considering the case, the Forum said the company’s argument was right that the policy purchased by the complainant is a unit-linked product. Its a market-linked policy and depends on market fluctuations, so the investment risk is borne by the policy-holder. Hence there was no question of repayment of full premium amount to the complainant, held the Forum.
The Forum observed that since Kaur did not pay the premium after the first year, her policy would stands lapsed in respect of her life risk cover. However, the units purchased from the amount of her first premium (23,700 units) could not be forfeited automatically. The Forum held that Kaur is entitled for the fund value of those units, after deducting necessary charges, and directed the company accordingly.
Express news service
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