Chandigarh Consumer Commission Holds LIC Liable For Reduced Maturity Payout Under Jeevan Saral Policy

The District Consumer Disputes Redressal Commission-I, Chandigarh, comprising Pawanjit Singh (President) and S.K. Sardana (Member), held the Life Insurance Corporation of India (LIC) liable for deficiency in service and unfair trade practice for paying a reduced maturity amount under Jeevan Saral Policy despite the policy document issued to the complainant reflecting a higher maturity sum assured. The Commission observed that LIC failed to justify the alterations made in the policy copy subsequently produced during the proceedings.

Brief facts

The complainant, Shanti Devi, had purchased LIC's Jeevan Saral Policy for a term of 15 years commencing on 28-03-2010 and maturing on 28-03-2025 by paying an annual premium of ₹18,015. According to the complainant, the policy provided for a maturity sum assured of ₹3,75,000 along with corresponding loyalty additions. Upon maturity, LIC paid only ₹2,71,503, comprising ₹1,78,035 as maturity amount and ₹93,468 as loyalty addition. Dissatisfied with the reduced payout, the complainant approached LIC seeking clarification, but no satisfactory explanation was provided.

Aggrieved by the alleged short payment, the complainant filed a consumer complaint before the District Consumer Disputes Redressal Commission-I, Chandigarh, alleging deficiency in service and unfair trade practice on the part of LIC.

Contentions of LIC

LIC contended that the maturity sum assured under the policy was only ₹1,78,035 and not ₹3,75,000. It was argued that ₹3,75,000 represented the death benefit sum assured and not the maturity benefit. LIC further submitted that the payable maturity amount along with loyalty addition had already been released strictly in accordance with the policy terms and conditions.

Observations and Decision

The Commission observed that the main dispute was regarding the actual maturity sum assured under the LIC Jeevan Saral Policy. After examining the policy documents, the Commission found that the copy earlier issued to the complainant mentioned the maturity sum assured as ₹3,75,000, whereas the later document produced by LIC showed ₹1,78,035 with apparent additions and alterations. The Commission held that the earlier policy document had greater evidentiary value and LIC had failed to justify the reduced payment.

Holding LIC guilty of deficiency in service and unfair trade practice, the Commission partly allowed the complaint and directed LIC to pay the balance amount of ₹1,96,965 along with loyalty benefits and 9% interest from the date of maturity. LIC was also directed to pay ₹10,000 as compensation and ₹10,000 as litigation costs.

Case Title: Shanti Devi v. Divisional Manager, Life Insurance Corporation of India & Ors.

Case No.: DC/44/CC/190/2025

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