Panchkula District Commission Holds Max Life Insurance Co. Liable For Failure To Provide Payment Breakdown And Wrongfully Increasing Premiums

Brief Facts:

Mr Ram Kanwar (“Complainant”), a senior citizen with limited income, was promised life risk coverage with a half-yearly premium of Rs. 2,743/- by the Max Life Insurance Co. Ltd (“Insurance Company”) through a telephonic conversation. The Complainant was assured a 30% payout before 5 years, 35% before two years of maturity, and the remaining amount with the bonus at the policy's tenure completion. The Complainant, being a matriculate and influenced by the insurance company's executives, agreed to the policy. The insurance company obtained the Complainant's signature on a blank form during a home visit, receiving the initial premium of Rs.2,743/-. The policy commenced on 22.06.2004, and the Complainant consistently paid premiums. In December 2019, the insurance company increased the premium to Rs. 2,771/-, citing taxes. Despite paying approximately Rs. 85,000/-, the insurance company only paid Rs. 83,831/- at maturity to the Complainant. The Complainant made several communications with the insurance company but didn't receive any satisfactory response. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Panchkula, Haryana (“District Commission”) and filed a consumer complaint against the insurance company.

In response, the insurance company contended that the Complainant voluntarily opted for the "Max Life Stepping Stones" insurance plan with a Rs. 50,000/- sum assured. The policy was based on the Complainant's proposal form and declaration. The insurance company contended that no objection was raised during or after the free look period by the Complainant. It argued that the Complainant received the entire admissible amount under the policy.

Observations by the District Commission:

The District Commission noted that the Complainant received Rs. 83,831/- against a total payment of Rs. 85,000/-, with the insured sum being Rs. 50,000/-. Therefore, it held the insurance company purportedly paid Rs. 33,831/- as a bonus without providing a detailed breakup. It held the insurance company liable for not furnishing a clear breakdown of the payment and bonus.

Secondly, addressing the Complainant's concern about the enhancement of the premium from Rs. 2,743/- to Rs. 2,805/-, the District Commission held that there was no explicit provision in the policy documents empowering the insurance company to enhance the premium. Therefore, it held the insurance company liable for deficiency in services.

Consequently, the District Commission directed the insurance company to

refund the excess premium collected beyond Rs. 2,743/-, with interest at 9% per annum from the date of the premium enhancement until realization. It was also directed to pay a compensation of Rs. 5,000/- to the Complainant for the mental agony and harassment endured. It was also directed to pay Rs. 5,000/- for the litigation costs incurred by the Complainant.