A life insurance company has been ordered to refund Rs 2.74 lakh and pay compensation to a policyholder after failing to prove that it provided the mandatory policy handbook containing terms and conditions before the proposal was finalized.
In an order issued on August 20, the Thiruvananthapuram District Consumer Disputes Redressal Commission found the insurer deficient in service and guilty of unfair trade practices. The three-member panel, comprising Commission President P V Jayarajan and members Preetha G Nair and Viju V R, directed company officials to jointly and severally remit the refund alongside Rs 10,000 in compensation for mental distress and financial loss, plus Rs 3,000 to cover legal costs, within 30 days.
Failure To Furnish Policy Handbook
The complaint was initiated by a consumer who purchased a Life Guaranteed Income Pro policy for his daughter after being approached and persuaded by company agents. On February 22, 2022, he remitted the first annual premium payment of Rs 3,09,145, an amount inclusive of Goods and Services Tax.
According to the policyholder, the contractual conditions governing the policy were not disclosed in advance. Although he requested the terms and conditions handbook, the insurer did not deliver the document until three months after receiving the premium payment.
Medical Crisis And Surrender Refusal
Following the transaction, the man suffered a stroke that caused speech and comprehension difficulties, impaired mobility, and paralysis or numbness across his face, arm, and leg. As the sole earning member of his family, and with considerable sums required for surgical treatment, ongoing medical care, and pharmaceuticals, he found himself unable to continue paying subsequent premiums.
When the complainant approached the insurer to terminate the coverage and recover the deposited sum, the company declined, stating that its rules did not permit any premium refund upon surrendering the policy at that stage. The policyholder had previously submitted a grievance regarding the withheld handbook to the insurance ombudsman before seeking relief from the consumer commission through his legal representatives, advocates Ajitha V K Nair and Sachin V L.
Commission Findings And Authorized Deductions
In its ruling, the commission observed that the matter constituted an exceptional case involving peculiar circumstances, distinguishing it from conventional disputes concerning claim repudiations under standard exclusionary clauses. The panel noted that the evidentiary record was devoid of proof showing that the booklet containing the policy terms was delivered to the applicant before he submitted the proposal form.
The commission also highlighted that although the insurance company entered an appearance through legal counsel following notice, it failed to submit a formal written response countering the allegations.
While granting relief to the consumer, the commission acknowledged that the insurer had incurred legitimate administrative outlays in issuing the contract, encompassing documentation charges, intermediary commissions, and statutory taxes. The bench ruled that the company was entitled to retain Rs 35,000 to cover these operational costs, calculating the final refund directive at Rs 2.74 lakh.
