Insured Is Required To Read Policy Documents Before Signing: NCDRC

Brief Facts of the Case

The complainant, a retired employee, was misled by Max New York Life Insurance/insurer into believing he was investing in a fixed deposit (FD) that would double in 5-6 years. Instead, he was issued a “Life Maker Premium Investment Plan” requiring higher payments. After making a single deposit, he later discovered the policy had been surrendered, and the fund value was zero. Despite agreeing to pay an outstanding amount, the insurer informed him the policy couldn't be revived and denied any refund. Aggrieved, the complainant filed a complaint before the State Commission of Rajasthan, which dismissed the complaint. Consequently, the complainant appealed before the National Commission.

Contentions of the Insurer

The insurer denied all allegations, stating that the disputed policies were Unit Linked Plans, subject to market fluctuations. The complainant was given the option to cancel the policies if unsatisfied but did not do so, implying acceptance. The policyholders, the complainant's son and daughter, had agreed to the terms, including paying premiums for five years. However, the complainant only paid the initial premiums, leading to the policies lapsing after repeated reminders. An attempt to revive one policy failed due to a dishonoured cheque. The insurer argued there was no deficiency in service and requested dismissal of the complaint.

Observations by the National Commission

The National Commission observed that The Commission observed that there was no deficiency in service or unfair trade practice by the insurer. It was undisputed that the complainant had entered into a transaction with the insurer, received the policy documents, and did not exercise the option to cancel the policy within the 15-day window. The Commission noted that the complainant's son, who was the sales manager, and his daughter-in-law sold the policies and benefited from commissions and incentives. This indicated the complainant was fully aware of the transaction. Despite the policy lapsing and a dishonoured cheque for policy revival, the Commission rejected the complainant's claim that he couldn't act due to non-receipt of the policy documents. The complainant, a reasonably prudent and educated individual, was expected to review or request documents before signing. Hence, the Commission upheld the State Commission's order dismissing the appeal.

Case Title: Prem Singh Vs. Max New York Life Insurance Co. Ltd. & Anr.

Case Number: F.A. No. 1060/2018

Click Here To Read/Download The Order