The bereaved family of a road accident victim was in for relief after a consumer forum directed the Life Insurance Corporation of India (LIC) to pay the sum insured amounting to ₹1.85 lakh. The forum found evidence that LIC had failed to settle the claim.
The District Consumer Disputes Redressal Forum was dealing with a complaint filed by M Chandrakala, a resident of Srirampur in Mancherial district.
In her complaint, she stated that her husband, who died in April 2016, had obtained three policies under the Salary Savings Scheme. She filed a claim and when there was no response, she sent a legal notice.
The LIC then communicated to Ms. Chandrakala that the policies had lapsed, and repudiated the claim.
Bone of contention
For its part, the LIC stated that the policy had lapsed and that the Salary Saving Scheme works in such a way that the employer pays the premium. If, due to some reason, that does not happen, it is up to the employee to pay the premium.
It also stated that there is around ₹20 crore in lapsed policies and that LIC incurs heavy expenses for reminding policy holders to make payments.
“If the policy lapses for non-payment of premiums within first three years of commencement of policy, it is in fact a drain on the finances of the corporation. If LIC has to honour all such claims under these lapsed policies, as and when policy holders die, the entire life fund of the corporation would not be sufficient to meet such a mammoth liability,” it stated.
Reminder of duties
Taking arguments and evidence placed on record, the forum noted that the complainant relied on a National Consumer Disputes Redressal Commission order which stated that the LIC is liable to pay the claim even if the employer does not pay premium.
The forum stated that on one hand, it is the duty of the LIC to inform of non-payment of premium, and on the other, it is the duty of the policy holder to ensure that premium is remitted on time.
Interest imposed
Apart from honouring the claim with relevant payment deductions, the forum imposed interest at 9% per annum and ligitation costs of ₹5,000.
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