Hyderabad: The insurance ombudsman has directed ICICI Prudential Life Insurance to pay Rs 23 lakh as refund of premium and interest on the amount to city resident Jai Prakash Agarwal for terminating his policy and refusing to review the decision.
Mr Agarwal had taken a Premier Life Gold policy from ICICI Prudential Life for Rs 1.3 crore for 19 years with a three-year premium paying term. After paying the first premium, he exercised the option for reduction of premium amount to Rs 10 lakh under the policy provisions. Thereafter, he paid premiums for two years at the revised rate of Rs 1 lakh.
There was no communication from the insurer, who only sent account statements. On July 18, 2017, Mr Agarwal received a letter from the insurer with a cheque for Rs 93,791.85 as final foreclosure payout as per the policy terms.
When he complained, the insurer contended that since the fund value had fallen down to less than 110 per cent of the annual premium, the policy has been automatically terminated as per the terms and conditions.
When Mr Agarwal’s petition to the company went unheeded, he went to the ombudsman.
The ombudsman was of the opinion that the need for revision of life cover when premium was reduced was never explained to Mr Agarwal. Had he been informed, Mr Agarwal would have duly modified the life cover accordingly.
The ombudsman said since Mr Agarwal was not apprised of the consequences and kept in the dark, it was a grave mistake on the part of insurer. “No sensible person would invest Rs 12.5 lakh for nine years to receive Rs 93,791.85. This has caused huge financial loss to the insured which needs to be compensated,” the ombudsman said.
The ombudsman directed the insurer to return the amount paid by the insured along with interest at 8.25 per cent on the actual premium paid, which amounts to Rs 23,42,928. The insurance company cleared the award amount to Mr Agarwal.
