Page 54 - Insurance Times July 2024

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Revive policy or accept surrender value terms of the policy. Kumar, on the other hand, claimed that
merely because he failed to pay the premium, the policy
Neeraj Kumar obtained a whole-life unit-linked insurance
policy from PNB MetLife India. Under the policy called "Met could not be terminated without notice, as the policy con-
Smart Plus Policy", which Kumar purchased, his son was ditions provided for reinstatement. He argued that the
insured for Rs 1.75 crore. The policy had a term of 93 years termination of the policy without notice was illegal and
for which the premium was Rs 5 lakh per annum. unjustified.

The policy commenced on September 27, 2007, and Kumar The National Commission agreed with the insurer's explana-
paid Rs 15 lakh over three years as premium. From the tion. It pointed out that the policy terms provided an option
fourth year onwards (from 2010), he stopped paying the to surrender the policy for withdrawal benefits after three
annual premium. years. The National Commission further noted that if the
policyholder wanted reinstatement, he should have made a
On October 31, 2013, Kumar was informed that the policy written request and should have also cleared the premium
had been terminated as the renewal premium had not been till that date, but no such request had been made.
paid after September 27, 2010. He was paid Rs.
13,91,553.54 as foreclosure proceeds. Kumar was surprised The Commission observed that Kumar was not a lay con-
that the policy had been terminated without issuing any sumer, but was well-educated and working as the chief
notice or an opportunity to apply for reinstatement. So, he executive of Jindal Saw, so he should have abided by the
filed a complaint before the National Commission seeking terms of the policy. However, having failed to do so, the
a direction to the insurer to continue the policy without Commission concluded that Kumar could not be allowed to
demanding any more premium. claim a right to reinstatement of the policy.

He argued that a policy commencing at the age of 8 years In its order of May 27, 2024, delivered by Justice A.P. Sahi,
with a term of 93 years with an annual premium of Rs. 5 the National Commission noted that the annualised pre-
lakh was absurd as the policy would go beyond the life ex- mium paid over three years was Rs. 15 lakh, while the in-
pectancy of the policyholder and the cumulative premium surer had computed the gross surrender value at Rs.
would exceed Rs. 4.5 crore. 16,16,273.54 (Rs. 2,24,720 deducted as surrender charge.
Accordingly, it concluded that there was no merit in the
The insurer argued that the terms of the policy provided complaint and dismissed it with the observation that the
for surrender or withdrawal benefits after three years, so payment made by the insurer was correct and in conso-
the payment made was correct and in accordance with the nance with the terms of the policy.

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48 July 2024 The Insurance Times