Case: Satwinder Kaur Vs. Life Insurance Corporation of India
Forum: National Consumer Disputes Redressal Commission (NCDRC)
Presided by: Justice A.P. Sahi and Dr. Inder Jit Singh
Brief Facts of the Case
- The Policy: The complainant, Satwinder Kaur, was the nominee of her son Tarandeep Singh’s life insurance policy, issued by the Life Insurance Corporation of India (LIC). The policy was a 20-year money-back policy with a sum assured of ₹8,00,000.
- Premium Payment: The premiums were paid through the Electronic Clearing Service (ECS).
- Death of the Insured: Tarandeep Singh passed away on February 1, 2015, due to a heart attack.
- Claim Filed: Satwinder Kaur submitted a claim for the sum assured to LIC.
- LIC’s Response: LIC rejected the claim because the premium due on January 21, 2015, was not paid as the ECS transaction had bounced.
- Legal Proceedings: Dissatisfied with LIC’s response, the complainant approached the District Consumer Disputes Redressal Forum, which ruled in her favor. LIC appealed to the State Commission and later to the NCDRC after unfavorable decisions.
Final Judgment:
- Policy Validity: The NCDRC noted that although the ECS transaction for the January 2015 premium had failed, the policy was within its grace period of 15 days when Tarandeep Singh passed away. Hence, the policy was still in force at the time of his death.
- Deficiency in Service: LIC’s refusal to settle the claim and its failure to act promptly were deemed as deficiencies in service.
- Holistic Interpretation: The Commission emphasized that insurance policies should be interpreted inclusively to fulfill the reasonable expectations of the insured.
- Decision: The NCDRC dismissed LIC’s appeal and upheld the decisions of the District and State Forums. It directed LIC to pay ₹8,00,000 as the sum assured along with interest to the complainant.
Significance: This judgment reinforces the principle that insurance companies must interpret policy terms to protect the interests of the insured and act promptly in settling legitimate claims.