Case Title: Life Insurance Corporation Of India Vs. Brijendra Kumar Tyagi
Case Number: F. A. No. 888/2021
The National Consumer Disputes Redressal Commission, presided over by Dr. Inder Jit Singh, ruled against an appeal made by Life Insurance. The commission emphasized that the interpretation of insurance policies should favor the policyholder and their beneficiaries.
The case came to light when the nominee of the policyholder approached Life Insurance Corporation for a pension policy. Due to the unavailability of the relevant form (Table No.147), an alternate form (Table No.122) was used. The policy commenced the following day with an annual premium of Rs.10,000 for 34 years. The policy’s special provisions stated that all premiums paid until the policyholder’s death would be reimbursed, accumulated at LIC’s set rate, alongside any term assurance sum assured.
However, the policyholder died in a road accident without having submitted the necessary form or application for the Term Rider Benefit. The insurance company returned the paid premium of Rs.10,000 and accrued interest of Rs.125 to the nominee, who accepted without protest. After a failed complaint with the Insurance Ombudsman, the nominee brought the case to the State Commission. The State Commission ruled in favor of the complainant, a decision that the insurer then appealed at the National Commission.
The insurer argued that the complainant did not meet the definition of a consumer as per the Consumer Protection Act 1986. They claimed that the State Commission’s order relied on assumption rather than the contract’s terms and conditions. They also argued that the use of Form 122 instead of Form 147 was due to the latter still being printed, and should be viewed as an irregularity, not illegality. The insurer contended that the policyholder was not entitled to term rider benefits without submitting Form 300 or a specific request.
The Commission noted the insurer’s use of the wrong form (Table 122) for a policy under Table 147, which caused confusion about whether the deceased had chosen an Annuity Plan with or without Term Rider Benefit. The commission referred to the Supreme Court’s verdict in Canara Bank Vs. United India Insurance Co. Ltd. & Ors. (2020), which asserted that insurance policies should be interpreted to benefit all parties involved. Any coverage clauses should be broadly interpreted, and ambiguities should be resolved in the insured’s favor, while exclusions or exceptions should be interpreted narrowly. Thus, the commission decided that the insurer could not treat the policy solely as an Annuity Plan without the Term Rider Benefit.
In conclusion, the Commission upheld the State Commission’s order and dismissed the insurer’s appeal. This judgment underscores the importance of clear communication between an insurer and policyholder to avoid misunderstandings and ensure that the policyholder’s interests are protected.
