Retired naval officer promised 5-year plan, landed with 53-year policy, wins Rs 6 lakh

A Chandigarh consumer commission recently directed PNB MetLife to pay over Rs 6 lakh to a retired naval officer after finding that he was allegedly sold a policy as a five-year investment plan, only to later discover that it required him to pay Rs 2.02 lakh every year for 53 years.

President Amrinder Singh Sidhu and Brij Mohan Sharma (member) were hearing the complaint filed by one Gurmeet Singh and noted that the insurer failed to explain why a retired naval personnel living on a pension would knowingly sign up for a policy requiring annual payments of Rs 2.02 lakh for more than five decades.

“Though the opposite party has relied upon the proposal form, policy schedule, free-look period and auto-debit mandate, it has failed to satisfactorily explain the circumstances under which a retired person with limited income opted for a policy involving annual premium payments of Rs 2.02 lakh for 53 years,” the June 19 order read.

The commission held that the PNB MetLife failed to adequately inform the consumer about the nature, tenure and premium-paying obligations of the policy.

Five-year investment or 53-year commitment?

Singh claimed that the agent of the PNB MetLife Insurance Company induced him to purchase a policy called “Met Smart Platinum New” by representing that a one-time premium of Rs 2.02 lakh was payable and that the complainant would receive returns at the rate of 18 per cent every year with the entire amount becoming payable on completion of five years.

Trusting these assurances, Singh bought the policy in May 2019 and paid Rs 2.02 lakh. However, when he received the policy documents, he was shocked to find that the policy allegedly required him to pay Rs 2.02 lakh every year for 53 years.

He claimed that after finding these details, he immediately approached the company, where one of the employees assured him that the mention of a 53-year premium term was a mistake and would be rectified, while reconfirming that the policy was intended to run for only five years.

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However, later, on June 26, 2020, the insurance company debited another amount of Rs 2.02 lakh from the complainant’s bank account without intimating him. When he inquired with the company, he was allegedly informed that the policy was, in fact, for a term of 53 years and that an annual premium of Rs 2.02 lakh would continue to be deducted every year.

Aggrieved by this conduct of the company, the complainant repeatedly went to its office seeking correction of the policy and refund of the wrongly deducted amount. However, he claimed that no satisfactory action was taken by the insurance company.

Affected by the inaction on the part of the company, the complainant moved the consumer commission alleging deficiency in service and unfair trade practice on its part. He sought directions to the insurance company to pay the premium amount of Rs 4.04 lakh along with interest, compensation for mental agony and harassment and cost of litigation expenses.

Advocate Sukhbir Maandi was representing the complainant in the matter.

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Commission not convinced by insurer’s stand

The company found that the complainant is a retired naval personnel drawing a pension, and there is nothing on record to convincingly establish that he knowingly opted for a policy requiring annual premium payments of Rs 2.02 lakh for a period of 53 years.

The commission noted that neither the complainant came forward to support his version, nor did the company produce any documentary evidence to prove that the said amount.

The consumer body held that the insurance company was deficient in service and indulged in unfair trade practice by failing to ensure that the complainant was fully informed about the nature, tenure and premium-paying obligations under the policy.

The consumer body directed the insurance company to refund the agreed amount of Rs 5.97 lakh to the complainant.

The commission directed the PNB MetLife Insurance to pay compensation of Rs 20,000 to the complainant towards the harassment caused as well as litigation expenses.

PNB MetLife’s defence

The PNB MetLife Insurance argued that the complainant was granted the free-look period as per applicable regulations, during which he could have cancelled the policy if dissatisfied with any term or condition.

It was further argued that despite this, the complainant neither exercised the free-look option nor raised any objection within the given period, thereby accepting the policy and its terms.

The company denied the allegation that the policy was represented as a one-time premium policy or that returns of 18 per cent annually were assured.

He added that the renewal premium of Rs 2.02 lakh debited on June 26, 2020, was deducted strictly in accordance with the instructions and auto-debit mandate voluntarily accepted by the complainant at the time of purchasing the policy.

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The company claimed that they have acted strictly in accordance with the policy contract and applicable regulations. They requested the dismissal of the complaint, denying any deficiency in service or unfair trade practice, as well as all other allegations.

Significance of ruling

The ruling serves as a reminder that insurance companies must clearly explain key terms of a policy, including how long premiums have to be paid and the financial commitments involved.

For consumer-related grievances, individuals may contact the consumer helpline in their respective states and union territories (Chandigarh helpline: 0172-2700183) or call the National Consumer Helpline at 1915 for assistance.