ANJANA KHANDELWAL vs Life Insurance Corporation of India

SOLE question in this complaint, filed by the complainant Smt. Anjana Khandelwal under Section 17(a)(i) of the Consumer Protection Act, 1986, for determination is whether life Insurance Policy No. 190154684 underwhich complainant''s husband Jugal Kishore Gupta, who died on May 11, 1991 in a bus accident was insured, had lapsed as pleaded by the opposite parties in their version filed before this State Commission on May 22,1993.

LATE Jugal Kishore Gupta had got his life insured with the Life Insurance Corporation of India under "Jeevan Mitra" (double cover endowment plan with profits (with accident benefits) for a sum of Rs. 50,000/- under Policy No. 190154684 commencing from May 28,1988 with date of maturity as May 28,2008. Rupees 1285.30 was payable as half yearly premium in the month of November and in the month of May of the succeeding year and so on. Complainant being the nominee, was beneficiary of the policy. Half yearly premium was duly paid by the insured upto May, 1990. Next half yearly premium became due in November, 1990. Jugal Kishore Gupta sent a cheque No. 311673 dated February 15,1991 for an amount of Rs. 1307/-to the Senior Branch Manager of L.I.C., Divisional Office, Jaipur with respect to the half yearly premium which had fallen due in November, 1990. This cheque was returned by the Senior Branch Manager with the letter dated March 9,1991 mentioning therein that the cheque was dishonored. It was also told that if the complainant deposited the amount of half yearly premium which fell due in November, 190 upto May 27, 1991, she would have further to deposit an amount of Rs. 57.83 as interest and that the complainant could accordingly deposit the premium amount alongwith interest upto May 27,1991. However, the husband of the complainant died in a bus accident on May 11, 1991 and he could not deposit the above half yearly premium alongwith interest despite the fact that there were 16 days still available for May 27, 1991 to reach. Upon claim being made, the complainant was only paid Rs. 25,000/- as ex-gratia payment by the Life Insurance Corporation by Cheque No. 411962 dated September 10, 1991. On representation being made by the complainant, she was informed by the Senior Branch Manager that as on the date of death of Jugal Kishore Gupta, the insurance policy was in a lapsed condition, the L.I.C. considered the claim and has paid Rs. 25,000/- to the complainant on ex-gratia basis by way of special claim compensation. Upon the above facts, it has to be decided whether on the date of death of complainant''s husband by bus accident on May 11, 1991, the insurance policy was in a lapsed condition or was still surviving. We have seen the conditions and privileges attaching to the insurance policy by perusing the insurance policy of late Jugal Kishore Gupta. Condition No. 2 of the policy provides that a grace period of one month but not less than 30 days will be allowed for payment of yearly, half-yearly or quarterly premium and 15 days for monthly premiums. If death occurs within this period and before the payment of the premium then due, the policy will still be valid and the sum assured is paid after deduction of the said premium as also the unpaid premiums falling due before the next anniversary of the period. If the premium is not paid before the expiry of the days of grace, the policy lapses. If the policy has not lapsed and the claim is admitted in case of death under a policy where,the mode of premium is other than yearly, unpaid premiums, if any, falling due before the next policy anniversary shall be deducted from the claim amount.

It is clear from the above condition that the policy can remain valid, if the death occurs within the grace period of one month (but not less than 30 days) even before the payment of the premium then due. However, if the death occurs beyond the above-mentioned grace period and the payment of the premium due was outstanding, the policy lapses. It is clear from condition No. 3 that a lapsed policy can be revived only during the life time of the life assured, but within a period of five years from the date of the first unpaid premium and before the date of maturity, on submission of proof of continued insurability to the satisfaction of the L.I.C. and payment of all arrears of premium together with interest at such rate as may be prevailing at the time of payment, but not exceeding 9% per annum compounding half yearly. The Corporation reserves the right to accept or decline the revival of discontinued policy. The revival of a discontinued policy shall take effect only after the same is approved by the Corporation and is specifically communicated to the life assured.

IN the instant case, the premium had become due on 28.11.90 and the grace period of one month had expired on 28.12.90. Amount of Rs. 1307/- remitted by Jugal Kishore Gupta in respect of half yearly premium and interest by cheque dated 15.2.91 was not paid to L.I.C. as the cheque was dishonoured and was returned to the deceased on 9.3.91. Jugal Kishore Gupta died on 11.5.91 when the policy had lapsed after the expiry of grace period on 28.12.90. The mere fact that in the first information sent by L.I.C. regarding non-payment of premium due on 28.11.90, the L.I.C. had specified instructions regarding the amount of interest payable upto various dates i.e. 1.1.91,10.2.91,13.3.91,1.4.91, 11.5.91 and 27.5.91 in case the due premium was paid upto these dates, it did not have the effect of continuing the insurance policy in existence upto 27.5.91. The instructions relating to interest amount was only for the information of the insured that in case he paid the due premium upto any of the above dates, different amounts of interest would have also to be paid alongwith the premium amount on account of delayed payment of the premium. These specifications of interest amounts could not at all have the effect of preventing the lapse of the policy on the expiry of the grace period. These specifications of interest amounts were solely meant in connection with revival of discontinued policies. Revival of discontinued policy could be made only during the life-time of the Life Assured and not after its death. Non-forfeiture Regulations contained in Clause 4 could only apply if at least three full /ears'' premium had been paid in respect of the policy. That had not happened in the instantcase as the insurance had commenced on 28.5.88 and the premium had been paid only for two full years in respect of the policy.

CONDITION No. 5 would be attracted which provides that in case any condition contained in the policy is contravened or in case the premium shall not be duly paid, the policy shall be void and all claims to any benefit in virtue of the policy shall cease and determine and all moneys that have been paid shall belong to the Corporation, except always in so far as relief is provided in terms of the privileges contained in the policy or may be lawfully granted by the Corporation. Accident benefit could accrue if at any time when the policy is in force for the full sum assured, the life assured, before the expiry of the period for which the premium is payable, is involved in an accident resulting in death. In the present case, the policy had lapsed and death of Jugal Kishore Gupta in accident occurred after the expiry of the period for which the premium was payable. The basic condition is that the accident resulting in death ought to have occurred when the policy was in force for the full sum assured and should not have lapsed. Accident benefit was, therefore, also not available to the complainant. What the complainant, therefore, was paid was by way of relaxation in the matter of settlement of death claim under policies where premiums had been paid for full two years. For that the Corporation by way of relaxation had provided as follows : - "After at least two full years premiums have been paid under a policy- (a) if the death of the Life Assured were to occur between three and six months of the due date of the first unpaid premium, to the extent of half the sum assured only without addition for any declared bonuses and without deductions towards any unpaid premium due from before the date of death or thereafter within the policy year of death. (See L.I.C.''s Policy Servicing Manual No. 11 (Claims) (31.12.90) page 26). It is further provided at page 27 that in the case of policies issued under Multi-purpose Plant and Jeewan Mitra Plan, the concession will be given with regard to the basic sum assured only. Neither the family income benefits available under Multi-Purpose Plan nor the Double Sum Assured under Jeevan Mitra Plan payable on death would be available." This relaxation is allowed by way of administrative instructions without effecting the existing provisions relating to payment of premiums (Days of Grace) and non-forfeiture Regulations contained in the terms and conditions of policy.

THE complainant has already been paid to the extent of half the sum assured i.e. Rs. 25,000/- and she was not entitled to anything more for the reason that policy had lapsed. It could not be revived on account of the death of the Life Assured and Non-forfeiture Regulations also did not apply. Thus there was no deficiency in service.

RESULT is that this complaint fails and is hereby dismissed. Parties are left to bear their own costs. Complaint dismissed.