LIC told to pay premium with interest after policy holder declared dead by court

The complaintant then served a legal notice on February 25, 2016, to release the amount against the policy, but LIC rejected it on the ground that the policy was lying in a lapsed condition nothing is payable. She then moved the Consumer Forum and filed a formal complaint.

Taking serious note of a complaint wherein the complaintaint had asked the Life Insurance Corporation(LIC) to release the claim amount against a policy but her application was rejected, the Consumer Forum has now directed LIC to pay the premium along with 9 per cent interest from the date the letter was rejected by the corporation.

Promila Kumari, in her complaint to the Forum had stated that her husband, Narinder Kumar, had taken a life insurance policy of Rs 1 lakh from LIC for 20 years on March 28,1999. The premium of Rs 584 per month, payable by the 28th of every month was deducted from the policy holder’s salary. The last premium was paid on April 2001 and the policy was to get matured on March 31, 2019.
Meanwhile, Kumar went missing on March 19,2001 and a FIR was lodged by Promila on March 22, 2001. Kumar was later declared dead by the court on November 5, 2011. The complaintant then served a legal notice on February 25, 2016, to release the amount against the policy, but LIC rejected it on the ground that the policy was lying in a lapsed condition nothing is payable. She then moved the Consumer Forum and filed a formal complaint.

In reply, LIC stated that the premium was deducted from the salary of the policy holder upto April 2001 and the policy remained in a lapsed condition for non-payment of the premium at the time of death, i.e till January 2014 and, therefore, nothing is payable as per the terms and conditions of the Insurance Policy.

Meanwhile, the Forum concluded that it is necessary for the policy to have been kept alive by punctual payment of premiums until the claim was made. But in the present case, the policy was lying in a lapsed condition since May 2001, on account of non-payment of the premium and the same was not revived. As such the complainant is only held entitled to the paid up value of the policy in question with interest and not the sum assured in the policy as claimed.

The Forum then directed LIC to pay the premium of the policy along with 9 per cent interest from the date of the rejection letter, ie. November 23, 2011 till its realisation.