AEGON Religare conveniently misinterprets surrender clause for Invest Maximiser plan

AEGON Religare is misinterpreting surrender clause to force four premium payments and also not giving satisfactory answer to policyholders on surrender while enticing new product sale without any surrender charge for old policy. Will the IRDA wake up?

AEGON Religare Life Insurance (ARLI) has given Dinesh Mehta (name changed) evasive answers on policy surrender charges for over six months even though he has been repeatedly asking for an answer to a simple query. The customer care personnel has been blindly sending him cut-paste replies from the surrender clause in product brochure without even looking at Mr Mehta’s case. When Mr Mehta persisted to get an answer, the customer care got email replies from the product team of “Invest Maximiser Plan ULIP” to give clarifications. Mr Mehta was able to get inter-department emails. It shows customer care’s lack of knowledge. Moreover, they resorted to the cut-paste job even after getting clarification from the product team.

After Moneylife Foundation Insurance Helpline intervention, Mr Mehta was able to get a one-line specific answer to his question on what would be the surrender charges if he were to surrender the policy after 48 months of policy term and payment of three premiums. The reply was – “We would like to inform you that there will be surrender charges applicable of 15% of regular premium fund value.”

While Moneylife Foundation was able to force ARLI to give specific reply after taking the issue to highest level, the problem is that ARLI has clearly misinterpreted the surrender clause of its product to its own benefit. Here is the wordings from Invest Maximiser Plan ULIP product brochure which the customer care personnel were doing the cut-paste job:

Surrender - You can surrender the policy any time after the first 3 policy years. There is no surrender charge after 4 policy years. Surrender value is fund value minus the surrender charges. If you surrender the policy before 4 years, charges will depend upon the period for which you have paid your premiums, as given below:


Regular premium paid period (months)

Less than 12

12 to 23

24 to 35

36 to 47

48 onwards

Surrender charges as a % of fund value of regular premium







If Mr Mehta paid three premiums and was willing to wait for 48 months from policy inception, there should be no surrender charges as per plain reading of the surrender clause. But, ARLI has created its own interpretation and insists on payment of fourth premium or else there will be 15% surrender charges.

In fact, ARLI is lax about the surrender clause if the policyholder pays four premiums and surrenders the policy even before 48th month. In this case, ARLI does not levy charges even though it should, as per surrender clause. Here is the reason for it. According to Mr Mehta, “In Ahmedabad the Renewal Manager is approaching every one to pay 4th premium and withdraw immediately and invest in a new plan. There is no rationality of 48 months surrender charges.” He has given an example of his friend’s policy for which no surrender charges were levied even though it was surrendered in 37th months. The key here is that 4th premium was paid.


It is not the first time ARLI has been vague about is its terms in the product brochure. Last year, Aegon Religare launched Educare, a traditional child plan. The product brochure does not mention about who pays the future premium in case of death of the policyholder. While the insurer intends to offer waiver of premium (WoP), why does the brochure omit such an important line? Is such vagueness strategically inserted?


Read: Aegon Religare Educare—Does it really offer waiver of premium?



Rahul Mukherjee

2 years ago

Aegon Religare Insurance Company is a fraud insurance company. They sell their product with fake commitment. And Customer Care is too dull to respond properly. I lost around Rs. 55000 in investing in Aegon Religare, and decided not to pay a single premium to them.I suggest all peoples not to Purchase any Policy of Aegon Life Insurance (Previously Aegon Religare). They are just fake. Our Money is invaluable to them.

Raman Jain

3 years ago

The interpretation taken by Aegon is appropriate. If you read carefully and without blinkers you will be able to make sense of what is written.

Please do not defame companies for your own profit.


Debashis Basu

In Reply to Raman Jain 3 years ago

"Own Profit"?
Can you please elaborate. Or is it designed to defame us?

raj pradhan

In Reply to Raman Jain 3 years ago

It may be your interpretation about the article. No problem with it.

We can also interpret that you can be insurer man writing under personal name.

If the insurer has an issue, they can write to us. They have not done it since last 10 months of the article.


4 years ago


Sensex, Nifty may suffer further declines: Tuesday closing report

We had mentioned yesterday “while the market is on a firm uptrend, there is a chance of a sharp decline at least on an intraday basis. A fall below 5,530 will signal the first weakness”. Expect further decline after 650 points loss in Sensex today

Except for few minutes of trading in the green, Indian indices saw a gradual slide downwards, trading in the negative for the entire session and ending with a huge decline on today. The 30-share BSE Sensex opened higher at 19,003 and hit an intra-day high of 19,007. The index hit the low of 18,166 and closed down at 18,235 (down 651 points or 3.45%). The Nifty opened higher at 5,575 and, after hitting an intra-day high at 5,581, ended at 5,324 (down 209 points or 3.77%). The percentage loss on the Sensex and the Nifty is the highest since 16 August 2013. The National Stock Exchange (NSE) saw a higher volumes of 62.63 crore shares.


All the other indices on the NSE closed in the negative. The top five losers were Bank Nifty (5.20%); Realty (4.88%); Finance (4.87%), FMCG (4.63%) and Media (4.47%).


Of the 50 stocks on the Nifty, three ended in the green: Lupin (2.59%); Coal India (1.14%) and Cairn (0.91%). The major losers were Axis Bank (-10.65%); IndusInd Bank (-8.67%); DLF (-7.17%); Reliance Infrastructure (-7.11%) and Punjab National Bank (-7.05%).


Last week, after the passage of the Food Security Bill, the market was pulled down on concerns of rising fiscal deficit. Yesterday, the Rajya Sabha approved a $20 billion scheme to distribute subsidised wheat and rice to 80 crore people.


Partly because of rising concerns of higher fiscal deficit, Standard & Poor's (S&P) considers chances of a credit ratings downgrade for India higher than for Indonesia. According to S&P, there was more than a one-in-three chance for India rating cut within two years. The ratings agency has a "BBB-minus" rating on India with a "negative" outlook. A downgrade would push Asia's third largest economy to "junk" status. S&P rates Indonesia at "BB-plus."


Goldman Sachs has cut India's GDP forecast to 4% from 6% for FY14 and to 5.4% from 6.8% for FY15. It says the downgrade reflects the more difficult external funding conditions for Asia as markets increasingly anticipate Fed tapering and eventual exit from unconventional monetary policies. They have also put out more bearish forecasts for the rupee, expecting the currency to trade at 70 in three months, at 72 in six months and back to 70 in 12 months against the US dollar.


Adjustment in the rupee, which has fallen by nearly 20% since May, was called for as the country has seen higher inflation compared with other countries, Prime Minister's Economic Adviser C Rangarajan said. Today the rupee reached closer to its all time low level of 68.80 per US dollar. Just six months ago, a clueless Rangarajan had pointed out that rupee should trade between 55-53 to the US dollar.


Rising crude oil prices due to fears about a potential US military strike on Syria  also added to woes in stock markets. Russian defence ministry was quoted by a news agency as saying that the radar station at Armavir, near the Black Sea, which is designed to detect missiles from Europe and Iran, had detected two ballistic "objects" fired towards the eastern Mediterranean. However, there was no sign of a missile strike on the Syrian capital Damascus according to Russia's state-run RIA news agency.


Except for Straits Times (down 0.03%) all other Asian indices ended in the green. Nikkei 225, was the top gainer, up 2.99%.


China's official purchasing managers' index (PMI) for the non-manufacturing sector dipped slightly to 53.9 in August from July's 54.1, according to the National Bureau of Statistics. A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing. The services sector index followed the bureau's manufacturing PMI on Sunday, which showed China's factory activity expanded at the fastest pace in more than a year in August with a jump in new orders.


Australia’s central bank left its benchmark interest rate unchanged and omitted a reference to scope for more easing. Governor Glenn Stevens and his board kept the overnight cash-rate target at a record-low 2.5%. The Governor said, “The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values, and further effects can be expected over time.”


US stock markets remained closed on Monday, on account of the Labor Day holiday.


Europe's financial markets were trading lower in early trade on Tuesday ahead of monetary policy decisions in Japan, the Euro zone and the UK on Thursday and the US employment report on Friday. US futures were sharply up.




4 years ago

Everytime the anchors and analysts of CNBC TV18 turn hopeful (just by the looks of pre-opening session), market turns to prove them wrong.

A good case study for behavioral finance.

Bank of India sells its entire stake in MCX at upper circuit

While MCX shares have been hitting the upper circuit limit for 10 out of 11 days, Bank of India sold its entire 1.03% stake in the company. What made the Bank so impatient?

On Monday, Bank of India sold its 1.03% stake in Multi Commodity Exchange of India Ltd (MCX) for over Rs20 crore in the open market. The sale was made through a bulk deal on the National Stock Exchange (NSE) at an average price of Rs392.60 per share. The sale came at a time when the scrip was getting locked in its upper circuit in 10 out of the past 11 trading days. Over this period, the stock on the Bombay Stock Exchange (BSE) has moved up by over 60% to Rs391.55 as on 2 September 2013 from a low of Rs243.25 on 16 August 2013. What made Bank of India so impatient?

The stock price of MCX had crashed by over 274% to all-time low of Rs240.65 as on 16 August 2013 from as high as Rs911 as on 10 June 2013, following concerns about a scam that has wiped out another group entity National Spot Exchange Ltd (NSEL). Today, the stock again opened hitting the upper circuit at Rs411.10 and closed at the same level.

Earlier, the stock was hit on concerns about investigation into MCX, in which the Jignesh Shah-led Financial Technologies’ held 26% stake. Financial Technologies is also the main promoter of scam-ridden NSEL. While the investigation is on whether the promoter—Financial Technologies—is fit to run the exchange, there are rumours that MCX will change hands, so to speak. However, media reports say that Shah would explore all legal options to retain control of MCX.

While there is much debate about the promoters, MCX is still the leading commodity futures exchange in India with a market share of 87.3% in terms of the value of commodity futures contracts traded in FY2012-13. This brings us to the question—why was Bank of India in a hurry to sell its 1% stake when the stock had begun moving up from its all-time low?

Let’s analyse the reasons for them to sell their stake.

Scenario 1: Jignesh Shah will not able to resolve the NSEL issue

In this case, Shah would probably be declared as ‘not fit and proper’ and would cease to be the promoter of MCX. Going by the shareholding pattern of MCX, more than 55% stake is held by institutional investors. They and Forward Markets Commission (FMC) may then look for a ‘fit and proper’ person to run the Exchange. Therefore, even if Financial Technologies has to exit, the stock would look undervalued and would be attractive as an investment, not something to get rid of. The stock price of MCX started moving up when the management on 19 August clarified that it had no exposure to scam-hit NSEL.

A change in promoter probably would not make a significant impact on the current business of MCX. The Exchange would have to meet all regulatory norms and, with all these checks and balances in place. The Exchange is debt-free and has a net worth of over Rs1,000 crore. With the stock trading at less than half its value compared with previous months, it still makes a good buy. There have been reports that the Kotak Group, which has an interest in the commodity business, may acquire MCX.

This is probably the main reason the stock has been hitting the upper circuit for eight days in a row.

Scenario 2: Jignesh Shah is able to able to hold on to MCX

This would mean that MCX would continue to function as a going concern with its profits, assets, business volumes all remaining intact. That again would mean the stock has to correct upwards after the severe decline it has suffered. Only if one suspects that NSEL issue will drag on and money would be siphoned from MCX to resolve the issue would one sell the stock.

Clearly, Bank of India has acted like an impatient retail investor and sold its entire stake.

There is another possibility.

Did someone know that one of these two scenarios is going to happen soon, calculate that the stock could be undervalued and so, got Bank of India, the state run lender, to part with its shares on the cheap? Will the Bank management investigate?



Aroon Malkani

4 years ago

BOI must have bought this stock either at IPO Price or pre IPO at a discounted price
In any case they would have paid more than what they got.
Shows how even big players panic and take such actions.


4 years ago

Mrs. Vijayalakshmi iyer CMD needs to save her job so timing cannot be better otherwise she and other members of investment cell of BOI would have landed up in Taloja or TIHAR

Vinay Joshi

4 years ago


Now the circuit breakers will be on daily basis.


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