A public interest litigation (PIL) filed by Moneylife Foundation was heard by the Supreme Court on Thursday. The bench of Chief Justice Ranjan Gogoi and Justice Deepak Gupta deferred the matter to 15 July 2019 as per request from senior counsel Arvind Datar, representing Moneylife Foundation.
The PIL filed on behalf of thousands policyholders of Jeevan Saral, seeks to have Life Insurance Corporation of India (LIC) and Insurance Regulatory Development Authority (IRDA) to "amend to Jeevan Saral Plan 165 policy maturity to repay all the premium paid along with bank saving rate at 8% per annum to all the existing Policy holders of the Jeevan Saral Policy."
The petition also seeks recall of LIC Jeevan Saral by IRDAI.
As highlighted by Moneylife, LIC's Jeevan Saral, which used to be a hot-selling insurance product for agents, until it was withdrawn, is a controversial product. In fact, Jeevan Saral was a traditional product that could make your premium (money paid) disappear! This can happen in many policies during surrender or making it ‘paid-up’, but, in the case of Jeevan Saral, it has happened even at policy maturity.
A senior citizen couple got just one-third of the premiums paid over the years.
The Jeevan Saral product, which has gobbled up hard-earned savings of policyholders (especially senior citizens) have also agitated LIC agents and their association. Despite innumerable letters, protests and objections, LIC has not budged so far.
Moneylife Foundation sent a memorandum to IRDAI on 18 August 2018
, pointing out that Jeevan Saral (with profit), a traditional policy, has caused senior citizens to lose as much as 65% to 70% loss of the money invested over 10 years.
From the Memorandum, IRDAI, highlighted four points in its letter to LIC and termed them as being of a 'serious nature'. These are:
1. The proposal form did not have any provision to mention the (lower) maturity sum assured; instead it had a provision only for the higher death benefit.
2. The maturity benefit was not printed on even the policy documents.
3. The agents, as well as some LIC officers were not aware of the plan in general, and the fact that customers may get lesser money than the total premium paid.
4. The prospective customers were not informed at the time of sale that the higher insurance coverage provided by the product would lead to poor (negative for those in the higher age group) returns.
Moneylife Foundation also sent copies of the Memorandum to the Finance Minister as well as the insurance regulator. The financial services department in the ministry, which looks after insurance matters, on 28 September 2018, forwarded the Memorandum to IRDAI asking its chairman to take appropriate action.
It has also asked IRDAI to inform the ministry about action taken (on the Memorandum) with regard to the Jeevan Saral policy and inform both, Moneylife Foundation and the ministry.
Moneylife Foundation has received a one-line reply to its memorandum from the LIC chairman VK Sharma, which says, "We appreciate the concerns raised by you in your letter dated 1 October 2018. It will be dutifully looked into."
However, there is no further response from either LIC or the insurance regulator, which forced Moneylife Foundation to approach the highest court seeking justice for crores of policyholders.
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