Reliance Life’s goodwill gesture of refunding Rs3 lakh to an illiterate widow, having a handicapped son, made a wonderful New Year gift. The fund value of her ULIP was only Rs1 lakh. The case which was taken to the insurer on humanitarian grounds was solved in a couple of days
Reliance Life has refunded Rs3 lakh to an illiterate 70-year old widow with totally handicapped son. She was mis-sold Reliance Super Market Return Plan (ULIP) in December 2009. Within a couple of days of Moneylife Foundation approaching Reliance Life with the humanitarian request, the policyholder has been offered a full refund of three years (Rs3 lakh) even though the fund value is a mere Rs1 lakh. The widow has been living on a meagre income along with her handicapped son. The refund has been completed, which is like a New Year’s gift to the old widow.
An insurance agent had approached the widow four years back and explained that if she pays one lakh premium annually, the policy will provide an insurance cover of Rs8.50 lakh. In case of her death, the handicapped son will get Rs8.50 lakh and he will not have a problem of livelihood. He also explained that if she pays for three years then she can withdraw all the money, however, coverage will continue for rest of her life. On this explanation, the poor widow took the insurance with the hope that her son will have a peaceful life after her death. She thought that she would get back Rs3 lakh after three years and the insurance cover will continue till her death.
It was a clear case of mis-selling. After four years, the fund value is Rs1.06 lakh due to hefty mortality charges, other charges and equity exposure. Would the old lady have known that in the last four years, Rs1.41 lakh went towards the risk cover? Does the agent who sold the policy even understand the risk cover charges at old age; why make promise of getting full money back after three years? Does illiterate person even understand what is meant by equity exposure let alone know anything about ULIP?
But, this is how ULIPs have been mis-sold by several life insurance companies. ULIPs sold before September 2010 had gigantic front-loaded charges, which made it lucrative for agents to make false promises to sell the product by hook or crook. It did not matter whether the buyer is getting a raw deal; getting big agent commission was the sole objective.
Recently, Reliance Life call centre told the old widow that if the fund value goes below one lakh then insurance policy would auto-surrender. She was asked to make fourth premium payment to keep the policy in-force. She and her son were shocked to hear that she can only get Rs1.06 lakh back in case of policy surrender. Moneylife Foundation Insurance Helpline was approached by one of her acquaintance as she was not in a position to write.
Moneylife Foundation is glad that Reliance Life took only couple of days to make offer for refund of full premium of Rs3 lakh. She has been given the full refund. A nice gesture from Reliance Life to the old widow will be remembered by her and son for a lifetime.
The year 2013 began with Reliance Life refunding Rs12 lakh investment along with Rs1.75 lakh interest, which is about 7.5% per annum to Arvind Injamuri. He was given justice after Moneylife Foundation fought for his case for nearly a year. Mr Injamuri, 65 years old, a standard 9th failed, retired railway employee living at Solapur, put his retirement kitty in insurance products. He was given false lure of TVS Scooty Pep which was part of agent “Fantastic Contest”.
All the nine policies had been issued in the names of his family members as Mr Injamuri did not qualify for highest NAV policies. He was seriously, and correctly, worried about inaccurate personal details, wrong or unidentifiable photos, PAN details of sister when she had never applied for one and forged signatures in the policy documents have rendered them worthless, since there are bound to be issues if and when a claim has to be made.
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Moneylife Foundation’s Insurance Helpline was started in 2013. We have received and solved all the 24 cases of Reliance Life insurance policy sold with a bait of fraudulent “interest-free loans” of 10 times the premium from Reliance Capital. In 23 out of 24 cases, Reliance Life’s corporate agent AB Capital was involved. The total refund made by Reliance Life has been Rs12.74 lakh. Three more AB Capital fraud selling cases have been taken up last week and we are awaiting response for the same.
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