The National Consumer Disputes Redressal Commission (NCDRC) mandated SBI Life Insurance to fulfill the insurance claim of a deceased customer, settling the remaining home loan amount. The husband of the deceased policyholder endured a 13-year struggle to secure the claim.
Loan and Insurance Details
Harjit Kaur acquired a Rs 9 lakh home loan from SBI, obligatorily coupled with the purchase of the SBI Life Dhanraksha Plus LPPT insurance policy. The premium of Rs 63,445 elevated the total disbursed loan amount to Rs 9.63 lakh. The insurance policy aimed to cover the home loan outstanding in the event of the borrower’s demise, preventing the burden from falling on the family.
Tragic Event and Claim Rejection
Mrs. Kaur’s demise on June 10, 2011, led her husband to file an insurance claim, which SBI Life rejected. The rejection was based on allegations of suppressing material evidence regarding the policyholder’s pre-existing illnesses.
District Consumer Forum Ruling
The District Consumer Forum, in its October 15, 2015, order, identified forced insurance selling and accused the insurance company of denying a rightful claim. It considered the policyholder’s compelled purchase due to the bank’s influence and ordered SBI to settle the claim, along with compensation and litigation costs.
State Consumer Forum Appeal
Following SBI Life’s loss in the District Consumer Forum, an appeal was filed in the State Consumer Forum. The State Consumer Commission, on August 19, 2016, overturned the District Forum’s decision, asserting that the policyholder concealed health information, rendering the insurance contract void-ab-initio.
NCDRC’s Observations and Verdict
The husband appealed to the NCDRC, which observed that the insurance policy was a collateral compulsion of the housing loan. The NCDRC, in its December 4, 2023, order, held SBI Life accountable for unfair trade practices and service deficiencies, upholding the District Forum’s decision. It emphasized that the deceased policyholder did not independently seek the insurance policy.
NCDRC’s Award
The NCDRC deemed SBI Life at fault, citing unfair trade practices and service deficiencies. It set aside the State Commission’s order and affirmed the District Forum’s decision, considering the acts and omissions as constituting ‘unfair trade practice’ and ‘deficiency in service’ under the act.
Ncdrc award in favour of deceased insured is a rightful verdict. Many housing loan have their own homeloan protection liability policy and single premium is compulsory to take from their insurance co otherwise loan cannot be disbursed. Housing loan co should not force to take an insurance policy . If it is required applicant will take it. In so many cases loan applicant have sufficient existing policy against bilateral security but banks will foce to take again additional premium and giving their own policy. This practice is very bad