Mis sold Regular Premium Plan instead of Single Premium Plan

In a regular premium plan, the policyholder is allowed to pay the premiums periodically, such as monthly, quarterly and annually. The premium is divided over the policy term. On the other hand, a single premium plan is an insurance plan where the entire premium is paid upfront as a lump sum payment at the beginning of the policy term. There are no further premium payments required.

However, in many cases, mis-selling of insurance policy occurs when insured individuals are mis-sold a regular premium plan instead of a single premium plan. This can happen when the insurance agent provides incorrect information to the insured, leading them to believe they are purchasing a single premium plan when, in fact, they are being enrolled in a regular premium plan.

Read the case below to know more. 

H.L.Sehgal vs 1. Birla Sun Life Insurance … on 9 April, 2013

The case involves the mis-selling of an insurance policy. The complainant, an elderly man, was approached by a representative of the Opposite Parties who promised good returns and convinced him to invest in an insurance policy as a single premium plan.

The complainant alleges that he was misled by the representative of the Opposite Parties who convinced him to invest in an insurance policy as a single premium plan. However, the complainant claims that due to his weak eyesight and the emotional distress caused by his son’s untimely death, he unknowingly signed blank papers and the Opposite Parties issued policies with regular premiums instead of the intended single premium plan. 

The complainant argues that misrepresentations, fraud and cheating took place, as the premiums were unaffordable for his income level. He requested the cancellation of the policies and a refund, but the Opposite Parties rejected the request, citing it fell outside the free-look period. The complainant filed a complaint under the Consumer Protection Act, seeking a refund compensation for mental and physical distress and litigation costs.

In response, Opposite Party acknowledges issuing the insurance policies as described but denies any wrongdoing. They claim that the policies were delivered to the complainant as proposed and since no cancellation request was received during the free-look period and subsequent premiums were not paid, the policies lapsed. Opposite Party denies misrepresentation, fraud, cheating, deficiency in service and unfair trade practices. They argue that the complainant, being educated, understood and signed the proposal forms and declarations. They refute the allegations made by the complainant.

The District Forum dismissed the complaint after considering the serious allegations of misrepresentation, fraud, and cheating leveled against the Opposite Parties, stating that the disputed facts cannot be adjudicated in summary proceedings. The complainant then filed an appeal against this decision.

However, it was stated that both the complainant and the Opposite Parties presented evidence through affidavits, and only the Civil Court is capable of resolving such intricate questions. Therefore, the District Forum correctly ruled that it lacked jurisdiction to decide the complaint. Also, the complainant was allowed to resort to other legal options to seek redress for their grievances under the applicable laws.           

What can you do if you are sold a regular premium plan instead of a single premium plan?

If you have been mis-sold an insurance policy, here are some steps you can take:

Review the policy terms: Carefully examine the terms and conditions of the insurance policy to determine if there was any misrepresentation between what was promised and what was actually provided. If so, you will be provided with a 15 days free look period to cancel the policy. 

Contact the insurance company: Reach out to the insurance company’s customer service department or the agent who sold you the policy. Request a resolution or clarification regarding the discrepancy.

File a complaint: If the insurance company does not provide a satisfactory resolution, consider filing a formal complaint with the IRDAI, Insurance Ombudsman or Consumer Forum. 

Conclusion  It’s important to consult with insurance experts to understand your legal rights and options. They can provide guidance on whether you have a valid case for compensation and help you in the process.