LIC told to pay Rs. 2.78L for misleading man over health insurance

LIC has also been asked to pay Rs. 2.78 lakh — Rs. 1.83 lakh towards medical expenses incurred by the consumer’s wife, and Rs. 95,000 towards harassment and litigation cost.

The State Consumer Disputes Redressal Commission has held the Life Insurance Corporation (LIC) guilty of unfair trade practice for giving a consumer a different policy with fewer benefits against the one chosen by him and failing to explain the terms and conditions of the other policy “in their language”. The LIC has also been asked to pay Rs. 2.78 lakh — Rs. 1.83 lakh towards medical expenses incurred by the consumer’s wife, and Rs. 95,000 towards harassment and litigation cost.

The corporation was fined by the district consumer disputes redressal forum, Alibaug for denying the claim of a man for surgery of his wife for breast cancer. (HT FILE)

“Selling a different insurance policy that would fetch less benefits without explaining the terms and conditions to the consumers in their own language amounts to unfair trade practice,” held the commission while dismissing the appeal filed by the LIC on Thursday. The commission specified that the corporation has to make the consumer understand all their terms and conditions in their language to obtain ‘informed consent’.

The corporation was fined by the district consumer disputes redressal forum, Alibaug for denying the claim of a man for surgery of his wife for breast cancer. The LIC was asked to clear medical bills of Rs. 1.83 lakh of the man for his wife’s cancer treatment and surgery. The corporation was also asked to pay Rs. 95,000 towards harassment and litigation cost. Appealing against this ruling, the corporation approached the commission.

As per the complainant, in March 2011, he took out an insurance policy which he believed covered his family and assured surgical benefits of up to Rs. 2 lakh.

In September 2014, the man’s wife was diagnosed with breast cancer, for which she underwent surgery in Pune. The couple approached the LIC to claim medical expenses of Rs. 1.85 lakh. However, the LIC cleared only Rs. 2,300, claiming that they were entitled only daily hospital cash benefit of Rs. 1,150 per day for two days of hospitalisation. The remaining claim was rejected.

The couple approached the district forum against the LIC’s decision. When the complaint was pending before the forum, the wife died and the case was pursued by her husband. When the district forum ruled in favour of the couple, the LIC took the matter before the commission. The LIC in its defense claimed that the couple’s policy was not mediclaim but a unit-linked policy. The LIC further claimed that the policy did not cover surgery benefit for cancer surgery.

Arguing for the couple, advocate Saurabh Butala referred the commission to the proposal form, which the couple had filled out when they took out the policy. He argued that the benefits of the Health Protection Plus policy the couple took out was offered as Table 901 while the actual issuance of policy was as per Table 902. He further submitted that the LIC had never mentioned that the policy did not cover surgery benefit for cancer surgery. He argued the terms and conditions were never sent to the couple in their language for them to understand.

The commission accepted the contentions of the couple that when the complainants decided to purchase mediclaim, the agent had guided them about the policy and they thought it would cover all of the family’s medical expenses. The commission held that there is no evidence on record about the “informed acceptance” of the terms and conditions by the insured.