Date of surrender of policy: Insurance Tribunal directs firm to pay premium

LAHORE: An Insurance Tribunal has directed the insurance company to pay premium paid along with liquidated damages excluding the paid amount from the date of the surrender of the policy till realization of the amount.

The tribunal further observed that the insurance companies in the matters of the unit linked policies on maturity or surrender offer a much less amount of cash value as against the premium paid by the policyholders.

The companies pay the maturity amount of the surrender value according to the performance of the funds chosen by the policyholders and the cash value of the units.

According to details, the policyholder had purchased the insurance policy through a bank. According to the terms of the policy, the sum assured the policy was Rs30,00,000 and the annual premium was fixed @ Rs6,00,000.

The policy period commenced from 2017 and its maturity was due in 2027. The policyholder regularly paid the annual premium for five years. The policy assured two benefits, i.e. the death benefit on or before the maturity and otherwise maturity benefit.

The policyholder applied for surrender of the policy after the completion of five years. But the insurance company paid partial benefit and flatly refused to pay the remaining amount despite repeated requests. The policyholder was of the view that the insurer should pay the surrender amount of the policy along with liquidated damages because she has fully complied with the terms and conditions of the policy by paying the premium amount regularly.

The company maintained that the policyholder paid five premiums and applied for surrender/discontinuation of the policy.

She was paid accordingly and confirmation was also sought from her through call back confirmation before transferring the disputed amount. It further pointed out that the policyholder had duly signed the proposal form, i.e. policy documents wherein it is clearly mentioned that the death claim, surrender value or the maturity claim shall be dealt with in accordance with the terms of the proposal form and the policyholder is not entitled to ask for the total paid premium, which is not available anywhere in the documents.

However, the tribunal did not agree with the insurance company and directed to pay the premium along with liquidated damages from the date of surrender till realization of the amount.

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