Pensioners in Rajasthan log complaints against SBI Life Insurance

Pensioners from Udaipur, Rajasthan have logged complaints against SBI Life Insurance Company Limited of buying high-premium Life Insurance policies worth lakhs of rupees. They allege company’s officials assured them the policies work like a fixed deposit schemes but ensure higher returns, concealing payment of the premiums.

Bhopal Singh Ranawat, a retired forest guard from Gajpura village of Udaipur in his complaint letter to SBI Life in October this year narrates how the officials converted his entire savings to manage the insurance policy.

Just a month after Ranawat’s retirement, benefits worth Rs 8 lakh were transferred to Udaipur’s treasury bank in August this year. The company officials approached and convinced him to invest in the ‘SBI life – Retire Smart’ plan – promising it would be more profitable than a fixed deposit (FD) scheme. “They had repeatedly convinced me that I was investing in a better plan than a fixed deposit. Later, I found they had issued me an insurance policy worth Rs 2 lakh without informing me the details,” his complaint letter to a news report.

In an duplicitous manner, the officials also issued him three fixed deposits of the remaining Rs 6 lakh – Rs 2 lakh each – for a maturity period of one year, two years and three years respectively so that they could be used to arrange for the annual premiums.

“If a person would opt for a fixed deposit, he would put in the entire amount in one FD, not in pieces like SBI Life did without my consent. It was clearly a conspiracy to forcefully sell me the insurance policy,” Ranawat said as per the report.

In his complaint, Ranawat also mentioned that his annual income and educational qualification in the policy documents were misinterpreted so as to set them as per the guidelines laid for the eligibility of high coverage plans.

“The agent falsely presented in the policy documents that I’m a class XII pass and have basic computer knowledge, hence mentioning some email ID, while in reality, I’m just class VIII pass and don’t know how to operate a computer. Even the contact number mentioned in the policy, on which the call for policy verification is usually sent, was not my own.” When Ranawat reached out to the manager, he misinformed him that it didn’t matter if he couldn’t pay the premium amount every year, he would still be returned the interest on his investment.   

On December 4, 2018, SBI Life accepted Ranawat’s complaint and decided to cancel the policy under the free-look period. However, they promised to return only the ‘appropriate amount’ that would be calculated according to the policy terms and conditions.

Free-look period is the time duration within which a customer, if not satisfied with the terms and conditions of the policy, can return it alongside stating the reasons. It is either 30 days (if policy is purchased through distance marketing channels) or 15 days (if the policy is purchased through a channel other than distance marketing) from the date of the receipt of the policy document.

The issue Ranawat’s complaint was brought to notice on November 2, 2018, three months after the policy issuance. 

While the company might have noted his complaint and decided to refund the premium, there are others whose grievances remain unaddressed.

Suresh Chandra Shrimali and Pushpa Shrimali from Badgaon in Udaipur have a similar story.

After retiring from Bharat Sanchar Nigam Limited (BSNL) in 2013, Shrimali’s account was credited with Rs 9,36,447. Soon, he too was approached by SBI Life officials to purchase a traditional life insurance policy called ‘Shubh Nivesh’ – which has the provision of forfeiting the fund if the insured person fails to pay the premium amount.

Following repeated persuasion by the officials, his wife and he agreed to buy two plan of Rs 200,000 and Rs 100,000 respectively, with an agreement that the invested money could be withdrawn anytime. Shrimali’s complaint letter reads -

“We are not well educated because of which we could not understand the policy terms written in English. When there was some need of cash at home, I went to the bank to withdraw the deposited money but found that it was invested in a life insurance policy that required an annual premium payment of Rs 300,000, falling which the entire amount could be forfeited to the bank.”

In the policy document, his annual income is incorrectly shown as Rs 400,000, when the only source of income is his monthly pension worth Rs 13,300. “If we were told during the issuance of the policy that we would be required to pay Rs 300,000 annual premium, we wouldn’t have purchased this policy at all,” said Shrimali.

Despite these efforts, SBI Life has reportedly refused to accept his complaint on the grounds of not raising the objection within the free-look period. “SBI Life has fraudulently sold us the policy. They didn’t inform us the plan had a forfeiture clause and are now telling us that we didn’t raise an objection within 30 days of the issuance of the policy,” Mukesh, Shrimali’s son told.

Complaints like this are on a constant rise despite Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulation, 2015 that governs the conduct of agents selling insurance policies. In August 2016, IRDAI issued a circular reiterating its seriousness over the complaints received from policyholders on forcibly sold or mis-sold insurance policies by banks and other NBFCs.