Dear Advocate Friends,

Lakhs of common people at the time of death claims were cheated by Insurance companies saying that customer has not disclosed material facts,consumer forums and courts have upheld the decision of Insurance companies,refering to IRDA(Insurance Regulatory and Development AUthority) guidelines saying that it is the responsibility of Insured customer to disclose the material facts.

How ever IRDA guide lines also states that  "Insurance company/its agent/official should disclose all the material facts related to the Insurance policy to the customer ,so as to enable the customer to select a insurance which best suits his requirements.The guide lines also states that failing which Insurance company/its agent can be punished.But these points no one has raised in any of the cases.

I got one Important case,where in customer has asked for accident benefit and requested for accident benefit in proposal form.Insurance company has collected excess premium towards accident benefit and without the knowledge of the customer,insurance company has tampered the proposal forms in columns related to term and sum assured and misappropriated the  excess premium by enhancing the sum assured.



Now the customer is arguing in the consumer forum that,

1.As per IRDA guide lines,any exclusions of policy benefits should be brought to the notice of the customer by writing and his consent & counter signature should be taken.

2.The proposal froms have asked for accident benefit for parent of the minor child,when it is not applicable how the proposals are approved and policy is processed without the consent of the customer.

3.How the tampered and over written proposals are approved.

4.If the customer is guided by LIC of India before processing the policy that accident benefit is not applicable,he could not have purchased the product or could have returned the policy for cancellation during 15 days cooling off period.

Now LIC of India is saying that policy can not be cancelled after 15 days cooling off period.

Please send me some judgements supporting my case.


Thanks and regards




I have had a personal experience with private insurer  where my proposal was TOTALLY changed ( although not in material aspects )- in fact a new form altogether written by someone else with " my" signatures !

I came to know of it when, as part of that company's process I presume - "my filled in proposal" was sent to me along with the Insurance Policy !!

Although - as I said -there was no change in the material aspects - I took it up vigorously. Finally, a new form was filled up by me to replace the earlier one and and an apology issued by the Company. The reason for this mess up was simple -  my form had been lost by the Agent  - and in their hurry to be within March 31 ( so that I could claim the tax benefits which was the prime reason for my taking up the policy ) as well as their own year end pressures/ targets, , the Agent filled in a  new form altogether. I understand the agent was removed from the  Company.

In your case, I'd imagine if the proposal clearly shows changes/ overwritings without the countersign of the Customer has a prima facie case of fraud and consequent damages etc.

Request other' views too.








This is an interesting thread.

You have raised valid points.

As it happens the offender employees are not made to appear in DCDRF and courts of law and the attitude of habitual offender gets encouraged.


You may analyze the following information and fine-tune it to suit you.


>> It is usually printed in the proposal form itself that “The..................... must authenticate any cancellation or alterations in this form.”





FAQ by Aegon Religare



HDFC Life :” The annuitant must authenticate any cancellation or alterations in this form. Insurance is a contract of utmost good faith,”



Birla SunLife;


Any alteration is to be validate in writing by customer.




Proposal Forms and Instructions for filling proposal form by LIC are at:





>> You have posted that:


-----“I got one Important case,where in customer has asked for accident benefit and requested for accident benefit in proposal form.Insurance company has collected excess premium towards accident benefit and without the knowledge of the customer,insurance company has tampered the proposal forms in columns related to term and sum assured and misappropriated the  excess premium by enhancing the sum assured.”



This is forgery. Police complaint should be lodged.


>> The alterations, non availability of rider in the policy being proposed to the customer, violate the guidelines of IRDA e.g;



Insurance Regulatory and Development Authority Notification Hyderabad 16 Feb 2013:


Insurance Regulatory and Development Authority (Standard Proposal Form for Life Insurance) Regulations 2013.



2 Definitions; (3) Suitability

7 (2) , (3) (a)

8:1 (b) (c) (d)




Instructions to Intermediary (agent........): clause3


>> Any overwriting, correction should be validated by customer with his signatures by hand. If not proposal from and issuance of the policy should have been rejected and premium should have been refunded.


In case of LIC usually local office where the proposal form is submitted conducts the financial, medical, and general underwriting and the same office issues the policy, hence you may demand to produce the proceedings and comments of each official involved in issuance o policy and to submit the names of each LIC employee involved in the process and charge them by name and let them appear in court and state that they can process and they have allowed the proposal form with alterations.


While all such officials are bound for proper scrutiny of the proposal form and reject it due to unauthorized alterations.


If LIC is claiming that the customer should have objected to the unauthorized changes on proposal form in Free Look Period then the stand of the LIC is wrong and it basically wants the DCDRF to pass an order to do so (usually DCDRF levies a monetary penalty and does not invoke serious penalty)  and does not want to accept the mischief.


However even after the decision of the DCDRF or during it no one can prevent you to highlight the malpractice, forgery, and volt faced approach of the agent and DO to the Chairman of LIC. You can also approach DY. Manager CRM and lodge complaint under acknowledgment.


You must submit a written complaint to the Chairman of IRDA highlighting that accidental rider was not available and term and Premium etc was altered to issue the policy.


IRDA has been levying huge penalties.



You can also demand and obtain the internal guidelines that prohibit to accept proposal form with alterations and if required pursue the RTI route.


Some of the companies had stopped accepting proposal forms having overwriting/correction even if these were countersigned.

If signature against overwriting/correction is not place then these should not be accepted.


If signature against overwriting/correction is forged then it is also forgery.


Why the agents and officials of the company connive and indulge in such practices.


The insurance company may have a policy to pay commission on Base premium and not on total annual premium (AP). The riders may fetch additional sum assured (SA) and there may be a need for medical examination.


In current case if the agent/DO cited that accidental cover is not available then customer would have felt offended and might have decided to take back the proposal form.


This would mean loss of business.


You may even now take a stand that you have been in touch with agent and DO, LIC and they did not accept to cancel the policy as FLC and did not guide you to lodge a complaint.



The insurance companies due to the malpractices had introduced in house policies/rules e.g: the DO/BM/outside agencies/HO etc as per SA, shall call the customer to check and verify the Term, AP, riders, address, countersignatures etc. 


You may get hold of such policies and this would be an imp. document.


The inclusion criteria, exclusion criteria have to be sated in policy brochure and policy schedule.

In addition to brochure the company has to provide benefit illustration showing tentative returns @ 6% and 10% that has to be signed by both agent/DO and customer.


Copy of proposal form and benefit illustration has to be supplied as part of policy bond.


If term, rider on proposal form have been forged then it should have been forged on benefit illustration also. You may check n compare if details in proposal form and benefit illustration match or not?


In such a case not only the agent but DO and everyone involved in the processing the proposal form including the underwriters and offenders.


Peruse the case properly.

Tame and shame them.


The decisions rendered by IRDA are available on its website.


The decisions rendered by Insurance Ombudsman are also available on website.

The decisions rendered by Distt/State/National Consumer Disputes Redressal Forum can be downloaded at:
















Consumer Complaints



>> Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002.


3. Point of Sale


(1) Notwithstanding anything mentioned in regulation 2(e) above, a prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover and, in case of life insurance, whether the product is participating (with-profits) or non-participating (without-profits). The allowable rider or riders on the product shall be clearly spelt out with regard to their scope of benefits,



(2) An insurer or its agent or other intermediary shall provide all material information in respect of a proposed cover to the prospect to enable the prospect to decide on the best cover that would be in his or her interest.


4. Proposal for insurance

(6) Proposals shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposals by the insurer.


{ The non availability of rider and alteration of Term etc which are not countersigned and approved should have been communicated by responsible officials of the LIC}


6. Matters to be stated in life insurance policy

(e)  the details of the riders attaching to the main policy;

{ This should ideally be stated in Benefit Illustration also}



11. General


(4) Any breaches of the obligations cast on an insurer or insurance agent or insurance intermediary in terms of these regulations may enable the Authority to initiate action against each or all of them, jointly or severally, under the Act and/or the Insurance Regulatory and Development Authority Act, 1999.

{ IRDA can proceed under this clause too}




Anti-Money Laundering (AML) :(Updated upto 31st October 2008)


3.3 Recruitment and Training of employees/agents:


“The committee monitoring the agents should monitor sales practices followed by agents and ensure that if any unfair practice is being reported then action is taken after due investigation; Periodic risk management reviews should be conducted to ensure

company's strict adherence to laid down process and strong ethical and control environment. Insurance companies should have adequate screening procedures when hiring employees. Instruction Manuals on the procedures for selling insurance products, customer identification, record-keeping, acceptance and processing of insurance proposals, issue of insurance policies should be set out.”



>> IRDA has pressed charges of mis selling and has penalized too:


e.g warning to Bajaj Allianz



>> You may also go thru attachment that is also available at:



>> If the evidence of mis selling are just and justified companies do refund premium even after FLP




13-04-2012 IRDA/Life/Ord/Misc/086/04/2012 Final Order in the matter of M/S Birla Sun Life Insurance Company Limited


Final Order in the matter of

M/S Birla Sun Life Insurance Company Limited


 Violation of Section 6(2) of IRDA (protection of policyholders’ interests) Regulations, 2002

Inspection Observation 32: It is observed that free look cancellations are allowed even after a period of 15 days and also observed that company has refunded full fund value along with all the charges recovered in the old policy under free look cancellations thereby not adhering to the lock in period provisions.


Decision:Insurer has submitted that they have deviated from the above regulations in the cases where requests received in the nature of complaints involving market conduct issues which were decided on case to case basis. Main intent is to meet customer’s expectation in justified cases. Benefit if any to the policy holder are charged to shareholders’ account and existing policyholders’ fund not affected. On examining the reply of the Insurer the charges are not pressed.


>> You may also find the decision interesting :




Final Order in the matter of M/s MetLife India Insurance Company Ltd

Ref: IRDA/LIFE/ORD/ MISC/014/01/2012

Date: 09-01-2012







Ref: 3/CA/GRV/YPB/10-11      27


July, 2010




4.  Grievance Redressal System/Procedure:


Any failure on the part of insurers to follow the above-mentioned procedures and time-frames

would attract penalties by the Insurance Regulatory and Development Authority.

It may be noted that it is necessary for each and every office of the insurer to adopt a system of

grievance registration and disposal.






Attached File : 251093902 irda regulations for standard proposal form for life ins 2013.pdf downloaded 95 times



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