A 73-year-old retired associate professor has secured ₹10.6 lakh in relief after a Hyderabad consumer commission found that an insurance policy sold to her was not backed by free and informed consent, The Indian Express reported.
The Hyderabad District Consumer Disputes Redressal Commission directed the insurer to close the policy and refund the ₹10 lakh invested by the woman. It also ordered the bank and insurer to jointly pay ₹50,000 as compensation and ₹10,000 towards costs.
The August 27 order was passed by Commission President B Uma Venkata Subba Lakshmi along with members C Lakshmi Prasanna and B Raji Reddy. The case is significant forcustomers because the commission did not treat signed documents as conclusive proof that the woman had understood what she was buying.
Retired professor says ₹10 lakh investment was presented differently
The woman had visited a bank branch on 4 September 2023 to transfer money to her son in the US. According to her complaint, bank officials introduced her to two agents who presented an insurance product as an investment.
She alleged that she was persuaded to invest ₹10 lakh and was told that the product would provide ₹2.67 lakh annually after four years. She also claimed that the agents recorded her salary as ₹1 crore, despite her being a retired associate professor receiving a monthly pension of around ₹57,000.
The woman maintained that she had no intention of purchasing insurance. She alleged that bank officials obtained her signatures on -related documents and subsequently invested the ₹10 lakh in the insurance policy.
She further claimed that the transaction was presented as a one-time investment even though the policy required annual payments.
When she sought cancellation, she alleged that bank officials told her that it could be done only in September 2024. After returning from the US in March 2024, she was allegedly told that cancellation would instead be possible in September 2025.
The bank denied obtaining signatures on blank papers and argued that the insurance transaction was between the woman and the insurer. The insurance company maintained that the policy had been issued with her request and approval. It also said the physical policy pack had been dispatched and delivered to her address on 18 September 2023.
Why the consumer commission ordered the ₹10 lakh refund
A key issue before the commission was whether the woman had received a genuine opportunity to examine the policy and use the free-look facility.
The proposal form contained both her permanent and current addresses. However, the insurer sent the policy documents to her permanent address while she was abroad.
The commission found that simply sending the documents was not enough if the consumer did not have a meaningful opportunity to examine them and exercise the cancellation option.
It also took into account the woman’s age and circumstances. The commission observed that a senior citizen and retired person cannot automatically be presumed to understand complex insurance terms and conditions. The bank and insurer should have explained the relevant terms and requirements to her.
The commission also noted the close connection between the loan transaction and the insurance , saying this raised questions about the genuineness of the woman’s consent.
It ultimately concluded that the policy had not been obtained with her free will and informed consent and held the bank and insurer responsible for deficiency in service and unfair trade practice.
The insurer was directed to close the policy and refund ₹10 lakh. The bank and insurer were also ordered to jointly and severally pay ₹50,000 as compensation and ₹10,000 towards costs.
For consumers, the case highlights why signing an insurance proposal should not be treated as the end of the process. Buyers should check the premium, payment frequency, policy term, benefits, exclusions, surrender conditions and cancellation rights as soon as the policy is issued.
The ruling also serves as a reminder for banks and insurers that collecting a signature is not necessarily enough to establish informed consent, particularly where a complex financial product is being sold to a senior citizen.
The ₹10.60 lakh total relief comprises the ₹10 lakh policy refund, ₹50,000 compensation and ₹10,000 towards costs.