Friday, July 4, 2014

Insurance Cos Can't Offer Investment Plan, Claims PIL

The Gujarat High Court on Thursday issued notices to the Insurance Regulatory and Development Authority (IRDA), the Government of India, Finance Secretary and 19 major insurance companies, including insurance behemoth the Life Insurance Corporation (LIC) of India, over a public interest litigation (PIL) filed by a Ahmedabad-based chartered accountant Kailash Maheshwari, that questions the legality of investment based products floated by the life insurance companies.

Calling the practices 'corrupt', the petitioner had objected to insurance plans such as Pure Endowment, Endowment, Unit linked Plans and Term plan with Return of Premium.

A division bench of Chief Justice Bhaskar Bhattacharya and Justice J B Pardiwala posted the hearing to July 3, directing all the 22 respondents to file their replies.

The petitioner, Mr. Maheshwari has demanded action against insurance companies for duping customers and for criminal conspiracy and to book them under provisions of Prize Chits and Money Circulation Scheme (Banning) Act as well as under anti-corruption laws.

The petition also demanded stay on collection of savings as well as investments by the life insurance companies and to declare endowment plans as illegal, and refund the premium.

“As per the law, life insurance business is only meant to be a business to compensate an amount to the beneficiaries in case of death of the policyholder. Payment on survival is not the business of the life insurance. Therefore, all the savings as well as investment plans are illegal as the insurance companies do not have licence to do business of collecting savings or investments,“ the petition reads.


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