[Resolved]  Aviva India Life Insurance — Unreasonable surrender charge and Suppression of information

Address:

Karnataka

Sub : Reg. unreasonable surrender charges and dismal performance of the fund
Ref: AVIVA Save guard life policy (Policy No,RSG 1632771)
I took a AVIVA Save guard life policy (Policy No,RSG 1632771) on 23/7/2007 with an annual premium of Rs.1,20,000/- . I took the policy through a representative of ABN AMRO Bank. I paid the premiums regularly for three years and yesterday when I went to the AVIVA office at Jayanagar Bangalore for surrendering the policy, I was shocked when the in-charge of the branch told me that I would be getting only Rs. 2,57,000 after deducting surrender charges which is as high as 29% for withdrawals after three years. I have paid Rs.3,60,000 premium for three years without any break and imagine my anguish when I was told that more than a Rs. 1,00,000, would be deducted from the fund value which is around Rs.3,63,000. The in charge put the blame on me that it was my mistake of not going through the conditions of the policy at the time of taking the policy.
In the policy documents the surrender charges are not cleanly mentioned as detailed in the form which is used for request for surrender. Even I was not briefed correctly about the surrender charges by the advisor. Even admitting that it is my mistake in accepting the proposal, I would like you to answer these questions.
1. What is the rationale for fixing the surrender charges at 29% after three years which is nothing short of day light robbery? Are these schemes formed to cheat the customers who reposed faith and invested with the company?
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2. I was not advised about the surrender value clause correctly by the advisor. He was mentioning that I can pay three years premium and surrender the policy and get back 95-96% of the fund value. I am enclosing a copy of the policy document wherein on the backside of the policy the surrender value is mentioned as 1.75% + surrender value on initial units which is shown in the form of a formula. This is intentionally done by the company to cheat the customers and hide the facts about the policy.
For your information I took ULIP policies of 10 years duration with ICICI prudential life and Kotak Life insurance at about same time and surrendered these policies after regular payment of premium for three years. I got back 96% of the fund value which is more than the full value of the premium plus a handsome return on the investment from these companies.
Even the fund value in case of the policy under reference has not shown any growth. Fund value of Rs.3,60,000 premium paid over three years is around Rs. 3,62,000. This shows that funds have not been managed properly by the company. I wonder what sort of fund manager they have, if he can’t make the investment earn a decent return particularly in the last one year when the market saw such robust growth. I am sure that there is gross negligence or misappropriation by the company in managing the funds. The company may be showing a lower fund value by diverting the earnings from this fund. I request you to order an inquiry and investigate into this.

3. These statistics cleanly shows that the schemes of the AVIVA are formed to dupe the gullible customers and not with any service motive to the society which is the main objective of an insurance company.

4. I request you to advise the company to refund at least the premium I have paid in view of the facts mentioned in Para 2 above (misleading the customer regarding surrender value) and initiate suitable action against the company for cheating investors.


Padmini Gopalakrishna