HOME LOAN AND LOAN COVERAGE INSURANCE BY SBI LIFE – IRDA DIRECTS SBI LIFE TO REFUND PREMIUM COLLECTED ON MISREPRESENTATION – WRONG – FRAUDLANT SALE


INSURANCE REGULATORY DEVELOPMENT AUTHORITY (IRDA) DIRECTS THE STATE BANK OF INDIA`S INSURANCE ARM (SBI LIFE) TO REFUND RS 275 CRORES, THE PREMIUM COLLECTED FROM POLICY HOLDERS FOR MISREPRESENTING THE FACTS ABOUT THE PLAN.

THE SAID PLAN WAS POSITIONED AS TWO YEAR PREMIUM PAYING TERM FOR COVERING HOME LOANS BORROWED BY THE HOME LOAN CLIENTS OF STATE BANK OF INDIA, BUT COLLECTED THE PREMIUM IN A SINGLE GO (UPFRONT)TO GIVE THEM THE COVERAGE.

THE BORROWERS OF HOME LOAN HAD PAID THIS PREMIUM UPFRONT.

THIS LIABILITY ALSO ADDS UP TO THEIR COMMITMENT. 

MOST OF THE HOME LOAN BORROWERS MIGHT ALREADY HAVE BOUGHT INSURANCE (LIFE COVER) BUT THIS ADDITIONAL COVERAGE (HOME LOAN-INSURANCE COVER) WILL BE AN ADDED BURDEN AND THIS WILL INCREASE THE LOAN LIABILITY AND THE INTEREST WITHOUT THE KNOWLEDGE OF THE BUYERS AND BORROWERS.

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