The case below illustrates the existence of unethical practices in the insurance trade and the policy of finding or even engineering excuses not to pay up unless consumers fight back and put them in a corner.


A young man whose family was living in a rubber estate in Gurun was himself working in a factory some 10-15 km from home and travelling to and fro on a motorcycle.

As is the norm nowadays, he was approached by an insurance agent and sold a life insurance policy. The problem occurred after he had paid the 37th months’ premiums to his agent and subsequently passed away a couple of weeks later when calamity befell him.

The family put in a claim which was rejected for the policy having “lapsed” due to non-payment of premium. This would mean the agent had not handed the premiums over to the company yet for that month! The mother of the deceased sent a handwritten letter in Tamil to CAP for assistance.

CAP’s officers went to the complainant’s home to get more details and to see if they had payment receipts/statements and the insurance policy.

It was confirmed that payments had been made for 3 years and the policy had a provision for automatic premium loan (APL), i.e. when the policy has been in force for 3 years, it becomes eligible for an automatic loan to the amount of accumulated bonus to pay as many premiums as the bonus could cover.

CAP then asked the insurance company why it had not utilised the APL to cover the 37th months’ premiums but had chosen to decline the claim on the ground payment was not made yet and the policy had therefore lapsed.

The company then owned up and settled the claim which came to about RM50,000.

NEXT, in tomorrow’s post: Case 2 – A stroke victim’s experience