LIC (LIFE INSURANCE CORPORATION OF INDIA) which is a statutory company i.e. it have its own act passed by parliament of India. LIC is headquartered in Mumbai. It is the largest insurance company in India with total assets worth Rs.2,529,390crore (2016). One of the most compliant company and today all is turning against them.


A PIL (Public Interest Litigation) filed by Mumbai based NGO Moneylife Foundation regarding Fraud in LIC POLICY. The ruling government also looking into actively as concerned matter is about such population which is considered as Dependent Population (old age people who is affected most).

Before purchasing Insurance one should be clear with difference between Investment and Insurance both are the different from each other. We should also be clear as returns promised in JEEVAN SARAL POLICY can only possible in the ULIPs (Unit-linked insurance plans) and not in others.


In the current case; Moneylife Foundation had sent a copy of the Memorandum to the Finance Minister as well as the Insurance Regulator. The financial services department in the ministry, which looks after insurance matters, on 28 September 2018, forwarded the memorandum to IRDAI asking its chairman to take appropriate action. It has also asked IRDAI to inform the ministry about action taken (on the Memorandum) with regard to the Jeevan Saral Policy and inform both, Moneylife Foundation and the ministry. Also the BJP MP Dr. KIRIT SOMAIYA wrote a letter to IRDA regarding this fraud and asked to look in the matter of LIC JEEVAN SARAL POLICY.


The observation which made this matter so serious and admissible by Top Court is the manner in which the Jeevan Saral Policy holders have been misled and cheated by LIC has resulted in violation of their fundamental rights and is in the teeth of Articles 14 and 21 of the Constitution, the petitioner contends.


Also, Right to information (RTI) application also had been filed with the insurance regulator to check for the action on the Jeevan Saral Memorandum. In response, IRDA has provided its letter to LIC which says, “The allegations made by the complainant (on behalf of Moneylife Foundation) are of serious nature. Therefore, you are directed to submit a comprehensive response addressing all the issues mentioned in the complaint on or before 5 October 2018.


Most interesting fact is that even Army of Agents of LIC were unknown of fact that what they are selling can cause in loss. Even though it is not ULIP it brought up negative returns which now causing negatively to Integrity, Honesty and Faith which they earned throughout the Decades.

Now the policyholders want to get back their investment (premium paid) plus any returns offered by LIC. The product ran for over 9 years selling over 50 million policies. LIC seems took the advantage of the fact that it is most trusted brand in INDIA.



The policy was designed in an arbitrary manner without proper due diligence and it was sold with inaccurate, faulty and misleading proposal forms, the petitioner alleges. The policy holders were misled into investing Rs. 73,000 crore to Rs. 1 lakh crore. Though various complaints and representations were made, LIC termed the “gross irregularity” as a “discrepancy” and has been trying to cover up the wrongdoing by writing letters to Zonal Office/ Managers to correct the discrepancies, the petition alleges. The petition also states that the Insurance Regulatory Development Authority (IRDA) is empowered under Section 33 of the Insurance Act read with the Insurance Amendment Act, 2015 and the IRDA Act, 1999 to investigate the malpractices. However, it has remained a silent spectator of “mass cheating by LIC”, Moneylife alleged.



Foundation who has also received a one-line reply to its memorandum from the LIC chairman VK Sharma today, which says, “We appreciate the concerns raised by you in your letter dated 1 October 2018. It will be dutifully looked into.”


  • They also create the feeling of greed of returns among the then interesting  investors and tried to sell their policies.
  • The buyers were not informed that the product would give poor returns due to the same reason as the investment component was low.



 A 58-year-old person, paying half-yearly premium of Rs4,076 for 12 years, had paid a total of Rs97,824. The maturity sum assured, which was paid to him after 12 years, was a mere Rs24,575 plus bonus, amounting to Rs.34,405. Even though the maturity amount was mentioned in the policy document, it was missing in the proposal, which only specified the death sum assured of Rs1.25 lakh. As the proposal did not mention the pathetic maturity sum assured, it tantamount to mis-selling by LIC itself. The policy was sold with inaccurate and misleading proposal form!



The IRDAI is empowered under Section 33 of the Insurance Act read with the Insurance Amendment Act, 2015 and the IRDA Act, 1999 to investigate the malpractices. However, it is still remained as a silent spectator of mass cheating by LIC.



As a law student, my opinion is that we must read all terms and conditions in keen manner and just look toward Maturity Sum Assured of the policy as this case can teach this for sure.

To avoid such huge losses, one who are in old age phase they should not go for such investment oriented policies and should opt for the pension plans, retirement plans. Also, we as an investment one should not go for LIC for investment. We should understand difference between insurance and investment and according to which we should move towards it.

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