Archive · 9 Oct 2026
Consumer Commission Holds LIC, UCO Bank Liable for Policies Surrendered Without Consent
A man had three life insurance policies.
He said he did not agree to let the insurance company cash them in early.
LIC sent the money from the policies to UCO Bank to help pay a loan connected to a company called Srishti Plywood.
LIC and the bank said the policies had been given to the bank as security for the loan.
The commission said there was no evidence that the man had been told about the planned payment or asked for consent.
It ruled that LIC and UCO Bank had provided poor service and used unfair practices.
The commission ordered them to pay the man Rs 15,000 in compensation and Rs 10,000 for legal costs.
Raipur District Consumer Commission found LIC and UCO Bank liable for deficiency in service and unfair trade practices.
LIC paid Rs 87,827 in surrender values from three policies to UCO Bank on October 14, 2015.
The policyholder said he had not consented to the surrender and had not pledged the policies for the loan.
LIC said the policies were voluntarily assigned to the bank in 2013; UCO Bank said they secured a loan to Srishti Plywood.
The commission ordered LIC and the bank to pay Rs 15,000 compensation and Rs 10,000 in litigation costs.
- Who
- A policyholder, LIC, and UCO Bank.
- What
- The Raipur District Consumer Commission held LIC and UCO Bank liable after LIC paid policy surrender values to the bank without documented written consent.
- When
- The surrender payment was made on October 14, 2015; the commission issued its ruling on September 30 (the year is not stated).
- Where
- Raipur, Chhattisgarh, India.
- Why
- The policies were paid to UCO Bank to adjust loan dues associated with Srishti Plywood; the policyholder disputed authorizing their use.
Policyholder and Commission
LIC and UCO Bank
Whether the policies were assigned with consent
Policyholder and Commission
The complainant said he had not pledged the policies for the third-party loan and had not consented to their surrender. The commission noted that he had not been informed or asked for consent before payment.
LIC and UCO Bank
LIC said the complainant voluntarily assigned the policies to UCO Bank in August 2013 and that the surrender payments followed his instructions.
Use of policies to settle the loan
Policyholder and Commission
The complainant disputed that the documents established the policies were collateral for Srishti Plywood's loan.
LIC and UCO Bank
UCO Bank said the policies secured Srishti Plywood's loan, whose account had become a non-performing asset.
Notice before payment
Policyholder and Commission
The commission found the complainant had not been informed of the proposed payment or asked to explain or consent.
LIC and UCO Bank
The parties argued that written notice had been issued and a notice published in a newspaper; the commission noted the bank had not provided documentary evidence supporting those claims.
- Policies
- Bima Gold, Jeevan Anand, and Jeevan Astha
- Policy purchase dates
- March 10, 2006; August 28, 2008; and December 21, 2008
- Combined maturity value
- Rs 7 lakh
- Total surrender value paid
- Rs 87,827
- Payment breakdown
- Rs 11,555 for Bima Gold, Rs 47,156 for Jeevan Anand, and Rs 29,116 for Jeevan Astha
- Ordered payments
- Rs 15,000 compensation and Rs 10,000 litigation costs
- Bank's account of assignment
- LIC said the policies were voluntarily assigned to UCO Bank in August 2013; the bank said they secured a loan to Srishti Plywood