Insurance company’s misleading messages

The annual premium on one of my life insurance policies is due on June 11, 2014. Since premium is paid annually, there is a grace period of 30 days, which means I can pay the premium on or before July 10, 2014 without any penalty of any sort.

On May 21, 2014, the company sent me a Premium Payment Reminder by email, stating:
Your next premium of Rs. 12000.00 for Insurance Policy no. 1234567 is due on 11/06/2014. Experience the benefits of paying online on our website.

It’s easy, effortless and you get an instant acknowledgement for your payment!

What’s more, while paying online you can set up standing instructions on your credit card to debit your future premiums on the due date.

How will this help you?
• You save time – no need for travelling to our branch or keeping track of due dates
Avoid late charges
Enjoy uninterrupted policy benefits
Setting up standing instructions is absolutely free of cost and does not require any documentation

Today, June 04, 2014, the company sent me an SMS stating:
Premium of Rs. 12000.00 for our Company policy no. 1234567 is due on 11/06/2014. Do not wait until last moment! You can pay now to continue to enjoy policy benefits. For cheque pick up, SMS PICKUP 1234567 to this number. Ignore if paid.

Both the Premium Payment Reminder and the SMS should have explicitly mentioned the Grace Period of 30 days. They did not do this. Instead, they give the impression that 11.06.2014 is the last date for paying the premium to avoid late charges and to enjoy uninterrupted policy benefits.

In my opinion, these communications have been cleverly worded to mislead me into believing that the last date for paying the premium is 30 days earlier than the actual last date. Assuming my Savings Account pays interest @ 4% per annum, interest for 30 days on Rs. 12,000.00 is Rs. 40.00. If the company collects total premium of about Rs. 24,000 crores per year, and if 50% of their policy holders pay premium 30 days earlier because of these misleading communications, the company stands to gain Rs. 40 crores. (The actual cost of finance for the insurance company is much more than 4% per annum.)

More importantly, the words “enjoy uninterrupted policy benefits” and “pay now to continue to enjoy policy benefits” give the impression that the policy will lapse if premium is not paid by June 11, 2014. This could cause tremendous stress to the policy-holder receiving the SMS on June 4, 2014.

Last year, for another policy with the same company, I had received over a dozen similar reminders by email, SMS and phone call till the day I paid the premium. I had complained about this in an email to the company’s Customer Care Department, but all I got in reply was an email stating, “This is with reference to your concern pertaining to the policy number 01234567.
We apologies for the inconvenience caused due to SMS recive to you, we hereby inform you that your premium payment for an amoun of Rs.10000/- has been received by us on D/M/2013 and the same has been applied towards your policy.” (I have reproduced the email as I received it, without any editing.) I realized that the Customer Care Department had chosen to ignore the fact that I was complaining about the distress caused to me.

This time, I intend keeping a record of every email, SMS and phone call received till the day I pay the premium. Then, I will take up this matter with the insurance company, not with the Customer Care Department, but at the senior management level. I want to insist that any Premium Payment Reminder, whether by email, SMS, phone call, letter or any other method should necessarily mention the Grace Period explicitly.

Before doing so, I want to know:
1. Do you think this matter should be taken up with the insurance company? Or is it too trivial a matter?
2. Is there any point that I have missed out?
3. Is there any better way of getting this matter resolved?

I would like to get as many opinions as possible. Hence, please reply to these questions. Further, if you think this matter is really important, please circulate this post by reblogging or by sharing on Facebook and/or Twitter and/or other social media with a request to reply to my questions.