Start by proving what happened: where the premium appears, whether a policy was actually issued, what consent record exists, and whether the premium was deducted or financed. Challenge the lender-side disclosure and insurer-side policy issue separately, and verify how any refund changes the loan ledger.
First identify what was actually added
Path A — Premium deducted but no policy documents
Ask the lender for the product name, insurer, premium, policy or certificate number, consent record and where the charge appears in the KFS, sanction or disbursal record.
Path B — Policy exists but you dispute consent
Get the proposal or consent trail, call recording or digital acceptance, policy wording and premium invoice. Challenge lender sale process and insurer/intermediary record separately if needed.
Path C — You consented but now want to cancel
Read the policy’s current cancellation or free-look terms and the loan agreement. Do not assume every policy can be cancelled on identical terms.
Path D — Insurance was financed inside the loan
Calculate how much principal and interest are attributable to the premium. A refund may need to reduce the loan account, not merely be promised verbally.
Build the evidence pack before asking for a refund
- Loan KFS and sanction letter or loan agreement.
- Disbursal statement showing gross sanctioned amount, net amount received and each deduction.
- Insurance policy or certificate, proposal or enrolment form, premium invoice and wording.
- OTP, e-sign, checkbox, recorded call or signed consent relied on by the seller.
- Loan ledger showing whether premium was paid upfront or added to financed principal.
- Your written complaint asking lender and insurer to explain the transaction.
Why the KFS and APR matter
For covered retail term loans, RBI’s KFS framework requires key loan facts and APR disclosure. Third-party charges recovered by the regulated entity on an actual basis, including insurance and similar charges, form part of APR and should be disclosed separately. The framework also restricts charging fees not mentioned in the KFS without explicit consent during the loan term.
That does not automatically prove a particular insurance sale was unauthorised. It gives you a concrete comparison: what the KFS disclosed, what the ledger charged and what consent record exists.
Calculate the real amount in dispute
If the premium was deducted from disbursal, the immediate issue may be the premium and lower net amount received. If it was added to principal, you may also pay interest on that financed premium. Ask for a ledger or amortisation view that identifies the impact.
How to write a precise challenge
State the loan account, policy number if known, premium amount, disbursal date and exact issue: “I cannot find this premium in the KFS and I did not provide the attached consent,” or “The financed premium was not explained in the net-disbursal calculation.” Ask for documentary proof, correction of the ledger if appropriate, and written confirmation of how any refund changes principal or EMIs.
If the lender says the insurer must handle cancellation, ask the insurer for its written decision and policy clause. If the insurer says the lender or intermediary sold it, keep both responses.
Keep EMI payments because the add-on is disputed
Unless the lender gives different written instructions or a competent authority orders otherwise, keep repayment separate from the add-on dispute. Missing EMIs can create a new delinquency problem.
After any refund, verify the money path. If the premium had been financed, confirm whether the refund reduced outstanding principal, changed the schedule or was sent elsewhere. Ask for an updated ledger.