
The National Consumer Disputes Redressal Commission (NCDRC) has ordered the Life Insurance Corporation of India (LIC) to pay Rs 1.57 crore to the husband of a deceased policyholder. The policyholder passed away in April 2017 due to breast cancer, and LIC rejected her husband’s insurance claim in March 2018. The NCDRC stated that LIC provided deficient service by rejecting the claim when it should have honored it.
Background of the Case
The policy in question was a health premium policy that secured the insured for a sum of Rs 1 crore on payment of Rs 7,00,000/- as premium. The policy was approved on March 29, 2016, after the usual medical and eco tests were carried out. The premium was paid on March 30, 2016, and a receipt was issued. The insured was admitted to the hospital on the same date, where a biopsy and other tests were conducted. She was discharged on April 6, 2016. The policy was renewed on March 30, 2017, and the insured passed away on April 28, 2017, due to breast cancer. LIC rejected the insurance claim on March 8, 2018, stating that the policyholder had not disclosed her breast cancer diagnosis at the time of taking the policy and at the time of renewal.
LIC’s Reason for Rejection
LIC’s primary reason for rejecting the claim was that the policyholder had not informed the insurer about her breast cancer diagnosis at the time of taking the policy and at the time of renewal. LIC argued that if such medical information is within the knowledge of the insured and is not disclosed after the submission of the proposal, it would invite exclusion and repudiation under the insurance policy.
NCDRC’s Decision
The NCDRC dismissed LIC’s argument and stated that there was no evidence to indicate that the insured had withheld any information that would violate the declaration clause. The NCDRC concluded that the insurance company had failed to establish that the insured had any knowledge of the adverse circumstance either on or prior to March 30, 2016. Therefore, the NCDRC found LIC’s argument to be without merit and ordered LIC to pay the claim amount.
NCDRC’s Order
After considering all the evidence and arguments, the NCDRC passed an order in favor of the policyholder’s husband. The following awards were given:
- Insured amount of Rs 1 crore with 9% interest from the date of liability incurred under the insurance policy.
- Rs 2 lakh along with 9% interest for mental agony and harassment.
- Rs 50,000 as litigation cost.
In total, the policyholder’s husband will receive Rs 1.5758 crore (Rs 1,57,58,000) as compensation.