LIC rejected claim for not paying premiums regularly, Now Court has ordered LIC to pay claim

The National Consumer Disputes Redressal Commission (NCDRC) recently ruled that the Life Insurance Corporation (LIC) of India and a company must pay a death insurance claim of ₹4.70 lakh to an employee, despite the employer’s failure to make consistent premium payments.

Presiding Member Justice Sudip Ahluwalia emphasized the importance of protecting the interests of the life assured, citing the Supreme Court’s view that an employer acts as an agent of the insurer.

The NCDRC made this decision in response to an appeal by LIC against the Telangana State Consumer Disputes Redressal Commission’s order. The State Commission had upheld a previous order by the District Commission, which directed LIC and the employer to fulfill the payment.

The claim was filed by the deceased employee’s wife after she did not receive the assured sum following her husband’s death. LIC argued that the employee’s voluntary retirement led to the employer ceasing premium payments on the insurance policy, resulting in the policy lapsing. Therefore, LIC claimed it was not liable for the claim.

However, the Commission noted that this argument had already been rejected by the State Commission. The Commission referred to the Supreme Court’s decision in LIC of India v Rajiv Kumar Bhasker, which states that an employer’s actions as an agent of the insurer cannot penalize the employee for any lapses or omissions.

Furthermore, the Commission highlighted that LIC failed to provide any counterarguments or legal precedents to challenge this position. As a result, the NCDRC rejected LIC’s appeal and held both LIC and the employer responsible for paying the ₹4.7 lakh death insurance claim.