NCDRC says Concealment of Health Conditions does not Affect Accidental Death Benefits if Policy is Active
The National Consumer Disputes Redressal Commission (NCDRC), led by AVM J. Rajendra, ruled that the concealment of health conditions does not invalidate the insured’s right to claim accidental death benefits, provided the policy was active at the time of the accident.
Case Background
The complainant’s husband held a life insurance policy from Life Insurance Corporation (LIC) worth ₹10,00,000, valid until 2035. After paying the half-yearly premium, he tragically died due to an electric shock. The complainant, being the nominee, submitted the necessary documents and filed a claim, but the insurer refused to pay. She then filed a complaint with the District Consumer Commission, which ruled in her favor, directing the insurer to pay the sum assured along with ₹3300 for mental harassment and litigation expenses. Dissatisfied, the insurer appealed to the State Commission of Haryana, which also dismissed the appeal. The insurer then filed a revision petition before the National Commission.
Insurer’s Arguments
The insurer contended that the complaint was not maintainable, and the complainant had no legal standing. They argued that the complainant had concealed important health information and filed the claim with ulterior motives. The insurer claimed the deceased policyholder had undisclosed health conditions, including hernia, hydrocele, Hepatitis C, septicaemia, and diabetes, which were omitted in the policy application despite direct questions. As the insurance contract is based on accurate information, the insurer rejected the claim due to non-disclosure and maintained that the rejection was justified.
National Commission’s Ruling
The central question was whether the complainant was entitled to accidental death benefits, despite the policyholder’s failure to disclose his health conditions. The Commission noted that the life insurance policy was active at the time of death due to electrocution. The deceased had also paid both the half-yearly premium and an additional premium for the Accidental Death and Disability Benefit Rider.
The Commission referred to Condition No. 11 of the insurance policy, which outlines the criteria for claiming accidental death benefits, and cited the Supreme Court’s ruling in LIC vs. Sunita, which held that non-disclosure of health conditions does not affect the right to claim accidental death benefits if the accident occurred while the policy was in force.
The court stressed that the insurer is liable to pay accidental death benefits if the death is caused by an unforeseen event, regardless of the insured’s undisclosed health conditions.
Limited Revisional Jurisdiction
The Commission also discussed its limited revisional powers under Section 58(1)(b) of the Consumer Protection Act, 2019, which parallels Section 21(b) of the 1986 Act. Citing Supreme Court cases like Rubi (Chandra) Dutta vs. United India Insurance Co. Ltd. and Sunil Kumar Maity vs. SBI, the Commission reiterated that its revisional powers are limited to cases involving material irregularity or jurisdictional errors, and it cannot interfere with findings based on the appreciation of evidence.
