A Delhi woman has won relief in a life insurance claim dispute case after an insurer rejected her Rs 20 lakh claim citing non-disclosure of diabetes and kidney disease by her husband, who had purchased the policy.
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The Delhi State Consumer Disputes Redressal Commission has ruled in favour of the complainant. The commission observed that common lifestyle diseases like diabetes or hypertension alone cannot justify claim rejection without strong evidence showing intentional misrepresentation.
What Was The Case About?
According to a report by The Economic Times, the case involved Ms Kain and her late husband. The deceased had taken a life insurance policy from IndiaFirst Life Insurance Company under the IndiaFirst Group Credit Life Plan. The policy was linked to a loan from Bank of Baroda and started on June 20, 2012. The sum assured was Rs 20 lakh and the premium amounted to Rs 56,011.
It was a home loan-linked insurance plan. Such plans are designed to protect families if the borrower dies during the loan term. The insurer pays the outstanding loan amount to the bank.This prevents the family from losing the home due to unpaid dues.
After the policyholder died in February 2014, his wife filed the insurance claim, which was rejected by the company. It said the deceased had not disclosed key medical facts at the time of buying the policy such as having Type-2 diabetes. It also claimed he was taking insulin injections.
The insurer further said the deceased had chronic kidney disease and was already on continuous peritoneal dialysis from March 2012. This, according to the insurer, meant the policy was obtained by hiding serious pre-existing illnesses. It argued that if these details had been disclosed, the policy would never have been issued, the ET report added.
The complainant argued the insurer relied on policy terms and exclusions that were never properly explained to the family.
What the Commission Said
After hearing the case, the commission ruled in favour of the complainant. It cited aspects such as the company's failure to show clear proof of deliberate concealment, lack of proper medical examination before issuing the policy, and issuing the policy even though the policyholder was nearly 50 years old. It also said the claim was rejected after a delay of 213 days, violating Insurance Regulatory and Development Authority of India (IRDAI) timelines.
It ordered the insurer to pay the Rs 20 lakh sum assured as well as 6% annual interest from Nov. 10, 2014 to April 24, 2026. Additionally, the insurer has been instructed to pay Rs 1 lakh for mental agony and harassment. The commission also imposed Rs 50,000 as litigation costs. It added that if payment was delayed beyond two months, the insurer would be liable to pay 9% interest until full payment.
“We have taken note of the order passed by the Hon'ble State Commission. However, in view of the on record pre-policy issuance documentary evidence of material non-disclosure, the company has filed an appeal before the Hon'ble National Consumer Disputes Redressal Commission (NCDRC) and will pursue appropriate legal remedies…,” the insurer stated.
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The case demonstrates how challenging such situations can be and what policyholders may have to go through to receive their claims. Hence, it is advised to read and keep the full policy document at purchase and disclose all health conditions. If one faces claim rejection, they must request clear reasons and documents, in case they need to approach consumer grievance redressal forums.
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