LIC ordered to pay up claim amount of 5 lakh, with 35,000 as compensation

CHANDIGARH: In a recent order, Nation Consumer Disputes Redressal Commission (NCDRC) while upholding UT state commission's order directed Life Insurance Corporation of India to pay a claim amounting to Rs 5 lakh along with Rs 35,000 as compensation and litigation cost.

In the revision petition in NCDRC, LIC while referring to the Section 45 of the Insurance Act- which states that any policy can be repudiated for misstatement and suppression of facts within three years of commencement of the policy- stated that this point was ignored by district forum in its order and thus the order was wrongly upheld by the state commission.

However, NCDRC stated that amendment to Section 45 providing a period of three years came later in 2014, while the policy was taken much earlier. In the order, it stated, "It is very clear that as per Section 45 of the Act in force, when the proposal was made and policy taken, no insurance policy can be repudiated after two years on the grounds of concealment/suppression of facts. The present case is covered by this section before its amendment and the deceased died after more than two years nine months after taking the policy." Therefore, the order of the commission was upheld and the insurance company was directed to pay up, said complainant's advocate Jagan Nath Bhandari.

"Initially, the district forum had directed LIC to pay up and this order was upheld by state commission while dismissing the petition filed by the LIC in state commission. Now the national commission has upheld it which is great success," shared Jagan Nath.

In the complaint, Jaswinder Kaur, a resident of Sector 34 had stated that in the year 2012, her Late Gurbir Singh Riar was issued a life insurance 'Jeevan Anand' with death sum assured of Rs 5 lakh. Under the said policy, Kaur was a nominee. The date of commencement of the policy was December 4, 2012. Unfortunately, on September 26, 2015, due to unknown reasons, her husband committed suicide. She lodged a claim with the divisional manager of LIC, but the same was erroneously rejected on June 24, 2016, claiming the deceased concealed material facts at the time of buying the insurance policy.

LIC in its reply had contested that after the death of the complaint's husband, a claim was lodged which was immediately examined and it was found that he was suffering from bipolar disorder (a mental illness) and had taken treatment from different places. They added that this material information had been deliberately suppressed by him while taking the policy.

In response, Kaur had stated that her husband was asked to simply put his signature on the proposal form and rest of the columns and answers were filled by the insurance agent. The entire proposal form was filled in handwriting of the insurance agent himself.