Case Title: Sushila Singh vs. Birla Sun Life Insurance Co. Ltd. and Anr.
Case No.: FIRST APPEAL NO. 2280 OF 2018
Summary
The National Consumer Disputes Redressal Commission (NCDRC) dismissed an appeal against Birla Sun Life Insurance Co. Ltd., the spouse of Sushila Singh, who had a life insurance policy with the company. The complaint was not eligible for reimbursement due to the deceased husband’s neglect to provide important health information about his health. The insurance company argued that the reinstatement of the policy was justified by the deceased husband’s signed Certificate of Insurability (COI), which declared the absence of any illness or damage.
The NCDRC denied the complaint, stating that the insured’s kidney condition was reported to the advisor but not mentioned in the revival form. The NCDRC received an appeal, stating that the late husband died due to a medical issue he neglected to disclose during the policy reinstatement process. The NCDRC affirmed the State Commission’s ruling, stressing the importance of the insurance contracts’ requirement of the highest good faith and underlining the insurance company’s prerogative to reject a claim in the event that crucial information is withheld.
About the case
AVM J. Rajendra, a member, and Subhash Chandra, the presiding member of the National Consumer Disputes Redressal Commission (“NCDRC”) bench, dismissed an appeal against Birla Sun Life Insurance Co. Ltd. submitted by the complainant, who was her deceased husband’s nominee. The NCDRC emphasized the value of good faith in insurance agreements and determined that the complaint was not eligible for a reimbursement since the deceased husband neglected to provide Birla Sun Life Insurance Co. with important information about his health. The spouse of Sushila Singh (“Complainant”) had a life insurance policy with Birla Sun Life Insurance Co. Ltd. (“Insurance Company”), insuring him for a death benefit of Rs. 50,00,000. The policy had an annual premium of Rs. 25,524.
Due to non-payment of premiums, the policy terminated in 2012; nevertheless, it was renewed in 2013 following the Complainant’s husband’s kidney disease diagnosis. During reinstatement, the insurance advisor neglected to record this health information. Regretfully, the complainant’s spouse passed away in 2013, and the insurance company rejected the claim.Enraged, the Complainant lodged a consumer complaint with the Bihar State Consumer Disputes Redressal Commission (the “State Commission”), requesting reimbursement for mental distress and the insured value of Rs. 50,00,000, plus interest. The insurance company contended that the reinstatement of the policy was justified by the deceased husband’s signed Certificate of Insurability (COI), which declared the absence of any illness or damage. He did, however, have renal issues prior to his readmission. The insurance company further argued that the deceased husband should have given correct health information and that restoration of a lapsed policy is considered a new contract. They also underlined that agents are only able to make promises that adhere to the terms and conditions set by the insurance company.
The premium was returned to the complainant after the claim was rejected.The State Commission denied the complaint, claiming that although the insured’s kidney condition was reported to the advisor, it was not mentioned in the revival form. They concluded that the insurance company’s choice was appropriate since it is essential that health information be accurate when resuming coverage. The National Consumer Disputes Redressal Commission (“NCDRC”) received an appeal from the Complainant, who was once again displeased with the ruling.The NCDRC noted that the case included a disagreement over the rejection of a life insurance claim. The complainant, who is the late husband’s nominee, asserted that the insurance company had incorrectly denied her claim. The principal matter concerned the purported withholding of the husband’s medical records throughout the policy reinstatement procedure and the appropriateness and legality of the insurance company’s decision to reject the claim.
The late husband first acquired a Rs. 50 lakhs life insurance policy in 2010, but it lapsed in 2012 as a result of unpaid premiums. 2013 saw the return of the policy. It’s true that the husband was receiving dialysis for a kidney condition at the time of the revival. According to the complaint, the insurance advisor was informed of this information but neglected to include it in the revival form. But there was no hard proof to back up her assertion. The insurance company, on the other hand, argued that the reinstatement of the policy was a distinct contract and that the insured had a duty to furnish full and correct information, including his medical history. It cited court rulings that emphasize the proposer’s obligation to notify the insurance company of any pre-existing conditions.The NCDRC looked over the State Commission’s decision to reject the complainant’s complaint again, noting that her husband died as a result of a medical issue he neglected to disclose during the policy reinstatement process. The NCDRC concluded that the insurance company’s choice was appropriate as a result.
The NCDRC affirmed the State Commission’s ruling, stressing the importance of the insurance contracts’ requirement of the highest good faith. It also underlined the insurance company’s prerogative to reject a claim in the event that crucial information is withheld. The NCDRC rejected the appeal after concluding that the insurance company’s denial of the claim was appropriate.
