LIC rejects claim over hidden diabetes, widow wins Rs 3 lakh insurance battle after 13 years

The Life Insurance Corporation of India (LIC) rejected a widow’s Rs 3 lakh insurance claim, alleging that her husband had concealed diabetes and high BP. But the forms relied on by the insurer to establish his ‘declaration of good health’ during the December 2010 policy revival carried dates from December 2012, months after his death. Finding that the insurance company failed to prove concealment of medical conditions, the Madhya Pradesh State Consumer Commission has dismissed its appeal and upheld an order directing it to pay Rs 3 lakh to the widow.

Commission president Justice Sunita Yadav and member Dr Monika Malik were hearing LIC’s appeal against an April 25, 2019, order of the Datia district consumer commission allowing a complaint by Asha Devi Sheetalani, widow of Hasanand. “Clearly, there are discrepancies in the dates of the revival forms, therefore LIC has not been able to justify existence of such DGH forms and concealment of material facts,” the commission observed on October 30.

After Hasanand died in March 2012, his widow sought benefits under the policies. The insurance company rejected the claim on January 16, 2014, alleging he had suppressed his medical history when they were revived. She challenged the rejection.

LIC alleged husband concealed diabetes, hypertension

Hasanand had bought policies for Rs 1 lakh and Rs 2 lakh, effective from March 14, 2006, and October 21, 2008, respectively. Both lapsed for non-payment of premiums and were revived on December 14, 2010.
LIC, however, alleged that he failed to disclose Type II diabetes and hypertension in the declarations of good health that were submitted.

It relied on an April 25, 2013, medical certificate from Dr Sunil Gadkar, which it said showed Hasanand had suffered from both conditions for two years. The insurer argued that the non-disclosure invalidated the policies. The widow said her husband was healthy and challenged the certificate, arguing that the doctor had never treated him.

She then approached the insurance ombudsman, Bhopal. In an award dated November 26, 2015, the ombudsman noted that copies of the declaration of good health forms carried dates of December 10 and December 14, 2012, with overwriting. The ombudsman recorded his death as March 18, 2012.

The ombudsman stated that Hasanand could not have signed forms after his death, flagged serious discrepancies, and recorded that fraudulent means had been adopted by a company official. It allowed her to approach the appropriate forum.

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Commission says LIC failed to prove concealment

The state commission noted that the medical certificate on record did not specify the duration of Hasanand’s diabetes and hypertension. The LIC filed another certificate mentioning the duration but produced no other medical document establishing that he had the conditions or was receiving treatment.

It concluded that the insurer had not established the disputed declarations or medical concealment. The insurer also argued that Rs 41,367 had been refunded towards the paid-up value or premium amounts under the policies in 2013 and 2014. The widow disputed receiving the money. The state commission found no error in the district commission’s order and dismissed the insurer‘s appeal.

The district commission had directed the insurer to pay the claim amounts under both policies, along with applicable bonuses and interest at seven per cent per annum from January 16, 2014, the date of repudiation, until payment.

It had also ordered Rs 5,000 as compensation and Rs 1,500 towards litigation costs. The payment was due within one month of the April 25, 2019, order, failing which the compensation and costs would also carry seven per cent annual interest. The state commission made no separate order as to costs.

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Takeaway

Insurance companies cannot reject claims merely by alleging that policyholders concealed pre-existing illnesses. They must support such allegations with reliable medical evidence and valid documentation. Policyholders and nominees should retain policy papers, revival forms and medical records to challenge unjustified claim rejections.

Consumers facing similar grievances may contact the consumer helpline in their respective states (Madhya Pradesh: 0755-2559778, 0755-2559993) or dial the National Consumer Helpline at 1915 for assistance.

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