Kolkata man gets over Rs 1 crore payout after insurer wrongly rejects mother’s death claim

A Kolkata District Consumer Commission has directed IndiaFirst Life Insurance to pay Rs 99.41 lakh to the son of a policyholder after it wrongly rejected a Rs 1 crore death claim after his mother died, holding that the insurer first alleged forged financial documents and later raised pre-existing illnesses as a ground with no evidence to support it. It also directed the insurance company to pay him Rs 60,000 payout.

President Kallol Chattopadhyay and member Udayan Roy observed that the insurer’s unjustified repudiation of a genuine death claim amounted to a deficiency in service and caused harassment and mental agony to the son of the deceased policyholder, for which he was entitled to compensation and litigation costs. 

“The plea of pre-existing disease fares no better. It is significant that this plea was not taken in the repudiation letter at all, and surfaced for the first time only in reply to the legal notice. A repudiation that shifts its ground in this manner, adding a fresh and inconsistent basis at a belated stage, is itself an indicator of afterthought and cannot be countenanced,” the  

The order added, “There is no material, and no evidence, to show either that the terminal ailments pre-dated the proposal or that the deceased deliberately suppressed any material fact with knowledge and intent. The burden being on the insurer, and the insurer having led no evidence, this ground also fails…the repudiation of the claim by the Opposite Party is held to be
arbitrary and unjustified, and amounts to deficiency in service.”

Rs 1 crore cover, but claim rejected

The woman purchased a term insurance policy from IndiaFirst Life Insurance with a sum assured of Rs 1 crore. She had paid her first yearly premium of Rs. 58,509.12 on January 23, 2022. The policy was issued after the insurer conducted her medical examination, both physically and virtually, and also verified her financial documents.

On January 30, 2023, she was admitted to a hospital for cough, fever and breathing problems. She died on February 1, 2023. Her death certificate disclosed severe sepsis, severe pancytopenia and acute kidney failure as the cause of death.

Her son, who was the nominee, later filed a claim of Rs 1 crore in March 2023. The insurance company allegedly rejected his claim, stating that the income and occupation documents submitted with the proposal were forged or tampered with and that the claim was fraudulent. Later, the Insurance company alleged that his mother had not disclosed her pre-existing diseases that were mentioned in her death certificate before taking the policy.

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The complainant denied these allegations and said the diseases developed only around the time of her final hospitalisation. He also argued that his mother’s death occurred within the grace period, after the renewal premium fell due on January 24, 2023, making the policy valid.

The insurer did not appear before the Commission or file a written version, and the matter proceeded ex parte.

Insurer files no reply, Commission upholds cover 

The Commission held that the insurance company had chosen not to contest the case, had filed no written version, and had produced nothing. In these circumstances, an adverse inference is drawn against them; it said that the policy was subsisting and in force on the date of death.

The commission directed IndiaFirst Life Insurance Company Ltd to pay to the son the sum of Rs. 99. 41 lakh, and it also directed it to pay to him compensation of Rs 50,000 and litigation cost of Rs 10,000. 

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Takeaway

The ruling highlights that if the cause of action arises within the territorial limits of the commission, the deceased being a resident of that district and the repudiation having been received here. The complaint is, therefore, maintainable and the commission has jurisdiction to entertain it. 

Consumers facing similar grievances may contact the consumer helpline in their respective states (West Bengal: 033–2252–0448) or dial the National Consumer Helpline at 1915 for assistance. 

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