Important Supreme Court judgment Information related to illness cannot be concealed while taking life insurance policy, claim may be rejected
If you are taking out a life insurance policy, it is your responsibility to provide the insurance company with all the correct information related to your illness. Failure to do so may result in dismissal of the claim from the insurance company. The Supreme Court on Thursday delivered a landmark judgment in a similar case.
A bench of Justice DY Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee said that the relationship of insurance depends on trust. If a person wants to take out life insurance, he has an obligation to disclose all the facts so that the insurance company can consider all the risks.
The court said that the insurance company estimates the risk from the form
The court said the form to be filled out for insurance contains a column stating any old illness. This allows the insurance company to estimate the person's actual risk. The court overturned a ruling by the National Consumer Disputes Redressal Commission (NCDRC).
The NCDRC had in March this year ordered the insurance company to pay the full amount of the deceased mother’s death claim, including interest. The insurance company told the apex court that the full amount of the claim had been paid by them due to the length of the proceedings. During the hearing, the judge realized that the deceased's mother was 70 years old and was dependent on the deceased. They therefore ordered that the insurance company not recover this amount.
Reviewing the NCDRC, the high court said that in the medical report received during the investigation, it was clear that the insured was already suffering from a serious illness. This was not reported to the insurance company. During the investigation, it was discovered that he had hepatitis-C.
The insurance company canceled the claim in May 2015 due to concealment of this fact. The nominee then lodged a complaint with the District Consumer Dispute Resolution Forum. In this regard, the forum directed the insurance company to pay the sum insured along with interest.
Insured in 2014
The person concerned approached the insurance company in August, 2014 for the policy. The form contained questions related to health and medical history. Which was to provide information about the current illness, hospitalization or treatment. They answered this question in name only. The insurance policy was issued on the basis of this answer. The man died in September 2014. Which was followed by a claim for a medical claim.
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