In a significant win for insurance policyholders, the national consumer disputes redressal commission (NCDRC) has dismissed an appeal filed by Birla Sun Life Insurance Co Ltd, upholding a 2014 verdict that directed the insurer to pay Rs21 lakh to a Telangana-based widow after the death of her husband.
The case, which has spanned more than a decade, centres on Bodakunt Prameela, the nominee and legal heir of the late Bodakunt Raghavulu, who had purchased a 'Foresight Plan' life insurance policy worth Rs21 lakh from Birla Sun Life in March 2011. Mr Raghavulu died in August 2012 while undergoing treatment for complications related to liver disease at Hyderabad's Asian Institute of Gastroenterology.
Despite the policy being valid and premiums fully paid, Birla Sun Life Insurance rejected Ms Prameela’s claim on the grounds that her husband had allegedly withheld information about pre-existing medical conditions, particularly grade 3 esophageal varices. (Grade 3 esophageal varices are considered a high-risk category for bleeding and are a common finding in patients with cirrhosis.)
The insurer cited 'material concealment' and claimed the deceased had given false answers on his application form.
However, in its order on 21 May 2025, the NCDRC bench comprising presiding member Subhash Chandra and member air vice-marshal (AVM) J Rajendra (retd) found no merit in the insurer's allegations. “None of the documents brought on record…indicate that Mr Raghavulu, the deceased life assured (DLA) was actually aware of these conditions,” the commission observed.
“There is a good possibility that the DLA was not aware of his medical condition when he signed the Proposal Form. In the absence of establishing the same, the contentions with respect to non-disclosure and non-compliance with uberrima fides (utmost good faith) fail,” the bench says.
Ms Prameela had approached the Andhra Pradesh state consumer disputes redressal commission in 2013, which ruled in her favour in 2014. The state commission directed Birla Sun Life to pay the sum assured of Rs21 lakh along with 9% annual interest from the date of the claim (28 August 2012) until realisation, and Rs10,000 in litigation costs.
Challenging the decision, the insurer moved NCDRC arguing that Mr Raghavulu, the deceased, had knowingly withheld crucial health details and that they had sufficient medical records and expert affidavits to justify claim repudiation.
Yet, NCDRC bench found the evidence submitted by the insurer inadequate. The bench stressed the principle that 'when any claim is repudiated on the grounds of exclusion such as pre-existing medical conditions, it is incumbent upon the insurer to prove that such conditions actually existed and the DLA was aware of them'.
While Birla Sun Life cited treatment records from February 2011—prior to the policy’s issuance date of 28 March 2011—and produced medical opinions and an affidavit from a doctor supporting its stance, the commission noted that none of the records conclusively proved that the deceased knew of his illness.
Further, NCDRC pointed out that the insurer had its own medical examiner evaluate the policyholder before issuing the policy. Ms Prameela had also submitted an affidavit asserting that her husband had no known health issues prior to taking the policy.
Finding no error in the state commission’s decision, NCDRC dismissed the appeal. “The detailed and well-reasoned order of the learned State Commission does not warrant any interference,” the bench ruled.
The ruling is a crucial precedent reaffirming that the burden of proof lies with insurers in cases of alleged non-disclosure. This case also underscores the responsibility of insurance companies to prove both the existence and the knowledge of pre-existing ailments and denials based merely on hindsight and hospital records won’t stand up.
With this verdict, Ms Prameela is now set to receive the life insurance payout originally claimed in 2012 — a 13-year-long wait for justice.
(First Appeal No1426 of 2014 Date: 21 May 2025)
