LIC Asked To Pay Rs19.75 Lakh Death Insurance Claim with 9% Interest under Jeevan Tarang Policy
Moneylife Digital Team 16 May 2024
Rejecting the Life Insurance Corporation of India (LIC)'s contention that the insured failed to disclose diabetes and an earlier operation for the removal of gall bladder, the national consumer disputes redressal commission (NCDRC) directed the insurer to pay Rs19.75 lakh, the entire death insurance claim along with an interest of 9%pa (per annum) and Rs10,000 litigation cost to the family of the deceased life assured (DLA).
In an order last week, the NCDRC bench of Subhash Chandra (presiding member) says, "It is manifest that the DLA expired within two years of the policy due to complications arising from cancer of the lung. The repudiation of the policy was on the grounds that the insured failed to disclose diabetes and an earlier operation for removal of gall bladder (cholecystectomy) in 2007. The DLA was diagnosed with cancer in November 2011, whereas the policy was obtained in July 2010, i.e. after the policy was approved. As held by the Supreme Court in Sulbha Motegaonkar case, the DLA cannot be disentitled from the claim."
Mulund, Mumbai-based Dr Shankar Shetty bought two life insurance policies from LIC. One was a Jeevan Tarang policy commencing from 14 July 2010 till 14 July 2025 for Rs19.75 lakh with a half-yearly premium of Rs74,923 and the other, a Samriddhi Plus policy for Rs2.75 lakh effective from 24 May 2011 till 24 May 2021 with a one-time premium of Rs2 lakh. 
On 29 September 2011, Dr Shetty, the DLA, was detected with cancer of the right lung and was under treatment at Tata Memorial Hospital till 11 November 2011. On 18 February 2012, he was admitted to Fortis Hospital, where the carcinoma was again diagnosed. On 29 February 2012, Dr Shetty expired. His wife, Shubhalaxmi Shankar Shetty and two children filed the insurance claim with LIC.
Under the Samriddhi Plus policy, LIC paid the Shetty family an ex-gratia amount of Rs2.75 lakh. However, it rejected the claim filed under Jeevan Tarang policy, stating that Dr Shetty had withheld correct information regarding his health at the time of obtaining the policy and that there was evidence that he was suffering from diabetes and had undergone a cholecystectomy in 2007.
The Shetty family filed a complaint before the Maharashtra state consumer dispute redressal commission. While allowing the complaint, the state commission directed LIC to pay Rs14.81 lakh, 75% of the sum assured (Rs19.75 lakh), along with 9% interest and Rs10,000 litigation cost to the Shetty family.
Aggrieved by the order, LIC approached NCDRC. Relying on a judgement given by the Supreme Court in the Reliance Life Insurance Company Ltd vs Rekhaben Nareshbhai Rathod case, the counsel for LIC argued that the concealment of the facts of prior illness and the existence of previous policies constituted valid grounds for repudiation of the policy and the state commission erred in concluding otherwise. 
The counsel for the Shetty family argued that although Dr Shetty was diagnosed with diabetes, he was not on any medication for it and that the disease was being managed through diet and exercise. Dr Shetty was treated in 2008 for calculous cholecystitis and not cholecystectomy as alleged by LIC, the counsel says.
The counsel also placed reliance on the Supreme Court's judgment in the LIC India vs GM Channabasamma where it was held that the onus to establish fraud or fraudulent suppression, misrepresentation of material facts lay with the appellant (LIC), which he says had failed to discharge. 
Perusing the order issued by the state commission, Mr Chandra from NCDRC observed that the cause of death not being related to the concealment of fact, the claim cannot be repudiated on the ground of non-disclosure of good health at the time of the policy proposal.
Talking about the Rekhaben case referred by LIC, the bench noted that in the present case, repudiation is based upon non-disclosure of good health and not the existence of previous policies. "In the Rekhaben case, the insurer had sought information with respect to previous insurance policies obtained by the assured. It was held that the disclosure of the earlier cover was material to an assessment of the risk...Hence, the ratio of Rekhaben case cannot apply to this case," it says.
Mr Chandra also referred to the apex court judgement in the Sulbha Motegaonkar case. In that case, the SC stated, "...since the alleged concealment was not of such a nature as would disentitle the deceased from getting his life insured, the repudiation of the claim was incorrect and not justified."
While dismissing the appeal, NCDRC directed LIC to pay, within eight weeks, Rs19.75 lakh with 9% interest from the date of repudiation of the claim and Rs10,000 litigation cost. 
(First Appeal No2145 of 2019 Date: 8 May 2024)
1 month ago
My wife was an LIC ZM CLUB MEMBER AGENT served for long 32 years with fame suffered from Cancer and died on 25th September 2023, but till date her legitimate dues are not paid after several requests and reminders. Nobody is in LIC to take care of the families of the agents, who died in harness. What to do ? I will be highly obliged if somebody give some advice in rhis matter as already 7 month's passed away.
Replied to sussou619 comment 4 weeks ago
Send me Agency code.
Branch name
Zonal office
1 month ago
Material facts like existing disease and operations were not disclosed by the DLA. Had these would have been disclosed it would have effected the underwriting. It seems a clear cut case of repudiation. However regards apex court judgment.
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