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National Commission: Insurance Claim cannot be denied on ground of Common Lifestyle Diseases

The Apex Consumer Commission has asked Life Insurance Corporation of India to pay Rs. 5,00,000/- to the wife of a deceased diabetes patient and made clear that insurance claims cannot be denied on the ground of common lifestyle diseases such as diabetes or hypertension but that does not give right to the insured to suppress information in respect of such diseases.

The National Consumer Disputes Redressal Commission (NCDRC), while setting aside the Punjab State Commission's order, asked the Chandigarh branch of the Life Insurance Corporation (LIC) of India to pay the sum of Rs. 5,00,000/- along with compensation Rs 25,000 and litigation cost Rs 5,000 within 45 days to Punjab-resident Neelam Chopra.

Neelam Chopra’s husband had taken insurance policy in 2003 where he was medically examined by approved doctors of the Insurance Company and after examining the documents, the Insurance Company issued policy. The husband of Neelam Chopra died due cardio respiratory arrest therefore she submitted claim for the same. However, the Insurance Company repudiated the claim on the ground that her husband had suppressed material information regarding his health at the time of taking the policy and also on the ground that claim has become time barred.

When Neelam moved the District Forum, LIC was told to pay her the insurance claim amount of Rs. 5,00,000/- along with 12 per cent interest besides Rs. 25,000/- as compensation for mental agony and Rs 5,000 as cost of litigation. The State Commission of Haryana allowed the appeal moved by LIC. This is when Neelam approached the National Commission.

A single bench of Hon’ble Prem Narain of National Commission observed that the Deceased Life Assured (DLA) died on 07.01.2004 and therefore, the disease on account of which the death occurred was not prevailing on the date of filing of the proposal form as the proposal form was filled on 24.01.2003. It has also been alleged that the DLA was suffering from diabetes as mentioned in the treatment record of PGI Chandigarh. He was suffering for 3-4 years from diabetes. In the certificate of Medical Attendance, it is also mentioned that the DLA was suffering from diabetes, however, diabetes was under control.

In this regard the Commission quoted a judgment passed by Delhi High Court in the case of Om Agarwal Vs. Oriental Insurance Co. Ltd.,  wherein it was held “that there is no dispute that diabetes was a condition at time of submission of proposal, so was hypertension. Petitioner was advised to undergo ECG, which he did- Insurer accepted proposal and issued cover note- It is universally known that hypertension and diabetes can lead to a host of ailments, such as stroke, cardiac disease, renal failure, liver complications depending upon varied factors that implies that there is probability of such ailments, equally they can arise in non-diabetics or those without hypertension.”

The Commission, therefore, held that it was clear that the insurance claim cannot be denied on the ground of these lifestyle diseases that are so common. However, it does not give any right to the person insured to suppress information in respect of such diseases. The person insured may suffer consequences in terms of the reduced claims.  The Commission also relied on Supreme Court’s decision in Sulbha Prakash Motegaonkar and Ors. Vs. Life Insurance Corporation of India where it said that “suppression of any information relating to pre-existing disease if it has not resulted in death or has no direct relationship to cause of death would not completely disentitle the claimant for the claim.” In the present case, the cause of death is cardio respiratory arrest and this disease did not exist when the proposal form was filled. Clearly, there is no suppression of material information in respect of this disease, which is the main cause of death.

The Commission, therefore, set aside the order of the State Commission and modified the order of the district forum to the extent that LIC was told to pay only the insurance amount of Rs 5,00,000/- and compensation of Rs 25,000 along with litigation cost of Rs 5,000.

Divya Patwal


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