Life insurance claim can’t be rejected for mis-statement in proposal after 2 years

The National Consumer Commission has ruled that a life insurance claim cannot be rejected for misstatement in the policy proposal after a period of two years. The law now provides three years. The present complaint was filed by Nikhil Sharma through his father Ajay Sharma. The complainant was the nominee in the policy taken by his deceased grandfather.
Gopal Dass had an account with Karnataka Bank, Varanasi Branch.

The bank’s officials persuaded him to take life insurance policies from Metlife India Insurance. He took three policies with a coverage of Rs 30 lakh, Rs70 lakh and Rs 35 lakh, totaling Rs 1. 35 crore. The policies were issued after subjecting him to medical tests. His grandson, Nikhil Sharma, was a the nominee under all the policies. Gopal Dass expired on October 25, 2011.

Nikhil, being a minor, lodged the claims through his father, Ajay Sharma. However, the claims were rejected through a common repudiation letter on the ground that Gopal Dass had suppressed material facts relating to his income. The insurer, however, issued demand drafts for Rs 4,43,941, Rs 54,137 and Rs 31,140 under each policy without giving any explanation.

Nikhil refused to accept the demand drafts, and approached the Insurance Ombudsman, but his complaints were rejected on technical grounds. So Nikhil filed a complaint before the National Consumer Commission.

In its order of February 9, 2022, delivered by C. Viswanath and Justice Ram Surat Ram Maurya, the National Commission ordered the insurer to pay the entire claim, totaling Rs 1. 35 crore along with 9% interest.



Views expressed above are the author’s own.