₹1cr Death Claim Rejected, Then Honoured
Telangana consumer commission directs Tata AIA Life Insurance to pay ₹1 crore death benefit after initially rejecting claim due to alleged non-disclosure of earlier insurance proposal
A Telangana consumer commission has directed Tata AIA Life Insurance to honour a ₹1 crore death claim after the insurer rejected it on the ground that the policyholder had failed to disclose an earlier insurance proposal that had been postponed on medical grounds.
The policyholder, a retired Central Excise officer, had purchased a Tata AIA Life Insurance Samporna Raksha policy with a sum assured of ₹1 crore, which commenced on October 31, 2019, and had a 25-year term with an annual premium of about ₹58,800.
The policyholder died on May 25, 2021, after contracting Covid-19, and the insurer rejected the death claim, alleging that the policyholder had failed to disclose an earlier insurance proposal that had been postponed on medical grounds.
The Telangana State Consumer Disputes Redressal Commission found that Tata AIA had not produced evidence establishing that the postponement of the earlier proposal had been communicated to the policyholder before he submitted the Tata AIA proposal.
The Commission also found no evidence showing that the medical report had been supplied to the policyholder or that he had attended any counselling or discussion about the adverse findings.
The Commission directed Tata AIA Life Insurance to pay the ₹1 crore death benefit, along with 9% annual interest from the date the claim was repudiated, ₹50,000 as compensation, and ₹10,000 towards legal expenses.
## Why it matters The case highlights the importance of disclosing relevant information while buying a life insurance policy and the need for insurers to prove that policyholders had knowingly concealed such information before repudiating a claim.
The decision of the Telangana State Consumer Disputes Redressal Commission is significant as it sets a precedent for similar cases where insurers reject death claims due to alleged non-disclosure of earlier insurance proposals.
The case also underscores the need for transparency and communication between insurers and policyholders, ensuring that policyholders are aware of the terms and conditions of their policies and the implications of non-disclosure.
The outcome of this case will provide relief to the family of the deceased policyholder, who will now receive the ₹1 crore death benefit, and serves as a reminder to insurers to carefully evaluate claims and provide adequate evidence to support their decisions.
