Chandigarh State Commission Holds Max Life Insurance Liable For Rejecting Insurance Policy Of Deceased

The Commission directed the insurance company to pay ₹19,64,026/- with 9% interest. Additionally, it was ordered to pay ₹40,0000/- as compensation for causing mental agony and ₹10,000/- as litigation cost.

Brief facts:

The deceased took a 96-month Group Credit Life Insurance Policy from Max Life Insurance Company Limited (Appellant) worth Rs. 68,817.56. During the purchase of the policy, the deceased was in good health but he died on 15.2.2022 due to sudden cardiac arrest. Due to the non-disclosure of previous health issues, his policy was rejected. Feeling aggrieved, his wife and daughter (complainant) filed a complaint in the District Commission.

In response, the insurance company alleged concealment of a medical history of hypertension and depressive disorder which constituted a breach of insurance policy. The District Commission partly allowed the complaint.

Dissatisfied by the decision of the District Commission, the Appellant filed an appeal before the State Consumer Disputes Redressal Commission, Chandigarh (“State Commission”).

Contentions of Max Life Insurance Company:

The Appellant argued that the District Commission incorrectly interpreted that there was no link between the policyholder's medical history and his cause of death. Reliance was placed on several cases emphasizing that non-disclosure of material facts justifies claim rejection.

Observation of the State Commission:

The State Commission rejected the appellant's claim as there was insufficient evidence to link the deceased pre-existing medical issues to his source of death. The deceased was suffering from hypertension which was not directly related to the cause of death as it is a common lifestyle disease. While other disease including vertigo is not life-threatening.

Reliance was placed on Sulbha Prakash Motegaonkar & Ors. Vs. LIC of India Civil Appeal No.8245 of 2015, wherein it was held that repudiation of the claim by the insurance company was incorrect on grounds of non-disclosure as a pre-existing condition had no nexus with the reason for death.

Furthermore, Life Insurance Corporation of India Vs. Jyotsna Rawal, Revision Petition No. 864 of 2018 was referred affirming that unless there is a direct connection between the undisclosed condition and the cause of death, rejection is unjustified.

Therefore, the State Commission upheld the rejection of insurance claims by Max Life Insurance Company Limited as incorrect. Thus, the appeal was dismissed and the decision of the District Commission was upheld.

Case title: Max Life Insurance Company Limited vs, Mrs. Jyoti Chawla & Ors

Case No: Appeal No. 292 of 2024

Date of Pronouncement: 18.11.2024

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