Insufficient Evidence To Link Smoking Or Hypertension As Cause Of Death, South Mumbai District Commission Holds LIC Liable Of Deficiency In Services

Brief Facts:

The husband of the Complainant was an employee of Brihanmumbai Electric Supply and Transport (“BEST”) and held a "Jeevan Saral Life Insurance Policy" of Life Insurance Corporation of India (“LIC”) with a sum assured of Rs. 2,00,000/-. The premiums for the policy were regularly paid by the employer, and the Complainant was the nominee. The Complainant's husband passed away on 16/11/2012 due to a heart attack/cardiovascular shock while undergoing treatment at J.J. Hospital. Following his demise, the Complainant submitted a claim to LIC.

LIC repudiated the claim and alleged suppression of material facts. It argued that the Complainant's husband didn't disclose his hypertension (HTN) for four years or his smoking habit of 25-30 years which constituted grounds for denial. The Complainant contested these allegations and argued that her husband was not suffering from hypertension for the specified period. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, South Mumbai, Maharashtra (“District Commission”) and filed a consumer complaint against LIC.

LIC argued that the deceased was under continuous treatment in various hospitals and referred to case papers from St. George Hospital indicating a known case of HTN for four years and chronic smoking habits. It argued that the Complainant was aware of these medical details which justified the claim repudiation.

Observations by the District Commission:

The District Commission held that according to IRDA guidelines, all terms and conditions should be explained to the insured in a language they understand, with their signature obtained below the endorsement. It noted that the deceased only received education up to the 2nd standard and lacked the ability to read and write. Additionally, the testimony of a handwriting expert revealed the inability to determine the actual signer of the proposal form due to the lack of specific character. Therefore, it held that the deceased did not sign the proposal form.

Secondly, the District Commission addressed the cause of death and held that while the deceased suffered a heart attack, there was insufficient evidence to conclusively link smoking or hypertension as the primary causes. The burden fell on LIC to substantiate these points, which it failed to do. Consequently, it held that there was no evidence of suppression of facts by the insured during the submission of the proposal form, especially considering his illiteracy regarding the policy's terms and conditions. It held that the repudiation order was unsustainable, and the Complainant was entitled to the insurance claim.

Therefore, the District Commission directed LIC to pay the insurance claim amount of Rs. 2,00,000/- to the Complainant with 9% interest per annum. Additionally, LIC was ordered to pay a compensation of Rs. 1,00,000/- for mental agony and Rs. 20,000/- towards the costs of litigation to the Complainant.

Case Title: Kashawa S.Yenugandula vs Life Insurance Corporation of India

Case Number: Consumer Complaint no: 27/2014

Date of Pronouncement: May 31^st, 2024