No Nexus Between Pre-existing Disease And Death, Bihar State Commission Directs TATA AIG Life Insurance Co. To Disburse Amount

Brief Facts:

Awadhesh Kumar Nirala's (“Complainant”) father Surya Narayan Shah purchased two life insurance policies from TATA AIG Life Insurance Co. Ltd. (“Insurance Company”) for Rs. 10,00,000/- and Rs. 75,000/- respectively. He submitted an annual premium amount of Rs. 2,00,000/- and Rs. 15,000/- for the same and declared the Complainant his nominee. The policies were granted after an extensive medical check-up conducted by a panel of doctors assigned by the Insurance Company. One day, the Complainant's father suffered a severe cold attack and was treated by a local doctor at his home. However, the treatment was unsuccessful, and he passed away. Pursuant to the incident, the Complainant filed a claim with the Insurance Company after submitting all the relevant documents. However, the claims were rejected based on non-disclosure of the pre-existing chronic asthma.

Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Vaishali, Bihar (“District Commission”). The District Commission perused the certificate by the treating doctor and held that the reason for the death of the insured was indeed due to the severe cold attack and not because of any pre-existing ailment. Therefore, it directed the Insurance Company to disburse Rs. 10,75,000/- to the Complainant. Dissatisfied by the order, the Insurance Company filed an appeal in the State Consumer Disputes Redressal Commission, Bihar (“State Commission”).

Observations by the Commission:

The State Commission referred to the decision in Life Insurance Corporation of India vs Sunita and Ors. [2020-JX(Con)-0-208], wherein it was held that unless the undisclosed pre-existing disease directly contributed to or caused death, it wouldn't disqualify the claimant from receiving benefits. The State Commission further observed that even though the deceased life assured failed to disclose his chronic asthma condition on the insurance proposal form, the cause of death, a severe cold attack, was not directly related to the undisclosed condition.

Resultantly, the State Commission upheld the decision of the District Commission, stating that it was well-appraised and reasoned. It found no significant errors in how the evidence was evaluated and affirmed the previous order as just and appropriate. Consequently, the appeal was dismissed, but the rate of interest was reduced to 8% (as opposed to 15%) per annum from the date of filing the complaint until its payment.