Uttar Pradesh State Commission Holds LIC Liable For Wrongful Repudiation Of Valid Claim

Brief Facts:

The Complainant's minor son was insured under the Jeevan Surbhi Policy by the Life Insurance Corporation of India (“LIC”). The policy covered an assured sum and a separate accidental benefit. The insurance premiums were regularly deposited. The insured attained the age of 18 in October 2022. Subsequently, he suddenly passed away in a road accident on 10th January 2023. The Complainant submitted a claim before LIC. LIC disbursed the sum assured of Rs. 1,84,700/- but refused to pay Rs. 1,00,000/- for the accidental benefit. LIC informed the Complainants that the accidental benefit was not disbursed because her son, on becoming an adult, did not pay an additional premium amount at the rate of Rs. 1 per 1000.

Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Sultanpur, Uttar Pradesh (“District Commission”). The District Commission directed LIC to pay Rs. 50,000/- with a 9% annual interest rate.

Dissatisfied with the order of the District Commission, LIC filed an appeal before the State Consumer Disputes Redressal Commission, Uttar Pradesh (“State Commission”). LIC contended that the deceased insured did not avail of the accidental coverage benefit by paying an additional premium amount after attaining the age of majority. Therefore, the repudiation was valid.

Observations by the State Commission:

The State Commission observed that the insured deceased passed away on 10th January 2023, almost 3 months after attaining majority in October 2022. The next instalment of the premium amount was due on 28th January 2023. Thus, the option of availing a fresh accidental coverage by paying an additional premium could not be availed by the deceased as he passed away earlier.

Further, LIC failed to produce any evidence which compelled the insured deceased to pay the additional premium immediately at attaining the majority age. Therefore, the appeal filed by LIC was dismissed and the order of the District Commission was upheld.

Case Title: L.I.C. vs Smt. Shanti Singh

Case No.: First Appeal No. A/2005/177

Advocate for the Appellant: Shri V.S. Bisaria

Advocate for the Original Complainant/Respondent: Shri Amit Kumar Singh

Date of Order: 05.07.2024