Madras High Court Orders Disbursal Of Life Insurance Amount To Family Despite Policy Holder Defaulting In Premium Payment "Due To Ill-Health"

Justice SM Subramaniam observed that the default was neither intentional nor wilful and the non-payment was only because the insured was hospitalized and taking treatment and had passed away subsequently.

“Considering the facts and circumstances and the mitigating factors placed before this Court, the petitioner is entitled for the relief on the ground of equity and more-so, there was no wilful or intentional default in non-payment of premium dues for the months of February and March 2020 by the deceased insured person,” the court said.

The petitioner's husband, Ramesh had taken a life insurance policy to the tune of Rs. 18,40,000/- and had been paying premiums punctually without default from 2017 October to 2020 January. In February 2020, Ramesh suffered ill health and was immobilized making it difficult for him to perform day-to-day functions. Ramesh was hospitalized and later died in March 2020.

The insurance company opposed the plea and submitted that the claim was rightly rejected as Ramesh had defaulted on paying premiums for the month of February and March 2020 and thus was not entitled to the insured amount. It was further submitted that the policy had lapsed and thus there was no infirmity.

The court noted that though there was a default in payment of premium, it was due to the ill health and hospitalization of the petitioner's husband. The court added that when the family itself was distressed, one could not expect the insured to promptly pay the premium due amounts.

The court added that though the insurance company was expected to strictly comply with the terms and conditions of the court, the could had to step in and exercise powers of discretion to mitigate the circumstances.

Thus, considering it to be an extraordinary circumstance, the court observed that the petitioner was entitled to the relief on grounds of equity. The court thus directed the insurance company to settle the amounts within a period of 4 weeks.

Counsel for the Petitioner: Mr.C.Prakasam

Counsel for the Respondents: Mr.M.B.Raghavan for M/s.M.B.Gopalan Associates, Mr.Kuberan for M/s.Rank Associates

Citation: 2024 LiveLaw (Mad) 33

Case Title: R Sasikala Devi v The AAO/ Assistance Secretary and others

Case No: WP No.17604 of 2020

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