The Hon’ble Supreme Court observed that a proposer who aims to acquire the Life insurance Policy is under obligation to reveal the already existing medical conditions to the insurer. In the present case, the questionnaire was proposed for the insurance and it included questions referring to the person’s health-related medical history and compulsory declaration about illness, hospitalization or any medication the proposer has been suffered and underwent; including the declaration of good health by the proposer. In this case, the proposer replied to the questions negatively, that implies that the proposer was in good health and had not gone under any medical treatment or hospitalization; hence the proposer was not suffering from any illness or ailment. According to the proposition submitted by the proposal, the insurer issued the life insurance policy.
After one month the insured person died, the mother of the insured made a claim, but her claim was rejected on the grounds of investigation reports which disclosed the reason for the death. The proposer was suffering from a stomach illness and use to vomit the blood; as the consequence of the illness, he was undergoing the treatment.
The claimant filed the complaint against the life insurance company in the District Consumer Forum. Then the insurance company filed the first appeal in the state consumer Dispute Redressal Commission was dismissed. Consequently, the revision petition was dismissed by the National Consumer Disputes Redressal Commission and stated that the occurrence of death was due to the natural causes, and there was no adequate nexus between the non-revelation and the cause of the death.
The Apex Court bench comprising Justices DY Chandrachud, Indu Malhotra and Indira Banerjee observed that the medical records of the deceased procured during the investigations reveal that the insured was suffering from an ailment already and did not disclose this important information to the insurer. The court holds the judgment passed by the National Consumer Disputes Redressal Commission as “it does not lay down in the correct position of law.”
The bench opined:
“A contract of insurance plan is one of the utmost desirable faith. A proposer who seeks to acquire a coverage of existence insurance plan is duty-bound to disclose all fabric statistics bearing upon the problem as to whether or not the insurer would think about it terrific to anticipate the danger which is proposed. It is with this precept in view that the notion shape requires particular disclosure of pre-existing ailments, to allow the insurer to arrive at a regarded decision based on the actuarial risk. In the existing case, as we have indicated, the proposer failed to expose the vomiting of blood which had taken area barely a month earlier than the issuance of the coverage of insurance plan and the hospitalization which had been occasioned as a consequence. The investigation by the insurer indicated that the certain used to be struggling from a pre-existing ailment, consequent upon alcohol abuse and that the information which have been in the knowledge of the proposer had now not been disclosed. This brings the floor for repudiation squarely inside the concepts which have been formulated by using this The court docket in the choices to which a reference has been made earlier.”
The court while discussing the matter also referred to its earlier judgment in “Reliance Life Insurance Co. Ltd. Vs Rekhaben Nareshbhai”, [i]where it held that the insurer could repudiate the claim under the insurance policy on the failure of discloser of any of the required questions. Although, the court considered the age of the complainant, i.e. 70 years old, revoked the article 142 of the Indian Constitution, to direct that no recoveries of the amount which has been paid shall be made from her.
Life insurance plan (or existence assurance, in particular in the Commonwealth of Nations) is a contract between an insurance plan policyholder and an insurer or assurer, the place the insurer guarantees to pay a specified beneficiary a sum of cash (the benefit) in trade for a premium, upon the demise of an insured character (often the policyholder). Depending on the contract, different activities such as terminal sickness or necessary sickness can additionally set off payment. The policyholder can pay a premium, both generally and as one lump sum. Other expenses, such as funeral expenses, can additionally be blanketed in the benefits.
Life insurance policies are prison contracts, and the phrases of the contract describe the barriers of the insured events. Specific exclusions are frequently written into the contract to restriction the legal responsibility of the insurer; frequent examples are claims concerning suicide, fraud, war, riot, and civil commotion.
Modern lifestyles insurance plan bears some similarity to the asset administration industry-
[1] Furthermore, existence insurers have assorted their merchandise into retirement merchandise such as annuities.
[2]Life-based contracts tend to fall into two main categories:
Protection policies: designed to furnish a benefit, commonly a lump sum payment, in the tournament of a special occurrence. A frequent form—more frequent in years past—of a safety coverage graph is time period insurance.
Investment policies: the important goal of these insurance policies is to facilitate the increase of capital through normal or single premiums. Common types (in the U.S.) are entire life, time-honored life, and variable existence policies.
[i] Reliance Life Insurance Co. Ltd. Vs Rekhaben Nareshbhai (2019) 6 SCC 175
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