Order Name: Isnaka Devasenamma Vs. M/S. Max Life Insurance Company Limited
Case No.: F.A. No. 664/2022
The National Consumer Disputes Redressal Commission, led by AVM J. Rajendra, has ruled that if a person hides important information when applying for an insurance policy, the insurer can choose to cancel the policy.
Key Facts:
- Insurance Issuance: Max Life Insurance issued a policy to an individual who later passed away. The insured had taken a loan from a bank, which helped facilitate the insurance policy.
- Claim Denial: After the insured’s death, a claim was made by the nominee, but it was denied because the insured had not disclosed a medical condition.
- Complaint and Appeal: The nominee argued that there was no intentional hiding of the illness and filed a complaint for the insurance payment with interest. The State Commission of Andhra Pradesh dismissed this, leading to an appeal to the National Commission.
Insurer’s Stand:
- Single Premium Policy: The insurer clarified that the policy was taken with a single premium.
- Non-Disclosure: They denied any coercion by the bank and stated that the claim was denied because the insured had not disclosed a pre-existing medical condition, supported by medical records.
- Refund of Premium: The insurer refunded the premium and argued that their actions were according to policy terms, hence, no service deficiency.
Bank’s Stand:
- Role Clarification: The bank stated it only facilitated the loan and was not involved in the insurance claim repudiation. They argued that they were wrongfully included in the complaint and sought its dismissal.
Commission’s Observations:
- Primary Issue: The main issue was whether the insured had hidden pre-existing medical conditions when applying for the policy.
- Evidence: It was undisputed that the insured had received treatment for non-Hodgkin lymphoma before applying for the policy and died shortly after due to a related condition.
- Legal Precedents: The Commission cited the Supreme Court’s rulings in Bajaj Allianz Life Insurance Company Ltd. v. Dalbir Kaur and Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, emphasizing that insurance contracts require full disclosure of all material facts.
- Verdict: The Commission found no error in the State Commission’s decision and dismissed the appeal, supporting the original decision.
Takeaway:
This judgment underlines the importance of disclosing all relevant information when applying for insurance. Failure to do so can lead to the policy being canceled and claims being denied. Always ensure complete and truthful disclosure to avoid such situations.
