LIC Denies ₹3 Lakh Insurance Claim, Alleging Concealment of Diabetes

The Life Insurance Corporation of India (LIC) withheld an insurance claim of approximately ₹3 lakh, alleging that the policyholder had concealed the fact that he had diabetes. The matter reached the Madhya Pradesh State Consumer Disputes Redressal Commission, which dismissed the company’s appeal and ordered the payment of the claim, along with interest.

When an individual passes away after purchasing an insurance policy, the insurance payout can serve as a vital financial lifeline for their family. However, if an insurance company refuses to make the payment by alleging that information regarding a pre-existing medical condition was withheld, the family faces a significant crisis.

One such case emerged in Madhya Pradesh, where a woman had to wage a long legal battle to secure the proceeds from her late husband’s life insurance policies. Ultimately, the Consumer Commission ruled in her favor and dismissed the appeal filed by the Life Insurance Corporation of India (LIC).

LIC Alleged Concealment of Diabetes and High Blood Pressure

The insurance company contended that when the policies were revived, Hasnand had failed to provide accurate information regarding his medical history. According to LIC, he suffered from Type-2 diabetes and high blood pressure—conditions that were not disclosed in his health declaration form. The company also cited a medical certificate from a doctor. In response, Asha Devi challenged this claim, stating that her husband had never received treatment from the doctor in question.

Claim Sought Under Two Policies

The case concerns Asha Devi Sheetalani, a resident of Madhya Pradesh. Her husband, Hasnand, had purchased two life insurance policies—worth ₹1 lakh and ₹2 lakh—on March 14, 2006, and October 21, 2008, respectively. Both policies had lapsed due to the non-payment of premiums but were subsequently revived on December 14, 2010.

Hasnand passed away in March 2012. Following this, his wife filed a claim for the insurance amounts under both policies, but the LIC rejected the claim on January 16, 2014.

State Commission dismisses LIC’s appeal

On October 30, the Madhya Pradesh State Consumer Commission observed that the LIC had failed to provide sufficient medical evidence to substantiate its allegation that an illness had been concealed. Dismissing the company’s appeal, the Commission upheld the decision of the District Commission.

The District Commission had directed the LIC to pay the insurance sum of Rs 3 lakh under both policies, along with applicable bonuses and 7 percent annual interest from January 16, 2014, until the date of payment. Additionally, the company was ordered to pay Rs 5,000 as compensation and Rs 1,500 toward litigation costs.

This ruling clarifies that insurance companies cannot reject a claim merely by alleging the concealment of an illness; they must provide concrete medical records and reliable documentation to support such a claim.

Discrepancies found in document dates

During the proceedings, the Insurance Ombudsman also identified serious discrepancies in the documents. The policy was revived in December 2010, whereas the health declaration form bore the date of December 2012. Notably, Hasnand had already passed away in March 2012.