Apex consumer court raps insurers for misusing clause on non-disclosure of pre-existing ailment

New Delhi, Oct 18 (IANS) The family of a life insurance policyholder cannot be denied a claim after his or her death on the grounds of non-disclosure of pre-existing health conditions if the so-called “suppressed information” is not related to the cause of death, the National Consumer Commission has ruled.

The apex consumer court’s judgment promises to offer relief to the kin of thousands of life insurance policyholders who are denied insurance claims on flimsy grounds.

Justice Sudip Ahluwalia, presiding member, the National Consumer Disputes Redressal Commission (NCDRC), delivered the decision against Bajaj Allianz Life Insurance Company which had challenged a verdict of the State Consumer Commission in favour of the family of deceased Delhi resident Sunil Kumar.

“In this case, Sunil Kumar’s death was due to natural causes, and not due to diabetes or the bypass surgery he had allegedly undergone,” the National Commission said in a recent order, rejecting the insurance company’s allegation that he made a false declaration about his health condition in the Insurance Proposal Form submitted by him for taking the life insurance cover for Rs 3 lakh in 2007.

The insurance company now has the option of challenging the NCDRC decision in the Supreme Court.

The National Commission rejected the company’s claim that pre-existing medical conditions were not disclosed by Sunil Kumar due to which it rejected the claim.

The company had claimed that in the proposal form, Sunil Kumar stated nothing about any disease/disorder of the Cardio Vascular System and also represented that he had not received any medical advice, nor undergone any advanced medical tests or investigation in the last five years, nor had taken any medical advice on health, or care in the hospital.

The National Commission accepted the contention of Sunil Kumar’s wife Anju Kumari who, citing an earlier decision of the Commission, claimed that the onus to prove that the insured was suffering from a pre-existing disease lies with the insurance company.

She said the insurance company had not provided any medical evidence or testimony from any doctor to prove that her husband was suffering from such a condition at the time the policy was taken in January 2007.

Anju Kumari’s lawyer also relied upon a Supreme Court order in which it was held that unless the ailment the deceased was suffering from could be linked to the cause of death, it should not be a ground for rejecting the insurance claim.

Earlier, a District Forum had in April 2011 ruled in favour of Sunil Kumar’s wife and directed the insurance company to pay Rs 3,00,000 with interest at 9 per cent per annum from December 6, 2007, till realisation, along with Rs 5,000 towards mental agony and Rs 2,000 towards the cost of litigation.

The insurance company later filed an appeal before the State Commission which affirmed the order of the District Forum.

Rejecting the insurance company’s appeal, National Commission’s Justice Ahluwalia said, “This Commission finds no grounds whatsoever to interfere with the concurrent decisions of both the Ld. fora below. The revision petition is therefore dismissed.”

–IANS

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