Life Insurance Corporation of India (LIC) recently faced scrutiny from the National Consumer Disputes Redressal Commission (NCDRC) in a case involving the rejection of an insurance claim. The NCDRC ruled in favor of the deceased policyholder's husband, ordering LIC to pay him Rs 1.57 crore. The deceased had succumbed to breast cancer in April 2017, prompting her husband to file an insurance claim, which LIC rejected in March 2018. The NCDRC deemed LIC's decision as deficient service, asserting that the claim should have been honored.
The policy in question was a health premium policy securing the insured for Rs 1 crore, with a premium of Rs 7,00,000/- paid. LIC emphasized that standard medical and eco tests were conducted before approving the policy on March 29, 2016. However, LIC's decision to reject the claim was primarily based on the non-disclosure of the policyholder's breast cancer diagnosis during both policy issuance and renewal.
The timeline of events provided crucial insights into the case. The deceased submitted the proposal form to LIC on February 6, 2016. Subsequently, LIC ordered medical tests on March 3, 2016, and approved the policy on March 29, 2016, coinciding with the policyholder's hospital admission. Despite undergoing tests and procedures, LIC's rejection of the claim came as a shock to the policyholder's husband, prompting him to appeal to the NCDRC.
In response, LIC argued that the policyholder failed to disclose her ongoing cancer treatment during the proposal phase, which would have influenced their decision. However, the complainant contended that the insured had no knowledge of her condition at the time of policy issuance or renewal. The complainant's argument gained traction as NCDRC found LIC's failure to establish any evidence of non-disclosure, thereby ruling in favor of the policyholder.
Following a thorough examination of evidence and arguments, NCDRC passed an order favoring the policyholder. The order included an insured amount of Rs 1 crore with 9% interest from the date of liability, along with Rs 2 lakh for mental anguish and harassment, and Rs 50,000 as litigation cost. The total compensation amounted to Rs 1.5758 crore, providing some relief to the deceased's family after a prolonged legal battle.
This case underscores the importance of transparency and communication in insurance transactions, highlighting the need for insurers to uphold ethical standards and prioritize customer welfare. Moreover, it emphasizes the crucial role of consumer protection mechanisms like the NCDRC in ensuring justice and fairness in the insurance sector.
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