In a significant ruling, the National Consumer Disputes Redressal Commission (NCDRC) has directed Reliance Life Insurance Company to pay Rs 1 crore, along with 9% interest and Rs 50,000 in litigation costs, to the nominee of a deceased policyholder. This decision came after the insurer rejected the claim on the grounds of non-disclosure of a previous head injury by the insured.
The case revolved around Mr. Vijay Kumar Verma, an employee of Oriental Bank of Commerce, who purchased a life insurance policy worth Rs 1 crore from Reliance Life Insurance in October 2015. Sadly, he met with a road accident in the same month, resulting in head injuries that ultimately led to his passing in November 2015.
Following his demise, Mr. Verma's nominee, Ms. Nirmala Devi, filed an insurance claim with Reliance Life Insurance. However, the insurer rejected the claim, citing that Mr. Verma had not disclosed a previous head injury that occurred a year before obtaining the policy.
The NCDRC bench ruled against the insurer, stating that the accident leading to hospitalization was not related to any pre-existing illness or disease, and therefore, it should not be considered a case of non-disclosure. Moreover, the Life Insurance Corporation of India (LIC) had previously settled Mr. Verma's insurance claim without raising objections.
The NCDRC emphasized that a nominee under an insurance policy is the rightful beneficiary of the benefits provided by the policy, as recognized by the Insurance Act. Therefore, Ms. Nirmala Devi's claim was valid, and she was entitled to the benefits.
The Commission found that the insurer's repudiation of the claim was not based on a fair assessment of the circumstances, and it directed Reliance Life Insurance to pay the eligible insurance amount of Rs 1 crore, along with 9% interest, and cover the litigation costs of Rs 50,000.
This ruling underscores the importance of transparent communication between policyholders and insurers and highlights the significance of honoring insurance claims when valid. It also reaffirms the rights of nominees as beneficiaries under insurance policies, ensuring that they receive the intended benefits in times of need.
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