LIC asked to pay 75% claim to family of policy holder


Deceased had no fraudulent intentions: consumer forum

Seven years after a man died of lung cancer, the State Consumer Disputes Redressal Commission recently directed Life Insurance Corporation (LIC) to pay ₹14,81,250 — 75% of his policy claim — along with 9% interest since 2012 to his family members.

Late K. Shankar Shetty had two life insurance policies from LIC — Jeevan Tarang and LIC’s Samridhi Plus. The period of policy for Jeevan Tarang was from July 14, 2010 to January 14, 2025, Shetty was paying a half yearly premium for it and was assured a sum of ₹19.75 lakh. The period for the Samridhi Plus policy, meanwhile, was May 24, 2011 to May 24, 2021. Shetty had paid one time premium of ₹2.5 lakh for the same and was assured ₹2.75 lakh.

In September 2011, Shetty complained of cough and breathlessness, and was diagnosed with lung cancer. He succumbed to his illness on February 29, 2012. When the family members wrote to LIC seeking the claim, LIC rejected it and said Shetty had not disclosed to them that he was a diabetes patient, and had undergone a cholecystectomy (removal of gall blader) in 2007.

A Bench of presiding judicial member D.R. Shirasao and member A.K. Zade noted that the family members had filed the complaint under the provisions of Consumer Protection Act, 1986. “It is a beneficial legislation to protect the rights of consumers,” the Bench said. According to them, since Shettty had taken insurance policy from LIC, he was a consumer. After his death, his children, being his legal heirs and beneficiaries, were the consumers.

In its 11-page order, the Commission said, “In this case, admittedly death of deceased had taken place due to Lung Cancer. Deceased had no fraudulent intention in suppressing the fact that once upon a time diabetes was detected in him and in the year 2007 he had undergone operation of Cholecystectomy. As both these facts had no relation with the cause of death of deceased, we are of the opinion that only on that ground claim of complainants should not be repudiated by LIC.”

The Commission also said, “At the most, the fault of deceased in not mentioning these facts in the proposal form at the time of taking insurance policy, the claim of the complainants can be allowed on non-standard basis to the extent of 75% of the claim amount.” It said it was of the opinion that LIC has been deficient in providing service to complainants, and that they were entitled to get the amount claimed from LIC on a non-standard basis along with the litigation cost.

The Bench directed the insurance company to pay ₹14,81,250 with 9% interest since September 2012 to Shetty’s family.

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Printable version | Jan 29, 2020 10:25:32 AM |

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