Life insurance companies cannot refuse to honour their commitment by accusing policy holders of suppressing their ailments as it is equally the duty of the insurer to verify the correctness of the information provided through rigorous medical examination before issuing the policy, the Madras High Court Bench here has held.
Justice T. Raja passed the ruling while directing Life Insurance Corporation (LIC) of India to pay the insured amount of Rs. 5 lakh to an aged woman, G. Muthupackiam of Nagercoil in Kanyakumari district, whose doctor son P. Thanga Murugan died in September 2006 due to Multiple Myeloma. He had taken the life insurance policy in May 2004.
Nominee
The doctor had named his mother as the nominee as he died within nine months since he got married in November 2005.
However, the insurance company rejected the claim for the insurance amount on the ground that the policy holder had suppressed his past history of seizures since childhood and the medication taken by him for bipolar disorder.
The insurance corporation also relied upon medical records obtained from a private hospital here to claim that the doctor had taken treatment between August 1991 and February 1993 when he was around 13 years old for poor concentration, fatigue, disturbed sleep and jerky movements of limps.
It also accused him of not disclosing these facts when the policy was renewed in November 2005 after a gap of five months.
On the other hand, the petitioner's counsel S. Natarajan contended that the alleged treatment taken by the policy holder at the age of 13 had no relevance to his cause of death.
Multiple Myeloma
The doctor was diagnosed of Multiple Myeloma only in January 2006, the lawyer claimed and stated that he died despite best possible treatment given to him at private hospitals in Madurai and Thiruvananthapuram.
Agreeing with his submissions, the Judge said that as per Section 45 of the Insurance Act, an insurance company could not question the insurance policy after the expiry of two years from the date on which it was issued. In the present case, the policy holder had died only after the lapse of two years and a written order rejecting the claim was passed on March 30, 2007.
The Judge also pointed out that the deceased doctor would not have failed to renew the policy for five months between May and November 2005 if he had already known about his ailment. Further, doctors in the panel of LIC had also examined him before the policy was issued.
“If this requirement was not followed properly, then the corporation (LIC) has to blame itself and not the insured,” the Judge said.
