Mumbai Mother Secures Rs 61.5 Lakh Payout Plus Interest After LIC Denies Insurance Claims for Son’s Diabetes
Life Insurance Corporation (LIC) of India has been ordered to pay Rs 60 lakh to a Mumbai woman after her claims were unjustly rejected following her son’s death. The National Consumer Disputes Redressal Commission found that LIC had no grounds to repudiate all five life insurance policies purchased by the woman’s son, who died of cardiac arrest in 2013. This ruling concludes a legal battle that spanned over a decade.
Background of the Case
The dispute began in June 2010 when Nitin Suresh Gambhir applied for five life insurance policies with LIC. He underwent a medical examination by an LIC-approved doctor. Three of the policies commenced on August 26, 2010, with sums assured of Rs 10 lakh, Rs 15 lakh, and Rs 15 lakh. The family claimed that the first premium for the remaining two policies was paid on September 7, 2010. However, LIC contended that it only received the first premium on September 13, 2010, which it used to determine the start of risk coverage.
Nitin was hospitalized on September 11, 2010, due to a leg wound and was diagnosed as a diabetic during his stay. He was discharged on September 13, 2010, and died from cardiac arrest on June 11, 2013. Following his death, his mother, Jayshree Suresh Gambhir, filed claims under all five policies, which were rejected by LIC in July 2014. The insurer claimed Nitin had failed to disclose his diabetes when applying for the policies.
Legal Proceedings
Jayshree appealed to the Maharashtra State Consumer Disputes Redressal Commission. The commission differentiated between the policies based on their commencement dates. It allowed claims for the first three policies, noting that Nitin’s hospitalization occurred after their risk coverage began. However, it upheld LIC’s rejection of the last two policies, agreeing that the first premium was received after Nitin’s hospitalization.
Both parties appealed to the National Consumer Disputes Redressal Commission, which reviewed the case comprehensively. The commission ruled in favor of the family for all five policies, stating that LIC failed to prove Nitin was aware of his diabetes when he submitted the proposal.
Findings of the National Commission
The commission found that LIC did not provide sufficient medical records to establish that Nitin was aware of his diabetes prior to signing the proposal form. Although a hospital discharge summary indicated he had been diabetic for two months, this alone did not prove he knew of the condition when applying for insurance. Additionally, a medical record from February 2013 described him as non-diabetic, further weakening LIC’s argument.
A crucial aspect of the case was the date on which LIC received the first premium for the last two policies. LIC presented documents dated September 13, 2010, as proof of receipt, but the commission determined these did not confirm the actual receipt date. In contrast, Jayshree provided Proposal Deposit Receipts dated September 7, 2010, which the commission deemed more credible. It concluded that LIC received the first premium before Nitin’s hospitalization, meaning he was not required to disclose any health changes for any of the policies.
Ordered Compensation
LIC has been ordered to pay Rs 60 lakh under all five policies, which includes Rs 10 lakh for each of the three policies and Rs 15 lakh for each of the remaining two. The commission also upheld a Rs 1 lakh compensation for mental anguish and set litigation costs at Rs 50,000. The total payout amounts to Rs 61.5 lakh, with interest at 9 percent per annum from the date of LIC’s claim rejection in July 2014 until full payment is made.
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