The State Consumer Disputes Redressal Commission in Chandigarh has mandated SBI Life Insurance to pay Rs 50 lakh to the family of a deceased chartered accountant, rejecting the insurer’s claims of concealment of prior illness, in a ruling that signifies a shift in insurer-claimant disputes.
A consumer commission in Chandigarh has ordered SBI Life Insurance to pay Rs 50 lakh to the family of a chartered accountant after rejecting the company’s argument that he had withheld information about earlier illness when he bought the policy.
The State Consumer Disputes Redressal Commission said the insurer had not shown that Raj Kumar knowingly concealed a material medical condition when he took out the SBI Life Smart Savadhan Plus policy in March 2019. The bench, comprising presiding member Padma Pandey and member Rajesh K Arya, ruled on 5 October that a refusal based on alleged suppression cannot stand simply because medical records later reveal a health issue.
Raj Kumar, who was 36 and lived in Mahendergarh in Haryana, died on 24 October 2020 after suddenly suffering chest pain. His wife, Anita Yadav, was named as the nominee on the policy, which carried a basic sum assured of Rs 50 lakh.
SBI Life had rejected the claim on 2 March 2021, pointing to a hospital admission in 2014 in which Raj Kumar was diagnosed with acute pancreatitis and delirium tremens. It also relied on an outpatient record and ultrasound dated 26 December 2019 that referred to a cirrhotic liver, arguing that he had been a chronic alcoholic with chronic liver disease before the policy began and had failed to disclose it.
The commission was not persuaded. It said almost four-and-a-half years had passed between the 2014 hospitalisation and the start of the policy, and the insurer had produced no intervening medical evidence to show that the condition had continued up to the date of purchase. The panel said the key question was whether Raj Kumar knew of a material illness when he signed the proposal and deliberately left it out, and found that the evidence did not establish that link.
The later liver finding also fell short, the commission held. It noted that the ultrasound did not say the cirrhotic liver was caused by alcohol or show that Raj Kumar was an alcoholic. The bench observed that cirrhosis can arise from different causes and said the record relied on by the insurer could not, by itself, prove chronic alcoholism or disclosure of a disease at the time of purchase.
The order also recorded that the medical paper cited by the complainants listed the cause of death as complications of atherosclerosis of the left coronary artery. The commission said no medical examination had been carried out by the insurer before the policy was issued.
The panel directed SBI Life to pay the sum assured in equal shares to the complainants, identified in the order as Raj Kumar’s widow, his minor daughter, his son and another family member. After adjusting the premium already refunded, the amount will carry 9% annual interest from 24 October 2020 until payment, with a higher rate of 12% a year if the insurer defaults after 30 days of receiving the certified order. The commission also awarded Rs 75,000 for mental agony, harassment and litigation costs, to be shared equally.
The Chandigarh ruling follows a series of recent consumer decisions that have pushed back against insurers’ attempts to deny death claims on technical grounds. In another case reported by The Indian Express, the Himachal Pradesh State Consumer Commission ordered SBI Life to pay nearly Rs 49.98 lakh after rejecting a widow’s claim over a single unpaid premium, while the Chhattisgarh State Consumer Commission recently directed the company to pay Rs 50 lakh in a separate concealment dispute. Consumer panels in other states have also repeatedly said insurers must produce clear evidence before accusing a policyholder of non-disclosure.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
