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Mohali widow wins 4-year legal battle for ₹1.05-crore life insurance claim
Punjab consumer commission comes to the rescue of Mohali woman after insurer rejects claim, citing her late husband’s pre-existing mental illness
A Mohali woman who was made to fight a four-year legal battle to claim her late husband’s life insurance worth ₹1.05 crore, after the insurer rejected the payout alleging pre-existing mental illness, has finally found closure.
The Punjab State Consumer Disputes Redressal Commission has ruled in her favour, holding that the insurer failed to substantiate its allegation of pre-existing depression and schizophrenia.
Observing that the burden of proof to establish material and fraudulent non-disclosure rests on the insurer, the commission has directed Max Life Insurance Company Ltd to release ₹1.05 crore, along with interest, to the widow, along with ₹25,000 as compensation for harassment and litigation expenses.
It further held that the mere fact of death, even if alleged to be by suicide, cannot by itself be treated as proof of a pre-existing mental illness in the absence of cogent medical evidence.
The complainant’s husband had obtained two life insurance policies from Max Life Insurance Company Ltd in October and December 2017. One policy carried a sum assured of ₹1 crore, while the other was for ₹5 lakh. His wife was named as the nominee under both policies.
After her husband’s death on March 12, 2020, the woman submitted claims with the insurer under both policies. However, Max Life repudiated the claims through a letter dated October 24, 2020, citing alleged non-disclosure of material facts.
The insurer claimed that the deceased had been suffering from depression and schizophrenia prior to taking the policies and had failed to disclose this information in the proposal forms. The harried widow then approached the consumer commission through a complaint on August 10, 2021.
In its written response, Max Life contended that the insured had wilfully concealed his medical condition and provided incorrect answers regarding his health status at the time of purchasing the policies. The insurer relied upon reports obtained after the death of the insured and also sought to invoke the suicide exclusion clause contained in the policy documents.
The commission, headed by president SK Aggarwal, and member Paramjeet Kaur examined the pleadings, evidence and documents placed on record by all parties. While ruling the matter in favour of the complainant, the commission observed that the insurer failed to produce any hospital records, treatment papers, prescriptions or medical documents predating the issuance of the policies to validate its allegations that the insured was suffering from any psychiatric illness at the relevant time.
The commission further noted that before issuing the policies, Max Life had subjected the insured to comprehensive medical examinations through its own empanelled medical practitioners. These examinations included physical assessment, blood and urine investigations, cardiac evaluation and assessment of family medical history. The commission observed that issuance of the policies after such medical scrutiny amounted to acceptance of the insured’s health status by the insurer at the time of underwriting.
President SK Aggarwal held that once an insurer issued a policy after conducting medical examinations, repudiation of a claim at a later stage on the basis of unsubstantiated allegations or reports prepared was not sustainable. The commission also ruled that the suicide exclusion clause could not be applied in the present case, as the death of the insured occurred beyond the specified period of 12 months from the commencement of both policies.
Accordingly, the commission directed Max Life Insurance Company Ltd to pay ₹1 crore and ₹5 lakh under the two policies, along with interest at the rate of 6% per annum from the date of filing of the complaint.
