LIC rejects claim, told to pay Rs 14.8 lakh

The state consumer disputes redressal commission has asked the LIC to pay Rs 14.81 lakh to the family of a man who died of lung cancer, rejecting the insurer's claim that he had intentionally not disclosed his diabetes and that he had undergone a surgery.

The SCDRC agreed with the contention that diabetes did not require regular medication and the man's death had nothing to do with his past operation. The order by DR Shirasao, presiding judicial member, and AK Zade, member, came on a complaint of Mulund resident Shubhalaxmi Shankar Shetty.

As per case papers, deceased K Shankar Shetty had bought two policies from the Life Insurance Corporation (LIC) – Jeevan Tarang with Rs 19.75 as the sum assured and Samridhi Plus for which the sum assured was Rs 2.75 lakh.

Shetty was diagnosed with cancer in the right lung in September 2011 by Tata Memorial Hospital.

In February 2012, he was admitted to a private hospital for restlessness and cough.

There too he was diagnosed with lung cancer. He died in the hospital in the same month, prompting his family to file claims with LIC.

While LIC paid Rs 2.75 lakh as covered by Samridhi Plus policy, it rejected the claim under Jeevan Tarang saying Shetty had not disclosed his health condition while filling the form. His family said an LIC agent had filled the form and Shetty had merely signed on it. They insisted that Shetty wasn't aware that he had to provide details about his diabetes and past surgery.

LIC rejected the contention saying the insurer couldn't claim that he did not know the details of the form.

At the commission, it was argued that Shetty was not on permanent medication for diabetes and he had kept it in control through exercise. His family also argued that the operation he had undergone in 2007 was not linked to his death.

Favouring Shetty's family, the commission said, "Admittedly as death of deceased had taken place due to lung cancer, the fact of diabetes or previous operation of deceased had no concern with the cause of death of deceased. In view of the ruling on which Learned advocate appearing for complainants relied it has become clear that if in concealment of any fact there is no fraudulent intention of deceased and it has no direct nexus with the cause of death of deceased then only on that ground claim in respect of insurance policy of deceased should not be repudiated."

The commission allowed the claim on a non-standard basis to the extent of 75%. It directed LIC to pay Rs 14.81 lakh with 9% interest from the date of death of the deceased. It also ordered LIC to pay Rs 10,000 as an additional cost.