New Delhi: The Supreme Court in a landmark judgment on Thursday said that while taking a life insurance policy, it is necessary to give complete and correct information related to the disease to the interested people. Failure to do so may result in the insurance company rejecting the policyholder’s claim. The apex court made the remarks while quashing a March decision of the National Consumer Disputes Redressal Commission (NCDRC).
An insurance company had filed a petition in the commission against the order to pay the full amount of the claim along with interest to the mother of the deceased, which was rejected by the commission. A bench headed by Justice DY Chandrachud said that the form of the proposal needs to disclose chronic diseases separately, so that the insuring company is able to reach a thoughtful decision on the basis of actuarial risk. The bench also included Justice Indu Malhotra and Justice Indira Banerjee.
The bench said, “The contract of insurance is based on high trust. It is the responsibility of every person wishing to take insurance to disclose all the information affecting the issue concerned, so that the insuring company can reach a prudent decision based on actuarial risk.
The insurance company had filed a petition before the Supreme Court against the commission’s decision. The National Commission had dismissed the petition challenging the decision of the State Consumer Commission in the matter.
The apex court quashed the decision of the National Consumer Grievance Redressal Commission, saying the insured had not disclosed information about his chronic illnesses. He did not even mention that he had vomited blood just a month before taking out insurance.
The bench said, “Investigation conducted by the insurance company has revealed that the insured was suffering from chronic diseases, which were caused to him due to prolonged consumption of alcohol. He did not even inform the insurance company of the facts of which he was well aware. “
