One Sri Vallapi Pedda Muneppa, S/o Sri Vallapi Chengappa, working as LIC Agent and resident of Gudikothur Village of Kuppam Mandal, under Chittoor District took the above two life insurance policies from Palamaner Branch of LIC, under Nellore Division. Both the policies were under Salary Savings Scheme, applicable to LIC Agents. They were in a lapsed condition due to non-payment/adjustment of premium due from 01/2000. Subsequently, the policies were revived by the life assured on 31.08.2001. The life assured died on 05.09.2002. The cause of death was reported to be paralytic stroke. Smt. C. Rathnamma, who is the nominee and complainant under the policies, lodged a claim with the LIC. Both the claims were repudiated by LIC of India, citing the reason, that the life assured, while reviving his lapsed policies, gave false answers to certain questions in the declaration of good health form, submitted by him at the time of reviving his lapsed policies. It was also stated by the LIC, that they held indisputable proof, to show that even before he revived his lapsed policies, he suffered from Intradural Archanoid Cyst
(?tuberculosis) at D4-D6 since 08/2000. He, however, did not disclose these facts
in the declaration of good health form. Instead, he gave false answers to the relevant questions in the declaration of good health form. Finding the life assured to be guilty of deliberate suppression of material facts relating to his health at the time of reviving his lapsed policies, the insurer repudiated the claims, by setting aside the revivals and offered the paid-up value, which accrued, as on the date of revival of the policies.
Smt. V. C. Rathnamma, W/o of the life assured and the complainant, represented to Zonal Office Claims Review Committee, Hyderabad for review. The ZO Claims Review Committee also upheld the decision taken by LIC of India, Nellore Division. Aggrieved with the rejection of the claims, the complainant represented to this office.
I heard the contentions of LIC as the complainant did not attend the hearing and perused all the documents, including the written submissions of the complainant, placed before me.
d) The life assured took two life insurance policies in 03/95 and 12/95 for a Sum Assured of Rs.50,000 each, under the Salary Savings Scheme, applicable to LIC Agent. Accordingly, the premium amount for the policies was recovered from the commission paid to the life assured and adjusted towards the premium of the policies upto 12/99. The life assured fell sick. As the commission amount was not sufficient to cover the premium amount, LIC did not recover the same from the commission and adjust towards the premiums under the policies. Hence, the policies lapsed. The life assured got the policies revived on
31.08.2001 by paying the entire arrears of premia with interest and also submitted declaration of good form duly executed by him. Later, the life assured died on 05.09.2002. The duration of the claims from revival was just 1 year. Since they were early claims, the LIC arranged for investigation of the claims;
e) LIC repudiated both the claims by setting aside the revivals effected on 31.08.2001, as the life assured deliberately suppressed material facts relating to his health prior to revival of the policies;
According to the treatment particulars obtained by the insurer in their claim forms B/B1 from SVIMS Hospital, Tirupati, the life assured was admitted there on 31.08.2000 vide Hosp. No. 161097 and discharged on 05.09.2000. The diagnosis arrived at the hospital was “Intradural
Archanoid Cyst (?tuberculosis) at D4-D6". Further, the life assured was admitted to the
hospital “with complaints of weakness of both lower limbs since one month, back pain
since one and half years and h/o extra marital affairs”;
g) According to the certificate dated 05.09.2000, issued by Department of Neurosurgery, SVIMS Hospital, Tirupati, the life assured w as admitted in the
Neurosurgery Ward with Paraplegia on 03.09.2000 and discharged on 05.09.2000 and on investigation, he has no changes of recovery, even after surgical treatment”;
h) The policies were revived on 31.08.2001, just one year before his admission and treatment in the SVIMS Hospital, Tirupati. Therefore, the life assured knew that he was suffering from intradural archanoid cyst (?tuberculosis) at D4-D6. Therefore, this admission and treatment in the SVIMS Hospital, Tirupati which was prior to revival of the policies and which were well within the knowledge of the life assured, ought to have been disclosed by the life assured at the time of revival of the policies;
i) The suppression of material fact of his illness from 31.08.2000 to 05.09.2000 had nexus with the cause of his death on 05.09.2002;
j) In the circumstances of this case, therefore, the suppression of material facts by the life assured is very clear. Revival of an insurance policy is considered to be a fresh contract between the parties and in the present case, the facts suppressed were obviously material to the fresh assessment of the risk. The fraudulent intention is also very clear, in that, the life assured had not disclosed the disease in the personal statement of good health submitted by him for the purpose of revival of his lapsed policies, although he was very much aware of the same;
k) The insurer was well within his right to invoke Section 45 of the Insurance Act, 1938 in the present case and fulfilled all the three ingredients, as required under the said section and repudiated the claims;
I) Therefore, I have to hold for the reasons as aforesaid and also in the light of medical evidences available on record as referred to above, the repudiation of the claim, setting aside the revival, by the insurer has to be upheld on law as well as on facts and hence the repudiation of the claims by the insurer does not warrant any interference at my hands. I also uphold the decision of the insurer in offering paid-up value together with accrued amounts, as mentioned in his letter of repudiation dated 03.03.2003.
The complaint is, therefore, not allowed.
Hyderabad Ombudsman Centre Case No. L-2054/2003-04
Smt. Leela Krishna Vs.
Life Insurance Corporation of India Aw ard Dated 27.1.2004
Sri K. Krishna, an auto consultant and businessman/mechanic took three insurance policies from City Branches of LIC under Bangalore Division I as per details furnished below. Policy No. 612229447 612247162 612350844 Date of Proposal 19.12.1998 03.12.1998 19.12.1998 Date of Acceptance/FPR 30.11.1998 15.12.1998 31.03.1999 Sum Assured 1,00,000 2,00,000 3,00,000 Plan & Term 14-15 75-20 75-20 Date of Commencement of risk 28.11.1998 15.12.1998 27.02.1999 Date of Death 31.10.2001 31.10.2001 31.10.2001 Date of Repudiation 04.10.2002 04.10.2002 04.10.2002 Cause of death Uraemic-
Encephalopathy, case of Chronic Renal Failure on Haemodialysis with Diabetes & Hypertension
FACTS OF THE CASE
Sri K. Krishna, an auto consultant and businessman/mechanic in Bangalore took the above insurance policies from City Branches of LIC under Bangalore Division-I of LIC of India. The life assured died on 31.10.2001. The cause of death was reported to be Uraemic Encephalopathy-Case of Chronic Renal Failure on Haemodialysis with Diabetes and Hypertension. Smt. Leela Krishna, who is the nominee and complainant under the policies, lodged a claim with the LIC. The LIC repudiated her claims on 04.10.2002, citing the reason that the life assured, while proposing for insurance, gave false answers to certain questions in the proposal forms. It was also stated by the LIC that they held indisputable proof to show that even before he proposed for the above policies, he was known to be a diabetic and hypertensive and suffered from chronic renal problem since 1996 and was under dialysis. He, however, did not disclose these facts in the proposals. Instead he gave false answers. Finding the life assured to be guilty of suppression of material facts relating to his health at the time of taking the insurance policies, the claims were repudiated by LIC.
I heard the contentions of both sides and also perused all the documents placed before me.
i) Sri K. Krishna, an auto consultant and businessman/mechanic, took three life insurance policies in 11/98, 12/98 and 03/99 for Sums Assured of Rs.1 lakh, Rs.2 lakhs and Rs.3 lakhs respectively. He died on 31.10.2001. All the three insurance policies have run for more than 2 years. Hence Sec.45 of the Insurance Act, 1938 is applicable under all the claims. The implication is that, before considering repudiation of the claims invoking 2nd part of the Sec.45, the insurer must fulfil all the three ingredients ‘required under the above section;
ii) All the three claims were repudiated by the insurer, on the ground that the life assured had deliberately suppressed material facts relating to his health before taking the insurance policies in question;
iii) According to the insurer, the life assured was a diabetic, hypertensive, suffering from renal problem since 1996 and was on dialysis even before the date of the proposals. In support of their repudiation, they obtained case summary and discharge record from St. John’s Medical College Hospital, Bangalore. According to this, the life assured was admitted there on 27.05.2000 vide Admission No.1351020/481725 and discharged on 06.06.2000. The final diagnosis arrived at the hospital was: “Diabetes Mellitus-Type 2; Chronic
Renal Failure on Maintenance Haemodialysis; Access Right UC; Advanced Diabetic Cataract (L) Eye; Right Eye-Proliferative Diabetic Retinopathy with Atrophic Maculopathy; Left AV Fistula Constructed; Immunised for HBaAg.” According to the summary of the hospital, it was reported that the life
assured was a known diabetic w ith one year history of recurrent pedal edema and facial puffiness, vomiting and tightness of chest of 2 weeks duration. Ophthalmology reference revealed right eye proliferative retinopathy. The patient was advised to continue maintenance haemodialysis on OPD basis and to go for renal transplantation;
iv) According to the progress record obtained by the insurer from St. John’s Medical College Hospital, Bangalore, the life assured was again admitted there on 24.10.2001 vide Admn.No.1492291 /531183 and discharged on 26.10.2001. The diagnosis arrived was “Metabolic Encephalopathy ?Uraemic; EDRS on MHD & Diabetes Mellitus Hypertension. It was also reported that Chronic
Renal Failure - Detected in 1996 and the life assured was known to this
hospital for ESRD;
v) The insured was taken to Sharada Dhanvanthari Charitable Dispensary, Bangalore during 09/2001 and 10/2001 for the treatment of haemodialysis, as per certificate dated 18.01.2002 obtained by the insurer from the hospital; vi) According to the treatment particulars obtained by the insurer in their claim
forms B/B 1 from St.John’s Medical College Hospital, Bangalore, the life assured was admitted there on 24.10.2001 vide Hosp. No.1492291- IP No.531183 in an unconscious state and expired in the hospital itself on 31.10.2001. The diagnosis arrived at the hospital was “Renal Failure-
Encephalopathy”. The primary cause of death as per claim form B was - “Uraemic Encephalopathy” and the secondary cause was - “Case of Chronic Renal Failure on Haemodialysis w ith Diabetes & Hypertension”. It was
reported by the hospital authorities in the claim form B, against Q.No.(6) as -
Renal Failure since 2000 and Diabetes Mellitus-Hypertension;
vii) In this connection, it is useful to refer to the provisions contained in Section 45 of the Insurance Act, 1938. The said section provides, inter-alia, that no policy of insurance effected after the coming into force of this Act after the expiry of two years from the date on which it was effected be called in question by the insurer on the ground that a statement in the proposal for insurance or any report of a Medical Officer or a referee or a friend of the insured or any other document leading to the issuance of the insurance policy was inaccurate or false unless the insurer shows that such a statement was on a material
matter or the insured suppressed a fact, which it was material to disclose and that it was fraudulently made by the insured and that the insured knew at the time of making it that the statement was false or that the insured suppressed the facts, which it was material to disclose;
viii) According to Mosby’s Medical Dictionary -2003 (Page No.978), the implications of Renal Failure are: Inability of the kidneys to excrete wastes, concentrate urine and conserve electrolytes. The condition may be acute or chronic. Chronic Renal Failure may result from many other diseases. The early signs include sluggishness, fatigue and mental dullness. Later anuria, convulsions, G.I.Bleeding, malnutrition and various neuropathies may occur. The skin may turn yellow-brown and become covered with uremic frost. Congestive Heart Failure and Hypertension are frequent complications, the results of hypervolemic urinalysis reveals greater than normal amounts of urea and creatinine, waxy casts and a constant volume of urine regardless of variations in water in take. Anemia frequently occurs. The prognosis depends on the underlying cause. Treatment usually includes restricted water and protein in take and the use of diuretics. When medical measures have been exhausted, long- term hemodialysis is often begun and kidney transplantation is considered;
ix) On a close perusal of the treatment particulars reported in the above hospital records, it is observed that there exists some discrepancy relating to the information furnished by the hospital authorities about duration of the illness; x) Further, according to underwriting norms of LIC, had the life assured disclosed
the material facts at the time of taking the policies they would have advised the life assured for obtaining some more special medical tests and depending upon the outcome of these tests, the question of considering insurance would have been decided;
xi) The suppression of material facts of his illness from 1996 has nexus with the cause of death on 31.10.2001;
xii) If the above events were put together in chronological order, it would establish the fact that the life assured was a chronic renal failure patient right from 1996 as confirmed by the hospital records of St. John’s Medical College Hospital, Bangalore. Therefore, it goes beyond doubt that the life assured was not in good health even before taking the insurance policies;
xiii) In the circumstances of this case, therefore, the suppression of material facts by the life assured is very clear. Contract of insurance is contract of utmost good faith and in the present case, the facts suppressed were obviously material to the assessment of the risk. The fraudulent intention is also very clear in that the life assured had not disclosed the disease in the proposal for insurance submitted by him for the purpose of insurance, although he was very much aware of the same;
xiv) The insurer was well within his right to invoke Section 45 of the Insurance Act,1938 in the present case and fulfilled all the three ingredients, as required under the said section and repudiated the claims;
xv) Therefore, I have to hold for the reasons as aforesaid and also in the light of the medical evidences available on record as referred to above, the repudiation of the claim, by the insurer has to be upheld on law as well as on facts and hence the repudiation of the claims by the insurer does not warrant any interference at my hands.
In the result, the complaint is dismissed.
Hyderabad Ombudsman Centre Case No. L-1075/2003-04
Smt. A. Kalpana Vs.
Life Insurance Corporation of India Aw ard Dated 27.1.2004
Sri A.Bhaskar Rao, work Inspector, A.P. State Housing Corporation, Kurnool took two life insurance policies, details of which are mentioned below: -
Policy No. : 651422102 651423491
Date of Proposal : 18.09.1995 30.03.1997 Date of Acceptance/FPR : 20.09.1995 31.03.1997
Sum Assured : 50,000 50,000
Plan & Term : 75-20 14-21
Date of Revival : 10.01.2000 10.01.2000 Date of Death : 23.03.2002 23.03.2002 Date of Repudiation : 02.02.2003 02.02.2003 Cause of death : --- Brain Cancer ---
FACTS OF THE CASE
The life assured late Sri A.Bhaskar Rao, Work Inspector, A. P. State Housing Corporation, Kurnool took the above policies from Kurnool Branch of Cuddapah Division, as per the details furnished above. The policies lapsed due to non- payment of premia due from quarterly due 11/1998. Later the life assured revived the policies on 10.01.2000 by submitting a declaration of good health form and paying the arrears of premia. The insured died on 23.03.2002 due to Glioblastoma Multiforme (Brain Cancer). The claim under the policy was repudiated by LIC on the grounds of suppression of material facts, as the life assured did not disclose his treatment for right temporal Glioblastoma for which he took treatment in a hospital during the month of November 1998 which was prior to revival of the insurance policy. It was also alleged that the life assured was on medical leave for 90 days during 01.11.1998 to 31.01.1999. He however, did not disclose these facts in his said personal statement regarding health. Smt. A.Kalpana, the complainant, represented to Zonal Office Claims Review Committee, Hyderabad for review. The ZO Claims Review Committee upheld the decision taken by LIC of India, Nellore Division. Aggrieved with the rejection of the claim, the complainant represented to this office.
I have carefully perused the papers placed before me and heard the arguments presented by both the sides.
i) Late Sri A. Bhaskar Rao, working as Work Inspector in AP State Housing Corporation, Kurnool took two life insurance policies for a Sum Assured of Rs. 50,000 each on 20.09.1995 and 31.03.1997 respectively. He died on 23.03.2002;
ii) According to the medical certificate no. 034837 dated 31.12.1998 issued by NIMS Hospital, Hyderabad, the life assured was under treatment in the hospital as in patient. The diagnosis arrived in the hospital was “Glioblastoma Multiforme”;
iii) The above admission and the relative treatment thereto was prior to taking insurance policy by the life assured;
iv) The life assured was again admitted in NIMS Hospital, Hyderabad on 27.02.2002 under I.P. No.203005. The life assured was discharged from the hospital after death on 23.03.2002. The Discharge Record of the above hospital contains a remark “Pt was operated for Rt. Temporal GBM 3 years ago”. v) According to the information furnished by the employer of the life assured in the
Claim Form E of LIC, the life assured availed medical leave during the periods 01.11.1998 to 31.01.1999 (90 days). The nature of illness was Head-ache &
Vomitings etc Undergone Operation. Incidentally, this was also prior to taking
the insurance policy;
vi) In the Declaration of Good Health form dated 30.11.1999 (which was received in the Branch Office on 10.01.2000) submitted by the insured, he had answered all the relevant questions in the negative though the life assured was fully aware of his admission and treatment in NIMS Hospital, Hyderabad, for Glioblastoma Multiform before revival of the insurance policies;
vii) All the above events when put together chronologically make it absolutely clear that the life assured was suffering from Glioblastoma Multiforme disease even