Mr. Pawan, aged 40 Years purchased an Insurance Policy for the Sum Assured of ₹1 Crore from XYZ Company Limited. The proposal date was 22.02.2024 and has paid one year premium of ₹30,733/-. In the proposal form, he nomin

CS Professional · Insurance - Law & Practice · PYQS · June 2025
Mr. Pawan, aged 40 Years purchased an Insurance Policy for the Sum Assured of ₹1 Crore from XYZ Company Limited. The proposal date was 22.02.2024 and has paid one year premium of ₹30,733/-. In the proposal form, he nominated his second wife Ms. Aparna and minor son Mr. Abhiroop who was born to his first wife as beneficiaries of 50% share of each for policy benefits. As his son is minor, his second wife Ms. Aparna is considered as legal trustee/guardian for the minor son. His first wife Ms. Karuna passed away on 1-2-2021 with post-partum problems leaving behind a son. Since his first wife passed away in 2021, he has been using anti-depressant medicines to come out from his bereavement and also married Ms. Aparna on 20-12-2023 to take care of his two-year-old son Mr. Abhiroop. The usage of depressant medicines is not mentioned in the proposal form as he thought that was not a material fact. His business also got affected with his mental depression and to raise money for his business continuation he assigned this ₹1 Crore insurance policy to his creditor on 25.06.2024 against the loan of ₹30 lakhs. Within 7 months of the proposal date, he died on 28.08.2024. The cause of death was reported in the discharge form of deceased life assured as sudden cardiac arrest in the sleep due to atherosclerosis (hardening of the arteries). As Ms. Aparna is not biological mother to Abhiroop and father passed away, parents of Ms. Karuna the biological mother of Mr. Abhiroop approached the insurance company for the policy benefits in the name of minor son Mr. Abhiroop under the trustee of biological grandparents. As it is an early claim, the investigation on death of the insured is initiated and the insurance company could not prove that it is a suicide though they come acrossed the rumors of suicide from neighborhood due to his depressive mentality. But on investigation, it is identified that life assured had suppressed or concealed the material fact of using anti-depressant medicines. Research showing that antidepressants might contribute to atherosclerosis by affecting factors like blood pressure, platelet aggregation, inflammation and endothelial function within the blood vessels which may lead to heart failure. Insurer put on hold the claim based on the following issues: Suppression of material facts or breach of the condition of 'utmost good faith' from the life assured. Early claim with a suspicion of suicide. Litigation on Trustee/Guardian for the minor son. Part of Insurance policy benefits is assigned to creditor. What is an early Claim? What can be the exclusions to repudiate the early claim and what are the possible frauds in early death claims? Justify your answer for the requirement of investigation in early claims.

Answer & Explanation:

Any death claim which is submitted within 2 years of date of commencement of the policy is referred to as early claims. The insurer often scrutinizes these claims more rigorously due to the higher risk of fraud. Exclusions to repudiate an early claim may include: Suppression of material facts or misrepresentation. Suspicion of suicide or intentional harm. Evidence of fraudulent activity or misstatement in the application. Possible frauds in early death claims can include: Faking death or staging an accident. Concealment of pre-existing conditions that may have contributed to death. The reason for referring such cases to investigation is to rule out the possibility of any moral hazard or non-disclosure of any pre-existing illnesses or treatments taken by the part of the life assured when the policy was taken. Life Insurance has faced serious frauds by persons taking life insurance policy on persons who are not in good health by giving false declarations. In all such cases, death usually happens soon after the policy is taken. In extreme cases, Life Insurance companies have also faced cases of taking life insurance policies on the lives of persons who were already dead even before the policy was taken, by forging documents. Therefore, claim investigation is very important in the case of early claims.

Topics: Life Insurance Claims

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic