Sudhakar Gupta has taken a life insurance policy on his life on 7-2-2018 for ₹1 lakh. But to get the benefit of lesser age premium the date of commencement of the policy is given as 7-4-2017. His yearly premium is ₹10,30

CS Professional · Insurance - Law and Practice · PYQS · December 2020
Sudhakar Gupta has taken a life insurance policy on his life on 7-2-2018 for ₹1 lakh. But to get the benefit of lesser age premium the date of commencement of the policy is given as 7-4-2017. His yearly premium is ₹10,305 and the second yearly premium was due on 7-4-2018. Sudhakar Gupta and Sachin Agarwal were partners in a business. Sachin Agarwal has also insured his life for a premium of ₹2,486 per annum. They issued a joint cheque towards combined premium on 7-5-2018. The insurer issued a stamped receipt on 25-5-2018 and sent the cheque for collection. The cheque for the premium amount was dishonoured and the cheque was sent back by the bank on 8-6-2018. The intimation of the dishonoured cheque was sent by the company on 21-7-2018 which was posted by it on 30-7-2018. It was posted to Sudhakar Gupta's residence and was received at his residence on 1-8-2018. The intimation required that Sudhakar Gupta is to pay the premium with interest by 16-8-2018. But the insurers were not aware that in an uneventful incident of an accident on 28-7-2018, Sudhakar Gupta had already expired. Anita Gupta, the wife of Sudhakar Gupta claimed the insurance and also the accident cover. She said that the insurer was deficient in the services and did not intimate about the dishonour of the cheque in time. To support her statement, she quoted the insurer's circular that stated that the intimation of the dishonoured cheques should be intimated immediately by the concerned staff by contacting the policyholder, which is not done in this particular case. Required: State whether Anita Gupta will get the insured money from the company, i.e. is her claim maintainable? Discuss with reference to: Revival of discontinued policies

Answer & Explanation:

Revival of a lapsed policy is a privilege or concession granted to the policyholder by the insurance company. The insurance company reserves the right to accept or decline the revival of a discontinued policy. There are also certain limitations while reviving a policy they are: Revival should be during the lifetime of the assured and not after his death. Within a period of 3 years from the due date of the first unpaid premium Before the date of maturity The conditions relating to the payment of the premium due on the lapsed policies should be complied with. In this case, the lapsed policy was not revived during the lifetime of Sudhakar Gupta the life assured. It could not be revived after his death. In any case, it is the right of the insurance company to revive the policy even if Sudhakar Gupta had paid the premium before he died after the grace period. However, the policy of Sachin Agrawal can be revived by the Insurance company as per the terms and condition of insurance contract.

Topics: Life Insurance Claims

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