A, an employee of a government organization purchased a life insurance policy on 28-4-2011. It was a non-medical scheme policy as he was an employee of government organization and no medical examination was conducted. Th

CS Professional · Insurance - Law and Practice · PYQS · December 2018
A, an employee of a government organization purchased a life insurance policy on 28-4-2011. It was a non-medical scheme policy as he was an employee of government organization and no medical examination was conducted. The above policy lapsed due to non-payment of premium which was due from April, 2012 to October, 2012. The life assured got the policy revived on 3-1-2013 by depositing the premium which was due. Unfortunately the life assured died on 13-1-2013. The legal heirs of the assured submitted a claim with the insurance company with respect to the above said policy. As the life assured died within 2 years from the date of obtaining the policy and within ten days of the revival of the policy, the insurance company carried out an investigation for the policy and the life assured. The investigation revealed that the life assured was not keeping good health at the time of obtaining the policy and as well as at the time of revival of the policy, because his employer organization had supplied the details of earned leave and medical leave availed by the life assured during his service period w.e.f. 4-6-2007 to 18-9-2012. The details given for the leave were as under: Medical leave: 12-5-2008 30-5-2008 to 27-6-2008 27-7-2008 to 10-9-2008 06-8-2010 to 13-8-2010 13-6-2011 to 06-8-2011 05-9-2012 to 18-9-2012 The fact of the medical leave was made known to the insurance company only on investigation and the fact that the life assured was suffering also came to their knowledge. The fact was not disclosed by the life assured in the original proposal form at the time of taking the policy as well as at the time of revival. The life assured was suffering from epigastria C bleeding per rectum due to which he died in the hospital on 13-1-2013 where he was admitted on 4-1-2013. Thus, it was a clear case of concealment on the part of the life assured which was against the terms of the Insurance policy. Accordingly the insurance company repudiated the claim. The legal heirs of the life assured challenged the repudiation of the claim in District Consumer Forum where the claim was awarded in their favour and against the insurance company. The insurance company aggrieved by the decision of the District Consumer Forum filed an appeal with the State Commission where the appeal was accepted and the decision of the District Consumer Forum was set aside. Based on the above case, answer the following questions: Given the facts of the case, what precautions and advises do you suggest to people taking insurance policies to cover their risks?

Answer & Explanation:

Insurance is a contract between two parties the insurer and the insured. This contract needs to comply with all the requirements of a contract for it to be valid. It is required that parties to the contract make all the disclosure about the terms and conditions of the contract as well as all the facts about the subject matter of the insurance contract. In the given case the life assured did not disclose the fact about the health conditions while submitting the proposal form due to which the insurance company was required to carry out the investigation and had the right to consider the contract as void due to non-disclosure of a fact which was material to the contract. Thus we would advise the person(s) taking insurance policy to make sure that before taking a policy they are aware of all the terms and conditions of the policy and also they disclose all the facts about the subject matter of the insurance policy. The facts which must be disclosed are: Facts, which show that a risk represents a greater exposure than would be expected from its nature e.g., the fact that a part of the building is being used for storage of inflammable materials. External factors that make the risk greater than normal e.g. the building is located next to a warehouse storing explosive material. Facts, which would make the amount of loss greater than that normally expected e.g. there is no segregation of hazardous goods from non-hazardous goods in the storage facility. History of Insurance (a) Details of previous losses and claims (b) if any other Insurance Company has earlier declined to insure the property and the special condition imposed by the other insurers; if any. The existence of other insurances. Full facts relating to the description of the subject matter of Insurance.

Topics: Life Insurance

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