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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
R. VIJAYAKUMAR, J.
N. Raji - Appellant
Versus
The Chairman, Life Insurance Corporation of India, Mumbai & Others - Respondent
W.P.(MD). No. 16898 of 2015 & MP(MD). Nos. 1 & 2 of 2015
Decided On : 21-09-2022
Group Insurance Policy - LIC Agent - Rule 16.08.2007 - The court discussed the Group Insurance Policy for LIC agents and highlighted the rule that if an agent is terminated before the Annual Renewal Date and reinstated after that date, he will not be covered for that policy year. The policy cover ceases from the date the agent is terminated. The court found that the petitioner's husband was not covered by the policy at the time of his death as he was not an LIC agent on the Annual Renewal Date. The court upheld the order rejecting the claim based on this interpretation of the rule.
Fact of the Case:
The petitioner's husband, an LIC agent, passed away and the petitioner sought payment of claim amount under the Group Insurance Policy. The claim was rejected based on the grounds that the husband's agency was not in force on the specified date.
Finding of the Court:
The court found that the petitioner's husband was not covered by the Group Insurance Policy at the time of his death as he was not an LIC agent on the Annual Renewal Date. The court upheld the order rejecting the claim.
Issues: The main issue was whether the petitioner's husband was entitled to the Group Insurance Coverage at the time of his death despite the termination and reinstatement of his agency.
Ratio Decidendi: The court interpreted the Group Insurance Policy rule that if an agent is terminated before the Annual Renewal Date and reinstated after that date, he will not be covered for that policy year. The policy cover ceases from the date the agent is terminated.
Final Decision: The court dismissed the writ petition, upholding the order rejecting the claim for Group Insurance Coverage based on the interpretation of the policy rule.
JUDGMENT
(Prayer: This Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records relating to the impugned order passed by the third respondent in Ref.No.P&GS/GI/File No.3382 dated 01.07.2015 and quash the same as illegal and consequently directing the respondents to pay Group Insurance Coverage to the petitioner on the death of her husband who has an Agent of LIC with License No. 225401 and Code No.02104749 from the date of death of her husband on 03.11.2014 with reasonable interest.)
1. The present writ petition has been filed challenging an order passed by the third respondent herein under which the request of the petitioner for payment of claim amount under Group Insurance Policy due to the death of the petitioner's husband was rejected.
2. According to the petitioner, the petitioner's husband was a full time LIC agent from the year 1980 onwards. His licence as an LIC agent was about to expire on 26.06.2016. However, the petitioner's husband had passed away on 03.11.2014 due to cardiac arrest. According to the petitioner, her husband being a confirmed tied agent of Life Insurance Corporation, he was a member of the Group Insurance Scheme from the year 2007 onwards. The scheme is a compulsory one for the agents unless they have opted out by way of a consent letter.
3. The petitioner had further contended that her husband's agency was terminated for a brief period from 05.07.2013 to 13.10.2013 and he was reinstated on 14.10.2013 and the Group Insurance Premium was deducted continuously even during the said period of termination. She had further contended that her husband was terminated for the second time from 05.07.21014 to 12.09.2014 and he was reinstated on 13.09.2014. Even during the period of second termination, there was a coverage of Group Insurance Policy. Hence on the date of his death namely 03.11.2014, there was a coverage in view of the fact that premium was collected from him.
4. The petitioner had further contended that after the death of her husband, several representations were made to the respondent authorities. Finally, the third respondent herein has passed the impugned order that rejecting the request for payment of claim amount on the ground that the agency should be in force as on 01.09.2014. However, the petitioner's husband was not an agent on 01.09.2014. Hence, the Group Insurance Policy is not applicable to him. On the said ground, the request of the petitioner was rejected. The said order is under challenge in the present writ petition.
5. The learned counsel for the petitioner had contended that the said Insurance Policy is compulsory in nature for all the confirmed agents who have completed one year from his date of appointment. In the present case, the petitioner's husband had joined in service in the year 1980 and he was confirmed in the year 1981. When the Group Insurance Scheme was introduced in the year 2007, he was already a confirmed as tied up LIC agent and right from the said date, he is the member of the Group Insurance Policy.
6. The learned counsel for the petitioner had further contended that premium has to be recovered from the Commission bill of August every year which is generated in the month of September every year and it should be credited to the account of Group Insurance Scheme for agents. He had further contended that in case if termination of agent, no premium will be refunded. If such terminated agent gets reinstated within the policy year, he will be covered for the insurance from the date of reinstatement till the next annual renewal date without any payment of further premium. Hence, it is contended that the petitioner's husband was terminated on 05.07.2014 and he was reinstated on 12.09.2014 namely within a policy year and hence, without any further payment of premium, he is entitled to be covered by the Group Insurance Policy.
7. The learned counsel for the petitioner had further contended that the Life I
Interpretation of Group Insurance Policy rule regarding coverage for LIC agents based on termination and reinstatement.
An insurer cannot deny a claim based on the late payment of premium by the employer if the premium was later accepted without objection.
The agent's collection of the premium on behalf of the Corporation constituted legal liability upon the Corporation to pay the assured under the policy.
The validity of an insurance claim is contingent upon the existence and operation of the insurance coverage at the time of the insured event, as per the terms of the insurance agreement.
The main legal point established is that the insurance company cannot avoid liability by postponing the commencement of a policy after receiving the premium, and the insurance agent cannot be held re....
The termination of an agent's agency with forfeiture of renewal commission is only legally sustainable when the element of fraud is proved.
The court held that GST exemptions on health insurance premiums are limited to individual policies and do not extend to group insurance obtained by retired bank employees.
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