A policy cannot be repudiated for non-disclosure of lapsed or terminated policies, especially when ambiguity exists in proposal forms; the insured must only disclose material facts that directly affect underwriting.

ORDER

JUSTICE SUDIP AHLUWALIA, MEMBER

This Consumer Complaint has been filed under Section 21 (a)(i) of the Consumer Protection Act, 1986 , challenging the repudiation of the Life Insurance Policy by the Opposite Parties.

2. The factual background, in brief, is that the Deceased Life Assured (DLA) had taken a Life Insurance Policy under Policy No. 21420994, issued by the Opposite Parties under the “Met Family Income Protector Plus Plan”. The Policy, commencing from 31.10.2014, was for a term of 15 years, with an assured sum of Rs. 1.2 Crores and an annual premium of Rs. 1,21,830/-. The first premium, amounting to Rs. 1,36,888/-, was duily paid by the deceased insured, and the Complainant was nominated as the beneficiary. The deceased, having only matriculated, was assisted in filling-up the Policy Proposal Form by an Authorized Agent of the Opposite Parties, who wrote the form in her own hand and marked the responses, including indicating “no previous policy” in response to a query regarding earlier Insurance Policies with other Insurers. The deceased merely signed where directed. Subsequently, in February 2015, the deceased contracted H1N1 Swine Influenza and was hospitalized in ICU from 26.02.2015 until his death on 12.03.2015. The Complainant incurred approximately Rs. 4.00 lakhs in treatment expenses. The Death Certificate was issued on 19.03.2015. She submitted the Insurance Claim form on 22.04.2015 along with supporting documentation. The Opposite Parties acknowledged the Claim and requested further documents, which were duly provided. Despite a prolonged delay involving multiple investigations by the Opposite Parties’ appointed Agencies, no discrepancies were found regarding the cause of death, However, to the Complainant’s shock, the Claim was repudiated vide letter dated 12.03.2016 on the ground that the deceased had failed to disclose three prior Insurance Policies with Birla Sun Life Insurance Company (BSLIC) bearing Nos. 005193546, 005193866, and 005319748. The Opposite Parties contended that such non-disclosure amounted to a fraud and rendered the Policy void under Section 45 of the Insurance Act, 1938 .

3. The Complainant, however, clarified that Policies bearing Nos. 005193546 and 005193866 were cancelled by the Insurer on the very same day the Application for those Policies was submitted (21.12.2011), and the respective cheques were returned on 23.12.2011. Policy No. 005319748 was a terminated Health Plan, not a Life Insurance Policy, and only covered Hospital admissions, offering no death benefit. Therefore, no disclosure was warranted, as no Insurance Contracts in force existed at the time of taking the impugned Policy. Moreover, these Policies were not material to the risk assumed by the Opposite Parties. It was further submitted that the Policy Proposal Form is ambiguous in its language, seeking disclosure of only “Life Insurance Policies” that are “in force”, “lapsed”, or “revived”. The omission of terminated or never-effective Health Policies cannot be construed as fraudulent suppression. It is the case of the Complainant that even if the Insurer’s stance under the amended Section 45 of Insurance Act is considered, the repudiation remains legally unsustainable. (2) requires proof of intent to deceive, which is absent in the present case. (4) is also (inapplicable, as the alleged non-disclosures do not relate to the life expectancy of the deceased. Additionally, the refusal of the Opposite Parties to refund the premium, despite no proof of fraud, amounts to a deficiency of service and unjust enrichment. Aggrieved with the same, the present