Consumer forum directs LIC to pay Rs 2 lakh claim to widow of policyholder

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Mumbai, Jun 7 (PTI) A consumer commission here has directed the Life Insurance Corporation of India (LIC) to pay a claim of Rs 2 lakh to the widow of a policyholder, citing that the man had been illiterate and was unaware of the terms and conditions of the policy.

In an order passed last month, the District Consumer Disputes Redressal Commission, South Mumbai, noted that guidelines of the Insurance Regulatory and Development Authority (IRDA) state all terms and conditions should be explained to the insured in the language known to him before taking his signature on the policy document.

Evidence suggested that the deceased had studied up to Class 2 and had no reading and writing skills, the commission said.

"In this respect, evidence of handwriting expert speaks that for want of specific character, he could not opine who had actually signed the proposal form," it noted.

The commission, after perusal of the evidence on record, concluded that the deceased had not suppressed any fact while submitting the proposal form, as "being illiterate", he was unaware of the terms and conditions of the proposed policy.

In the complaint, the deceased man's wife said her husband had taken an LIC policy of Rs 2 lakh, and in December 2012, he died of a heart attack at a hospital while undergoing an angioplasty.

When the complainant filed for the claim, the insurer repudiated it on the ground of "suppression of material facts".

It contended that the complainant's husband had not disclosed that he suffered from hypertension and had the habit of smoking.

To this argument, the commission said there is no clear-cut evidence that smoking was the cause of death.

"Moreover, there is no sufficient evidence that hypertension is the root cause of death by heart. Thus, it was the duty of the respondent (LIC) to prove all the above points, but it failed to do so," it said.

The repudiation was "arbitrary and unsustainable", the commission said, holding the woman's claim as justified.

The commission then directed LIC to pay the widow the claim amount of Rs 2 lakh with nine per cent interest from the date of repudiation, March 18, 2013, till its actual realisation.

The LIC has also been directed to pay a compensation of Rs 1 lakh towards mental agony and Rs 20,000 towards litigation to the complainant. PTI AVI ARU

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