Uttarakhand consumer commission orders LIC to pay Rs 2 lakh in rejected death claims

The State Consumer Disputes Redressal Commission, Uttarakhand, has ordered Life Insurance Corporation of India (LIC) to pay Rs 2 lakh to a widow whose death claims on two policies it had rejected. In an order pronounced on 16 October 2026, the commission held that LIC had not shown that the policyholder's past hepatitis treatment was a material fact that justified rejecting the claims.

What Happened

The policyholder bought two LIC policies with a sum assured of Rs 1 lakh each, naming his wife and son as nominees. He died in May 2012, within months of buying them. LIC rejected both claims in June 2013, saying he had not disclosed treatment for hepatitis taken in August and September 2011. A district forum dismissed the widow's complaint in 2016, and she appealed.

The commission noted that the doctor who treated him certified that his condition improved after treatment, that a pathology report from September 2011 showed a normal bilirubin level, and that LIC's own panel doctor recorded a heart-related cause of death and no other disease. Per the order, no medical opinion linked the earlier hepatitis to the death.

The commission held that insurance requires full disclosure of material facts, but not every omission justifies rejecting a claim. The insurer must show that the undisclosed fact mattered to its decision to accept the risk. Relying on a Supreme Court ruling on this point, it found that LIC had not done so. It set aside the district forum's order and allowed the complaint.

What It Means

LIC must pay Rs 2 lakh with interest at 6% a year from 24 March 2014, the date the complaint was filed, until payment, plus Rs 10,000 as litigation charges, within one month of the order. The order may be appealed.

For families of policyholders, the ruling shows that an insurer relying on non-disclosure of a past illness must prove the illness was material to the risk, not merely that it existed. Families whose claims are rejected on such grounds can seek help through the National Consumer Helpline (1915) or file a complaint on e-Daakhil.

Source: Consumer commission order