LIC rejects insurance claim saying policyholder hid illnesses: Court says past typhoid, jaundice had no link with sudden heart attack; insurer ordered to pay over Rs 10 lakh

LIC rejected a death insurance claim filed by a widow in Guntur, Andhra Pradesh, on the grounds that her husband had concealed past illnesses when he bought the policy. The District Consumer Commission at Guntur has now ruled against the insurer, holding that the illnesses LIC cited, typhoid and jaundice, had no connection to the heart attack that killed him, and ordered LIC to pay Rs 10.10 lakh with interest.

The order was passed on 10th July 2026.

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LIC Jeevan Labh Policy and the Claim

Nagesh Babu, a resident of Tenali in Guntur district, took out a LIC Jeevan Labh policy in January 2021 for a sum assured of Rs 10.10 lakh, paying a monthly premium of Rs 4,927. He named his wife, Kanumanchi Kalpana, as nominee.

On 28 June 2023, Nagesh Babu died of a cardiac arrest at V Cardiac and Multispeciality Hospital in Tenali. Kalpana submitted the claim along with the required documents.

LIC sent a repudiation letter in November 2023. The insurer said the policy had not completed three years from issuance and that the claim fell within the early claim period, which under Section 45 of the Insurance Act, 1938, allows insurers to investigate whether material facts were suppressed at the time of taking the policy. LIC said its inquiry revealed that the policyholder had hidden significant health information and refunded only the premiums paid, treating that as full and final settlement.

What LIC Found, and What It Argued

In the proposal form, Nagesh Babu had answered no to questions asking whether he had consulted a doctor for any ailment requiring treatment for more than a week in the previous five years, whether he had remained absent from work on health grounds, and whether he had suffered from jaundice or any liver-related illness.

LIC's investigation retrieved his leave records from his employer. Those records showed he had applied for medical leave on four occasions between 2018 and 2019: twice for typhoid in February and March 2018, once for jaundice between July and August 2018, and once more in October 2019. Each leave application was backed by medical certificates and fitness certificates.

LIC argued before the commission that these records proved deliberate suppression of material facts. It said the repeated illnesses showed the policyholder was in poor and frequent ill health, that this health history had a bearing on his eventual death, and that had he disclosed these facts, the policy would never have been issued. The insurer cited Supreme Court and National Commission rulings to support the position that concealment of material facts makes a policy voidable.

LIC Insurance Claim Rejection Challenged

Kalpana, represented by advocate J. Srinivasa Rao, contested the repudiation on a straightforward ground: her husband died of a sudden cardiac arrest, and typhoid and jaundice have nothing to do with heart attacks.

The commission found this argument persuasive.

It examined the leave and medical records LIC had submitted, running to Exhibits B-1 through B-22, and noted that all of them were leave-related documents obtained for the purpose of workplace absence, not treatment records showing ongoing or chronic illness. The commission observed that typhoid and jaundice are curable conditions and that there was no material on record linking either illness to the cardiac arrest that caused his death.

The death certificate, marked as Exhibit A-3, recorded the cause of death as sudden cardiac arrest. The commission noted that even the doctor's certificate filed by LIC itself, Exhibit B-3, described the heart attack as a sudden one. There was, in the commission's words, no nexus between the past illnesses and the cause of death.

What the Court Said About Insurance Claim Rejections

The commission made a pointed observation about LIC's conduct that goes beyond the facts of this individual case.

It noted that under IRDAI guidelines, insurers are required to conduct pre-medical tests through their panel doctors before issuing a policy. In this case, LIC did not file any record of such a pre-medical examination having been conducted. The commission said this absence spoke for itself, and that the insurer appeared to have used the suppression argument as a tool to avoid a legitimate claim rather than approaching the matter with clean hands.

This is a significant finding. It signals that insurers cannot selectively invoke disclosure obligations when settling claims if they did not bother to carry out basic due diligence at the time of issuing the policy.

The commission also distinguished the Supreme Court and National Commission judgments cited by LIC. In those cases, the concealed conditions were directly connected to the cause of death, including one involving a doctor who had hidden a hernia surgery. The commission said those facts were in stark contrast to the present case, where the diseases cited were curable, had occurred years before the policy was taken, and bore no medical relationship to a sudden cardiac event.

On the question of intentional suppression, the commission found no evidence that Nagesh Babu had deliberately withheld information to mislead LIC. It noted that he was hale and healthy at the time he took out the policy in 2021, and that the illnesses had occurred in 2018 and 2019, well before the policy date.

LIC Ordered to Pay Rs 10 Lakh

The commission ruled that LIC's repudiation of the claim was not sustainable in law and that the insurer was guilty of deficiency in service.

It directed LIC to pay the full sum assured of Rs 10.10 lakh to Kalpana, along with interest at 9 per cent per annum from the date of final repudiation, 31 July 2023, until the date of actual payment.

LIC was also ordered to pay Rs 10,000 covering mental agony, damages, and litigation costs.

The insurer has six weeks from the date of receiving the certified copy of the order to comply.