HDFC Life Insurance Asked To Pay Rs50 Lakh Insurance Claim Rejected on Wrong Grounds
Moneylife Digital Team 29 March 2024
While upholding an order passed by the Telangana state consumer disputes redressal commission, the national consumer disputes redressal commission (NCDRC) directed HDFC Life Insurance Co Ltd to pay the Rs50 lakh insurance claim with an interest of 6%pa (per annum) to the family of the deceased policyholder. HDFC Life Insurance had rejected the claim, citing the wrong date of birth and concealment of diabetes by the deceased life insured (DLA).
 
In an order earlier this month, the NCDRC bench of justice Ram Surat Ram Maurya (presiding member) says that the 10th mark memo submitted by the DLA has the same date of birth as mentioned on the insurance policy proposal form. Also, before issuing the policy, HDFC Life Insurance had obtained a blood test report of the DLA, in which blood sugar was found normal, the bench says.
 
The case is related to the HDFC Life Click 2 Protect policy which was bought by Mehboob Nagar-based K Prabhakar on 13 March 2014 by depositing the premium with HDFC Life Insurance. After conducting necessary medical investigations and tests to ascertain Mr Prabhakar's health condition, on 18 March 2014, the insurer issued the policy. He continued paying annual premiums for the insurance policy. 
 
On 16 August 2017, Mr Prabhakar expired. His wife, K Pushpavati and three children filed an insurance claim with HDFC Life Insurance. However, the insurer rejected the claim, saying that Mr Prabhakar, the DLA, had given age details in the proposal form which were found to be false and he had diabetes which was concealed in the proposal form. 
 
Ms Pushpavati then approached the state commission seeking an insurance claim of Rs50 lakh and Rs4 lakh as compensation for mental agony and litigation costs. 
 
During the hearing, HDFC Life Insurance submitted that Mr Prabhakar had also applied for an insurance policy from Aditya Birla Sun Life Insurance Company Ltd, for which the premium was charged at a higher rate, inasmuch as the deceased was suffering from diabetes. "Thereafter, Mr Prabhakar got that policy cancelled but this fact has not been disclosed in the proposal form dated 13 March 2014. As such, the material fact has been concealed and the insurance policy was voidable for concealment of material facts," the insurer contended.
 
However, in its order on 3 October 2022, the state commission held that the grounds taken for repudiation of the claim were not correct. "So far as the withdrawal of policy issued by Aditya Birla Sun Life Insurance is concerned, it is not proved that the insurer has rejected the policy due to health conditions of Mr Prabhakar, nor it is proved that he was suffering from diabetes and hypertension."
 
HDFC Life Insurance challenged the order before the NCDRC. After perusing the claim rejection letter issued by the insurer and 10th class mark memo of Mr Prabhakar submitted before the state commission, NCDRC noted that the finding of fact does not suffer from any illegality. 
 
HDFC Life Insurance contended that Mr Prabhakar was suffering from diabetes and, after being charged higher, had withdrawn from the policy of Aditya Birla Sun Life Insurance. It also submitted the policy and application for withdrawal filed by Mr Prabhakar with Aditya Birla Sun Life Insurance. 
 
In the application, Mr Prabhakar mentioned that he had taken ‘Easy Protect Plan’ (from Aditya Birla Sun Life Insurance) and, after going through it, he found that in the mediclaim, extra premium was required to be deposited. Therefore, he decided to cancel the policy (of Aditya Birla Sun Life Insurance).
 
"From these documents, it is not proved that Mr Prabhakar was suffering from diabetes. It is not disputed by HDFC Life Insurance that before issue of the policy, blood test report was obtained by it in which blood sugar (of Mr Prabhakar) was found normal. The reason assigned for repudiation of the claim that due to diabetes, he was rated at a higher rate by Aditya Birla Sun Life Insurance is also incorrect inasmuch as in the application of Mr Prabhakar, he sought cancellation only on the ground that the policy does not include the mediclaim for which extra premium was required, (this) reason was entirely different," justice Maurya says.
 
While dismissing the appeal, NCDRC directed HDFC Life Insurance to pay the insurance claim of Rs50 lakh with 6% interest and Rs10,000 as compensation and litigation cost to Ms Pushpavati and her three children.
 
(First Appeal No6 of 2023  Date: 1 March 2024)
Comments
asklic.sudhakar
2 months ago
Insurance is risk management by transferring it to Insurance company. Here people keep some risk with them by saving little premium or looking for lower premium. Insurance is taken for immediate financial support of family in the event of loss of bread winner. 7 years is too long period. Winning battle was not sure. 7 years is enough to come out of financial hardship. Rate is not deciding factor in Insurance product. LIC premium looks costlest. It is not costly, it's standard rate.
ks2sun
3 months ago
To sum it up, no Insurance Company will pay the insured amount willingly. As much as possible, they will try to delay or altogether cancel payments. LIC might be an exception.
Pradeep Kumar MS
3 months ago
From my long, multiple experiences with HDFC:

1. Contract is a CONTRACT.
Calling it a Policy is deception by default.
It suggests a company "handout" rather than a negotiated contract."Policy" sounds less formal and evokes a sense of trust, masking the binding nature of the contract.


2. Free (post payment, post signing) Look Period:
This is an Evil practice, but prefixing "Free" to it attention is diverted,
that again being Evil, patently. And a Mega Scam. You can't fool all, all the time. Even Sati had it's justifications, but this ????????????.

Here the emphasis is on the insurer's timeline, not yours. Activation must necessarily occur only upon your informed consent, no other way.

Free Look Period: Very strange for a contract - no pre-knowledge, no free will. No sound person will consent, had he known. Defective by default. Again, what if we're outstation unexpectedly. How many such cases exists ?Who holds data, IRDA ?????????????

Medicals: No choice of labs. No transparency in lab-company contract. Lab refuses an attested full copy of the report, even on offer to pay. Lab refuses revelation of terms of engagement with company. This is critical, since it's our privacy and the insurer's data handling policies for medical reports need to be clear and prioritize the insured's right to access and control their own health information.

And again, we are charged for medicals once we terminate contract. Exorbitant Vengeance deterrent charges are deplorable, especially after denying us the medical report for which we paid for.
Choice of Hospitals= okay,
Choice of Labs=lifting a stranger's skirt in public place. Big No - No.????. Something stinks terribly. This Information Asymmetry- is it unintentional or Strategic?

While the insurer might emphasize quality control as an excuse for limited lab choices, are there alternative ways to ensure quality without restricting options?



Surrender vs. Termination:

"Surrender" implies the insured is giving something up and Powerless, while "termination" is only Apt. This word choice suggests the company views cancellation as your fault (guilt tripping)

Overall, this structure reflects an unequal power dynamic. Boy don't they know a thing or other about Behavior Economics.????.

The company dictates terms before you have full information (free look period).
They control pre-contract processes (limited lab choice).
The language downplays your agency ("surrender").
This approach intimidates you with limited options, rather than a valued partner in managing your health security
tejinder1962
3 months ago
Insurance company should be made to pay higher rate of interest for wrongly and intentionally repudiating the claim
plmuthal876
3 months ago
Many of insurance company officials are employed to find crooked ways to repudiate the claims so that they can get higher performance linked bonus ESOPS. At least in this case the authority has taken the right decision. Other wise they also join hands with this Crooks.
rajagopalansriraman09
3 months ago
Very good justice for the family.
Not only this insurance even other insurance companies also to avoid insurance claims, they ask for irrelevant details and the insured person has got pre diseases which were not revealed at the time of issuing policy bond etc
It doesn't mean all people are cheating to claim policy money.
Lot of straight forward people are there in our country. But most of the time insurance companies are avoiding claims. Which is not good for the public.
To mitigate the risk, people are going for policy, irrespective of premiums asked by the insurance companies. Anyway after going through all the details, the court has given the good verdict. Incase any appeal to higher court by insurance company should be dealt with severe punishment to pay the money with 12 or 24 % with entire delayed payment.
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