In a scathing rebuke, the national consumer disputes redressal commission (NCDRC) has blasted the Life Insurance Corporation of India (LIC) for what it termed as 'shocking insensitivity' after its officials issued a letter demanding premium payment, addressed to a deceased policyholder.
The NCDRC bench of Dr Inder Jit Singh (presiding member) and justice Dr Sudhir Kumar Jain (member) also upheld the compensation order passed by the state commission in Uttar Pradesh, directing LIC to pay Rs5 lakh to the widow of the deceased policyholder, along with an additional Rs25,000 in costs. The court warned LIC’s senior management to take note of its conduct and take corrective measures.
The case pertains to late Rajendra Prasad Tripathi, a resident of Pratapgarh in Uttar Pradesh, who had taken a life insurance policy worth Rs5 lakh with LIC. The policy’s second premium instalment was due on 24 August 2003. Mr Tripathi issued a cheque dated 11 August 2003, which LIC claimed to have received on 29 August 2003, five days after the due date.
Tragically, Mr Tripathi passed away on 29 September 2003, before the cheque was cleared. It was eventually returned by his bank with the reason: 'drawer deceased.' LIC subsequently refused to settle the insurance claim, arguing that the premium had not been realised before the policyholder’s death, rendering the policy lapsed.
However, the consumer forums—both at district and state levels—held that LIC had indeed received the premium cheque well before the policyholder’s death and had even submitted it for collection. NCDRC affirmed these findings, stating that by accepting and processing the cheque, LIC was deemed to have condoned any delay and could not now deny the claim.
“It is not a case where the cheque was dishonoured for lack of funds,” the NCDRC bench observed, adding that LIC could hold the bank accountable for delays, but not punish the deceased’s family for issues beyond their control.
What drew sharp censure from NCDRC was a letter LIC sent on 24 December 2003, nearly three months after Mr Tripathi’s death, instructing him to remit payment for the unpaid premium by 28 December 2003, and warning that proof of good health would be required if payment was delayed beyond six months.
The letter, astonishingly, was addressed directly to the deceased Mr Tripathi.
“We place on record our displeasure that the officials of the insurance company have issued such a letter without any application of mind and shown such insensitivity to a dead person,” the commission said in its order.
The letter was signed by a senior branch manager from LIC’s Pratapgarh office, despite clearly acknowledging the policyholder’s death in the letter’s content.
The commission has ordered that a copy of the judgement be sent to senior LIC officials at the general manager level or above, instructing them to take appropriate corrective action against those responsible.
"This kind of insensitivity is unacceptable from a public sector organisation tasked with securing people's lives," the bench noted, warning that such behaviour undermines public trust in institutions.
The commission stated unequivocally that once LIC accepted the cheque and initiated processing, it could not claim the policy had lapsed, particularly when the cheque was returned only after the insured’s death.
It added that the onus was equally on LIC to monitor the collection process, and any lapse on the part of banks did not absolve the insurer of its responsibilities.
“The assured person was not concerned with the collection process unless and until he was informed by LIC that there is some hurdle,” the bench says.
With both the district forum and the state commission having ruled in favour of the complainant, NCDRC dismissed LIC’s revision petition and upheld the compensation, further imposing Rs25,000 in additional costs for dragging the matter into protracted litigation.
(Revision Petition No2449 of 2024 Date: 21 July 2025)
