Allahabad High Court Flags Alleged ‘Deathbed’ Insurance Policies, Orders Inquiry And Issues Warrant

The Allahabad High Court has ordered an inquiry into life insurance policies allegedly issued to persons who were critically ill and has also issued a bailable warrant against officials of HDFC Life Insurance Company for not appearing before it despite summons in the case.

The court passed the order while hearing a bail application in a criminal case arising out of an insurance claim dispute. While examining the facts, the court indicated that the issue may not be confined to a single transaction and warranted closer scrutiny.

Dispute Over Insurance Claim

The case stems from a policy under which a claim of Rs 9 lakh 60 thousand was settled in favour of the deceased policyholder’s widow. Subsequently, it was alleged that nearly Rs 4 lakh 80 thousand from the claim amount was taken away by an intermediary. Following this, an FIR was lodged, and the issue came up before the High Court during the hearing of a bail application, according to a recent report by Live Law.

At the hearing, the bench asked the branch head and the operations manager of HDFC Life’s Moradabad office to appear before it and clarify how the policy had been issued. However, instead of appearing in person, they were said to have sent another representative.

The judges expressed displeasure over their failure to appear and made it clear that orders passed by the court cannot be ignored or treated lightly. It remarked that sending an uninformed representative did not satisfy its order.

Consequently, the court issued a bailable warrant against the branch head and directed that he be present on the next date of hearing. The judges also indicated that continued non-compliance could invite further legal consequences.

Inquiry Into Underwriting Practices

While dealing with the specific case, the court also made broader observations about policies allegedly taken in the names of persons who were already in serious medical condition. It noted that similar matters had come before it earlier, prompting concern about whether established procedures were being properly followed.

In response, the court directed the Vice President of the Risk Management Committee Unit in New Delhi to conduct an inquiry into policies issued in the Moradabad region under comparable circumstances. The probe is expected to examine how such policies were processed, what disclosures were made, and whether due diligence norms were adhered to before issuance.

The court pointed out that life insurance works on the principle of complete and honest disclosure, along with a careful evaluation of medical and financial risk. It was observed that if these safeguards are diluted, disputes are bound to arise and trust in the system could suffer, leaving families to face unnecessary litigation.

The case is listed for hearing again on the next date fixed by the court, which has made it clear that its orders must be followed without fail. The findings of the inquiry may determine whether further action is required in relation to the officials concerned and the policies under question.