Rare Disorder, Overseas Job Loss: Chandigarh Commission Upholds Rs 18 Lakh Insurance Payout

A Chandigarh consumer commission has upheld an order directing an insurer to pay Rs 18 lakh to a policyholder whose claim was rejected after he was diagnosed with Neurofibromatosis and left his job in Oman.

The man had bought a five-year policy linked to his home loan in March 2018, paying a premium of Rs 1.37 lakh. He said he was told the cover would protect the outstanding loan if illness, an accident or death affected his ability to repay it.

The State Consumer Disputes Redressal Commission dismissed the insurer’s appeal against the district commission’s order. It found that the insurer had not produced satisfactory evidence that the policy conditions restricting the cover had been provided to, or acknowledged by, the policyholder.

The district commission had ordered the insurer to pay Rs 18 lakh with interest at six per cent a year from June 4, 2019, when the claim was rejected. It also awarded Rs 20,000 towards compensation and litigation expenses.

Illness Led Him To Return From Oman

The policy was in force from March 22, 2018, to March 21, 2023. About 10 months after buying it, the man began experiencing pain in different parts of his body while working in Oman. Medical investigations in January 2019 led to a diagnosis of Neurofibromatosis, according to a recent report by The Indian Express.

As his health worsened and he could no longer continue working, he returned to India and sought treatment at the Postgraduate Institute of Medical Education and Research in Chandigarh. A hospital record from June 2019 noted multiple neurofibromas. Doctors advised their surgical removal but warned of possible neurological complications. A later PET-CT scan also documented the condition.

The insurer rejected his claim. Before the district commission, it argued that the policy was a defined-benefit plan covering only seven specified major illnesses and procedures. Neurofibromatosis was not on that list, it said. The policy also did not promise to repay a home loan solely because the policyholder developed another illness or became unable to work.

The man argued that the insurer had not shown that it had supplied or explained the detailed terms and restrictions before issuing the cover. The district commission accepted his contention, noting that the company had not produced satisfactory proof that he had received or acknowledged those conditions.

Read The Policy Schedule And Exclusions

The insurer challenged the district commission’s decision, arguing that it had extended coverage beyond the policy’s terms. The State Commission found no sufficient reason to interfere. It referred to a Supreme Court ruling on communicating policy conditions and said an insurer must establish that a restriction it relies on was supplied to the policyholder.

The order turns on the evidence in this case. It does not mean that every illness-related claim linked to a home loan will be payable, or that a policy automatically covers loss of employment. The terms of the particular plan matter: some policies pay a fixed benefit only for listed illnesses, while others may define when a loan-related benefit is triggered.

Before buying such cover, borrowers should ask whether it pays the outstanding loan, instalments for a limited period or a fixed sum after diagnosis of a specified condition. They should check the list of covered illnesses, waiting periods, exclusions and claim requirements, and keep a copy of the full policy wording and any document confirming receipt of those terms.

If an insurer rejects a claim, the policyholder can compare the stated reason with the policy documents and retain the claim correspondence and medical records. These documents can help clarify whether the dispute concerns the policy’s coverage or whether a restriction was properly communicated.

FAQs

Does this order mean a home-loan insurance policy covers any illness that prevents work?
No. Cover depends on the policy’s terms, including the illnesses listed and the benefit triggers. The commission’s decision turned on whether the insurer had shown that the restrictions were communicated to the policyholder.

What should borrowers check before buying insurance linked to a home loan?
Check whether the policy pays the outstanding loan, instalments for a limited period, or a fixed benefit. Read the covered illnesses, exclusions, waiting periods, and claim conditions.

What payout did the commission uphold?
The insurer was ordered to pay Rs 18 lakh with six per cent annual interest from June 4, 2019, plus Rs 20,000 towards compensation and litigation expenses.