Wife Dies Five Days After Buying Life Cover, Consumer Commission Orders Insurer To Pay Rs 50 Lakh

A consumer commission in Visakhapatnam has directed HDFC Life Insurance to pay Rs 50 lakh to the husband of a woman who died of a heart attack just five days after her life insurance policy came into force.

The District Consumer Disputes Redressal Commission held that the insurer could not cancel the policy and reject the claim without placing adequate evidence on record to establish that the policyholder had misstated or concealed material facts while submitting the proposal form.

Apart from the sum assured, the insurer has also been directed to pay interest at six per cent per annum from the date of the policyholder’s death until the payment is made. It must also pay Rs 25,000 as compensation for mental agony and Rs 5,000 towards litigation costs.

Policy Was Issued Days Before Death

The complaint was filed by Savara Bhaskar, whose wife, Savara Radha, had purchased an HDFC Life Smart Protect Plan on March 10, 2025. She had paid an annual premium of Rs 50,000 for a life cover of Rs 50 lakh, according to a recent report by The Indian Express.

The policy came into effect on March 10, 2025. Just five days later, on March 15, Radha died at her residence following a heart attack.

Bhaskar then approached HDFC Life for the claim as the policy nominee. The insurer, however, later wrote to him saying the policy had been discontinued. It said its review of the proposal form had found alleged incorrect disclosures and misrepresentations of material facts.

The insurer maintained that the policy was subject to the principle of utmost good faith. It argued that a policyholder has a duty to disclose all material details correctly at the proposal stage. The insurer said the policy was cancelled on April 10, 2025, during the early period of the contract, on the grounds that there had been misrepresentation of the policyholder’s profile.

It also argued that no vested right had accrued to the nominee because the policy had been cancelled after scrutiny of the proposal details.

Commission Finds Deficiency In Service

The consumer commission did not accept the insurer’s stand. It noted that the insurance company had issued the policy after receiving the premium and had failed to produce evidence to support its allegation that the information furnished in the proposal form was incorrect.

The commission observed that an insurer cannot avoid its liability after an insured event merely by relying on exclusion clauses, particularly when it is unable to substantiate allegations of misrepresentation.

It held that the cancellation of the policy after the death of the insured, without a justifiable basis, amounted to a deficiency in service. The commission also said the insurer’s conduct amounted to an unfair trade practice.

The order underlines that an early death after the purchase of a life insurance policy does not, by itself, give an insurer the right to deny a claim. While insurers are entitled to investigate suspicious claims and verify disclosures made in a proposal form, a repudiation must be backed by clear evidence.

Policyholders should keep the proposal form, policy papers, premium payment proof, medical records, and emails or letters received from the insurer. These may be needed later if an insurer rejects a claim by alleging that some health or personal detail was not disclosed properly.

The ruling reinforces that once a life insurance policy has been issued and the risk has commenced, the insurer must establish valid grounds before cancelling the contract or refusing a death claim.

FAQs

Can a life insurance claim be rejected if the policyholder dies soon after buying the policy?

No. An early death alone is not a valid reason to reject a claim. The insurer must show clear evidence of non-disclosure or false information in the proposal form.

What should a nominee do if a life insurance claim is rejected?

Ask the insurer for the written reason and all supporting documents. The nominee can first approach the insurer’s grievance cell, then the insurance ombudsman or consumer commission.

Which documents should policyholders keep after buying life insurance?

Keep the proposal form, policy document, premium receipts, medical reports and all emails or letters from the insurer. These can help if there is a dispute over a future claim.