3 min readNew DelhiUpdated: Aug 21, 2026 10:51 AM IST
The Andhra Pradesh State Consumer Commission has upheld a Rs 50 lakh insurance claim payment to a widow after Life Insurance Corporation (LIC) allegedly rejected it over the non-disclosure of her husband’s occupation and income. Finding the rejection “untenable”, the state commission directed the payment.
Presiding member (non-judicial) CVS Bhaskaram and member (Judicial) B Srinivasa Rao were hearing LIC’s first appeal against the December 5, 2022 order of the Visakhapatnam District Consumer Commission, which had partly allowed a complaint filed by the woman.
“The rejection of the claim is on untenable grounds and amounts to deficiency in service on the part of the opposite parties. Hence, we do not find any defect in the order of the District Commission warranting our interference. Accordingly, the appeal is dismissed,” the August 14 ruling said.
The woman’s late husband had availed two LIC policies, a Rs 20 lakh policy in April 2019 and another for Rs 30 lakh in May. He died on August 15, 2019, while undergoing treatment at a Visakhapatnam hospital. After his death, his widow sought the Rs 50 lakh insurance payout, but the insurance company rejected the claim.
The April 22, 2019 policy carried a premium of Rs 7,900 whereas the May 3 policy carried a premium of Rs 20,190. The man died on August 15, 2019, during treatment following which the widow sought the insurance payout.
LIC rejected the claim on March 31, 2021, alleging that the man had suppressed material information about his occupation and income. The insurer said he had described himself as a construction worker in the proposal for the Rs 30 lakh policy, with an annual income of Rs 10 lakh.
Income-tax records
The state commission examined the proposal forms and income-tax records referred to in the proceedings and noted that a proposal form dated April 19, 2019 mentioned an annual income of Rs 10 lakh, while another proposal form dated April 22, 2019 mentioned annual income of Rs 6 lakh.
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From the documents placed on record, the commission observed that the man was earning a “considerable” income and directed the insurance company to pay the amount apart from Rs 50,000 compensation and Rs 5,000 costs.
Takeaway
Insurance claims cannot be rejected merely on allegations of non-disclosure and the insurer must be able to substantiate the grounds for rejection with the material on record. In this case, the commission found LIC’s grounds “untenable” and upheld the widow’s Rs 50 lakh claim.
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