Widow wins Rs 30 lakh after HDFC Life rejects insurance claim over husband’s death

The insurer later rejected the death claim, alleging that he had misrepresented his occupation while applying for the policies.

“Under Indian consumer laws, procedural delays in intimating death do not invalidate a genuine claim unless the insurer can prove that they suffered irreparable prejudice and were prevented from investigating. The opposite parties did not include the delay in intimation as a specific ground in their letters of repudiation… a genuine claim should not be rejected on the grounds of delayed intimation. The fundamental liability of the opposite parties remains, and we find the repudiation unfair,” the commission said on June 3.

The commission also rejected HDFC Life’s argument regarding the delayed intimation of death. (Image generated using AI)

Relief granted

• Allowing the complaint partly, the commission directed HDFC Life and its concerned offices to jointly and severally pay Rs 4,83,086 under the Super Savings Plan policy.
• Rs 25 lakh under the Click 2 Protect Plus policy.
• Interest at 6 per cent per annum on both amounts from April 2, 2019, until realisation.
• Rs 25,000 towards litigation costs.
• The HDFC has also been directed to comply with the order within 30 days from receipt of the judgment.

Husband died just months after buying policies

According to the complaint, Rajendar Gundu, a self-employed real estate trader purchased two insurance policies from HDFC Life in April 2015. One was an HDFC Life Super Savings Plan carrying a sum assured of Rs 4.83 lakh, while the second was an HDFC Life Click 2 Protect Plus policy with a cover of Rs 25 lakh.

Just over three months later, on August 4, 2015, Gundu died. His widow subsequently sought settlement of the death claims under both policies of the HDFC.

However, HDFC Life rejected the claim through letters dated May 29, 2018, contending that the deceased had misrepresented his occupation at the proposal stage. The insurer claimed that while he had described himself as “self-employed” in the proposal form, a Bank of Baroda passbook listed his occupation as “labourer”.

Insurer cited early claim, alleged misrepresentation

The HDFC argued that the death occurred within four months of policy issuance, making it an “early claim” warranting detailed scrutiny. It maintained that the discrepancy in occupational details justified the cancellation of the policies and rejection of the claim.

The company also pointed out that the death was formally intimated to it only in March 2018, nearly three years after the policyholder’s death, and argued that the delay was significant.

No evidence of false declaration

The commission found that the deceased had consistently declared an annual income of around Rs 3 lakh, a fact supported by income tax returns produced before the forum.

The complainant also submitted documents showing that her husband was engaged in buying and selling properties and earned income from such transactions.

“We are of the view that in fact there is no discrepancy between the words labourer and self-employed,” the commission observed while rejecting the insurer’s central argument that the deceased had concealed his true occupation.

The bench noted that merely because a bank passbook described a person as a labourer did not automatically contradict a declaration that he was self-employed.

Referring to the ordinary meaning of the term, the commission observed that a labourer could very well be self-employed and generate income independently.

It added that self-employed status could include daily wage workers, masons, labourers and independent tradespersons who work for themselves rather than a formal employer.

“The repudiation holding misrepresentation in the proposal form as self-employed holds no water,” the commission said, adding that the insurer ought to have verified income through documents such as income tax returns and bank statements instead of relying solely on the first page of a passbook.

Delay in informing death not enough to reject genuine claim

The commission also rejected HDFC Life‘s argument regarding the delayed intimation of death.

It noted that when the insurer received information about the death in March 2018, it asked the claimant to submit supporting documents and proceeded with processing the claim. Importantly, delayed intimation was not cited as a ground for repudiation in the final rejection letter.

The bench held that procedural delays alone cannot invalidate a genuine insurance claim unless the insurer proves that the delay caused irreparable prejudice or prevented a proper investigation.

“We are of the considered view that a genuine claim should not be rejected on the grounds of delayed intimation,” the commission said.

Consumer takeaway

The ruling reinforces that insurance companies cannot reject death claims merely because of minor differences in how a policyholder’s occupation is described in different documents.

It also underscores that delayed reporting of a death, by itself, is not sufficient to deny a legitimate insurance claim unless the insurer can show actual prejudice caused by the delay.

Consumers facing similar grievances may contact the consumer helpline in their respective states (Telangana contact: (040) 233 94 399 ) or dial the National Consumer Helpline at 1915 for assistance.