NEW DELHI: The apex consumer commission has pulled up Life Insurance Corporation for "exploitation of policy holders" by rejecting genuine claims and asked it to pay Rs two lakh to the kin of a deceased woman.
National Consumer Disputes Redressal Commission (NCDRC) bench, presided by Justice J M Malik, asked LIC to pay the amount to Zeenath's family members, whose insurance claim was denied by the company after she died of cancer on the ground that she had withheld material information on her health.
LIC had rejected the claim contending that Mangalore resident Zeenath had died due to bipolar mood disorder and she had not disclosed the illness in her policy form.
The bench, however, said she died of cancer and not because of behavioural disorders. It said bipolar mood disorder was a condition of mind and not a disease and it does not amount to withholding of material information.
"It will be unfortunate, if the insurance companies try to repudiate genuine death claims on such technical and flimsy grounds. Most of the innocent insured will be victims and the beneficiaries will be deprived of fruits of life insurance.
"Therefore, we are of the considered view that deceased, an illiterate woman, did not suppress any material fact with any fraudulent intention. There is no nexus at all between bipolar mood disorder and carcinoma of larynx (cancer).
"No doubt, bipolar mood disorder may lead to suicidal tendencies and death, but it will never be a cause for any cancer in the human body," NCDRC said.
The bench said it was unfortunate that on one hand LIC raised voice of 'Utmost good faith' but, in contrast, the faith will be lost while not settling the genuine claims for some or other reasons.
"It is exploitation of policy holders. The consumers are literally under fear or dilemma that, whether, after death, the beneficiaries ever certainly get any fruits from LIC," the bench, also comprising its member S M Kantikar, said.
Zeenath had obtained a Bima Gold Policy from LIC on March 28, 2006 for Rs two lakh. She paid first and second premium and during the subsistence of the policy, she died on November 12, 2007 due to Carcinoma Larynx.
Zeenath's husband and children had filed the claim with the insurance company. LIC, however, repudiated the claim stating that at the time of filling up the proposal form, the woman had withheld material information regarding her health and that she was suffering from bipolar mood disorder.
It contended that 15 days prior to filling the form, the woman had suffered from bipolar mood disorder but she did not disclose it in the form.
Rejecting LIC's contentions, the bench said,"... it (bipolar mood disorder) is seen commonly in women, during abnormal menstrual cycles or during pregnancy. Therefore, as such, it is a condition of mind and not to be called as disease."
In its order, NCDRC also added that the woman died due to carcinoma Larynx (cancer) with secondaries and not due to behavioural disorders (bipolar mood disorder).
The apex commission passed the judgement while setting aside the orders passed by the district and state consumer fora which had dismissed the family's complaint.