Hyderabad: The Telangana State Consumer Commission has issued a firm ruling against the Life Insurance Corporation of India (LIC), stating that it cannot deny an insurance claim after having revived a lapsed policy, even if the policyholder was under medical treatment at the time.
The Commission directed LIC to pay the insured sum of Rs 2 lakh along with interest, as well as an additional Rs 8,000 as compensation.
Case background
The case relates to G Durgayya, an agricultural labourer from Tallampadu village in Khammam district. In 2014, he had taken a Rs 2 lakh life insurance policy in the name of his wife, Satyavathi.
After some time, due to financial difficulties, the policy lapsed. In 2019, the policy was revived. However, after Satyavathi’s death, LIC refused to release the insurance benefit.
Khammam District Consumer Commission ruled in favour of Durgayya
Aggrieved, Durgayya approached the Khammam District Consumer Commission, which ruled in his favour and ordered LIC to pay the insured amount. Challenging this order, LIC appealed before the State Consumer Commission.
Upon review, the commission, led by in-charge president Meena Ramanathan and member VV Seshubabu, dismissed LIC’s appeal.
The bench questioned LIC’s decision to revive and reissue the policy despite knowing the insured was undergoing treatment, and then later refusing to honour the claim.
The commission affirmed that once a lapsed policy is revived, the insurer is bound to settle the claim as per the terms and cannot deny it on such grounds.
Thus, the state commission upheld the district order directing LIC to pay the sum assured along with compensation to the complainant.
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