Summary
A family's 1 crore term insurance claim was rejected after the policyholder's death. The insurer claimed the deceased had a smoking habit not disclosed in the proposal form 8 years earlier. We proved the medical exam at policy inception showed no nicotine traces, and the insurer's own underwriting accepted the risk. The Ombudsman ordered full payout with 9% interest within 90 days.
How We Solved It
S Situation
Policyholder passed away 8 years after buying a 1 crore term plan. Insurer rejected death claim citing 'smoking habit non-disclosure' based on a single hospital record from 3 years after policy inception. Family had no knowledge of this.
T Task
Prove the non-disclosure was not material at policy inception. Demonstrate the insurer's underwriting accepted the risk. Win at Ombudsman.
A Action
- 1. Obtained original medical exam report — cotinine test negative at inception
- 2. Got insurer's underwriting file showing standard rates applied (no smoker loading)
- 3. Proved the hospital record was from 3 years POST policy inception
- 4. Filed Ombudsman complaint with Supreme Court precedent on 'materiality at inception'
- 5. Argued insurer cannot re-underwrite after 8 years and claim rejection
R Result
Bangalore Ombudsman awarded full 1 crore + 9% interest from date of claim. The award cited: 'non-disclosure must be material at time of proposal; post-policy habits cannot void the contract'.
Lessons Learned
- Non-disclosure must be material AT POLICY INCEPTION
- Insurer's own underwriting decision (standard rates) proves acceptance of risk
- Post-policy medical records cannot prove pre-policy non-disclosure
- Ombudsman is binding on insurer, not policyholder
"They said my husband lied about smoking 8 years ago. Hari Sir got the original medical test — no nicotine. The Ombudsman said the insurer accepted him at standard rates. We got 1 crore plus interest."
— They said | Jayanagar, Bangalore
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