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Consumer Commission directs Reliance Life Insurance to pay ₹60 lakh with interest to widow of policyholder

The Maharashtra State Consumer Disputes Redressal Commission recently directed Reliance Nippon Life Insurance Limited to pay ₹60 lakh along with 12% interest and an additional ₹2 lakh as compensation for mental and physical harassment of the widow of a policyholder.

On August 27, 2016, Rajesh Tiwari, 40, died at MIT Hospital, Aurangabad, due to cirrhosis of the liver and portal hypertension. His widow, Vijeta, contended that he had taken a Life Insurance Policy in April 2015 for a period of 35 years and paid a yearly premium of ₹9,890 with an assured sum of ₹60 lakhs. After his death, Ms. Tiwari informed the company about it and issued a letter along with a claim form as she was his nominee. However, the company refused to pay the claim and said Tiwari had concealed material facts about cirrhosis of liver for two years and was hospitalised for the same in 2016.

Ms. Tiwari then issued a letter to the Ombudsman, Pune, in September 2017, but she was informed that the complaint cannot be considered as it exceeded ₹30 lakh. Ms. Tiwari then moved the Commission and stated that her husband did not conceal any facts about his health, and she has no source of income and needs the money to take care of her minor child.

The Nagpur Bench of the Commission said, “It cannot be said that the deceased – Rajesh Tiwari had suppressed any material information or material facts so as to invoke section 45 (policy not to be called in question on ground of misstatement after two years) of the Insurance Act. We are of the view that the repudiation of the insurance claim on the ground of concealment of material facts was not justifiable.”

Presiding member A.Z. Khwaja and member K.M. Lawande held, “The Insurance company was not justified in denying legitimate insurance claims of the complainant. The company has committed deficiency in service as well as unfair trade practice.”

The Commission directed the company to pay ₹60 lakh along with interest at the rate of 12% from the date of order till its actual realisation, ₹2 lakh as compensation towards mental and physical harassment and ₹25,000 for cost of litigation.

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