Rs 1 cr insurance claim rejected after mother’s death; insurer told to pay son Rs 99 lakh

The commission also ordered the insurer to pay Rs 50,000 as compensation and Rs 10,000 towards litigation costs, calling the repudiation “arbitrary and unjustified” and a clear deficiency in service.

Policy, premium and the claim that was turned down

The deceased had bought a term life insurance policy with a sum assured of Rs 1 crore from an insurance company. She paid her first annual premium of Rs 58,509.12 on January 23, 2022, and the policy was issued after the company carried out physical and virtual medical examinations and verified her financial and occupation documents.

In late January 2023, she was hospitalised with a cough, fever and breathing difficulties. She died on February 1, 2023; the death certificate listed severe sepsis, severe pancytopenia and acute kidney failure as causes. Her son, the nominee, filed a Rs 1 crore death claim in March 2023, the IE report stated.

According to the commission’s order, the insurer initially rejected the claim on the ground that the income and occupation documents submitted with the proposal were forged or tampered with, terming the claim “fraudulent.” Later, in its reply to a legal notice, it added a second ground: that the policyholder had not disclosed pre-existing diseases that appeared in the death certificate.

Shifting grounds and no evidence: What the commission found

The consumer commission—President Kallol Chattopadhyay and member Udayan Roy—rejected both lines of defence. It noted that the pre-existing disease argument did not appear in the original repudiation letter and surfaced only later, which it viewed as an afterthought.

“The plea of pre-existing disease fares no better. It is significant that this plea was not taken in the repudiation letter at all, and surfaced for the first time only in reply to the legal notice. A repudiation that shifts its ground in this manner, adding a fresh and inconsistent basis at a belated stage, is itself an indicator of afterthought and cannot be countenanced,” the September 25, 2026 order said, IE reported.

On the question of non-disclosure, the commission said the insurer led no evidence to show that the terminal ailments pre-dated the policy or that the deceased deliberately suppressed facts.

“There is no material, and no evidence, to show either that the terminal ailments pre-dated the proposal or that the deceased deliberately suppressed any material fact with knowledge and intent. The burden being on the insurer, and the insurer having led no evidence, this ground also fails…the repudiation of the claim by the Opposite Party is held to be arbitrary and unjustified, and amounts to deficiency in service,” the order further read.

Insurer stays away; adverse inference drawn

The insurance company did not appear before the commission and filed no written version or documentary evidence. In such situations, consumer forums can draw an adverse inference against the absent party, the Indian Express report added. The commission held that, on the material before it, the policy was subsisting and in force on the date of death, including because the death occurred within the grace period after the renewal premium fell due on January 24, 2023.

Based on this, the commission directed the insurer to pay:

• Rs 99.41 lakh towards the death claim (the balance after accounting for certain adjustments)
• Rs 50,000 as compensation for harassment and mental agony
• Rs 10,000 towards litigation costs.

Jurisdiction and what the order says about similar cases

The order also clarified that the complaint was maintainable in Kolkata because the cause of action arose within its territorial limits: the deceased was a resident of the district and the repudiation letter was received there. This is a routine but important point in consumer disputes, as it determines which forum can hear the case.

For consumers facing similar claim rejections, the legal story highlights that help is available through state consumer helplines (in West Bengal: 033–2252–0448) or the National Consumer Helpline at 1915.

The case underscores two recurring issues in life-claim disputes:

Burden of proof: When an insurer alleges fraud, forgery or non-disclosure, the onus is on the insurer to produce credible evidence. Mere assertions, especially introduced late, are unlikely to survive scrutiny.

Shifting defences: Courts and consumer commissions tend to look unfavourably on insurers that change their stated grounds for repudiation after the fact, treating it as a sign of an unsustainable rejection.

For term-policy buyers, the ruling is a reminder to keep proposal forms, medical reports, premium receipts and communication with the insurer intact, and to approach consumer forums quickly if a genuine death claim is turned down on weak or evolving grounds.