LIC Policy Claim Dispute: Life Insurance Corporation of India (LIC) is considered the largest and most trusted insurance company in the country. Crores of people secure their family’s future by taking an LIC policy. It is identified as a “zero risk investment”. But a recent important decision of the Supreme Court teaches people that hiding any important information while taking out insurance can cause huge losses. A lie or incomplete information can deprive your family of lifelong security.
The story started in Haryana
This case is from Jthe hajjar district of Haryana. Mahipal Singh here had purchased LIC’s Jeevan Arogya Health Policy on 28 March 2013. In the policy form, he described himself as drug-free and clearly wrote that he neither drinks alcohol nor consumes tobacco. The family was confident that now their future is now secure.
But fate had something else in store. Only a year after taking the policy, Mahipal Singh died of cardiac arrest on 1 June 2014. Prior to this, he was hospitalized for a long time, where, during the examination, it was revealed that he had been suffering from constant stomach pain and vomiting. The medical report revealed that his liver and kidneys had been damaged due to excessive alcohol consumption.
Why was the insurance claim rejected?
After the death of her husband, wife Sunita Singh applied for an insurance claim. But LIC refused to accept the claim. The company said that Mahipal Singh had concealed his drinking habit while filling out the application, whereas in reality, he had been consuming alcohol for a long time. This became the real reason for his death. According to LIC, this was a violation of the terms of the policy, and hence the claim is invalid.
The consumer forum gave a decision in favor of the wife
After LIC’s refusal, Sunita Singh approached the District Consumer Forum. The forum heard the entire case and gave the decision in favor of Sunita Singh. The court ordered LIC to pay the claim amount along with interest and also pay compensation of ₹5,21,650.
Hearing this decision, Sunita felt that now justice had now been done. But LIC refused to give up and took the matter to the State and then the National Consumer Commission. The company had to face defeat in both places. The commission accepted that the Jeevan Arogya Policy is a cash benefit plan, and hence, the claim should be given.
Big decision of the Supreme Court
LIC finally took the matter to the Supreme Court in March 2025. Here, the bench of Justice Vikram Nath and Justice Sandeep Mehta gave the verdict in favor of LIC. The court said that the information that was hidden while taking the insurance became the cause of death. The liver and kidneys were damaged due to alcohol addiction, and ultimately, this became the cause of death.
The Supreme Court clearly said that whether the policy is a cash benefit plan or any other, if the root of the disease or death is related to the hidden habits or diseases, then the insurance company will not be bound to give the claim.
Why is honesty important while taking out insurance?
The court also clarified in its decision that the insurance policy is based on trust. If a person hides a chronic illness, alcohol-tobacco addiction, or any serious health problem, and the same later becomes the cause of illness or death, then in such a situation, the company can reject the claim.
This case is a big lesson for all those people who hide small information while buying insurance, considering it unimportant. Actually, with these facts, the company decides how much the risk is and how to determine the premium.
A lesson that every policyholder should understand
This case of Jhajjar has forced millions of policyholders across the country to think. It is important to trust the insurance company, but it is even more important that you share your lifestyle and health information with complete honesty.
Because a small mistake can deprive your family of the security for which you have invested in the policy for years.