Can you imagine if an assured amount of Rs.55,00,000/- were to become Rs.23,30,875.99 after diligently paying premiums for years? Read along to know what mistake can cause this.

This exact scenario occurred in the legal case of Succha Singh vs Hdfc Life Insurance on 1 March 2018.

The complainant, Sucha Singh, representing his deceased son Kuldeep Singh, filed a complaint against HDFC Standard Life Insurance Company Limited. Kuldeep Singh had procured the HDFC SL Progrowth Flexi insurance policy for ten years with a sum assured of Rs.55,00,000. Kuldeep paid premiums regularly until February 2014, but unfortunately, he passed away on March 25, 2014, due to an illness.

Following Kuldeep's death, Sucha Singh submitted a claim for the insurance amount. However, the insurance company repudiated the claim, alleging concealment of material facts. Instead, the company credited Rs. 23,30,875.99 to Sucha Singh's account.

Court's findings -

The court acknowledged Kuldeep failed to pay the fourth instalment of the premium due on August 31, 2013, leading to the lapse of the insurance policy. The policy was revived on January 30, 2014 ( depositing the fourth instalment of the premium and other charges) during hospitalisation for chronic liver disease. The insurance company repudiated the claim based on Kuldeep's alleged concealment of health issues and the presentation of fake documents about his income. The court rejected the complainant's argument that the insurance company should have verified health details at policy issuance. Relying on Section 30 of the Insurance Corporation Act, the court held that the insurer could repudiate the policy within two years if material facts are concealed fraudulently. Thus, The court upheld the dismissal of the complaint, supporting the insurance company's repudiation based on Kuldeep's alleged concealment of his health condition during the policy revival.when a policy lapses ( health/life), revival of such lapsed policy will be subsequent to fresh medical tests all over again. All ailments that were not there when the policy had been purchased, will now be considered as pre-existing.

WHY DO POLICIES LAPSE

Insurance policy lapse occurs when a policyholder fails to pay the premium within the stipulated time frame. The premium is the expense of keeping insurance coverage. While a missed payment initiates a grace period, failure to catch up within that time frame results in policy termination. Reinstating the policy is possible by paying the past premiums, but until then, coverage remains suspended. NOTE: Revival of a lapsed policy is only feasible with health or life insurance. A lapsed coverage in General Insurance (specifically, auto insurance) cannot be reinstated. A new policy needs to be obtained.

However, some insurers may fail to:

● Adjust procedures in compliance with new laws

● Send bill notices to policyholders

● Notify policyholders of impending lapses Skilled life insurance attorneys play a crucial role in investigating whether the insurer's oversight led to the lapse, making the insured not responsible for the missed premium payment. HOW TO AVOID A POLICY LAPSE

● Set up automatic payments

● Choose a ‘no lapse policy'

● Regularly review finances

● Choose affordable coverages

● Stay informed about grace periods

● Explore policy options

Speaking to subject matter experts is one way to avoid insurance claim related issues, understand the circumstances, and advocate for the rightful benefits of the policy.