The contract of insurance policy between the policyholder and the insurance company is based on trust. Whenever you buy an insurance policy, it is mandatory to disclose all the material facts like age, medical history and any pre-existing health conditions to the insurance provider while filling the application form. The company assesses these factors and then decides on the coverage benefits to be paid in case of the policyholder's death. But can neglecting to disclose information lead to claim rejection-related issues? 

Before answering this question, let's check out this case below. 

BRANCH MANAGER, BAJAJ ALLIANZ LIFE INSURANCE CO. LTD. AND OTHERS vs.  DALBIR KAUR

In this case, Kulwant Singh (policyholder) bought an insurance policy from Bajaj Allianz Life Insurance and made his mother, Dalbir Kaur, the nominee. In the proposal form, Kulwant Singh stated that he was not suffering from any ailments. Based on his statement, the insurance company issued a life insurance policy for Rs. 8.50 lakhs on 12 August 2014 with a death benefit of 17 lakhs. 


On 12 September 2014, Kulwant Singh passed away and a death claim was filed by his mother. However, the insurance company rejected the claim on the ground of “misrepresentation of material facts” in the proposal form and that the policyholder was undergoing treatment for Hepatitis C. 


During the investigation, the medical reports also revealed that Kulwant Singh was suffering from a chronic stomach ailment and was undergoing treatment for the same. But the insured did not disclose these information related to his health, hospitalization and treatment to the insurance company.

However, Mr. Amol Chitale, representing the appellants (Insurance company), informed the court that the entire claim was already paid to the respondent during the proceedings.


But considering the age of the respondent, who is seventy years old and the death of the insured on whom she was dependent, the court directs that no recoveries shall be made from the respondent regarding the amount that has already been paid.


In this case, the age of the complainant was considered by the court. Moreover, she was a village lady who was solely dependent on his son. Keeping all these factors in mind, the court was not harsh in its decision. However, most of the time, these types of cases are dismissed by the court leading to rejection of claims based on”non-disclosure of material facts.”


Every year, there are many complaints against insurance companies regarding the rejection or delay of claims. But it is to be noted that there are many reasons for such rejections among which concealment of material fact is a significant one. Thus, it is always advised to be truthful and provide accurate information in the proposal form. 


Conclusion 

As stated above, failure to disclose material facts can result in claim rejection-related issues. If you need any guidance for your insurance-related problems, you can always reach out to the insurance subject matter experts for their assistance.