Court ticks off LIC for faulty clauses

NEW DELHI - The Delhi High Court Thursday pulled up the Life Insurance Corporation (LIC) of India for not acting “fairly or reasonably” in refusing an insurance claim and harassing consumers at large.

Justice Kailash Gambhir while reprimanding the LIC, said: “LIC is not acting fairly or reasonably in insisting that no claim will be entertained for two years after the commencement of the policy.”

The court was hearing the petition by Rajiv Khosla, an advocate, who had challenged LIC’s Jeevan Kishor policy under which LIC is not obliged to make payment if the assured dies prior to the deferred date.

In the present case, Khosla took the policy for his daughter in 1994 of Rs.1 lakh but due to unfortunate circumstances his daughter died in 1996 and he did not pay the premium and demanded the claim from LIC.

Rejecting Khosla’s claim, LIC said that since the life assured person had died within a period of two years of the commencement of the policy, only the premium paid till date was payable and nothing more.

“It appears to the court that once the LIC accepts the contract by offering to insure even the life of a child, then it obviously does do so irrespective of the age of the child,” the court said.

“Insurance business is largely dependent on the analysis of risk, it is not possible to accept that the deferred date clause became necessary only on the basis of the risk that may be faced by the LIC. If the LIC chooses to insure children and collects premia, there is no justification for negativing a claim on the basis that payments thereunder should stand postponed to a deferred date,” the court said.