The Supreme Court has ruled that insurers can deny claims if policyholders conceal their drinking habits while purchasing health insurance, even if their death was not directly caused by alcoholism. A bench of Justices Vikram Nath and Sandeep Mehta upheld Life Insurance Corporation’s (LIC) decision to reject a claim under its Jeevan Arogya policy after the policyholder failed to disclose his chronic alcoholism.
Claim Denied: LIC Rejects Payout Over Concealed Alcoholism
The man bought the policy in 2013 but did not reveal his drinking habit. Less than a year later, he was hospitalized in Jhajjar, Haryana, for severe abdominal pain, remained under treatment for a month, and ultimately died of cardiac arrest. When his widow filed for hospitalization benefits, LIC refused to pay, citing a policy clause that excluded coverage for “self-inflicted conditions” and “complications arising from the misuse of alcohol.” LIC argued that suppressing this fact was enough to nullify the claim.
The district consumer forum initially ruled in favour of the widow, directing LIC to pay ₹5.21 lakh. The state and national consumer commissions upheld this decision, stating that while the deceased had diabetes and chronic liver disease, his death was caused by cardiac arrest, which was not directly linked to these ailments.
Supreme Court Backs LIC: Concealed Alcoholism Justifies Claim Rejection
However, LIC challenged the ruling in the Supreme Court, which found merit in its argument. The court noted that this was not a simple reimbursement case but a fixed cash benefit policy, where entitlement depended on policy terms. Medical records confirmed a history of “chronic alcohol intake,” proving that the man’s condition resulted from long-term drinking.
Referring to a 2015 case, the court clarified that undisclosed ailments do not always justify claim rejection unless they contribute to the cause of death. While LIC had already paid ₹3 lakhs to the widow, the court refrained from ordering its return, considering her financial situation.
Summary:
The Supreme Court upheld LIC’s rejection of an insurance claim after a policyholder concealed his chronic alcoholism. Despite lower courts ruling in favour of his widow, the Supreme Court found that his undisclosed drinking habit contributed to his health issues, justifying the claim denial under the policy’s exclusion clauses.
