Scenario: a parent's death claim rejected for non-disclosure within three years

This walkthrough follows an invented family whose father's life insurance death claim is rejected for non-disclosure about two years after the policy began. It shows where Section 45 of the Insurance Act fits, what the insurer must put in writing, what the family can check in the proposal form and the medical records, and the route for a complaint. It is general information, not legal advice, and it does not say how the dispute ends.

Where Section 45 fits

Section 45 of the Insurance Act, 1938, which IRDAI's master circular restates, bars any challenge to a life policy after three years, counted from the latest of the policy's issue, the start of risk, a revival or a rider. What counts is when the insurer calls the policy in question: here it repudiated the claim a little over two years after the policy began, inside the three years, so it can question the policy, but only on the grounds and in the way the section allows.^[1]

• Fraud: The insurer may question the policy for fraud, but must communicate in writing the grounds and materials on which the decision is based. Mere silence about facts likely to affect the risk is not fraud, unless the circumstances made it the insured's or the agent's duty to speak, or the silence is itself equivalent to speaking. Where the policyholder has died, the burden of disproving fraud falls on the beneficiaries.^[2]
• Defences to a fraud allegation: The section bars repudiation for fraud if it is proved that the misstatement was true to the best of the insured's knowledge and belief, that there was no deliberate intention to suppress the fact, or that the insurer knew of it.^[2]
• Misstatement without fraud: The insurer may also question the policy for an incorrect statement or suppression of a material fact. A fact is material only if it has a direct bearing on the risk, and the insurer must show it would not have issued the policy at all had it known; it must also give its grounds and materials in writing.^[2]
• Premiums: If the policy is repudiated for misstatement rather than fraud, the premiums collected up to the date of repudiation must be paid to the nominee or legal representatives within 90 days of the repudiation.^[2]
• The agent: A person who solicits and negotiates the contract is deemed, for forming it, to be the insurer's agent. How that bears on an agent-filled proposal form depends on the facts and on case law this page does not cover.^[2]

What the family checks

1. 1

   The written grounds

   Does the letter set out the grounds and the materials it relies on? If not, the daughter asks for them in writing, with a copy of the 2021 record, as the section requires.^[2]

2. 2

   The proposal form

   She gets a copy and reads exactly what was asked about diabetes and what was written. See getting a copy of the proposal form.

3. 3

   The record relied on

   She reads the 2021 record itself: a diagnosis, a single test, a one-off prescription? See asking for the documents the insurer relied on.

4. 4

   The materiality question

   Would the condition, as recorded, have stopped the policy being issued at all? That is the test the section puts on the insurer for a misstatement.^[2]

5. 5

   The insurer's own timetable

   IRDAI's master circular requires a death claim to be settled within 15 days of intimation, or within 45 days where it warrants investigation, and no claim may be repudiated without legally tenable evidence.^[1]

Who complains, and where

IRDAI's 2024 Regulations count a nominee as a complainant, so the daughter can write the grievance herself, and the Insurance Ombudsman Rules let a complaint be made through a nominee or legal heirs. The route is the usual one: a written complaint to the insurer, then the Ombudsman if it is rejected, answered unsatisfactorily or not answered within one month, filed within the one-year limit that runs from that answer or silence.^{[3, 4]}

ClaimAssure is an independent private platform. It is not an insurer, IRDAI, Bima Bharosa or the Insurance Ombudsman, it never files anything on your behalf, and it cannot promise any outcome. What it does is read your documents and show you what they say.

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