Life Insurance Corporation of india (LIC) is one of the most trusted names in the insurance sector. However, even a small mistake while purchasing a policy can lead to a complete rejection of your claim—leaving your family without financial support when they need it most. A recent supreme court case highlights the importance of full disclosure at the time of buying an insurance policy.
1. The Case That Shocked Policyholders
Mahipal Singh from Jhajjar, Haryana, purchased LIC’s jeevan Arogya health Plan on 28 march 2013. While filling out the application, he declared himself to be completely free from addictions like alcohol, smoking, or tobacco.
However, less than a year later, on 1 june 2014, Mahipal Singh passed away following severe stomach pain and vomiting, which eventually led to cardiac arrest. His wife, Sunita Singh, filed a claim with LIC—only to face rejection.
2. Why Did lic Reject the Claim?
LIC rejected the claim on the grounds that Mahipal Singh had concealed his history of alcohol consumption. Medical reports indicated that he had been a heavy drinker for a long time, leading to liver and kidney damage—factors that contributed to his death.
According to lic, this non-disclosure directly violated the terms of the policy and affected the risk assessment made at the time of purchase.
3. Legal Battle: From district Forum to supreme Court
Initially, Sunita Singh challenged LIC’s decision in the district Consumer Forum, which ruled in her favor and directed lic to pay ₹5,21,650 along with interest and compensation for mental harassment.
LIC appealed to the State and National Consumer Commissions, but both upheld the lower court’s ruling, stating that Jeevan Arogya Yojana is a cash benefit policy and should pay out regardless of treatment expenses.
However, lic took the matter to the Supreme Court, which overturned all previous decisions.
4. supreme Court’s Ruling in Favor of LIC
In March 2025, the supreme court bench of Justice vikram Nath and Justice sandeep Mehta ruled in LIC's favor, stating three key points:
- Concealed Information Led to Death – Alcohol addiction was hidden and became the primary cause of death.
- Mandatory Disclosure of Habits – Details of addictions like alcohol, smoking, or tobacco are crucial for risk assessment.
- Policy Terms Are Binding – Even though jeevan Arogya Yojana is a cash benefit policy, concealment of vital information nullifies the claim.
5. The Key Lesson for Policyholders
Insurance is a contract built on trust. Any false statement or omission—no matter how small—can lead to claim rejection. The supreme court emphasized that if hidden information is directly linked to the cause of death or treatment, the insurer is not liable to pay.
Final Takeaway
While buying a lic policy (or any insurance), disclose all medical conditions, habits, and history truthfully. Hiding facts may save you a few minutes during paperwork, but it can cost your family their rightful claim when they need it most.
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