In a recent pronouncement, the Supreme Court has held that concealment of chronic alcoholism while procuring a health insurance policy constitutes material misrepresentation, entitling the insurer to repudiate the claim irrespective of the immediate cause of death.
The Bench comprising Justice Vikram Nath and Justice Sandeep Mehta upheld the Life Insurance Corporation of India’s (LIC) decision to deny hospitalisation benefits under its Jeevan Arogya policy, after it emerged that the deceased insured had failed to disclose his long-standing habit of alcohol consumption at the time of entering into the insurance contract.
The dispute arose when the widow of the deceased policyholder sought medical benefits following her husband’s death. The deceased, who had subscribed to the policy in 2013, had been hospitalised for severe abdominal pain and later succumbed to cardiac arrest. LIC, however, declined the claim invoking an exclusion clause for “self-inflicted conditions” and “complications arising from the misuse of alcohol”, alleging that the policyholder had expressly declared himself as a non-drinker during the proposal stage.
The district consumer forum, followed by the State and National Consumer Disputes Redressal Commissions, had initially granted relief to the widow, holding that the cause of death was cardiac arrest, unconnected to the alleged pre-existing liver disease. However, upon appeal, the Supreme Court overturned these concurrent findings, categorically holding that the insurer's rejection was justified due to suppression of material facts.
“This was not a case of simple medical reimbursement, where hospital bills automatically translate into payouts,” observed the Bench, clarifying that fixed benefit policies operate strictly on contractual terms, which were breached by the insured’s omission. The Court found that the deceased was not merely an occasional drinker but had a history of “chronic alcohol intake”, evident from his medical records.
Rejecting the argument that such history came to light only post-policy issuance, the Bench firmly remarked, “Chronic liver disease due to alcohol consumption doesn’t develop overnight.” The Court further differentiated the present case from Sulbha Prakash Motegaoneker vs. LIC (2015), where suppression of disease was held irrelevant as it had no causal nexus with the death. Here, however, the insured’s liver condition, precipitated by sustained alcoholism, was held to have contributed to the deterioration of his health.
While the Court noted that LIC had already disbursed ₹3 lakh to the claimant under the consumer forum's earlier order, it exercised restraint by not directing recovery of the amount, citing the widow’s financial hardship.
Case Title: Life Insurance Corporation v. Sunita and others
Case no.: Special Leave to Appeal (C) No(s). 15354/2020
Picture Source :
