New Delhi – The Supreme Court has ruled that insurance companies can reject claims if a policyholder fails to disclose their alcohol consumption when purchasing the policy.
A bench of Justices Vikram Nath and Sandeep Mehta upheld the Life Insurance Corporation’s (LIC) decision to deny a claim under the ‘Jeevan Arogya’ scheme. The policyholder, who took the policy in 2013, was entitled to daily benefits for hospital stays. However, he was hospitalized a year later due to severe abdominal pain and passed away a month later.
When his wife filed a claim, LIC rejected it, citing that he had not disclosed his chronic alcoholism. LIC referred to Clause 7(xi) of the Jeevan Arogya Plan, which excludes coverage for conditions arising from alcohol or drug use.
Initially, a consumer forum ruled in favor of the widow and ordered LIC to reimburse medical expenses. However, the Supreme Court overturned this decision, stating that the policyholder knowingly hid his long-standing alcohol condition, making LIC’s rejection of the claim valid under the policy’s exclusion clause.
