Can a life insurance company refuse to make payment of insurance proceeds? If yes, under what circumstances?
Rachit Aggarwal, Delhi
By issuing a life insurance policy in return of consideration in the form of regular premiums, the insurer undertakes to pay the sum insured on the death of the insured to the nominee or the legal heirs of the policyholder. Normally, the sum assured is paid as soon as the required documents are filed and the verifications conducted at the end of the insurers. However, under some exceptional circumstances, if the insurers find that the insurance policy was obtained by fraud or concealment of material facts, they may refuse the payment of policy proceeds. The circumstances can be nondisclosure of pre-existing diseases and submission of forged documents.