A 13-month death claim with a pre-proposal hospitalisation and a later revival

Materiality. The test is whether a prudent insurer would have been influenced by the fact in deciding whether to accept the risk, and on what terms. A hospital admission seven months before proposal for uncontrolled type 2 diabetes with a foot infection, with an HbA1c of 9.8% and insulin on discharge, would plainly have led to a postponement, a heavy rating, or a decline. The fact is material, the answer 'No' to diabetes and to hospitalisation in the last five years was false, and the insurer can show both limbs.

Contestability. Death occurred 13 months after commencement, inside the contestability period applicable in this market. Outside it the insurer would be limited to proving fraud, which is a higher and more expensive standard. Inside it, the insurer can call the policy in question on the ordinary civil standard - the balance of probabilities - and must prove the false answers, their materiality and reliance.

The revival matters twice. First, a revival revives the contract on a fresh declaration of health; this declaration, signed on 20 March 2024 while he was on insulin, is a second false statement. Second, in many markets a revival restarts or creates its own contestability period, so the insurer is not confined to the original window. The claim is therefore within the window on both counts.

Counter-arguments to expect. The nominee will say the agent completed the form. That is a conduct issue but does not by itself defeat the insurer: a proposer who signs without reading is generally bound by the answers, subject to any finding that the agent acted fraudulently. She may also say the insurer chose not to test blood sugar; that is true but the non-medical limit is a decision about testing, not a waiver of the duty of disclosure, and it does not cure a false answer about a known hospital admission. The insurer's own underwriting shortcut weakens it in a forum that leans towards the policyholder, so the file must be documented carefully.

Evidence still needed

1. Certified copies of the October 2022 admission and discharge records, the prescription and the date of first diagnosis, obtained from the hospital under a signed authorisation.
2. Pharmacy or insurer claim records showing the dates on which insulin or oral hypoglycaemics were first dispensed - this fixes knowledge before the proposal date.
3. The complete general practitioner file for the three years before proposal.
4. The proposal form in original, to establish who wrote each answer and whether the handwriting differs from the signature; obtain the agent's file and training record.
5. The revival declaration and the reason for the late premium - a financial or health cause.
6. The autopsy or post-mortem report if one exists, to test whether the myocardial infarction was secondary to long-standing diabetes and renal disease.
7. A statement from the widow and from the hospital's treating doctor.
8. An independent medical opinion from a chief medical officer on what terms, if any, the risk would have been accepted in April 2023 with that history.

Standard of proof. This is a civil claim: the insurer must prove the false statements and their materiality on the balance of probabilities, not beyond reasonable doubt. Where the allegation is effectively fraud, some forums require the insurer to prove the fraud clearly and convincingly, and the burden never shifts to the claimant. The insurer's own underwriting file - including the decision not to test blood sugar - will be disclosable.

Practical point. Build the decision as a written submission to a claims committee: facts, evidence, materiality opinion, the alternative terms the risk would have attracted, and the remedy proposed. That record is what will be defended before an ombudsman or a court.

Handling. Acknowledge the claim in writing within the service standard, tell her what information is being gathered and why, give her a named contact, and do not allow the agent's disappearance to become her problem. Treat the agent-completed-form allegation as a serious conduct allegation and investigate it in parallel with the claim - the two are linked, and the investigation must not be used as a reason to delay the claim decision indefinitely. Set a decision date and stick to it.

Remedy options, in order of legal strength for the insurer:

1. Repudiation for material non-disclosure, with the premium refunded as the contract and market rules require. Strongest on the law, weakest on the facts if the agent is found to have fabricated the answers.
2. Repudiation with an ex-gratia payment, where the insurer is satisfied the non-disclosure was not deliberate or that the agent's conduct contributed materially. The ₹41 lakh mortgage is a relevant fairness factor but not a legal one.
3. Full payment, only if the investigation shows the applicant did disclose and the agent suppressed it, or the insurer's own process is found to have created the loss.

Governance and servicing responses

• Root-cause review of the non-medical limit: an applicant aged 52 with a ₹75 lakh sum assured was accepted with no blood sugar test. Reconsider the limits.
• Agent-conduct review of all business written by the departed agent, with a look-back and any remediation required.
• Review the revival process: a revival accepted within weeks of a late premium, on a bare declaration, with no financial or medical check.
• Record the decision, the reasoning and the dissent in the claims committee minutes; the ombudsman will read them.
• Check whether the case meets internal reporting thresholds for suspected intermediary fraud.