Section 45 and a death two weeks before the three-year mark
Sunita Rao, 47, bought a ₹75 lakh endowment policy on 18 June 2021 through a medical examination arranged by the insurer. In the proposal she answered 'No' to the questions on chest pain, breathlessness and heart disease. In fact she had been evaluated for angina in 2019: an ECG and a stress test showed inducible ischemia, and a cardiologist advised medication and follow-up. She stopped the tablets after four months and told her agent the episode was 'only acidity'.
Sunita died of a myocardial infarction on 3 May 2024. Her husband filed the claim with the death certificate and hospital records. The insurer's investigation recovered the 2019 hospital file, and its medical examiner opined that, had the condition been disclosed, the proposal would have been declined or issued with a loading.
All premiums were paid, the policy had never lapsed or been revived, and no loan had been taken. On 28 May 2024 the insurer repudiated the claim in full, citing suppression of material facts. The family says the policy is 'over three years old' and cannot be questioned.
1. Is the repudiation correct? Work through the statutory timeline and the burden of proof.
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The family's 'over three years' argument fails, but the repudiation is only as good as the insurer's proof.
Section 45 of the Insurance Act, 1938 (as amended in 2015) fixes the line at three years from the date the policy was issued or last revived. Before that line the insurer may repudiate on the ground of fraud or material misstatement; after it, the policy cannot be called in question on any ground of fraud or misstatement.
- Policy issued 18 June 2021. Death 3 May 2024; repudiation 28 May 2024. Both fall inside the window - the policy was 2 years 11 months old, not 'over three years'.
- Inside the window the insurer must still prove three things: that the answer was false, that the fact was material, and that a truthful answer would have changed its decision. The 2019 hospital file is documentary proof, the proposal question was specific about chest pain and heart disease, and the medical examiner says the proposal would have been declined or loaded. That is a strong case.
- Process matters. Repudiation must be a written, reasoned decision by an authorised officer, citing the proposal question and policy clause relied on, and the premium should be refunded rather than retained.
- Sunita's own belief that it was 'acidity' weakens an allegation of deliberate fraud but not necessarily the charge of material misstatement.
The repudiation is defensible. The family's remedies are the insurer's grievance officer, then the Insurance Ombudsman, then the consumer commission.
2. How would the answer change if Sunita had died on 25 June 2024, or if the policy had lapsed in 2022 and been revived in March 2023?
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Two small facts would flip the outcome - one in the family's favour, one against.
Death after 18 June 2024. Had Sunita died on 25 June 2024, the statutory bar would have attached before the claim arose. The insurer could not call the policy in question on grounds of fraud or misstatement, and the 2019 file would be irrelevant. The claim would have to be paid. The exceptions are narrow and different in kind: impersonation at the medical examination, the life assured actually being alive, a lapse without revival, or fraud in presenting the claim itself.
Revival in March 2023. Section 45 runs from issuance or revival, whichever is later. A revival restarts the three-year clock, so a policy issued in 2021, revived in March 2023 and claimed in May 2024 sits squarely inside the window and the insurer keeps its right to repudiate. Agents who tell clients to 'just pay the arrears and keep it going' rarely mention that revival buys the insurer a fresh three years.
For the file, three dates decide a Section 45 dispute: date of issuance, date of every revival, and date the repudiation was communicated.
3. What should the agent have done at the proposal stage, and what exposure does the agent now face?
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Nothing in Section 45 protects the agent.
- The proposal form is the client's declaration, but the agent presents it. Advising 'the company will not check' or 'mention it only if asked' is abetment of suppression and a Code of Conduct breach under the IRDAI (Appointment of Insurance Agents) Regulations, 2016 - independent of what happens to the claim.
- The correct action: read each health question aloud, record the 2019 ECG, the cardiologist's advice and the stopped medication, and let the underwriter decide - decline, loading, or postponement with a fresh test.
- If the underwriter declines, that is a service, not a lost sale. A ₹75 lakh claim repudiated at the worst possible moment destroys the family's trust and the agent's licence.
- Keep a written record of what was asked and answered, and never sign the agent's certification on a form the client has not read.
In this file the agent is a witness the insurer will call, and possibly a co-respondent before the Ombudsman.