Life insurance claim denied over non-disclosure? Why family won ₹1 crore after insurer failed to prove concealment

A Telangana consumer commission has directed Tata AIA Life Insurance to honour a ₹1 crore death claim after the insurer rejected it on the ground that the policyholder had failed to disclose an earlier insurance proposal that had been postponed on medical grounds.

The Telangana State Consumer Disputes Redressal Commission, in a judgment dated 12 June 2026, dismissed Tata AIA’s appeal against a District Consumer Commission order directing it to pay the claim, along with interest, compensation and litigation costs.

The case concerned Ramdas Vislavath, a retired Superintendent in the Central Excise Department, who purchased a Tata AIA Samporna Raksha policy with a sum assured of ₹1 crore. The policy commenced on 31 October 2019 for a 25-year term, with an annual premium of ₹58,800.

Vislavath died on 25 May 2021 after contracting Covid-19. His wife, Padma Vislavath, was the nominee and filed a claim for the ₹1 crore sum assured.

Since the death occurred within two years of the policy being issued, Tata AIA investigated the claim. During the investigation, the insurer found that Vislavath had earlier approached ICICI Prudential Life Insurance for another ₹1 crore policy in July 2019. That proposal had been postponed following medical findings.

Tata AIA relied on a question in its proposal form asking whether any insurance application had ever been declined, postponed or accepted at an extra premium or on modified terms. Vislavath had answered “No”.

The insurer argued that the earlier proposal and its postponement were material facts and that the negative answer amounted to suppression. It consequently repudiated the claim and treated the policy as void from inception, while refunding the premium.

Why the commission rejected Tata AIA’s argument

The State Commission did not hold that an earlier insurance proposal could never be material. Instead, it focused on whether Tata AIA had proved that Vislavath knowingly concealed the information.

The Commission found that the insurer had produced documents showing the earlier proposal and medical reports, but had not produced evidence establishing that the postponement had been communicated to Vislavath before he submitted the Tata AIA proposal.

It also found no evidence showing that the medical report had been supplied to him or that he had attended any counselling or discussion about the adverse findings. Therefore, the fact that an earlier proposal existed did not, by itself, establish conscious suppression.

The Commission also noted that Tata AIA had conducted its own medical examination before issuing the policy. This gave the insurer an opportunity to independently assess the risk.

The Commission distinguished the Supreme Court’s 2019 judgment in Reliance Life Insurance Co. Ltd. vs Rekhaben Nareshbhai Rathod. In that case, the Supreme Court held that previous insurance cover or proposals can constitute material information that a proposer is required to disclose.

However, the Telangana Commission said the factual foundation required to apply that principle was missing in the Tata AIA case. The insurer had to establish that the earlier proposal was postponed before the Tata AIA proposal, that the policyholder knew about the postponement and that he knowingly gave a false answer.

The Commission concluded that Tata AIA had failed to establish this essential element of conscious non-disclosure. It observed that suspicion about what the insured “must have known” could not substitute for evidence.

Tata AIA must pay ₹1 crore claim with interest

The State Commission dismissed Tata AIA’s appeal and upheld the District Commission’s order.

The District Commission had directed Tata AIA to pay the ₹1 crore death claim with 9% annual interest from 10 January 2022 until realisation, along with ₹50,000 compensation and ₹10,000 towards litigation costs. It had also provided for a higher interest rate in case of non-compliance within the specified period.

The judgment does not mean policyholders can leave previous insurance proposals or medical information undisclosed. The Commission itself recognised that such information can be relevant to an insurer’s risk assessment.