Health insurance claim rejection due to non-disclosure of material alcoholism is valid, rules SC

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In this case, the apex court held LIC’s (Life Insurance Corporation) claim to reject an individual’s hospitalization claim under their now-discontinued Jeevan Arogya scheme (a health insurance benefit-based policy) since he had not apprised LIC of his chronic alcoholism.
The Supreme Court upheld the decision of the LIC to repudiate a claim over the hospitalisation of a policyholder under the «Jeevan Arogya” scheme since he gave false information regarding his habit of alcohol consumption. The individual had remained hospitalized for nearly a month after complaining of severe abdominal pain before succumbing to a cardiac arrest.

“The deceased provided false information in the proposal form. The relevant question in the form asked, «Does the life insured consume alcohol/cigarettes/bidis/or tobacco in any form?» The deceased answered, “No.” The policy was issued based on this declaration. However, evidence on record establishes that the deceased was a chronic alcoholic. This fact was not disclosed at the time of obtaining the policy,” the judgment noted.
Complete disclosure on behalf of the policyholder becomes all the more important under schemes such as Jeevan Arogya since they are issued under a Non-Medical General Scheme, i.e., where no medical examinations are conducted before issuing a policy.

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Lower courts and dispute redressal commissions approached by the aggrieved’s wife had rejected the