LIC slammed for insensitive letter to deceased policyholder.

LIC Slammed for Letter to Dead Policyholder

• NCDRC Rebukes LIC Over Shocking Insensitivity

• Dead Policyholder, Live Letter: LIC Under Fire

• NCDRC Orders LIC to Pay ₹5 Lakh Compensation

Unmesh Gujarathi
Sprouts News Exclusive
Contact: +91 9322755098

The National Consumer Disputes Redressal Commission (NCDRC) has severely criticized LIC for demanding premium payment from a deceased policyholder. Upholding a state commission’s ruling, the NCDRC ordered ₹5 lakh compensation and ₹25,000 in costs. Sprouts News Investigation Team (SIT) reports the judgment sends a strong message on insurer accountability and public sector conduct.

LIC’s Policy Lapse Claim Dismissed by NCDRC in Landmark Insurance Case

In a scathing verdict that could shape future conduct of public insurers, the National Consumer Disputes Redressal Commission (NCDRC) has upheld compensation for the widow of late Rajendra Prasad Tripathi, whose insurance claim was rejected by Life Insurance Corporation of India (LIC) under controversial circumstances.

The bench comprising Dr Inder Jit Singh (Presiding Member) and Justice Dr Sudhir Kumar Jain (Member) ruled that LIC displayed “shocking insensitivity” by sending a premium payment reminder to a deceased policyholder. The NCDRC also confirmed the earlier judgment of the Uttar Pradesh State Consumer Commission, directing LIC to pay ₹5 lakh compensation and an additional ₹25,000 in legal costs.

The Sprouts News Investigation Team (SIT) notes that this ruling highlights a growing judicial emphasis on ethical accountability for public sector entities, especially those in life and health insurance.

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Cheque Accepted Before Death, Claim Wrongfully Rejected

The case revolves around a ₹5 lakh life insurance policy taken by Mr. Tripathi, a resident of Pratapgarh, Uttar Pradesh. He had issued a premium cheque dated 11 August 2003, though the second instalment was due on 24 August 2003. LIC claimed to have received the cheque only on 29 August, five days after the due date.

Tragically, Mr. Tripathi passed away on 29 September 2003, before the cheque cleared. The cheque was returned by his bank marked “drawer deceased.” LIC, relying on this, denied the insurance claim, arguing the policy had lapsed due to non-payment before death.

However, both district and state consumer forums ruled in favor of the complainant, concluding that LIC had received and processed the cheque before the insured’s death and had therefore implicitly condoned the delay. NCDRC agreed, emphasizing that once the cheque was submitted for collection, LIC could not revoke its obligation under the policy.

Letter to Deceased Draws Severe Censure

What truly intensified the court’s condemnation was a letter sent by LIC on 24 December 2003, nearly three months after the policyholder’s death, instructing Tripathi to remit the unpaid premium by 28 December. The letter warned that if payment was delayed beyond six months, a health certificate would be required.

The commission was shocked to find the letter was explicitly addressed to the deceased person, despite acknowledging his death within the letter’s body. The document was signed by a senior branch manager at LIC’s Pratapgarh office.

“We place on record our displeasure that officials of the insurance company have issued such a letter without any application of mind,” the commission noted, calling the act unacceptable for a public sector organisation entrusted with citizens’ financial security.

NCDRC’s Final Verdict: Policy Valid, LIC Must Compensate Widow

The Sprouts News Investigation Team (SIT) reviewed the final NCDRC judgment, which clearly stated that by accepting the cheque and initiating its processing, LIC had waived its right to later reject the claim on technical grounds. The bench also ruled that any delay in cheque clearance due to the bank did not absolve LIC of responsibility.

“The assured person was not concerned with the cheque collection process unless and until LIC informed him of any issue,” the commission said.

LIC’s revision petition was dismissed in totality. The court also criticized LIC for prolonging the matter unnecessarily, adding ₹25,000 in additional costs to the compensation already awarded to the widow.

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Sprouts SIT Insight: Wake-Up Call for Insurers and Policy Reforms

This judgment is being seen by the Sprouts News Investigation Team (SIT) as a clear warning to public insurers about the importance of compassion, procedural diligence, and prompt communication, especially in sensitive cases involving bereaved families.

Experts suggest that the verdict could lead to greater accountability for LIC and similar public sector insurers, potentially prompting internal audits, training programs, and policy-level reviews to ensure such lapses do not recur.