Insurance policy not renewed after receiving premium. My wife lagged behind in paying her life insurance premium for April and May, hence her policy went on hold. But later she paid the premiums and even paid a little extra. Then she kept paying it till the month of September and as she was diagnosed with Muscular Dystrophy she claimed for the disability rider in her life insurance policy.
We got a response that our policy is still on hold since June and the insurance company will conduct a medical test before reinstating it. And as my wife had already been diagnosed with MD, her results obviously came out to be of a sick person. And then they denied us the claim and terminated the policy. What should we do in this case?
Asked from: Maharashtra
The health insurance contract is related to the category of life contracts. A policy of health insurance is for insuring against the risk of disease. The contract of health insurance, like that of life insurance made in consideration of premium. When the insurer receives the premium it has an effect that the contract between insurer and insured become complete.
In your case the insurance company had been receiving the premiums towards the policy. It enables you to take all the benefits available under insurance policy. Whether an insurance policy is on hold or inactive is the fact within the specific knowledge of the insurer. It was the liability of the insurer to intimate the insured person towards the status of policy before receiving premium.
If the insurer does not inform the insured person about the status of policy but receiving premiums, it proves that the policy is renewed. The rule of estoppel will apply in this case and the insurer shall be stopped to take any plea which tends to disentitle the insured person to take benefits of policy.
In your case the insurance company has accepted the premiums with a fine in respect of late payment. Accepting premiums reflects the conduct of the insurance company that it has renewed or reinstated the policy. You have paid all the premiums and two of them i.e. premium for the month of April & May with a fine.
It was the duty of the insurance company to conduct a medical test immediately after receiving the premiums. If not done on time the insurer cannot refuse the policy.
Accepting premiums with fines proves that the policy has not been terminated. Refusal to renew the policy after receiving a claim of reimbursement from the insured person is an arbitrary action of the insurer. Such a refusal is prohibited.
In Biman Krishna Bose v. United India Insurance Company Ltd. (2001) 6 SCC 477; the Supreme Court held that the insurer cannot arbitrarily refuse to renew the policy.
A renewal of an insurance policy means repeating the original policy. When a policy is renewed, it extends the original terms from the expiration date. Essentially, renewal revives the old policy and substitutes the obligations of the old policy, unless stated otherwise. Though a new contract may come into effect upon renewal, it adheres to the same terms and conditions as the original.
If an insurance company, which has the exclusive right to provide insurance, refuses to renew a mediclaim policy based on irrelevant reasons, any disease contracted during the gap period won't be covered under a new policy due to the exclusion clause for pre-existing conditions.
If the policy cannot be renewed retroactively, insurance companies could exploit this to deny renewals arbitrarily, depriving the insured of coverage for diseases that arose during the lapse period. This unjust refusal to renew must be corrected. Therefore, if an insurance company's refusal to renew a policy is found to be arbitrary, the policy should be renewed from the original renewal date.
You should serve a legal notice to the insurer for the reimbursement. If the insurer does not reimburse then you should file a case before the District Consumer Forum. Insurance policy not renewed after receiving premium by cheque is directly affecting your right.
