MANU/IRDA/0041/2015

Authority : Insurance Regulatory and Development Authority

Notification No. : IRDA/Life/GDL/MISC/186/10/2015

Date : 28.10.2015

All the Life Insurers

Applicability of provisions of Sec 45 of Insurance Act 1938 in various scenarios

After amendment to Section 45 of Insurance Act 1938, we have been receiving queries from the Life Insurers with regard to the application of new provisions in various scenarios that can arise during the course of life insurance policies in general and more specifically the approach to be taken for refunding premium , once the insurer takes the decision of repudiating a policy on the ground of misrepresentation or suppression of the material fact made by the policyholder / life Assured to effect or continue a Life insurance policy.

The queries raised with regard to various scenarios and the view taken by Authority is as follows:

Q1: In case of delayed intimation by the claimant i.e. where death of the life assured has occurred within 3 years of effecting the policy, but death claim intimation is given late by the claimant (whereby the period of 3 years from the date of effecting/revival of the policy is over). In such cases, since the period of 3 years will be over, whether the insurer has the option to call the policy in question?

Answer: The Insurer has only 3 years window for calling a policy in question on the ground of misrepresentation or suppression of a material fact not amounting to fraud, from the date of issuance of Policy or date of commencement of risk or date of revival of policy or date of rider of the policy, whichever is later. It is regardless of whether claim has arisen or not and when it is intimated. Once this period of 3 years is over, the policy cannot be called in question.

Q2: Whether the period of 3 years within which a policy can be called in question by the insurer is to be interpreted as date of effecting the policy till the date of death of the life assured (or) date of effecting the policy till the date of repudiation (if any) by the insurer.

Answer: The 3 years period is not necessarily connected with death claim arising under the policy and is counted from the date of issuance of policy or commencement of risk or revival or rider whichever is later. A Policy can be called in question within 3 years even if there is no death claim.

Q3: In case of ULIP polices, whether to refund the entire amount of premium received or pay only the fund value + refund of risk prem........