Life Insurance Corporation of India v. Manish Gupta
Background
The respondent took a Mediclaim ("Health Plus") policy from LIC without undergoing a medical examination, declaring in the proposal form that he had no cardiovascular disease. He later underwent heart valve replacement surgery, and his hospital records showed a documented "past history" of rheumatic heart disease since childhood. LIC repudiated his claim for reimbursement on the ground that this was a pre-existing condition that he had failed to disclose, but the District Forum, State Commission, and National Commission all ruled in the policyholder's favour, prompting LIC's appeal.
Decision Breakdown
The Supreme Court held that the consumer fora had erred by ignoring clear, uncontroverted hospital records showing the respondent had a known history of rheumatic heart disease since childhood, which he was obligated to disclose under the insurance proposal's terms given the "utmost good faith" nature of insurance contracts. Since the policy was issued in the "Non-Medical" category without any medical check specifically because the proposer's own declarations were relied upon, concealment of this material health history amounted to a valid ground for repudiation under the policy's own exclusion and fraud clauses. The Court allowed LIC's appeal, set aside the National Commission's order, and dismissed the policyholder's complaint.
Lesson Learnt
When applying for insurance without a medical check-up, an applicant must truthfully disclose known past health conditions, however minor they may seem, concealing such history can be a valid ground for the insurer to deny a later claim, since insurance contracts are built on the insured's full and honest disclosure.