Consumer panel directs insurer to pay Rs 93 lakh in suicide claim case

CHENNAI: Rejecting the insurer’s arguments against paying the assured sum to the widow of a life insurance policy holder who died by suicide, the Chennai North District Consumer Disputes Redressal Commission directed the firm to pay her Rs 92.84 lakh with interest – nearly 100 times what the company had originally agreed to pay.

K Gunasekar, the deceased, had purchased a 40-year life insurance policy from Tata AIA Insurance Company in 2020, naming his wife Saranya as the nominee. As per the policy, she would get Rs 1.10 crore (immediate payout of Rs 50 lakh and Rs 50,000 monthly for 120 months) in the event of his death. He paid premiums till 2023, but died by suicide in 2024 due to financial distress.

Saranya filed a claim for Rs 92.84 lakh death benefit, but was paid only Rs 95,000 citing policy clauses. The firm argued that the premiums were paid with delays and interest, triggering a clause that policies would lapse if premiums for the first two years remained unpaid beyond the grace period. It also invoked a suicide clause, limiting payout to premiums paid or surrender value if death occurs within 12 months of policy revival or commencement.

During proceedings, Tata AIA failed to appear or submit a written defense, leading the commission to declare them ex parte in January.

Commission president D Gopinath and members V Ramamurthy and Kavitha Kannan noted that the policy was active as premiums – though delayed - were paid until 2023 and said delayed payments with interest did not invalidate coverage. The suicide clause was also deemed inapplicable, as the policy had been in effect for over four years, exceeding the 12-month exclusion period.

The company was asked to pay Rs 92.84 lakh as death benefit (with 9% annual interest from the claim rejection date), Rs 25,000 as compensation for mental agony, and Rs 5,000 for litigation costs.