Can a life insurer reject a death claim because the policy had lapsed and still be asked to refund the premium paid by the policyholder? In a significant ruling, the Maharashtra State Consumer Disputes Redressal Commission upheld HDFC Life's decision to deny a Rs 70-lakh death claim after finding that the life insurance policy had lapsed due to non-payment of the renewal premium.
However, the Commission also directed the insurer to refund the Rs 7 lakh first-year premium to the widow, observing that retaining the entire premium despite these exceptional circumstances would amount to unjust enrichment. Here’s why the consumer court ruled this way:
