Facts

The complainant's late husband, Rajesh Soni, had obtained a Bharti AXA Life Loan Secure insurance policy in connection with a loan against property availed from PNB Housing Finance Limited. The policy, issued on January 31, 2019, provided base coverage of ₹22,85,450 for a term of 108 months. Soni was recorded as the beneficiary and nominee.

Rajesh repaid the loan on July 18, 2019, and PNB Housing Finance issued a No Objection Certificate confirming that no amount remained outstanding. He died on May 8, 2020.

The complainant stated that she discovered the policy documents in August-September 2023 during home renovation and submitted a death claim on September 13, 2023. The insurer subsequently transferred ₹10,085.19 to her account on February 16, 2024. She disputed the amount and sought payment of the insurance benefit, alleging deficiency in service.

The insurer did not file its written version within the prescribed period, and its application seeking condonation of delay was dismissed by the Commission. Although it subsequently filed written arguments, the Commission clarified that these could not substitute for a written version, while considering them only to the limited extent of submissions concerning policy terms and documents already on record.

Observations

The Commission identified the central question as whether the base insurance cover continued after the loan was foreclosed on July 18, 2019.

It observed that Item No. 5 of the policy provided two alternatives upon foreclosure: refund of the premium as per the surrender-value formula or continuation of the cover if the customer chose to continue it. The Commission held that the contractual right to continue coverage was not equivalent to automatic continuation by default.

Citing the Supreme Court judgments in Sikka Papers Ltd. v. National Insurance Co. Ltd. and Suraj Mal Ram Niwas Mills (P) Ltd. v. United India Insurance Co. Ltd., the Commission reiterated that insurance contracts must be construed according to their terms, without adding, deleting or substituting words.

The Commission noted that no document, service request, endorsement or other contemporaneous evidence had been produced to establish that Rajesh exercised his option to continue the insurance cover between the foreclosure of the loan and his death.

It further held that the complainant's communication in November 2023, stating that she did not wish to surrender the policy but wanted to claim the insurance benefit, could not retrospectively establish that the deceased policyholder had elected to continue the cover during his lifetime.

The Commission also rejected the claim under the accidental death rider. The Death Claim Form recorded the cause of death as Multiple Organ Dysfunction Syndrome (MODS), and there was no evidence establishing that the death was accidental within the policy's contractual definition.

Decision

The Commission held that the complainant had failed to establish that the insurance cover remained in force on the date of her husband's death or that the insurer was deficient in service by declining to pay the claimed death benefit.

Accordingly, it dismissed the consumer complaint. No order as to costs was passed.