Can section 45 safeguard your nominee from life insurance claim rejection?

I purchased a term plan in February 2021. I had mentioned my eye treatment and provided an MRI brain report, which was normal. I forgot to mention that I underwent a routine endoscopy in 2019, which was normal, too. My medical examination before the proposal was accepted was fine. I’ve been paying premiums on my policy, which is active, over the past four years. If something happens to me in the future, could this oversight of not disclosing endoscopy cause issues for my nominee when claiming the insurance amount? Will Section 45 be relevant here?

- Name withheld on request

Section 45 of the Insurance Act of 1938 outlines the conditions under which an insurance claim can not be disputed. As per the section, after a period of three years (36 months) from the date of policy issuance or reinstatement, an insurer cannot dispute a claim based on any misrepresentation, incorrect statement, or non-disclosure, provided the policyholder has paid all premiums on time and the policy has remained active.

You’ve been consistently paying the premiums for four years. This means your policy has been in force for more than 36 months. Since the policy has crossed this crucial threshold and remains active, Section 45 would protect your nominee in the event of a claim as long as there is no lapse or reinstatement during the policy term.

While it’s true that you forgot to mention the endoscopy from 2019 in your initial proposal form, this procedure was routine and did not reveal any significant findings. The fact that you underwent an endoscopy and the rest of your medical history would be less of a concern once Section 45 applies. The insurance company's medical examination, yielding normal results, further strengthens your case. Therefore, as long as the policy remains in force, the non-disclosure of the endoscopy should not pose a problem for your nominee when claiming the sum assured. 

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To ensure uninterrupted coverage, it’s crucial to maintain timely premium payments. We recommend being mindful of the premium payment modes and grace periods the insurer provides. 

As long as your policy remains active and the premiums are paid on time, your nominee should not face any issues due to the non-disclosure of the endoscopy. Section 45 provides significant protection after 36 months of continuous coverage, and your policy’s current status gives you peace of mind regarding future claims.

(Shilpa Arora is co-founder and chief operating officer of Insurance Samadhan) 

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