The Supreme Court (SC) has ruled that if a policyholder purchases a new life insurance plan without disclosing their existing policies, their new claim may be rejected. The court made this statement in response to a petition filed by the Insurance Regulatory and Development Authority of India (IRDAI).
The IRDAI had asked the SC to clarify the rules regarding the disclosure of existing life insurance policies while taking out a new one. The authority was concerned that some policyholders were not disclosing their existing policies, which could lead to irregularities and potential losses for the insurance companies.
The SC ruled that insurance companies have the right to know about all existing policies held by a policyholder, including any existing life insurance policies. This is necessary to ensure that the new policy is issued correctly and that the policyholder does not buy multiple policies without permission.
The SC also ruled that if an insurance company is not informed of a policyholder’s existing policies, the company has the right to reject any claims made by that policyholder. This means that if a policyholder fails to disclose their existing policies and then makes a claim on a new policy, the insurance company can reject their claim.
The SC’s ruling is intended to ensure that life insurance companies are aware of all existing policies held by a policyholder, which will help to prevent irregularities and potential losses for the insurance companies.