The Chennai North District Consumer Disputes Redressal Commission has directed Tata AIA Insurance Company to pay a widow, Saranya, a sum of Rs 92.84 lakh with interest, after her husband, K Gunasekar, died by suicide in 2024. Gunasekar had purchased a 40-year life insurance policy from Tata AIA in 2020, naming Saranya as the nominee, with a coverage of Rs 1.10 crore. Although he paid premiums until 2023, the company refused to pay the full death benefit, citing policy clauses, and instead offered only Rs 95,000.
The company argued that the premiums were paid with delays and interest, which triggered a clause that would lapse the policy if premiums for the first two years remained unpaid beyond the grace period. They also invoked a suicide clause, which limited the payout to premiums paid or surrender value if death occurred within 12 months of policy revival or commencement. However, the commission rejected these arguments, noting that the policy was active as premiums were paid until 2023, and that 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 commission observed that Tata AIA failed to appear or submit a written defense, and was declared ex parte in January. The commission ordered the company to pay the death benefit with 9% annual interest from the claim rejection date, as well as compensation for mental agony and litigation costs.
The total payout, including interest, is nearly 100 times the amount the company had originally agreed to pay. The commission’s decision is a significant victory for Saranya, who had been struggling to receive the death benefit after her husband’s death. The ruling highlights the importance of insurance companies honoring their policies and paying out benefits to nominees in a timely and fair manner, even in cases where the policyholder has died by suicide.