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If you have ever read the brochure of a life insurance product till the end, you must have noticed the last section of the brochure always describes Section 45 of the Insurance Act 1938. What is it, why is it one of the most important information for the policyholders or new policy buyers to be aware of. Well, According to Section 45, a life insurance company cannot reject an insurer’s claim after three years. Read on for the details.
What is Section 45 of the Insurance Act?
According to Section 45 of the Insurance Act, an insurer cannot question any life insurance policy on any grounds after three years from :
a. the date of issuance of Policy, or
b. the date of commencement of risk or
d. the date of rider to the Policy, whichever is later.
Life insurance company can question the policy on grounds of fraud
The life insurance company can question the policyholder on grounds of fraud within three years. The insurer can do so in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based. Three years here mean the same as described above.
If the policyholder or his beneficiaries (in case the policyholder is not alive) can prove that there was no deliberate intention to suppress the fact or that the policyholder was unaware of the information, the insurance company cannot cancel the policy and claims.
What happens if the life insurance policy is repudiated by the insurance company?
In case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the insurance company will return the premiums collected till date to the insured or the legal representatives or nominees or assignees of the insured. The premiums have to be returned within a period of ninety days from the date of such repudiation.
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