Section 45 of the Insurance Act

Life insurance helps people protect their family’s financial future in case of an unfortunate death during the policy term. When choosing a life insurance plan from any insurer, people often ask about Section 45 of the Insurance Act, 1938. According to this section, the initial three years in a life insurance policy is an important period as no insurer can question the claim if a policyholder’s death happens after this period. So, you should always see details about Section 45 of the Insurance Act in the last section of every policy brochure.

If you want a life insurance plan for yourself and your family, it is crucial to understand Section 45 of the Insurance Act in detail. Well, this article could help you in the same as we will be discussing important points related to it. Keep reading to know more about it!

Important Points Related to Section 45 of the Insurance Act

We are showing the important points that will help you understand Section 45 of the Insurance Act, 1938 better. Have a look!

Situations When an Insurance Company Cannot Question any Policy

According to Section 45 of the Insurance Act, any insurance company cannot question any life insurance policy after three years from the following situations

1. Date of issuance of the policy, or
2. The date of commencement of the policy, or
3. The date of revival of the policy (in case the policy has lapsed if a policyholder has failed to pay the premium on due date), or
4. The date of rider chosen on the policy, whichever is later

When Can Insurers Question a Policy?

Life Insurance companies can question the life insurance policy of a policyholder on the ground of fraud. To do the same, the period should be within 3 years from

1. The date of issuance of the policy, or
2. The date of commencement of the policy, or
3. The date of revival of the policy (lapsed policy due to non-payment of premium)
4. The date of rider to the policy, whichever is later

The life insurance company can question the policy on account of fraud in writing by giving the grounds and materials on which such a decision is based on. This will be sent to the policyholder or his/her legal representatives or nominees or assignees. If the said people can prove the authenticity of the claim by providing the required materials mentioning that there was no deliberate claim to suppress the fact, the insurance company cannot reject the claim.

What is the Meaning of Fraud under Section 45 of the Insurance Act?

Under Section 45 of the Insurance Act, fraud means any of the following acts committed by the policyholder or his/her agent, with an intent to deceive the insurance company or induce it to issue a life insurance policy.

1. The suggestion, as a fact of that which is not true and which the policyholders don’t believe to be true
2. A fact actively concealed by the insured having its knowledge or belief
3. Any other act fitted to deceive the insurance company
4. Specific acts or omissions declared fraudulent by the law

Important Note: Mere silence will not be considered as an act of fraud unless it is the duty of the policyholder or his/her agent to keep silent to speak, or silence is in itself equal to speaking. It will also depend on the circumstances of a particular case.

If a Policy is Called in Question on the Ground of Life Expectancy of Policyholders

A Life insurance policy can be called in question within 3 years based on any statement of or suppression of a fact related to the incorrect life expectancy of the policyholder in the proposal form or other insurance document. For this, the company should communicate in writing to the policyholder or his/her legal representatives or nominees or assignees. It will mention the ground and material on which the decision to reject the claim is based.

What if Rejection is Based on the Ground of Mis-statement and Not on Fraud?

In such a case, the premium collected on policy till the date of rejection shall be paid to the policyholder or his/her legal representatives or nominees or assignees, within 90 days from the date of rejection of the claim.

Will Section 45 of the Insurance Act be Applicable for Questioning Age?

No. This section will not be applicable for questioning age or adjustments based on proof of age submitted subsequently. The insurance company can ask for proof of age anytime. However, the policy will not be considered in question only because the terms of the policy are adjusted based on subsequent proof of age of the policyholder.