Section 45 of IA : Section 45: Policy Not To Be Called In Question On Ground Of Mis-Statement After Two Years

Explanation using Example

Example Scenario: Application of Section 45 of The Insurance Act, 1938

Imagine Mr. John Doe took out a life insurance policy on January 1, 2020. He provided all the necessary information to the best of his knowledge and the policy came into effect immediately. Three years and six months later, on July 1, 2023, Mr. Doe unfortunately passes away and his beneficiaries file a claim with the insurance company.

Under Section 45(1) of the Insurance Act, 1938, the insurance company cannot call into question the validity of Mr. Doe's policy on any ground whatsoever since more than three years have passed since the policy's issuance. Therefore, the company is obligated to process and pay out the claim to Mr. Doe's beneficiaries.

If the insurance company had discovered within the first three years that Mr. Doe had committed fraud, as defined in the act, they would have been able to repudiate the policy. However, since the three-year period has expired, they cannot do so now.

Additionally, if the insurance company had found a misstatement or suppression of a material fact within the first three years, they would have been required to communicate the grounds for repudiation to Mr. Doe or his representatives in writing, as per Section 45(4). But again, since more than three years have passed, this is no longer applicable.

Lastly, Section 45(5) clarifies that the insurer could have requested proof of Mr. Doe's age at any time, and if there were any discrepancies, they could have adjusted the terms of the policy accordingly without calling the policy into question.