The brief facts giving rise to the above case were that the 26-year lod female had taken a money back policy for Rs 50,000/- under category three from the insurer. The insured was a non-earning women and she committed suicide after two years of commencement of policy. The husband of the insured filed the claim with LIC which was rejected on the ground that the policy was issued with the endorsement of clause 4-b i.e. special female clause, according to which sum assured was not payable as the life assured had died within a period of 3 years from the date of the policy. LIC sent a refund of premium which was not refused and the claimant filed with district forum. The agent of the insurer submitted that clause 4-b was not part of the policy. The learned district forum held that since the clause 4-b was not the part of the policy hence ordered insurer to pay the sum assured along with interest @ 18% p.a.

The insurer appealed before the state commission which observed that endorsement of clause 4-b was not a part of the policy but it was sent with the proposal. The case of the deceased was covered under category III of the underwriting manual of the LIC, which mentioned that the clause 4-b should be imposed on the females below the age of 35 yrs. It was admitted by the LIC and the respondent that the deceased was under the age 35 yrs at the time of taking the proposal who committed suicide after the commencement of the policy but within 3 yrs. From the date of the policy and hence the liability of the LIC was limited to refund of premiums as was clearly mentioned in the clause 4-b. The proposal could not have been accepted in any case without the force of clause 4-b even if there had been a clerical error or mistake on part of the agent. The court also referred to some earlier decisions that laid on clause 4-b. The implication of clause 4-b was clear in the sense that -:
“Where there is intentional self injury, suicide or attempted suicide, insanity, accident (other than an accident in public place or murder) if the death occurs before the expiry of three yrs from the date of the policy in such case the liability of LIC would be limited to sum equal to total amount of premiums paid under the policy without interest.”

Hence in the present case also since the death of the insured had taken place by suicide at her residence her case was covered under the above clause which entitled her nominee to refund of premiums only. Merely because the endorsement of clause 4-b was inadvertently not made in the policy, the nominee could not take advantage of the same and since the age of the deceased was below 35 yrs. And she was non-earning; the proposal could not have been accepted without the endorsement of the same clause.

Held: Refund of premium amount with interest @ 12% p.a. from date of repudiation and cost Rs. 500/-.