Section 45 (Insurance Act)

Section 45 of the Insurance Act 1938, as amended in 2015, limits the grounds and the time window within which a life insurer can challenge or repudiate a life insurance policy. It is one of the most important consumer-protection provisions in Indian insurance law because it balances the insurer's legitimate right to verify disclosure against the policyholder's need for certainty that a legitimate claim will be honoured. The section works in two layers.

For the first three years from the date of policy issuance or revival, the insurer can call into question the policy on any ground — non-disclosure, misstatement, or fraud — and if substantiated, the claim can be repudiated and premiums may be refunded or retained depending on the circumstances. After three continuous years, the protection narrows sharply. The policy can only be questioned on the ground of 'fraud', which requires the insurer to prove that the misstatement was deliberate, made with knowledge of its falsity, and with the intent to deceive.

Mere error, inadvertent omission, or honest misunderstanding is not enough to invalidate a three-year-old policy. The burden of proof for fraud lies on the insurer, and the insurer must share with the nominee the grounds and evidence relied upon. Worked example: a ₹1 crore term plan was issued in May 2020.

The life assured died in August 2024, four years into the policy. The insurer discovered that the proposal form did not disclose a 2017 episode of elevated blood pressure that had normalised. Because the policy is beyond three years, the insurer cannot repudiate on simple non-disclosure; to repudiate, it must prove the life assured knew of the hypertension, knew it was material, and deliberately concealed it.

On the facts (a single, minor reading that resolved without medication), repudiation would likely not succeed, and the claim would be payable. A common misconception is that Section 45 applies to every line of insurance. It applies only to life insurance.

For health and general insurance, the period of protection, the grounds of repudiation, and the burden of proof are governed by the relevant policy contract and the IRDAI regulations, without the same three-year protection. Another common misconception is that Section 45 eliminates the need for full proposal-form disclosure. It does not — it creates a prescribed process and a time limit, but full disclosure at inception remains the cleanest path to claim certainty.

Related: proposal form, underwriting, material disclosure.