Section 45 Rule in Term Insurance: Death Claims Cannot Be Rejected After 3 Years

Scenario: the family’s earner has died suddenly. The nominee files a claim with the company — and the company responds: ‘the health declaration at the time of application wasn’t accurate; an investigation is ongoing.’ That single line breaks many families’ hope. But the law draws a clear boundary — once the policy has run for 3 continuous years, the company simply cannot repudiate a death claim. That protection is Section 45 of the Insurance Act, 1938 (as amended in 2015).

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1. What Section 45 Exactly Says

The gist of Section 45 after the Insurance (Amendment) Act, 2015:

• Once 3 years have passed from the date of issuance, risk commencement or reinstatement, the life insurer cannot call the policy into question on any ground whatsoever — meaning it cannot repudiate the claim.
• If fraud or a false declaration is discovered within 3 years, the company can cancel the policy; the burden of proof is on the company.
• After 3 years, even if fraud is proved, the company has only one right — forfeiting the premiums; the sum assured must be paid to the nominee. Forfeiture is limited to future premiums.

2. From Which Date the 3 Years Are Counted — Be Careful

Event	Counting Starts
Normal policy	3 years from issuance/risk commencement date
Policy lapsed and revived (reinstatement)	A fresh 3 years from the revival date
Premiums paid continuously	From the issuance date itself

Practical rule: never let the policy lapse — on lapse-and-revive, the Section 45 clock silently resets for many people.

3. The Company’s Rights Within 3 Years — and Your Protections

Within 3 years the company can investigate and repudiate a claim — but not on empty words:

• The burden of proof is on the company: ‘it was concealed’ isn’t enough — it must prove the false statement was made with intent to defraud.
• Was the question even asked: whatever illness/habit (smoking etc.) the application form never asked about cannot be ‘concealed’.
• Investigation deadline: the investigation must be completed and a decision communicated within a prescribed period from the claim date (extendable usually up to 180 days).

4. What to Do if a Death Claim Is Stuck

1. Ask for written reasons: demand the specific grounds and clause for the repudiation or delay in writing.
2. Reply citing Section 45: if the policy is past 3 years, that is your main argument — quote the section in your letter.
3. Grievance cell → 30 days → Ombudsman: read the full process in our insurance claim rejection guide — life claims follow the same escalation path, with award rights up to ₹50 lakh.
4. Papers: death certificate, policy, ID, bank details, medical records (to verify the cause of death) — keep originals and submit copies.

5. What You Must Follow When Buying the Policy

Section 45 protects you at claim time, but the disclosure duty at entry is yours:

• In the application’s health declaration, write every pre-existing illness, hospitalisation, medication and smoking/drinking habit truthfully — leaving it blank to look good can sink a claim entirely within the first 3 years.
• If an agent fills the form for you, read every field yourself before submitting — the declaration signature is yours.
• Answer medical tests honestly — a documented, truthful health declaration stops later fraud allegations for good.

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Remember: Section 45 is a law protecting nominees — not a licence for dishonesty. Truthful declaration + avoiding lapses = a claim that stays virtually untouchable after 3 years.

For rules on choosing a term policy, see our insurance guide, and use the Finance Calculator to plan for your family.