Repudiation & Contestability — Section 45 Deep Dive
How section 45 of the Insurance Act, 1938 controls the repudiation of life insurance claims: the three-year period, the two routes of fraud and material misstatement, who carries the onus on each, the refund of premiums, and what the section does not cover.
Repudiation and the three-year period
Repudiation is the insurer's formal rejection of a claim. For life policies, a rejection that attacks the policy itself, by saying it was obtained through false or incomplete statements, is governed by section 45 of the Insurance Act, 1938, as amended in 2015.
The section works with a single clock. It runs for three years from the latest of four dates: the issue of the policy, the commencement of risk, a revival, or a rider. Within that period the policy can be contested on limited grounds. After it, no policy can be called in question on any ground whatsoever, so even fraud cannot be raised.
Two routes within three years
The first route is fraud. The insurer must give its grounds in writing. Where fraud is alleged after the policyholder's death, the beneficiaries carry the onus of disproving it. A fraud plea is not open where the fact was within the insurer's knowledge.
The second route is misstatement or suppression of a material fact that falls short of fraud. Here too the grounds must be in writing, and the onus is on the insurer to show that the fact was material, meaning that it would not have issued the policy had it known. The test is materiality, not whether the fact caused the death. On this route the insurer must refund the premiums within 90 days.
Before and after 2015
Before the Insurance Laws (Amendment) Act, 2015, section 45 let a policy be questioned for two years, and after that only if the insurer proved fraud on a material matter. The amendment lengthened the period to three years and made the bar after it complete. The section's heading still says two years, but its text says three.
What the section does not do
Two limits keep the three-year bar in proportion. The insurer may still ask for proof of age at any time. And the section is about contesting the policy, not about whether the event claimed for is covered or whether the policy was in force: a lapsed policy, or a death that falls under the suicide provision, is decided on the policy terms whatever the policy's age.
A revival matters for the same reason the issue date does. Because the period runs from the latest of the four dates, reviving a lapsed policy starts a fresh three years from the date of revival.
Rules at a glance
A misstatement that is not fraud
Illustration, with assumed figures: Prakash answers no to a question about recent hospitalisation, although he had been admitted for a serious heart condition a few months earlier. He dies 18 months after the policy is issued, having paid premiums of ₹90,000 in all.
The insurer repudiates on the ground of suppression of a material fact, without alleging fraud. It has to give its grounds in writing and show that it would not have issued the policy had it known of the hospitalisation. It must also refund the ₹90,000 of premiums within 90 days of the repudiation. Whether the heart condition caused his death is not the test.
Finding the last day for a challenge (illustrative dates)
- Assumptions: policy issued and risk commenced on 10 January 2022; no rider added later; the policy lapsed and was revived on 5 March 2024; the life assured dies on 20 August 2026.
- Three years from issue and commencement of risk = 10 January 2025.
- Three years from revival = 5 March 2027.
- Section 45 takes the latest starting date, which is the revival, so the policy can be contested until 5 March 2027.
- The death on 20 August 2026 is before 5 March 2027, so the insurer may still contest the policy for fraud or material misstatement, with written grounds.
- Without the revival, the period would have ended on 10 January 2025 and no challenge would be possible in August 2026.
Result. With the revival, the policy remains open to challenge on the section 45 grounds until 5 March 2027. Without it, the bar would have applied from 10 January 2025.
Key points
- Section 45 allows a life policy to be contested only within three years of the latest of issue, commencement of risk, revival or rider.
- Within three years the grounds are fraud, or misstatement or suppression of a material fact, each with written grounds.
- For non-fraud misstatement the insurer must show materiality and refund the premiums within 90 days.
- Where fraud is alleged after the policyholder's death, the beneficiaries carry the onus of disproving it.
- After three years the policy cannot be called in question on any ground, though proof of age can still be asked for.
Common misunderstandings
- Fraud cannot be raised at any time: after three years section 45 bars every ground, including fraud.
- The insurer does not have to link the suppressed fact to the cause of death: the test is whether it was material to issuing the policy.
- Section 45 does not make every old policy payable: it does not decide whether the policy was in force or the event is covered.
Questions people ask
Who has to prove materiality when a claim is repudiated for non-fraudulent suppression?
The insurer. It must show that it would not have issued the policy had it known the fact, and give its grounds in writing.
What was the period before 2015?
Two years, after which a policy could still be questioned if the insurer proved fraud on a material matter. The 2015 amendment made it three years with a complete bar afterwards.
Are premiums returned when a policy is repudiated?
On the route of misstatement or suppression that is not fraud, yes: the premiums must be refunded within 90 days.
What this lesson relies on
- Insurance Act, 1938 — section 45
- Insurance Laws (Amendment) Act, 2015
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.