New Delhi, Aug. 4 -- If a life insurance policy lapses due to non-payment of premiums, the insurer can legally reject the death claim. But can the insurer also keep the premiums already paid by the policyholder?

In a significant ruling, the Maharashtra State Consumer Disputes Redressal Commission said that while HDFC Life Insurance Company was justified in rejecting a Rs.70 lakh death claim because the policy had lapsed, it could not retain the entire Rs.7 lakh first-year premium paid by the insured.

According to a report by The Economic Times, the Commission said that it would not be fair for the insurer to keep the entire Rs.7 lakh premium, given the exceptional facts of the case.

As reported by The Economic Times, the deceased polic...