Section 45 of the Insurance Act, 1938

What is Section 45 of the Insurance Act?

Section 45 of the Insurance Act, 1938 is the incontestability rule for life insurance in India. Once three years have passed from the date of the policy, a life insurer cannot call the policy into question on any ground, including fraud or non-disclosure. Within those three years the insurer can question it, but only on two grounds, fraud or a misstatement of a material fact, and only by explaining its reasons in writing. The rule protects families from having a claim refused decades after the policy was bought because of an answer on an old proposal form.

How Section 45 works

The present text was substituted by the Insurance Laws (Amendment) Act, 2015, with effect from 26 December 2014. It replaced an older two-year rule that still allowed insurers to contest a policy later for fraud. Oddly, the marginal heading in the consolidated Act still says "after two years", while the body says three. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, in force from 5 February 2026, did not change the substance of Section 45.

The three-year clock. It runs from the latest of these dates: issue of the policy, commencement of risk, revival of the policy, or the date a rider was added.

Within three years: fraud. The insurer can repudiate for fraud, which the section defines as acts done by the insured or the insured's agent with intent to deceive the insurer or induce it to issue the policy: stating as fact something the insured does not believe to be true, actively concealing a known fact, any other act fitted to deceive, or anything the law specifically declares fraudulent. Mere silence is not fraud unless there was a duty to speak.

The fraud defence. The insurer cannot repudiate for fraud if the insured proves that the statement was true to the best of their knowledge and belief, that there was no deliberate intention to suppress, or that the insurer already knew the fact. If the policyholder has died, the burden of disproving fraud falls on the beneficiaries.

Within three years: misstatement. The insurer can also question the policy if a fact material to the life's risk was stated incorrectly or suppressed in the proposal or related documents. A fact is material only if it has a direct bearing on the risk, and the insurer must show it would not have issued the policy had it known. If it repudiates on this ground rather than for fraud, it must return the premiums collected to the insured, nominee, assignee or legal representatives within 90 days.

Age. The section does not stop an insurer from asking for proof of age at any time, or adjusting terms if age was wrongly stated. That is not treated as calling the policy into question.

The seller as insurer's agent. An explanation in the section says the person who solicits and negotiates the contract is deemed to be the insurer's agent for forming it.

Example. A policy is issued on 1 June 2023, lapses, and is revived on 1 March 2025. The three-year window now runs to 1 March 2028, because revival is the latest date. A death claim in January 2028 can be examined under Section 45. A claim in April 2028 cannot be contested on disclosure.

What Section 45 means for distribution

• It sets the investigation window. Insurers investigate most deaths within three years ("early claims"). Distribution leaders should expect early claim quality to be reviewed by channel and seller.
• The proposal form is the seller's responsibility too. Because the person who solicits the policy is deemed the insurer's agent, an incomplete or ghost-filled proposal weakens the insurer's position and exposes the seller to action. Read every question to the customer and record the answers they give.
• Revivals restart the clock. When reviving a lapsed policy, tell the customer that a fresh health declaration is a new disclosure and that the three-year window starts again.
• Do not overstate the protection. Section 45 protects against old disputes. It does not make a policy claimable if it has lapsed, or if the event is excluded by the policy terms.
• Courts expect proof. Indian courts have repeatedly set aside repudiations where the insurer could not prove the suppression it alleged. Distributors should still treat full disclosure as the only safe practice.