3 changes in health insurance claim rules to help consumers: Reduced waiting period for pre-existing diseases, moratorium

The insurance regulator has made it compulsory for health insurance companies to reduce the maximum waiting period to get complete health insurance coverage in case of pre-existing diseases (PED) from 4 years to 3 years. The regulator modified the definition of pre-existing disease in its IRDAI (Insurance Products) Regulations, 2024, notified on April 1, 2024. According to the notification, pre-existing disease (PED) means any condition, ailment, injury or disease:

a) that is/are diagnosed by a physician not more than 36 months prior to the date of commencement of the policy issued by the insurer; or

b) for which medical advice or treatment was recommended by, or received from, a physician, not more than 36 months prior to the date of commencement of the policy.

However, the definition of PED is not applicable on overseas travel policies

When you buy a health insurance policy, the insurer will ask you about any history of illnesses and any medical conditions that you still have. In case a condition falls in the category of pre-existing disease, the health insurer will ask you to wait for a certain period before the policy starts covering the diseases linked to the PED. If you fall ill during the waiting period due to the mentioned PED, the insurer will not offer any coverage. So a reduction of one year in this waiting period wil help many existing policyholders and those planning to take a policy.

"This is a commendable move as it addresses a major concern for health insurance buyers, reducing their concern before claiming for any PED. By reducing the PED waiting period from 48 months to 36 months, more individuals are likely to opt for health insurance, thereby enhancing insurance penetration in the country,” says Siddharth Singhal, Business Head-Health Insurance at Policybazaar.com.

Moratorium period too reduced from 8 year to 5 years

The IRDA has also reduced the moratorium period significantly from 8 years to 5 years. Once an active health insurance policy’s moratorium period ends, the insurer cannot deny any claim covered by the policy on any grounds, except fraud.

The IRDA notification states that after a health insurance policy has had a coverage for sixty continuous months (including portability and migration), the insurer cannot contest the policy and any claim on grounds of non-disclosure or misrepresentation; but it can on grounds of established fraud. This period of sixty continuous months is called the moratorium period.

The moratorium would be applicable on the sums insured of the first policy. When this sum insured is enhanced, the insured would have to wait for 60 months from the date of enhancement to make a claim on the enhanced limit.

Specified disease waiting period reduced from 4 years to 3 years

The IRDA has also reduced the specified waiting period. According to the notification, “specific waiting period” means a period of up to 36 months from the commencement of a health insurance policy when specified diseases and treatments (except due to an accident) are not covered. After this period, the diseases and treatments mentioned in the policy document will be covered provided the policy has been renewed without any break. When you buy a health insurance policy, the health insurer will give you the details of the diseases that fall into the specified waiting period, and are covered only when this period is over but the policy remains active. “From a customer perspective, a shorter waiting period is always preferable as it reduces uncertainty and allows for quicker coverage of illnesses or claims against them," says Singhal.

Will the reduced time be applicable on new policies or on old policies too?

The new reduced waiting period on health insurance will benefit both old as well as new policyholders. "For first-time policyholders, this change means they will enjoy the advantage of a reduced waiting period going forward. Existing policyholders will also benefit, as the waiting period will be reduced to align with the new 3-year clause upon policy renewal. Overall, this initiative is beneficial for customers, ensuring they receive enhanced benefits and reduced waiting times when accessing period going forward. Existing policyholders will also benefit, as the waiting period will be reduced to align with the new 3-year clause upon policy renewal. Overall, this initiative is beneficial for customers, ensuring they receive enhanced benefits and reduced waiting times when accessing health insurance coverage," adds Singhal.