basunivesh@gmail.com
Yes, you are reading it right 🙂 As per the IRDAI’s recent proposed standardized guidelines on health policies, your health insurance claims can’t be rejected after 8 years. This may be the biggest relief to many.
As per the recent (16th May 2019) IRDAIs exposure draft on the “Guidelines on Standardization of Exclusions in Health Insurance”, this wonderful move was discussed in length.
Let me put the wordings as they are in the exposure draft.
“After completion of eight continuous years under the policy no look back to be applied. This period of eight years is called as a moratorium period. The moratorium would be applicable for the sums insured of the first policy and subsequently, completion of 8 continuous years would be applicable from the date of enhancement of sums insured only on the enhanced limits. After the expiry of the Moratorium Period, no health insurance policy shall be contestable except for proven fraud and permanent exclusions specified in the policy contract. The policies would, however, be subject to all limits, sub-limits, co-payments, deductibles as per the policy. The moratorium period is applicable for health insurance policies issued by General and Health Insurers.”
It is clear from the above wordings that Health Insurance companies can’t reject the claim after 8 years of completion. However, few points one must understand here and I have tried to explain the same as below.
# Eight years means the CONTINUES for 8 years. Hence, if there are certain breaks, then your moratorium period starts from the latest renewal. Hence, make sure that there must not be any break in policy periods. Pay the premium within the dues to get such benefit.
# This 8 years period is called the moratorium period.
# The moratorium period will be applicable for the Sum Insured of the first policy. This means if you have enhanced your coverage at a later stage of the policy period, then such enhanced coverage should also get complete 8 years to be eligible for moratorium period.
# Once such moratorium period of 8 years completed, then health insurance companies can’t deny the claim.
# However, it does not mean that you do a fraudalant activity and request for the claim. If there is a fraud in the claim, then health insurance companies have the rights to reject the claim.
# Also, exclusions explained in the policy documents are not eligible for this and hence health insurance companies may reject the claim if the claim is due to the diseases of exclusions.
# The moratorium period is applicable for health insurance policies issued by General and Health Insurers. Hence, if your health insurance is from the Life Insurance Companies (few offers), then this moratorium period will not be applicable.
Once this turned to be law, then it is a big relief for all of us. But in my view, considering this moratorium risks, health insurance companies may enhance the premium.
If you remember, there is the same feature with respect to Life Insurance also. I have already written a post on this. You may refer “Term Insurance-Claim Settlement Ratio no more a big criteria“.
Does that mean that for the first 8 years the insurance company can reject any claim (not a fraud ofcourse) and my hospitalisation expenses, if any, are not in effect covered for the first 8 years?
Dear Geetha,
Not like that. Even if they reject also, they have to give the valid reasons.
Is the moratorium period applicable if i have ported my policies to multiple companies, but on continous coverage for 10-12 years.
I want to port my old policy brought in 2012, will i get the moratorium benefit with the new company?
Dear Vinay,
Yes.
My mother had taken her mediclaim policy from a public sector insurance company in 1999. She ported her policy to a private sector insurance company in 2019. IRDA in October 2020 came up with a new regulation stating that any insurance company can not reject a claim if 8 years have passed since first taking the policy.
Requesting your inputs on if in my mother’s case 8 years will be considered from 1999 or 2019.
Dear Rahil,
Yes, it is considered.
Sir..hello..
we are afamily of 3..nearly 40 aged both and 10 yr son…we have a annual income of 7.5 lkhs…
i hve aterm insurance of 1cr with 10 lakh critical illness rider of icici pru i protect smart(since wife is govt servant so policy is of her name)…and 5lakh family floater health insurance..
of new india assurance…
I want to ask should i continue the critical illness rider or not…do they really pay in need….or i should enhance health insurance cover….i hve started i protect smart in 2017..
Dear Anubhav,
Don’t compare Critical illness with health insurance. Both are entirely different products. You must have a separate health insurance.
Sir..
my question was should i continue critical illness rider…do the companies really pay it..
or…i should increase the new india insurance health cover
Dear Anubhav,
They pay as per the critical illness feature and again I am saying the payout with respect to each product will be as per the features.
You mentioned that moratorium period is not applicable for health insurance policies from life insurance companies. Do you mean something like LIC? Does that mean it is better to go with pure health insurers (such as religare)?
Dear Ragu,
For health insurance, always go with Non-Life Insurance Companies.
Will this be applicable for policies taken before the law enactment?
Dear Ragu,
Let this be notified.
Thankyou.. Basa for saving my money.
I got a call from my RM to invest money in this plan and they started to force me to invest in this plan.
But I have some doubts regarding this your explanation. Please help me resolve.
I took the below situation:
Base amount :120000 yearly
Interest rate – 7%
Term-25 years
SI (Simple interest) results
Total amount:330,000 (Interest:210,000 + Principal:120000)
Compound Interest results:
Total amount:651,291.92 (Interest:531,291.92 + Principal:120000)
Sanchay plan (Guaranteed Income) (Yearly premium-120000)
Total amount:2975999 (Interest:1,535,999 + Principal:1440000)
If I put money in a bank I will get 6.5 Lac at 25 years and in this sanchay plan I will get 30 Lac.
Could you please help me understand where am I getting wrong in my calculations.
Thanks.
Dear Saurabh,
Do the IRR calculation on both the cases and you will find which is best suitable for YOU.
Hello ,
Will this clause be applicable for heath policies issued in year 2015 ?
Dear Pratik,
Yes.