IRDAI Health Insurance Guidelines 2020 – 12 Rules you must KNOW

IRDAI issued new guidelines on 11th June 2020. Let us understand the new IRDA Health Insurance Guidelines 2020. These are really beneficial for all the insured.

IRDAI Health Insurance Guidelines 2020 – Do you know these changes?

1. Health Insurance Policies indisputable after 8 years of premium payment

Is it a new guideline? It is an old guideline that IRDAI issued on 27th September 2019. I have already written a detailed post on this. Refer the same at “Health Insurance Claims can’t be rejected after 8 Yrs !!“.

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 fraudulent 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“.

2.Disclosure of Information

Thinking that Health Insurance companies can’t question you 8 years does not mean you can hide the materiel facts. Hence, disclosing the materiel facts which you know is very much important.

The guidelines clearly mention this as a priority as below.

The policy shall be void and all premium paid thereon shall be forfeited to the Company in the event of misrepresentation, misdescription or non-disclosure of any material fact by the policyholder.

(Explanation: “Material facts” for the purpose of this policy shall mean all relevant information sought by the company in the proposal form and other connected documents to enable it to take informed decision in the context of
underwriting the risk)

But refer my recent post where I have mentioned the Supreme Court Judgement, which may be handy for you in understanding this guideline properly. Refer it at “Health Insurance Claim rejected due to Non-disclosure? Read this Supreme Court Judgement“.

3.Penalty for delay in Claim Settlement

Here, there are strict guidelines with respect to claim settlement. If there is a delay from health insurance companies, then obviously it cost to health insurance companies.

The company will have to settle or reject a claim, as the case may be, within 30 days from the date of receipt of last necessary document. Remember, it is within 30 days from the date of receipt of LAST NECESSARY DOCUMENT.

Hence, until and unless you not submit the required documents to the health insurance companies, this rule not applies to you.

ln the case of delay in the payment of a claim, the Company shall be liable to pay interest to the policyholder from the date of receipt of the last necessary document to the date of payment of claim at a rate 2% above the bank rate.

However, where the circumstances of a claim warrant an investigation in the opinion of the Company, it shall initiate and complete such investigation at the earliest, in any case not later than 30 days from the date of receipt of last
necessary document- ln such cases, the Company shall settle or reject the claim within 45 days from the date of receipt of the last necessary document.

ln case of delay beyond stipulated 45 days, the Company shall be liable to pay interest to the policyholder at a rate 2% above the bank rate from the date of receipt of last necessary document to the date of payment of claim.

Here, “Bank rate” shall mean the rate fixed by the Reserve Bank of lndia (RBl) at the beginning of the financial year in which claim has fallen due.

4.In case of Multiple Policies

ln case of multiple policies taken by an insured person during a period from one or more insurers to indemnify treatment costs, the insured person shall have the right to require a settlement of his/her claim in terms of any of his/her policies. ln all such cases the insurer chosen by the insured person shall be obliged to settle the claim as
long as the claim is within the limits of and according to the terms of the chosen policy.

lnsured person having multiple policies shall also have the right to prefer claims under this policy for the amounts disallowed under any other policy/policies even if the sum insured is not exhausted. Then the insurer shall independently settle the claimed subject to the terms and conditions of this policy.

lf the amount to be claimed exceeds the sum insured under a single policy, the insured person shall have the right to choose insurer from whom he/she wants to claim the balance amount.

Where an insured person has policies from more than one insurer to cover the same risk on an indemnity basis, the insured person shall only be indemnified the treatment costs in accordance with the terms and conditions of the chosen policy.

I have written a detailed post on this earlier. Refer the same at “Multiple health insurance policies -How to claim from all?“.

5.Coverage will not be available during grace period of Health Insurance!!

lf the insured person has opted for Payment of Premium on an installment basis i.e. Half Yearly, Quarterly or Monthly, as mentioned in the policy Schedule/Certificate of insurance, the following Conditions shall apply

• Grace period varies from company to company as it is left with Health Insurance companies.
• During such a grace period, coverage will not be available from the due date of installment premium till the date of receipt of premium by Company.
• The insured person will get the accrued continuity benefit in respect of the “Waiting Periods”, “Specific Waiting Periods” in the event of payment of the premium within the stipulated grace period.
• No interest will be charged if the installment premium is not paid on the due date.
• ln case of installment premium due not received within the grace period, the policy will get canceled.
• ln the event of a claim, all subsequent premium installments shall immediately become due and payable.
• The company has the right to recover and deduct all the pending installments from the claim amount due under the policy.

6.Right to revise the features and premium

The Company, with prior approval of lRDAl, may revise or modify the terms of the policy including the premium rates. The insured person shall be notified three months before the changes are effected.

7.Nominee have rights over legal heirs

As I pointed in my earlier post “Who is Beneficial Nominee in your Life Insurance?“, with respect to life insurance will apply to health insurance also. Even though IRDAI silent on mentioning the BENEFICIAL NOMINEE.

The policyholder is required at the inception of the policy to make a nomination for the purpose of payment of claims under the policy in the event of the death of the policyholder. Any change of nomination shall be communicated to the company in writing and such change shall be effective only when an endorsement on the policy is made. ln the event of the death of the policyholder, the Company will pay the nominee {as named in the Policy Schedule/Policy Certificate/Endorsement (if any)} and in case there is no subsisting nominee, to the legal heirs or legal representatives of the policyholder whose discharge shall be treated as a full and final discharge of its liability under the policy.

8.Free look in period applies to NEW policies but not to renewals/porting/migrating policies

The Free Look Period shall be applicable on new individual health insurance policies and not on renewals or at the time of porting/migrating the policy.

The insured person shall be allowed free look period of fifteen days from date of receipt of the policy document to review the terms and conditions of the policy, and to return the same if not acceptable.

lf the insured has not made any claim during the Free Look Period, the insured shall be entitled to:-

• a refund of the premium paid less any expenses incurred by the Company on medical examination of the insured person and the stamp duty charges or
• Where the risk has already commenced and the option of return of the policy is exercised by the insured person, a deduction towards the proportionate risk premium for period of cover or
• Where only a part of the insurance coverage has commenced, such proportionate premium commensurate with the insurance coverage during such period;

Insurance companies have rights to increase the free look in period from 15 days to more also (if they feel so).

9.What if the product is closed?

ln the likelihood of this product being withdrawn in the future, the Company will intimate the insured person about the same 90 days prior to the expiry of the policy.

lnsured Person will have the option to migrate to similar health insurance product available with the Company at the time of renewal with all the accrued continuity benefits such as cumulative bonus, waiver of the waiting period. as per IRDAI guidelines, provided the policy has been maintained without a break.

10.Migration and Portability of Health Insurance

You have an option to migrate to some other product of the same company. This is called migration. However, if you wish to move to some other company, then it is called portability.

• Migration:-The insured person will have the option to migrate the policy to other health insurance products/plans offered by the company by applying for migration of the policy at least 3O days before the policy renewal date as per IRDAI guidelines on Migration. lf such person is presently covered and has been continuously covered without any lapses under any health insurance product plan offered by the company, the insured person will get the accrued continuity benefits in waiting periods as per IRDAI guidelines on migration.
• Portability:-The insured person will have the option to port the policy to other insurers by applying to such insurer to port the entire policy along with all the members of the family, if any, at least 45 days before, but not earlier than 60 days from the policy renewal date as per IRDAI guidelines related to portability. lf such person is
• presently covered and has been continuously covered without any lapses under any health insurance policy with an Indian General/Health insurer, the proposed insured person will get the accrued continuity benefits in waiting periods as per IRDAI guidelines on portability.

11.Right to cancel the policy by policyholder and Insurance company

• The policyholder may cancel this policy by giving 1Sdays’written notice and in such an event, the Company shall refund the premium for the unexpired policy period as detailed below. Notwithstanding anything contained herein or otherwise, no refunds of the premium hall be made in respect of Cancellation where any claim has been admitted or has been lodged or any benefit has been availed by the insured person under the policy.
• The Company may cancel the policy at any time on grounds of misrepresentation non-disclosure of material facts, fraud by the insured person by giving 15 days written notice. There would be no refund of premium on cancellation on grounds of misrepresentation, non-disclosure of material facts or fraud.

12. No Claim based loading while renewal

This new guideline reinstate what it was earlier with respect to claim based loading of premium in health insurance.

The policy shall ordinarily be renewable except on misrepresentation by the insured person. grounds of fraud, misrepresentation by the insured person.

The company will intimate to the policyholder about the renewal dates. However, the company is not under obligation to give you any notice for renewal.

Renewal can’t be denied just because the policyholder made a claim in the preceding policy years.

No loading shall apply on renewals based on individual claims experience.

Conclusion:-You noticed that many in these guidelines are not new. Instead, they were notified long back. However, by bringing in these new guidelines, it is easier now for us to understand these rules in a better way.