Health insurance claims not contestable if premium paid for 8 yrs: Irdai

Health insurance companies will no more be allowed to contest claims if the premium has been paid for a continuous ‘moratorium’ period of eight years, except in cases of proven fraud and specified permanent exclusions, according to the fresh guidelines issued by the Insurance Regulatory and Development Authority (Irdai).

“All policy contracts of the existing health insurance products that are not in compliance with these guidelines shall be modified as and when they are due for renewal from April 1, 2021 onwards. After completion of eight continuous years under the policy no look back to be applied…After expiry of moratorium period (of eight years) no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract,” said the insurance regulator.

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The objective of the guidelines is to standardise the general terms and clauses incorporated in indemnity based health insurance (excluding personal accident and domestic/overseas travel) products by simplifying the wordings of general terms and clauses of the policy contracts and ensure uniformity across the industry, it said.

The policies will, however, be subject to all limits, sub-limits, co-payments, deductibles as per the policy contract.

This period of eight years is called as moratorium period. The moratorium would be applicable for the sums insured of the first policy and subsequently completion of eight continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits, the regulator said in the guidelines on ‘Standardization of General Terms and Clauses in Health Insurance Policy Contracts’.

On claim settlement, Irdai said the insurance company should settle or reject a claim, as the case may be, within 30 days from the date of receipt of last necessary document.

In the case of delay in the payment of a claim, the company will be liable to pay interest to the policyholder from the date of receipt of last necessary document to the date of payment of claim at a rate 2 per cent above the bank rate.

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It also said the policy will become void and all premium paid will be forfeited to the company in the event of misrepresentation, mis-description or non-disclosure of any material fact by the policyholder.

On portability, the guidelines said 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.

If 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.

(With inputs from agencies)