Transparent disclosures in health insurance are essential for policyholders, not just during the initial purchase, but also when switching to a new insurer. Failing to disclose relevant information can lead to claim rejections and policy cancellations, resulting in financial losses for individuals and families.
One such case involved Kriti Mehta (name changed) and her husband, who switched their health insurance policy to a cheaper one in 2020 without disclosing a hysterectomy procedure Mehta had undergone that year. When Mehta developed complications related to the procedure and needed hospitalization, the new insurer denied her claim due to non-disclosure. This is a common issue, with the suppression of pre-existing diseases being the top cause of claim rejection, according to the Mumbai Insurance Ombudsman office.
So, what exactly is a pre-existing illness? It refers to any health condition, injury, ailment, or disease diagnosed and treated within 48 months before purchasing a new insurance policy. Such illnesses are typically covered after a waiting period, which can range from one to four years, depending on the product and insurer. Policy buyers are responsible for disclosing all past ailments or conditions they have been diagnosed with, as this information is used by insurers to assess risk and determine premiums.
Concealing information about pre-existing conditions at the time of policy purchase carries serious consequences. In addition to claim rejection, insurers may also cancel the policy based on misrepresentation of health status. Even if the hospitalization is for a different disease unrelated to the undisclosed condition, the policy can still be canceled, affecting other family members covered under a family floater policy.
When it comes to switching insurers through the process of porting, policyholders should disclose all known ailments to the new insurer. While claim history can be accessed by the new insurer from the existing one, it is crucial for policyholders to provide comprehensive health information. Non-disclosure during porting can lead to claim denial and policy cancellation. However, many policyholders fail to share their complete health history during this process, often in pursuit of cheaper policies. This lack of disclosure can ultimately result in claim rejection by the new insurer.
To prevent such issues, it is important for insurers, intermediaries, and policyholders to prioritize transparent communication and thorough health disclosures. Policyholders should take the initiative to share their full health details with insurers, ensuring a smooth claims process and policy continuity. By following proper disclosure practices, individuals can protect their financial interests and secure the benefits of their health insurance policies.
1. What is a pre-existing illness and why does it matter?
A pre-existing illness refers to any health condition, injury, ailment, or disease diagnosed and treated up to 48 months before purchasing a new insurance policy. It matters because such conditions are usually covered after a waiting period, and policyholders must disclose them to insurers for risk assessment and premium calculation.
2. Can an insurer cancel a policy if the illness for which one is hospitalized is not related to an undisclosed health condition?
Yes, insurers can cancel a policy based on misrepresentation of health status, even if the disease being treated is unrelated to a concealed condition. This can affect other family members covered under a family floater policy as well.
3. Do old ailments known to an existing insurer have to be disclosed to a new insurance company during policy porting?
Yes, it is advisable to disclose all known ailments to the new insurer during the policy porting process. While claim history can be accessed, comprehensive health information provided by the policyholder ensures transparency and avoids claim denial or policy cancellation.
4. What should policyholders do if new conditions develop during the policy term?
New conditions that develop during the policy term should be disclosed to the insurer. It is important to keep the insurer informed about any changes in health status to ensure proper coverage and claim settlement.
5. How does the eight-year moratorium clause mandated by the Insurance Regulatory and Development Authority of India help policyholders?
The eight-year moratorium clause, introduced in 2019, provides relief to policyholders who have been paying premiums for several years. It aims to ensure smoother claim settlements by preventing insurers from rejecting claims based on non-disclosure of pre-existing diseases after a specified period of time.