IRDAI changes waiting period, moratorium rules. Here’s how you will benefit!

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The Insurance Regulatory and Development Authority of India (IRDAI) has made changes to the rules regarding Pre-Existing Diseases (PED). This is set to benefit a large number of health insurance policyholders. Previously, any illness existing up to four years before applying for a policy was considered a pre-existing disease. IRDAI has now reduced this period to 3 years. This means that all illnesses up to three years before purchasing the policy will fall under the category of PED.

Reduction in the Moratorium Period

Along with this, the insurance regulator has also reduced the moratorium period from 8 years to 5 years. Moratorium period means that if you continue with your health insurance policy for 5 years continuously, the insurance company cannot reject a claim for any illness. During this time, all other types of waiting periods will not be taken into consideration. If a person has ported their policy, the term of the old company’s policy will also be included in the moratorium period. The new rules have come into effect starting April 1, 2024.

Pre-Existing diseases

The treatment of pre-existing diseases can prove to be expensive, so insurance companies only begin covering such diseases after a certain period, which is known as the waiting period. This period previously ranged between 2-4 years, depending on the disease.

After the waiting period ends, insurance companies provide coverage for treating that disease. According to the new rules, if an insured person is diagnosed with an illness within 3 months of purchasing the policy, the same will not be considered a pre-existing disease. However, if a person suffers a heart attack or is diagnosed with diabetes within 3 months of purchasing the policy, it will be considered a pre-existing disease.

How detrimental is hiding pre-existing diseases?

Let’s say you have applied for a health insurance policy. Under IRDAI’s new rules, if you has any pre-existing disease or have been taking treatment for any disease up to three years before purchasing the policy, you will have to disclose it in the proposal form.

If the insurance company discovers while you are filling the proposal form that you or any member in your family has had an illness, they can can increase the premium, add co-payment clauses, or even reject the application altogether. Under the co-payment clause, the insured person has to pay a predetermined portion of the treatment expenses from their own pocket. The remaining amount will be borne by the insurance company.

But say you hide the disease and gets insurance coverage, but then, undergo treatment for it after a few months.  During this time, if the insurance company finds out that your disease is pre-existing, not only can the company reject the claim, but also cancel the policy.

Now let’s understand how many types of waiting periods are associated with insurance policies.

Initial Waiting Period :  Just because you have purchased a policy does not mean you can get treatment from day one. There is an initial waiting period in health insurance policies. Typically, this lasts for 30 days, meaning one month. During this period, if you are admitted to the hospital, you will not be eligible for any claims. However, in the case of an accident, a claim can be made.

Pre-Existing Diseases : There are different waiting periods for pre-existing diseases. Typically, this period ranges from 2- 4 years. During this time, if you are admitted to the hospital for any pre-existing disease, you will not be able to make a claim. It is also possible that this waiting period is applicable only for specific diseases only.

Waiting Period for Specific Diseases : In some cases, a waiting period is applicable for serious diseases such as cancer surgery, hernia, cataract, and joint replacement in insurance policies. This waiting period can range from two to four years. This information is clearly stated in the policy document.

Maternity Waiting Period : In health insurance, the benefit of maternity comes with a waiting period of one to five years. However, most insurance companies do not provide maternity coverage. Separate riders needs to be taken for this. Maternity cover can be available from the beginning in group insurance.

SEBI-registered Investment Advisor Jitendra Solanki says that the change in the definition of pre-existing diseases and moratorium period in health insurance is beneficial for policyholders. Now, insurance companies will not be able to reject a policyholder for any disease that was not detected three years before purchasing the policy. To prevent health claims from being rejected by referring to pre-existing diseases during insurance claims, the regulator has reduced the time limit for PED from 4 to 3 years. More people will be now be able to buy health insurance with this change by IRDAI.

In total, IRDAI’s new rules will benefit policyholders. But to fully benefit from health insurance, you should provide accurate information in the proposal form when purchasing the policy. Also understand the waiting periods associated with the policy well, i.e., how many days after the pre-existing disease will be covered.