Moratorium Period in Health Insurance

​As of April 2024, the moratorium period in health insurance has been reduced from 96 months to 60 months. But what is the moratorium period meaning in health insurance? – This article is a detailed guide that can help you understand. So, let's dive in!

What is the Moratorium​​ Period in Health Insurance?

A moratorium period is a fixed time after which coverage or claims can no longer be denied to policyholders on grounds of non-disclosure or fraud unless otherwise proven by the insurer. As of April 1^st, 2024, IRDAI has set this period to be 5 years.

This means that if an individual has been covered by a health policy for 60 months or more, the insurer can not reject a claim due to non-disclosure or unless fraud is proven. Cases of portability and migration will also be included in this 60-month time frame (without any breaks or lapses).

Insurers often contest question disclosures during the proposal stage when it comes to chronic illnesses or pre-existing conditions like diabetes, arthritis, high blood pressure, etc. They also scrutinise these disclosures and cross-check them with any commentary (on discharge summary) made by the policyholder’s treating doctor at the time of claims.

Any conflicting evidence or inconsistencies in information in the disclosure can lead to disputes during claims settlement. Once the moratorium period is over, insurers lose the right to reject claims on these grounds, unless they can prove fraud or misrepresentation.

What is Fraud in Insurance?

According to section 17 of the Indian Contract Act of 1872, fraud encompasses several fraudulent acts perpetrated by a party to a contract, or by their representatives, or with their cooperation, with the aim to mislead another party or persuade them to enter into a contract. These acts include-

• Making a promise without any intention of following through with it.

• Making a misleading suggestion as reality by someone who does not think it is true.

• Actively hiding a truth by someone who knows or regards it to be true.

• Any omission or act that the law declares to be fraudulent.

• Any other act focused on deceiving.

Purpose of Moratorium Period in Health Insurance .

A moratorium period in health insurance acts as a safety net for policyholders and also encourages honesty when applying for a policy.

Policyholders are more likely t​o disclose their medical history during the policy application process. Also, medical insurance moratorium periods also establish a strict time frame after which insurers cannot contest a claim filed by policyholders without valid proof.

This level of transparency helps the insurance providers and policyholders accurately assess risk and choose the right health insurance policy at the time of purchase.

Difference Between Usual Waiting Period and Moratorium Period in Health Insurance

Usual Waiting Period

This waiting period applies to all kinds of medical coverage within the health policy, regardless of pre-existing medical conditions. It can differ depending on the specific health policy but might cover treatments such as specific surgeries or outpatient department consultations. These details are outlined in the health policy document.

Moratorium Period

It is a set waiting period (5 years in India) after which, insurance claims can not be contested by the insurance provider. It is also referred to as a look-back period.

Why Does the Moratorium Period Matter?

When You Are Purchasing a Policy

• Ensure to disclose all information you know.

• Use email or extra paper to add any additional information and ensure to keep records of all conformation.

When You Already Have an Insurance Policy

• If you know about any non-disclosure, inform the insurance provider promptly.

• Holding onto a health insurance policy with undisclosed information can be detrimental. This is because you should know that your insurance claims will be questioned.

IRDAI New Rules For Moratorium Period In Health Insurance Claim Settlement

This year, the IRDAI has reduced the moratorium period in health insurance from 8 years to 5 years. Once the moratorium period of an active health insurance policy ends, the insurance company cannot deny any claim covered by the health policy, except in the case of fraud.

The IRDAI states that after a health insurance plan has had coverage for a continuous 5 years (including migration and portability), the insurance provider cannot contest the policy and any claim on grounds of misrepresentation and non-disclosure; however, it can on grounds of fraud.

Tips to Navigate The Moratorium Period In Health Insurance

Navigating the moratorium period demands diligence and proactive communication on the part of policyholders. When buying a health policy, make sure that you provide complete and accurate information during the application process.

Disclose all relevant information about your lifestyle, medical history and any pre-existing health conditions to avoid potential problems during the health insurance claim process.

If you come across any omissions or discrepancies in your health policy document, promptly notify your insurance provider to rectify the situation. Honesty and transparency is vital to maintain a positive relationship with your insurance provider and to ensure that your coverage remains effective and valid.

How Do I Ensure Coverage with Reliance General Insurance?

Health insurance works by the insurance provider evaluating your risks and the chances of you making an insurance claim. They depend on information you provide such as your medical history, lifestyle, age etc, to determine how much insurance premium you will be charged for your coverage.

You provide these details through -

• The application form when you buy our Health Infinity Insurance.

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• During interactions with your insurer or with their representatives (when you speak with someone in their customer support team).

Since we at Reliance General Insurance base our decisions on the information you provide, it is essential to be honest and accurate in your declarations. This ensures you get the right pricing and health insurance coverage for your needs.

If you provide incorrect information in your health policy, it might lead to denied claims or cancelled policy.

In the past, insurance providers could cancel your health insurance policy or reject insurance claims even after years of renewing it, leading to uncertainty for customers. To address such cases, the IRDAI launched the “Moratorium Period in health insurance” to ensure coverage.

Conclusion

A moratorium period in health insurance is essential to maintain a balanced risk pool and ensure fair health insurance premiums for everyone.

After the 5-year moratorium in health insurance, insurance companies cannot reject claims because of undisclosed information.

However, you must remember that honesty is essential when providing information to insurance providers, as misrepresentation can still result in claim rejection.

By staying honest and informed about all health insurance terms, you can ensure that the insurance you purchase from us remains effective and reliable. Hopefully, this guide has helped you understand the moratorium meaning in health insurance.