New Rule: After 8 Years of Premium Payment Health Insurance Claim Becomes Non-Contestable
The worst nightmare for a health insurance policyholder would be the rejection of the claim by the insurer. There have been several advancements in medical science over the last few decades. Nothing seems impossible now; there is almost a cure to every disease that was considered incurable earlier. However, with medical science advancements, the cost of treatment has skyrocketed, and it has nearly become impossible for the middle class to afford the treatment. Health insurance is the only safety net now. So it will be challenging for the insured to settle claims if the health insurance company rejects or contests the claim.
To safeguard the policyholder’s interest, the Insurance Regulatory Development Authority of India (IRDAI) has issued new guidelines that will immunize policyholders from claim rejection. The guidelines’ main purpose is to standardize health insurance terms and conditions and make it simplified for a layman to understand.
New Guidelines in Health Insurance Claim Settlement
IRDAI has set up new guidelines and introduced a moratorium period to safeguard claim rejection by insurance providers. The details of the new guidelines are mentioned below:
- -> Health insurance companies are not allowed to challenge claims for policyholders who have been paying the insurance premium for eight continuous years. This means that if a policyholder is paying for the insurance for eight consecutive years, then the claim will be settled easily.
- -> Any existing policy whose terms are not as per the new guidelines will have to modify the terms from 1st April 2021. So, whenever there is renewal on or after 1st April 2021, the terms will have to be revised.
- -> The eight-year duration is a trial period by the insurance companies, termed as the moratorium period. Insurance companies can judge the claims raised within the moratorium period, but any policyholder who has completed the moratorium period will be immune from claim rejection.
- -> The moratorium period is applied to the initial sum assured. It means if there is any enhancement in the sum assured, then the net enhancement will have to cover the moratorium period separately. For example, say the initial sum assured was 10 lacs on 1st Jan 2010, and after three years, the sum assured was increased to 15 lacs. The initial sum assured will have to complete eight years in 2018, and the increased sum assured of 5 lacs will complete its moratorium in 2021.
- -> In case of fraud or breach of trust on the policyholder’s part, the policy will be disqualified. There will be no benefit given to the policyholders.
- -> Policyholders can port the policy from one insurer to another. The portability should be done 45 days before the renewal date.
IRDAI is coming up with new guidelines to make the health insurance policy easily accessible to the masses. It is always advisable to read the guidelines and terms before purchasing a policy. Once an individual has complete knowledge, he/she will be able to utilize the policy optimally.
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