Updates From IRDA Which New and Existing Policyholders Should Know: 2024


Summary

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Insurance regulatory and development authority of India has come out with updates related to the waiting period and moratorium period of insurance plans. These updates which are effective from April 1, 2024 would benefit both the existing policyholders as well as the new policyholders taking any health insurance plan. 

Continue reading to know the updates from IRDAI:

Two Important Updates Published by IRDAI

Pre-existing Waiting Period

Pre-existing waiting period was reduced from 4 years to 3 years. With this change by IRDAI, health insurance companies cannot deny coverage for any pre-existing disease once you have successfully completed the 3 year waiting period without any break in the continuity of the policy.

This update would be applicable to existing as well as new health insurance plans. In case of existing health insurance plans, policyholders who have completed a 3 year waiting period may choose to claim benefits for pre-existing conditions without having to wait for another year. 

Moratorium Period

Moratorium period was reduced from 96 months (8 years) to 60 months (5 years). Previously the moratorium period for health insurance plans was 8 years which is now reduced to 5 years and would greatly benefit the existing policyholders.

Under this new update the moratorium period includes the time that is covered under previous insurers in case of portability and migration of health insurance plans from one insurance company to another. 

Previous definition of moratorium was a bit unclear in which the insurance companies calculated the moratorium period of 96 months starting with the time a policyholder has taken a policy from them.

For example, if you held a health insurance policy from XYZ insurance company for 10 years and ported it to ABC company, then ABC company used to calculate the moratorium period from the date you joined their company instead of the date of taking the policy i.e. before 10 years. 

In addition the new wordings have more clarity compared to the previous wordings. The revised policy wordings state that any health insurance policy cannot be contested for misrepresentation or non-disclosure of any material facts after the moratorium period, except for conditions of proven fraud. 

So, if you have held a health insurance policy for more than 60 months, now any claim made by you cannot be contested by the insurance companies except if they were able to prove it as a case of fraud. All other reasons for claim denial are not acceptable after the completion of the moratorium period.

FAQs

  1. What is the moratorium period in insurance?

    Moratorium period in insurance refers to the time period after which an insurance company cannot contest the claim raised by the policyholder for reasons such as misrepresentation and non-disclosure of material facts except for reasons of proven fraud.

  2. When was the moratorium period introduced in health insurance in India?

    Moratorium period was introduced by the Insurance regulatory development authority of India in the year 2020 with respect to health insurance plans. The initial moratorium period was 8 years and recently from April 1, 2024 it has been reduced to 5 years.

  3. What happens to the moratorium period if a health insurance policy is ported?

    As per the update from IRDA, the moratorium period would be counted from the policy start date of the health insurance policy and even if the policy is ported the calculation would be from the first policy date subject to the condition that there is a continuity in policy coverage.

  4. What is the new pre-existing waiting period in health insurance?

    The new pre-existing waiting period in health insurance is 3 years instead of the existing 4 years. The new pre-existing period would be applicable to new as well as existing health insurance plans in India.

  5. What is the advantage of less pre-existing waiting period in health insurance?

    The main advantage with decreased pre-existing waiting period is that it would help the policyholders claim early and make better use of their health insurance plans.

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Susheel Agarwal