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    Standard Exclusions in a claim

    The biggest pain point, atleast from a Customer’s perspective, in the health insurance value chain is the claim processing vertical. More often than not the decision as to whether the Customer would continue patronizing an Insurer boils down to the qualitative and quantitative aspect of claim settlement. While the qualitative aspects are subjective and Insurer dependent, IRDAI brings in some objectivity to the quantitative aspect in terms of what claims would not be settled by the insurers. These are generally referred to as standard exclusions and are the same across the board for all Insurers.

    Hierarchical Graph of Standard Exclusions Claim

    Exclusions can broadly be classified into

    1. Time dependent exclusions - Ones that would be covered after you have been a continuous policy holder for a certain period of time. Such exclusions are

      1. The 30 day waiting period clause. This clause is meant to protect the Insurer from Customers with ill-natured intent - Customers buying insurance policies after they know they are going to need hospitalization in the near future doesn’t sit well with the principles of insurance.
        That said two exceptions to the rule are
        • Claims arising out of an accident - the Insurer is liable for a claim if you have made the premium payment at the thier office and have an accident on your way home.
        • Policies that are being ported in - this is a benefit that accrues to the policy holder by virtue of having already borne the 30 day waiting period with an earlier insurer, when she had bought the policy for the first time.
      2. Specific disease/ procedure waiting period - This clause, like the earlier one, gives an Insurer a sense of surety that a Customer isn’t buying a policy to make a claim, in the immediate future.
        One of the principles of Insurance for a Customer is to have a policy but to act like she doesn’t have one i.e. an individual is expected to take care of her asset (in this case her health) like she doesn’t own a policy.
        IRDAI doesn’t mandate the number of years that an Insurer can prescribe as a waiting period, but does cap it at 4 - none of the waiting periods in a policy can exceed 4 years.
        The general industry practice is to club all non life-threatening hospitalizations like Cataract, Kidney Stone, Hernia into one bucket and cap the waiting period for such hospitalizations at 1 or 2 years, and life-threatening hospitalizations into another bucket and cap these at 2 or 4 years.
        Your policy will generally specify the hospitalizations (broadly if not specifically) and the bucket that these would go under.
      3. Pre Existing Disease (PED) waiting period - Generally speaking, PED form the most number of contentious cases that are heard by the Insurance Ombudsman.
        IRDAI defines PED as a condition/ ailment/ injury/ disease which was either diagnosed or treated not before 48 months from issuance of a policy. General insurance practice is to cap PED’s at 3 to 4 years.
        IRDAI also allows for carrying forward of this benefit when you decide to port the policy - the number of years of PED waiting period gets reduced from your incoming insurers policy by the number of continuous years you have spent with your outgoing insurer.

    2. Permanent exclusions - While insurance has been an evolving industry, we have sadly not reached a point where private Insurers could bear the cost of diseases that are draining in terms of cost (Birth Control/ Infertility); certain treatments are also aesthetic and personal (Cosmetic/ Plastic surgery) in nature and the number of people subscribing for such treatments is simply too small for the insurers to break even let alone make profits on them; finally some treatments are in conflict with the law of the land and can therefore not be covered under any insurance policy. IRDAI allows for insurers to exclude such diseases as permanent exclusions. These can broadly be classified into
      • Investigation & Evaluation expenses. IRDAI allows for exemption of charges incurred on diagnostic expenses that do not lead to a hospitalization. Even before/ during/ after hospitalization any diagnostic expense not directly related to the active line of treatment is exempted.
      • Maternity & other miscellaneous expenses. Most individual health policies exclude the maternity cover. Lawful termination of pregnancy is also a standard exclusion, as is treatment for birth control, sterility and infertility.
        Here’s a list of some other standard exclusions

        1. Rehabilitation & rest cure expenses. Expense incurred on rehabilitative treatment i.e. treatment to restore an individual's health to normal after an addiction or illness is a standard exclusion. In the same vein, any treatment to address a spiritual/ emotional need remains an exclusion.
        2. Any Obesity related surgery that is not prescribed by a doctor and/ or is life threatening in conjunction with comorbidities.
        3. Cosmetic surgery, unless certified by a medical practitioner towards reconstruction of a body part, following an accident , burn or cancer.
        4. Expense on treatment of hazardous or adventure sports.
        5. Expense on treatment arising out of a breach of law with criminal intent.
        6. Treatment for addictions including but not limited to alcoholism.
        7. Treatment received in spas, nature cure clinics.
        8. Treatment by dietary supplements unless prescribed by a medical practitioner as a part of hospitalization.
        9. Correction of eye sight due to refractive error less than 7.5 dioptres.
        10. Unproven treatments that lack significant medical documentation to support their effectiveness.
        11. Any treatment specifically excluded by an Insurer in black and white.
      • IRDAI permits insurers to list certain diseases as permanent exclusions if they do not fit into the underwriting philosophy of the Insurer, albeit after appropriate disclosures to the Insured at the time of underwriting. Some of these illnesses are unfortunately ones where medical science hasn’t been able to achieve any significant breakthrough towards their ultimate cure like HIV, AIDS, Alzheimers, Parkinson's disease; others like Cerebrovascular disease, Inflammatory bowel disease, Chronic liver disease are lifestyle related.

    A complete list of all of these exclusions can be accessed at this Link