Launching Health Insurance program for an upcoming private bank in India, I had an interesting time studying the various aspects of Health Insurance. Unlike term life insurance which does not have too many conditions, Health Insurance is a tad complicated. It has many sub conditions which greatly impact the policy coverage and the premium charged. It is important to educate oneself about these and use these parameters to compare health plans of various companies. I will over next few days cover these aspects in my blog.
Today we will talk about Pre Existing Diseases.
Meaning of pre-existing condition
While many of us know what health insurance is, we may be unclear what a pre-existing condition is. Thanks to the 2013 IRDAI guidelines on standardisation of terms in health insurance, all health insurers in India have to follow a common definition of “pre-existing condition” as follows:
Any condition, ailment or injury or related condition(s) for which you had signs or symptoms, and / or were diagnosed, and / or received medical advice / treatment within 48 months to prior to the first policy issued by the insurer.
So, if you are applying for a policy on January 1, 2017, if at any time between Jan 1, 2012 to December 31, 2016, you’ve had signs/were diagnosed/had received medical advice/undergone treatment for any medical condition, it will qualify as a pre-existing condition.
How pre-existing condition can affect your health insurance policy
Regardless of which of the health insurance plans in India you choose from, a pre-existing condition can affect it in one or more of the following ways:
You will be required to make a disclosure at the time of purchase:
In any application form for health insurance, you’ll find a question on this point. One of the basic principles of insurance is “utmost good faith” & here, the onus is on you to disclose honestly details of any such condition. In an event that you misrepresent/do not disclose, the insurer has every right to reject your claim when you make one.
Affects the policy issuance decision:
Every health insurer has a set of internal underwriting guidelines that they follow when deciding whether and on which terms they can issue the policy to you. In case of a pre-existing medical condition, there can be the following implications:
- For an issue on standard terms, insurers can add a waiting period
- You may be asked to pay a higher insurance premium(also known as “loading”) to cover the additional risk
- Issue subject to life time exclusion to the pre-existing condition i.e. your insurer may agree to insure you for events other than those caused by your pre-existing medical condition
- The policy can be denied in exceptional cases or in case of chronic illnesses
Waiting period applies for pre-existing condition:
As mentioned above, even if a standard policy is issued, if you closely read the terms and conditions of the policy, it will invariably have a “waiting period” which ranges from 12 months to 48 months. This implies that for a policy issued on Jan 1, 2016, if you are hospitalised due to “diabetes” anytime till December 31, 2019 (assuming a waiting period of 48 months), your insurer is not liable to pay the claim.
Sum assured enhancement:
Insurers give an option to policyholders to increase the sum assured of the policy upon renewal. So, continuing from the above example, suppose on the renewal date Jan 1, 2018, if you decide to raise the sum assured from Rs. 2 lac to Rs. 3 lac, the waiting period for diabetes for the incremental Rs. 1 lac will end on December 31, 2021 (and not December 31, 2020 for the existing sum assured of Rs. 2 lac)
Following are some pointers to note w.r.t. pre-existing condition
While buying a health insurance policy:
- Buy health insurance as early as possible as the chances of contracting illnesses increases with age, along with insurance premium
- Compare policies from different insurers on the parameter of duration of waiting period for pre-existing condition
- Fully disclose the pre-existing condition in the proposal form without fail and do not try to conceal any material facts
Once you buy a health insurance policy:
- In case the waiting period for the policy leaves you uninsured for the following years, ensure you have an emergency medical fund set aside.
- Renew the policy without letting it lapse due to delay in paying insurance premium, else the waiting periods may start afresh
- In case you are planning to change your health insurance provider, opt for portability rather than buying a new insurance policy to preserve built up credit of waiting periods
A pre-existing medical condition should not be a deterrent for buying health insurance and securing your family’s financial future. However, proper disclosure and some precautions ensure that in case you need to make a claim, you have a smooth and hassle free experience.
#Good Health #pre-existing diseases