IRDAI Makes Health Insurance Claims Non-contestable after 8 Years of Paying the Premium

The Insurance Regulatory and Development Authority of India (IRDAI) in its latest guidelines has prohibited insurance companies to contest health insurance claims after 8 years of receiving premiums. The insurers also have to pay an interest of 2% above the bank rate to the policyholder for a delay in claim payments, applicable from the date of receiving all the documents.

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      This new amendment does not permit the Health insurance companies to contest claims if the policyholder has been paying premium continuously for a period of 8 years. The guidelines are issued in order to standardise and simplify the indemnity-based medical insurance terms and conditions. It is not applicable to personal accident and international and domestic travel insurance plans. The idea is to bring uniformity across the health insurance industry.

      It further mentions that the health insurance contracts that are not in compliance with these new set of guidelines need to be modified when they are due for renewal on or before April 01, 2021.

      As per the guidelines issued on Standardization of General Terms and Clauses in Health Insurance Policy Contracts, this duration of 8-years is also termed as the moratorium period, which would be applicable to the sum insured of the first health insurance plan. The moratorium of 8-years applies would be applicable from the sum insured enhancement date only on the enhanced limits.

      After expiry of eight years of moratorium period the medical insurance claims are not contestable unless it is a fraudulent act or is mentioned under the policy exclusions. However, the co-payments, sub-limits, deductibles shall follow as per the Mediclaim policy contract.

      Moreover, at the time of claim settlement, IRDAI instructs the insurers to reject or settle health insurance claims within 30 days on receiving the last essential document. And if the claim settlement is delayed, then the insurance company would be liable to pay interest to the insured at a rate of 2% above the bank rate. Any misinterpretation or non-disclosure by the policyholder would call for fortification of the premium paid and the policy will be cancelled.

      And if the policyholder needs to port the policy as per the guidelines, he can do that and port it for all the family members and it needs to be done a minimum of 45 days before the renewal date. And if someone is insured under a health insurance policy at present and has been paying the premium continuously without any lapses, the proposed policyholder will get the accrued benefits of the waiting periods.

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