Certain illnesses in 1st 3 months of health insurance policy to be treated as pre-existing disease
A pre-existing disease is a condition, ailment or injury that already exists at the time you buy a health insurance policy.
This change was included in the guidelines on standardisation in health insurance released by Insurance Regulatory and Development Authority of India (IRDAI) on September 27, 2019. These norms will be applicable to products filed after October 1, 2019. For existing health contracts, the new rules will come into effect from October 1, 2020.
What is a pre-existing disease?
A pre-existing disease (PED) is a condition, ailment or injury that already exists at the time you buy a health insurance policy and these PEDs are generally excluded from the policy coverage for an initial waiting period. The maximum waiting period on such PEDs is 4 years.
Definition as per IRDAI regulations: "It is a condition, ailment or injury or related condition(s) for which the policyholder had signs or symptoms, and/or was diagnosed, and/or for which medical advice/treatment was received within 48 months prior to the first policy issued by the insurer and renewed continuously thereafter."
Modification in the definition of PED
The IRDAI circular said, "A condition for which any symptoms and or signs if presented and have resulted within three months of the issuance of the policy in a diagnostic illness or medical condition will be treated as PED." This clause is in addition to the existing definition of PED.
This expansion in the PED is the part of the guidelines set out in the circular on September 27, 2019. These guidelines also clarify that insurance companies can no longer exclude many illnesses which were not covered till now.
Also read: Insurance companies can no longer exclude many illnesses
Kapil Mehta, CEO, SecureNow.in, a Delhi-based Insurance broker, said that suppose if a person complains of dark shadows in the eye vision for the past year and is then diagnosed with retinal detachment within three months of buying the insurance policy then that disease will not be covered, as the same will be considered as a PED. "However, if the retinal detachment is discovered 6 months after buying the insurance policy, then the disease will be covered. After 3 months, a disease can be classified as PED condition only if there is conclusive proof that this was diagnosed previously. If the disease was undiagnosed then it cannot be classified as PED."
Hence, the statement on PED in the guidelines issued on September 27, 2019 means that the disease will be considered as PED when a condition for which any symptom/disease has resulted within three months of the issuance of the policy in a diagnostic illness or medical condition.
Earlier, at times there were disputes between insurer and a policyholder filing a claim within few months of buying the policy due to the insurer's suspicion that the illness for which the claim was filed was actually a PED.
Naval Goel, CEO and Founder, PolicyX.com said, "The new circular of modification guidelines on standardisation in health insurance will bring some changes in the sense that this will curtail fraud early claims that were coming due to not having any waiting period after the issuance of the policy. After getting insured, if anyone is inflicted by a disease within 3 months of the policy, then it might face rejection on filing claims as per the new clause (amended definition of PED) which is not in favour of the policyholder. But it will surely reduce the cases of fraud applications."
What happens if you don't disclose pre-existing disease?
Gurdeep Singh Batra, Head - Retail Underwriting, Bajaj Allianz General Insurance said that if someone does not disclose the pre-existing disease at the time of buying the policy then the same (PED condition) will be treated as non-disclosure/misrepresentation/non-declaration if diagnosed after three months from date of purchase of the policy and hence, in such a case, the insurer can refuse to cover the illness throughout the policy term on the basis of violation of "disclosure of information norm".
It needs to be mentioned that an insurer can refuse to cover any illness during a health insurance policy tenure if the illness is proven to be a PED which was not disclosed at the time of purchase of the policy.
Also, alternatively, depending on the nature and extent of the un-disclosed disease, insurers are advised to look at following options too at their discretion, Batra explains:
- In case such pre-existing disease not disclosed at the time of buying a policy is falling under the permanent exclusions under Chapter IV then the insurer can take consent from insured/policyholder and continue policy by permanently excluding such previously un-disclose pre-existing.
- In case such pre-existing disease not disclosed at the time of buying policy falls under 'other than the permanent exclusion' under Chapter IV, then insurer can incorporate additional waiting period not exceeding 4 years, for the said undisclosed disease from the date of the detection of such un-disclosed disease and continue policy with consent from insured/policyholder.