After 8 Years of Premium Payment Health Insurance Claim Becomes Non-Contestable
People seek health insurance to pay for unforeseen medical expenses that occur at an unpredictable time. The recent announcement from the Insurance Regulatory and Development Authority (IRDAI) favors insurance payers, as it states that the insurance agency cannot contest for insurance claims after eight years. These eight years are also referred to as the moratorium period. The objective of this new guideline is to standardize the general clauses and the terms that are associated with health insurance claims. This step is for the benefit of the insurance payers, to prevent them from incurring huge losses with claims rejection.
Highlights of the Health Insurance Claims Settlements by the IRDAI
The important aspects to consider in the revised guidelines of the IRDAI pertaining to health insurance claims are:
1. Easy Settlement: The new guideline declares the insurance plan as claims non-contestable after eight years of premium payment and benefits the insurers with easy claims settlement. During the moratorium period, insurance companies can analyze the genuineness of the claims. But at the end of the trial period, they cannot challenge the health claims and the clause about contestability in the policy will be revoked
2. Extension of the Moratorium: The second highlight of this IRDAI regulation is that the moratorium period will extend if the sum assured increases.
3. Fraud Trials: The claims can be contested in cases of fraud where a particular cost is excluded from coverage in the contract. Also, at instances of misrepresentation and non-disclosure of information, the policy will be considered null and the premium paid would be forfeited.
4. No effect on Co-payments: This new guideline pertains only to indemnity related health insurance plans that cover the true cost of hospitalization and any co-payments applicable under the insurance policy continues to apply.
5. Period of Claim Settlement: The updated IRDAI regulations on health insurance claims also state that the insurance companies should reject or settle their claims within 30 days of receiving the documents about the claim. In cases of delay, the company is liable to pay interest at 2% (along with bank rates) for the delay.
6. Shifts with Policies: Even when the policy is ported from one scheme to another, this moratorium period will apply to the ported policies and will be calculated based on the date at which the policy was originally bought.
After-Effects of the Updated Guideline From IRDAI
The ultimate aim of this revised guideline from IRDAI is to simplify the claims process of medical insurance plans. It also protects the policyholders from the fear of claims rejections in their existing plans.
Along with these guidelines, the terms and conditions that are related to the claim would be used in simple terms for the understanding of the common man.
Upon completion of the moratorium period of 8 years, no look back can be applied, except at instances of proven fraud and exclusions.
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Bottom Line
With the updated guidelines on claims settlement on medical insurance from IRDAI, we can expect easy and quick settlement of the health insurance claims. After the moratorium period, insurers can be at peace that their claims be settled quickly and easily.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
