Ajay Singh (32) had bought a health plan in 2020 after the outbreak of the pandemic made him realise the importance of it. He got hospitalised in August 2021 due to Covid-19. He was sure his health plan would take care of hospital expenses. However, when he filed the claim of hefty hospital bill after recovering from Covid, the insurer denied it. Why so? It was clearly mentioned in his medical report that he had been a patient of hypertension for a long time. The insurer reasoned that hypertension, a pre-existing disease (PED), was not disclosed while buying the health policy. The disclosure of PEDs holds the key in health insurance.
What is the meaning of PED in health insurance?
Any disease, ailment, injury, etc, that you have suffered in the past is considered as a pre-existing disease in your health insurance policy. It is necessary to disclose the same while buying a policy even if you have recovered from it. For example, if you were diagnosed with asthma prior to policy purchase, you must disclose it even if you no longer suffer from it while buying the policy. This is because such medical conditions and ailments may have a long-term effect on a person’s health, thus important for the insurance company to know beforehand.
If a customer fails to do so and the insurer finds out about it during the claims settlement, the claim will get rejected. This is applicable even if the treatment for which you have made the claim is unrelated to the undisclosed PED. Diabetes, Tuberculosis, blood pressure, cholesterol, hypertension, asthma and cardiac conditions, etc. are some common examples of PEDs.
PED crucial in underwriting
Pre-existing diseases play a major role in the underwriting process. If your PED is part of permanent exclusions, the insurer will not accept your policy proposal in the first place. In other cases, it may issue you a policy, but after rating up the premium. The insurer will also fix a waiting period during which the treatment for PED will not be covered in insurance. Different insurers will have different waiting periods that vary in the range of two to four years for PEDs. Note that some insurers offer buyback on the waiting period on certain health insurance policies that can help you get coverage on PEDs from day one.
Be honest in PED disclosures
Insurers define PEDs as any disease diagnosed up to 48 months prior to the date of policy purchase. However, it does not mean that you don’t disclose the diseases contracted before 48 months. You should disclose all material health issues that you have suffered in the past. This is because the health insurer may not reject your claim on the grounds of non-disclosure of PED if the disease was diagnosed before 48 months, but because of non-disclosure of material information. However, if you have paid premiums for a health plan consistently for eight years, your claim cannot get contested except on the grounds of proven fraud or permanent exclusions. This is because IRDA has modified the PED exclusion clause and introduced the moratorium period of eight years for the policies renewed after April 1, 2021. So, if a PED had not been declared while buying the policy and the claim arises after running the policy for eight years, the health insurer will have to settle your claim. If it doesn’t, you have all the right to lodge a complaint with the regulator.
The bottom line – be honest in disclosures to avoid claims rejection.