New Delhi, June 14: Health insurance companies will not be allowed to contest claims once the premium has been paid for a continuous period of eight years, said regulator Insurance Regulatory and Development Authority (IRDAI) in a fresh set of guidelines.
As per the guidelines, the objective is to standardise the general terms and clauses incorporated in indemnity based health insurance (excluding personal accident and domestic or overseas travel) products by simplifying the wordings of general terms and clauses of the policy contracts and ensure uniformity across the industry.
All policy contracts of the existing health insurance products that are not in compliance with these guidelines shall be modified as and when they are due for renewal from April 1, 2021, onwards.
"After the expiry of the moratorium period (of eight years), no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract”, Irdai said.
The policies will, however, be subject to all limits, sub-limits, co-payments, deductibles as per the policy contract. This period of eight years is called a moratorium period.
The moratorium would be applicable for the sums insured of the first policy and subsequently, completion of eight continuous years would be applicable from the date of enhancement of sums insured only on the enhanced limits, the regulator said in the guidelines on 'Standardization of General Terms and Clauses in Health Insurance Policy Contracts'.
On claim settlement, Irdai said the insurance company should settle or reject a claim, as the case may be, within 30 days from the date of receipt of the last necessary document.
In case of delay in the payment of a claim, the company will be liable to pay interest to the policyholder from the date of receipt of the last necessary document to the date of payment of claim at a rate of 2 per cent above the bank rate.
It also said the policy will become void and all premium paid will be forfeited to the company in the event of misrepresentation, misdescription, or non-disclosure of any material fact by the policyholder.
On portability, the guidelines said the insured person will have the option to port the policy to other insurers by applying to such insurer to port the entire policy along with all the members of the family, if any, at least 45 days before, but not earlier than 60 days from the policy renewal date.
If such a person is presently covered and has been continuously covered without any lapses under any health insurance policy with an Indian general or health insurer, the proposed insured person will get the accrued continuity benefits in waiting periods.