Health insurance claim rejected? Here’s why that may have happened

Health insurance policies act as a shield against unforeseen medical expenses, safeguarding your hard-earned savings. However, what happens if your claim is denied? Situations like incomplete waiting periods and room rent limits can cause issues when applying for a claim and may lead to significant medical debt. Understanding what your policy covers can be challenging, but it is essential to know what is not covered. Since every policy comes with exceptions, it is vital to read the documents carefully. 

According to Policybazaar, limited understanding of health policy and undisclosed pre-existing diseases contribute to maximum number of claim rejections at 75%. For example, some diseases may not be covered until after a predetermined number of years. It is important to understand that certain illnesses may have time exclusions up to 2 years, even if not pre-existing, so asking these questions beforehand prevents last-minute surprises. You should also check the number of diseases covered in critical illness plans, as these plans require the insured to survive for a minimum of 30 days following diagnosis. These policies typically do not cover pre-existing diseases, and claims cannot be claimed during the first 60-90 days of the policy. According to data shared by Policybazaar, more than 18% of claims get rejected because of an 'incomplete waiting period,' which implies the claim is filed before the waiting period is over.  

Moreover, the complex legal language can make policy wording confusing. Investing time in understanding the terms of your policy with your insurance agent can prevent future misunderstandings. According to PolicyBazaar, the second-largest category of claims rejection is 'Claims outside coverage,' representing 25% of the total rejections. Within this category, 16% of claims were filed for ailments not covered by the policy, while 9% were for out-of-hospital (OPD) or daycare activities that were not included in the coverage. This troubling trend underscores the necessity for policyholders to thoroughly understand their coverage and consult their policy documents before seeking treatment.

Also read: 'If your credit score is below...': Credit card users must bear THIS in mind, explains Bank Bazaar's Adhil Shetty

Also read: Here's how wealthy Indian youngsters are diversifying their investment portfolio to grow their wealth

Also read:  How to reach savings target of Rs 1 to Rs 10 crore with 5% annual increase in SIP investment

However, the most significant category contributing to claim rejections is the non-disclosure of pre-existing conditions (25%). Certain waiting periods apply to pre-existing illnesses, making them ineligible for coverage from day one of the policy. Typically, coverage commences only after the completion of a waiting period, often up to a maximum of 4 years, though some insurers offer shorter waiting periods, as little as two years. Before investing, it’s prudent to check and choose a policy with the minimum waiting period. Additionally, it's crucial to declare every past ailment in the application form.

This lack of transparency contradicts the very purpose of health insurance and stresses the importance of providing correct medical history during policy enrollment. Other reasons given by insurers are inadequate responses to queries (16%) and unjustified hospitalisation (4.86%). The study also revealed the lowest rejection rate (2%) in the sum insured range of Rs 50 lakh and Rs 1 crore. However, a high volume (53%) of rejections was observed for a sum insured of Rs 5 lakh. Policybazaar’s data is based on the analysis of 30,000 rejected claims out of 200,000 claims between April and September.