Irdai reduces pre-existing disease waiting period from 4 to 3 years: Here is what existing policyholders should know

Now, health insurers cannot deny coverage for your pre-existing condition once you have completed the three-year waiting period on health insurance policies. The Insurance Regulatory and Development Authority (IRDAI) has updated the definitions of the pre-existing condition and moratorium period (MP) in health insurance policies effective from 1 April 2024.

While the waiting period for pre-existing disease (PED) coverage in health insurance policies has been reduced from four years to a compulsory three years, the moratorium period has been shortened from 96 to 60 months. Insurance companies enforce a "no look back" policy during this period.

Abhishek Bondia, principal officer and managing director at SecureNow.in, said,"The new regulations are extremely positive for the policyholders.  While several insurers have already reduced waiting period for pre-existing diseases, the new guidelines set the outer limit to 3 years. It also removes the burden on the policyholders to declare pre-existing diseases for which they have not taken any treatment within the last 3 years or ailments diagnosed beyond 3 years.  Many policyholders do not keep historical medical records. The new regulations would reduce such disputes with the insurer."

Rahul M Mishra, CEO and Co-founder of Policy Ensure, said, "The previous definition used the term "look back," which was not clearly defined, leading to ambiguity. The revised policy uses more specific language, stating that policies can't be contested for non-disclosure or misrepresentation after the MP, except in cases of proven fraud."

The revised moratorium period now explicitly includes time covered under previous insurers through portability and migration, which ensures that policyholders will retain moratorium period progress when switching insurers. This clarification benefits policyholders.

"The reduction in moratorium period will shift the onus of a thorough underwriting onto the insurer.  Since insurers cannot dispute non-disclosure beyond 5 years, policyholders will be further assured about a smooth claim process. After a continuous renewal of 5 years, a bonafide policyholder need not worry about claim rejection," said bondia.

Additionally, Siddharth Singhal, Business Head - of Health Insurance at Policybazaar.com, says, "By reducing the PED waiting period from 48 months to 36 months, more individuals are likely to opt for health insurance, thereby enhancing insurance penetration in the country. Additionally, the moratorium waiting period which has been reduced from 8 years to 5 years, would too enhance customer confidence by minimising doubts about claim denials. Moreover, the specified disease waiting period may now extend to 3 years, which was four years earlier, providing customers with faster coverage. From a customer perspective, a shorter waiting period is always preferable as it reduces uncertainty and allows for quicker coverage of illnesses or claims against them."

The waiting period for pre-existing diseases disclosed by the persons to be insured shall be a maximum of up to 36 months of continuous coverage under the Health Insurance policy. Insurers may endeavour to have fewer pre-existing disease waiting periods and specific waiting periods for health insurance products, as per the IRDAI (Insurance Products) Regulations, 2024.

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"This change means first-time policyholders will enjoy a reduced waiting period going forward. Existing policyholders will also benefit, as the waiting period will be reduced to align with the new 3-year clause upon policy renewal," added Singhal. Overall, this initiative benefits customers, ensuring they receive enhanced benefits and reduced waiting times when accessing health insurance coverage.

The regulator has made these changes to ensure responsive management practices for policyholders, effective oversight, and adequate due diligence regarding insurance products, including innovative products, considering the interests of policyholders.