Can insurers reject claims after five years?

Synopsis Cutting through money jargon, one topic at a time. This week, Preeti Kulkarni explains how the moratorium clause in health insurance protects policyholders against arbitrary claim rejections. Listen to this article in summarized format Listen Consider this: you have held a health insurance policy for over seven years and paid your premiums regularly. Yet, when you file a claim, your insurer rejects it, alleging that you failed to disclose a pre-existing condition at the time of purchasing the policy. However, the moratorium clause in your policy can act as safeguard against such arbitrary claim denials. The rule restricts an insurer’s ability to question a policy for non-disclosure or misrepresentation once a specied period has elapsed. The Insurance Regulatory and Development Authority of India (Irdai) first introduced an eight-year moratorium period in 2019 and reduced it to five years (60 months) in 2024, strengthening protection for long-term policyholders. At a glance Earlier: 8 years Now: 5 years (60 months) Introduced in 2019; reduced in 2024 What is moratorium period? *Policies/claims cannot be contested after *60 months of continuous coverage No arbitrary rejection of claims citing non-disclosure or misrepresentation The benefit *Reduced risk of claim rejection due to ‘undisclosed’ PEDs *Stronger grounds to challenge repudiation before ombudsman The exception *No blanket guarantee of claim settlement *Can still be rejected in cases of established fraud *But onus of proving fraud on the insurer Stronger protection “After completion of sixty continuous months of coverage (including portability and migration) in health insurance policy, no policy and claim shall be contestable by the insurer on the grounds of non-disclosure, misrepresentation, except on grounds of established fraud,” the Irdai regulations state. This period of sixty continuous months is termed as the moratorium period. The rule covers both fixed benefit policies, which pay out a pre-defined amount on the diagnosis of covered illnesses and indemnity-based policies, which reimburse the actual hospitalisation costs incurred, subject to conditions such as the sum insured, co payments, deductibles and sub-limits. Put simply, once a policy has completed five continuous years, insurers ordinarily cannot reject claims by citing non-disclosure of pre-existing ailments, such as diabetes or hypertension, a common trigger for claim disputes. Not only do insurers tend to repudiate claims citing suppression material information, such as pre-existing conditions, but also cancel the policy on grounds of breach of the principle of utmost good faith. The moratorium period is calculated based on the number of years of continuous coverage. So, if you port your policy to another insurer, the moratorium clock does not get reset -- you do not lose the benefit of the period already served. To be sure, for policyholders, the moratorium clause is not a guarantee that every claim will be honoured, but it does provide an additional layer of protection against claim repudiation. As per Irdai regulations, insurers can still contest claims in the case of frauds, but the onus of proving it lies on the insurer. If an insurer rejects a claim after the five-year period has expired, the policyholder has stronger grounds to challenge the decision before the insurance ombudsman or other grievance redressal forums. (Join our ETWealth WhatsApp channel for all the latest updates) Add as a Reliable and Trusted News Source Add Now! Read more news on Health insurance moratorium period Health insurance moratorium clause 5-year moratorium period in health insurance 60 months moratorium period IRDAI health insurance rules 2024 Health insurance claim rejection Health insurance claim rejection rules Pre-existing disease health insurance Non-disclosure in health insurance (Catch all the Personal Finance News , Breaking News , Budget 2025 Events and Latest News Updates on The Economic Times .) Subscribe to ET Prime and read the ET ePaper online. ...more Add Comment