Once you have paid premiums for a health insurance policy for eight years continuously, your insurer will have to pay all claims as per the policy limits from April 1, 2021 onwards.
Insurance Regulatory and Development Authority of India (IRDAI) in its guidelines on standardisation of terms and clauses in health insurance said that after the expiry of the eight-year moratorium period no health insurance claim can be contested. The exceptions are proven fraud and permanent exclusions specified in the policy contract.
This means policyholders need not wait in anticipation for the health insurer to approve a claim once eight years are over. It is a given that the claim will have to be settled within the admissible limits of the medical insurance product.
A similar provision is available for life insurance products as well. Under Section 45 of the Insurance Act, no life policy claim can be contested once a third-year term period is over.
For the modified health guidelines, IRDAI said this will be applicable to products filed on or after October 1. All policy contracts of existing health insurance products that are not in compliance with these guidelines have to be modified during renewal from April 1, 2021 onwards.
If an individual has multiple policies and claims exceed limits in one policy, IRDAI said these persons can choose the insurer from whom he/she wants to claim the balance amount.
Insurers have also been barred from repudiating on grounds of fraud if the insured can prove that the there was no deliberate intention to suppress facts.
For premium increases at the time of renewal, IRDAI said customers would have to be informed three months in advance.Claims settlement
IRDAI said that for all policies an insurer has to settle or reject a claim within 30 days from the date of receipt of the last necessary document.
ln the case of delay in the payment of a claim, the insurer has to pay an interest rate of 2 percent above the bank rate. The latter is a rate fixed by the Reserve Bank of India (RBI) at the beginning of each financial year and it currently stands at 4.25 percent.
In cases where the health insurance claim demands an investigation, insurers have to initiate and complete this process within 30 days from the date of receipt of last necessary document. Here, insurers have 45 days’ time to settle or reject the claim from the date of receipt of last necessary document.
If there is a delay beyond the stipulated 45 days, IRDAI said an interest rate of 2 percent above the bank rate has to be paid to the policyholder from the date of receipt of the last necessary document to the date of payment of claim.Premium payment on instalments
In case the insured has opted for premium payment on an instalment basis (half yearly, quarterly or monthly), IRDAI said a grace period should be granted for payment.
However, insurance coverage will not be available from the due date of instalment premium till the date of receipt of premium by the insurer. But no interest will be charged if the instalment premium is not paid on the due date. Once the grace period is over, the health policy will get cancelled.
If a claim is filed under such EMI health plans, all subsequent premium installments have to be immediately paid by customer.