Some pre-existing illnesses could be permanently excluded from insurance coverage, said a working group report.
Insurance companies could be allowed to set a waiting period of four years for any pre-existing conditions under a health policy.
Waiting period is the duration when a claim is not admissible. At present, the waiting period for most illness is up to two years and is decided by insurers based on past claims data.
The extension of the waiting period is part of the recommendations that intend to make insurance terms more customer friendly. It also asks insurers to be more transparent about what illnesses are covered.
According to recommendations of a working group, constituted by Insurance Regulatory and Development Authority of India (IRDAI), all health conditions acquired after the policy inception should be covered.
In its report on standardisation of exclusions, the working group said exclusion of diseases contracted after taking a health insurance policy such as Alzheimer’s, Parkinson’s, HIV/AIDS and morbid obesity cannot be permitted. However, they can have a waiting period of four years.
Insurers could incorporate a list of permanent exclusions under a policy. These are pre-existing illnesses, which will not be covered.
The group has recommended 17 such exclusions including epilepsy, stroke, chronic liver diseases, chronic kidney diseases and Hepatitis B. Alzheimer’s and Parkinson’s disease are on the list and will not be covered if they are pre-existing conditions.
If the non-disclosed condition is other than that mentioned on the list of permanent exclusions, then the insurer can incorporate an additional waiting period for a maximum period of four years from the date of detection.
The recommendation, however, state that these exclusions could be reviewed on a yearly basis.
The working group has recommended a moratorium period of eight years of continuous renewals after which the claim cannot be questioned based on non-disclosures or misrepresentations at the time of taking the policy.This would mean the policy would be incontestable in terms of application of any exclusions, except for proven fraud as well as permanent exclusions specified in a policy contract.