As you are aware that Section 45 of the Insurance Act, 1938 provides that Policy not to be called in question on ground of mis-statement after two years. No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy‑holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose:
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.
PLEASE NOTE THAT: The above provisions are not applicable in case of fraud on behalf of the insured while inception of Insurance Policy.
IRDAI NEW HEALTH INSURANCE GUIDELINES
Health insurers will not be allowed to contest claims once the premium has been paid for a continuous period of eight years, regulator IRDAI said in a fresh set of guidelines.
IRDAI said the objective of the guidelines is to standardize the general terms and clauses incorporated in indemnity-based health insurance (excluding personal accident and domestic/overseas travel) products by simplifying the wordings of general terms and clauses of the policy contracts and ensure uniformity across the industry.
THE NEW GUIDELINES PROVIDES THAT
"All policy contracts of the existing health insurance products that are not in compliance with these guidelines shall be modified as and when they are due for renewal from April 1, 2021, onwards.
"After completion of eight continuous years under the policy no look back to be applied after expiry of moratorium period (of eight years) no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract,".
"After completion of eight continuous years under the policy no look back to be applied. After expiry of moratorium period (of eight years) no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract,".
This period of eight years is known as the moratorium period
The moratorium would be applicable for the sums insured of the first policy and subsequently completion of 8 continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits, the regulator said in the guidelines on ‘Standardization of General Terms and Clauses in Health Insurance Policy Contracts’.
On claim settlement, IRDAI said the insurance company should settle or reject a claim, as the case may be, within 30 days from the date of receipt of last necessary document.
In the case of delay in the payment of a claim, the company will be liable to pay interest to the policyholder from the date of receipt of last necessary document to the date of payment of claim at a rate 2 per cent above the bank rate.
PLEASE NOTE THAT: the policy will become void and all premium paid will be forfeited to the company in the event of misrepresentation, misdescription or non-disclosure of any material fact by the policyholder.
On portability, the guidelines said the insured person will have the option to port the policy to other insurers by applying to such insurer to port the entire policy along with all the members of the family, if any, at least 45 days before, but not earlier than 60 days from the policy renewal date.
If such person is presently covered and has been continuously covered without any lapses under any health insurance policy with an Indian general/ health insurer, the proposed insured person will get the accrued continuity benefits in waiting periods.
LET’S SUMMARISE
The IRDAI has laid down some rules for health insurance claim settlement for all insurance providers registered under it. These rules are laid down to help both the insurer and the insured. Listed below are some of the rules for health insurance claims laid down by the IRDAI:
- A health insurance policy may not have an exit age if the policyholder renews it on schedule without any interruptions in renewal.
- A Group Health Insurance policy comes with a validity of a maximum of one year.
- The insurer is responsible for providing the policyholder with information regarding the terms and conditions of the policy concerning receiving care at a hospital in India.
- The insurance provider must give the policyholder the choice to switch to another plan after meeting the exit conditions for their health insurance policy. Additionally, insurers must award appropriate credits if the policy was renewed without any gaps.
- The insurance provider must give the applicant a fair, justifiable, and open explanation in writing if their request to purchase health insurance is declined.
- A policyholder will receive rewards if they renew their coverage on time, purchase it early in life, or have a positive claims experience with an insurance provider. The prospectus and policy document should include explicit references to the benefits as agreed by the board.
- Before issuing the policy, the insurance company should give the policyholder a list of medical facilities, government or otherwise, from whom the firm will accept the medical reports.
- Particularly for senior individuals, the premium amount should be reasonable, equitable, and clear. Additionally, the total sum should be made clear to the potential policyholder.
IRDAI NEW RULES FOR CLAIM SETTLEMENT
IRDAI has rules for claim rejection and settlement as well. Some of them are:
FOR CLAIM REJECTION
- If the policyholder maintains the coverage for 8 years without a break, the health insurance provider cannot deny a claim. These 8 years are called the moratorium period.
- Except in cases of fraud and/or a claim brought against the exclusion of the health policy after the moratorium period, the insurance company cannot appeal to the IRDAI against the settlement of such a claim.
- A claim cannot be denied by the insurance company due to misrepresentation or non-disclosure.
- A claim cannot be denied on that basis since IRDAI has allowed the insurance company an 8-year window for validating the information provided by the policyholder.
FOR CLAIM SETTLEMENT
- The insurance company is responsible for paying interest on the claim amount at a rate that is 2% higher than the bank rate if the insurer's claim payment is delayed.
- The claim should be resolved within 30 to 45 days of the date the policyholder received the last necessary document.
DISCLAIMER: The contents of this article should not be construed as legal opinion. Recipients should take independent legal advice before acting on any views expressed herein. The comments in the article are as of the laws prevalent on the date the article was originally published. The views stated in the article are not binding on any authority or court, and so, no assurance is given that a position contrary to that expressed herein will not be asserted by any regulatory authority/courts.
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