Moratorium Period in Health Insurance

A moratorium period is a set waiting time frame within a health insurance policy where coverage for certain pre-existing medical conditions is excluded. This means if you had a medical condition, received treatment, or even just had symptoms before taking out the policy, claims related to that condition might not be approved during this initial period.

IRDAI has set this period to be 8 years.

Simply put, a Pre-Existing Disease (PED) refers to any ailment that you were already diagnosed with within 48 months prior to purchasing your insurance policy. Although many policies provide coverage for pre-existing diseases, they typically impose a waiting period before such coverage kicks in.

A moratorium period in health insurance is where the insurer initially excludes coverage for all pre-existing conditions from the last eight years for a specific period, similar to a waiting period, and then begins covering them thereafter.

Yes, the moratorium and the usual waiting period in health policies are quite different.

Here is the main difference between the two:

Moratorium Period: This applies specifically to pre-existing medical conditions. It is a set waiting period (8 years in India) where claims related to those pre-existing conditions might be excluded.

Usual Waiting Period: This general waiting period applies to all types of medical coverage within the policy, regardless of pre-existing conditions. It can vary depending on the specific policy but might cover treatments like maternity benefits, OPD (Out-Patient Department) consultations, or specific surgeries. You will typically find these details outlined in the policy document.

Insurance companies rely on a balanced pool of policyholders – some with higher risks and some with lower risks – to keep premiums fair for everyone. Without a moratorium period, people might only buy health insurance when they need immediate coverage for a pre-existing condition.

This could lead to a surge in claims and ultimately drive up premiums for everyone. The moratorium period discourages this by delaying coverage for pre-existing conditions, helping to maintain a more balanced risk pool.

The moratorium period also encourages honesty when applying for health insurance. By knowing there's a waiting period for pre-existing conditions, policyholders are more likely to disclose their complete medical history during the application process.

This transparency helps the insurance company accurately assess the risk of insuring you and set appropriate premiums.

The moratorium period works in two stages:

Pre-Moratorium Period

• During this initial period, the insurance company looks back at your medical history for a certain timeframe.

• If they find evidence of pre-existing conditions – any condition you received treatment for, had symptoms of or consulted a doctor about – claims related to those specific conditions might not be covered.

• This does not exclude coverage for unrelated illnesses or accidents that occur during this time.

Post-Moratorium Period (After 8 Years)

• Once you have successfully completed the moratorium period, the "look-back" period expires. This means pre-existing conditions are generally covered by the insurance policy, just like any other medical condition.

• However, some policies might still have permanent exclusions for specific pre-existing conditions. It is crucial to review your policy wording to understand this carefully.

The moratorium period in health insurance might seem like a hurdle, but it actually benefits both policyholders and insurance companies in the long run.

Here is why it matters:

Fair Premiums for Everyone: The moratorium period helps maintain a balanced risk pool for the insurance company by preventing people from buying insurance solely for pre-existing conditions. This translates to fairer premiums for everyone, including those with no pre-existing conditions.

Peace of Mind After the Wait: Once you have crossed the moratorium period, you gain valuable peace of mind knowing most pre-existing conditions will be covered, just like any new medical issue. This financial security allows you to focus on your health without worrying about hefty medical bills.

Legally Mandated: A moratorium period is mandated by the Insurance Regulatory and Development Authority (IRDAI) through their guidelines. These guidelines have the force of law within the insurance industry, so in practice, all health insurance providers in India must adhere to a moratorium period.

If the policyholder renews a health insurance policy without any breaks for a continuous period of 8 years, the insurance company is prohibited from rejecting claims. This uninterrupted 8-year duration is termed the moratorium period.

During this period, the insurance company cannot appeal to the Insurance Regulatory and Development Authority of India (IRDAI) against the settlement of such claims, except in cases involving fraud or claims raised against the exclusion of the policy after the moratorium period.

Furthermore, the medical insurance policy provider is not allowed to reject a claim based on misrepresentation or non-disclosure. The IRDAI has provided the insurance company with an 8-year period to verify the information provided by the policyholder, thereby ensuring that claims cannot be rejected on these grounds.

When choosing a health insurance policy, you can consider factors related to the moratorium period that might influence your decision:

Be Upfront About Pre-Existing Conditions: Regardless of the moratorium period, it is always best to be honest about your medical history during the application process. This allows the insurer to set appropriate premiums and avoids any claim rejections later.

Consider Your Health Status: A moratorium period might not be ideal if you have pre-existing conditions and need coverage sooner rather than later. Explore alternative options like group health insurance plans offered by employers, which may have less stringent waiting periods for pre-existing conditions.

Compare Policies: Though the moratorium period is standardised, other policy features can vary. Look for coverage that aligns with your needs, such as hospitalisation expenses, OPD consultations, or critical illness benefits. Choose a plan that offers comprehensive coverage after the moratorium period.

Tata AIG offers the most comprehensive medical insurance plan options. You can compare the policies on our online health insurance calculator and pick one with the best coverage options.

The moratorium period in health insurance might seem like an inconvenience, but it plays a vital role in ensuring fair premiums and a balanced risk pool for everyone. Understanding how it works and its purpose enables you to make informed decisions when choosing a medical insurance policy.

When it comes to choosing a reliable health insurance provider, Tata AIG offers a range of health insurance plans designed to meet your specific needs and budget.