IRDAI with an aim to ” rationalise and standardize the exclusions in Health Insurance” had released a set of guidelines in Sep 2019. On Feb 10th 2020, they have made an important amendment to these guidelines removing a controversial pre-existing disease clause. A look at why this is controversial and how its removal will benefit buyers.
The guidelines apply to all General and Health Insurers offering indemnity based health insurance (excluding personal accident and Domestic / Overseas Travel) policies offering hospitalisation, domiciliary hospitalisation and day-care treatment.
This standardization in wording removes a big chunk of confusion for at least discerning buyers who bother to read terms and conditions of the policy purchase. Let us first look at the statement removed from the Definition of Pre-Existing Disease (PED)
A condition for which any symptoms and or signs if presented and have resulted within three months of the issuance of the policy in a diagnostic illness or medical condition. (this has now been removed from the definition of a pre-existing disease)
Why is this controversial? Suppose you buy a policy in Feb 2020 and within three months of the policy issue, say April 2020, a routine test reveals that you are diabetic, or have a faulty liver or have cardiac issues etc. There was no indication of this problem when you applied for the policy and therefore no mention of it in the application.
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Five years pass without a claim. in May 2025 you get admitted. While taking down your medical history, the doctor mention in the report, “diabetic since April 2020”. For the sake of simplicity let us assume that diabetes is directly related to the cause of hospitalisation.
This is enough reason for the insurer to reject the claim because you had a pre-existing condition diagnosed within three months of the policy issue. This is unfair to policy-holders and thankfully now has been removed.
Definition of Pre-Existing Disease as per Guidelines on Standardization of Exclusions in Health Insurance Contracts
Reference: IRDAI/HLT/REG/CIR/046/02/2020
Pre-existing Disease means any condition, ailment, injury or disease:
a)That is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement (Feb 2020 circular includes reinstatement term and clarifies date of policy issue) or
b) For which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement
(Life Insurers may define norms for applicability of PED at Reinstatement)
Other changes made in the guidelines
1. For “life-threatening situations following an accident” treated in a hospital excluded specifically by the insurer, “expenses up to the stage of stabilization are payable but not the complete claim”.
This has now been modified to “life-threatening situations or following an accident” That is, an emergency admission can be done in a hospital excluded from coverage regardless of whether it was caused by an accident or not.
2. The term “birth control” has been removed from “exclusions Q: Birth control, Sterility and Infertility”. This is not expected to have a positive or negative impact on both the insured and insurer!!
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