IRDAI removes controversial pre-existing disease clause in guidelines

IRDAI has removed a controversial pre-existing disease clause in the standard health insurance guidelines. This will benefit buyers

Image of hands protecting a family representative of IRDAI protecting health insurance policy holders by removing a controversial pre-existing disease clause in the standard health insurance guidelines

Published: February 12, 2020 at 10:27 am

Last Updated on

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.

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

Join our 1200+ Facebook Group on Portfolio Management! Want to know how to reduce fear, doubt and uncertainty while investing for financial goals? Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community

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!!

Do share if you found this useful
Join our 1200+ Facebook Group on Portfolio Management! Want to know how to reduce fear, doubt and uncertainty while investing for financial goals? Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author

Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com

About freefincal & its content policy

Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News
Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)

Connect with us on social media

Our Publications


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingThis book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
   

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new

This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when traveling, how traveling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)  

Free Apps for your Android Phone

Comment Policy

Your thoughts are the driving force behind our work. We welcome criticism and differing opinions.Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

3 Comments

  1. If pre existing disease is limited to 48 months prior to policy issuance, does this imply it is not necessary to declare medical conditions that may have been cured prior to these 48 months (e.g. during childhood)? If no, then why?

Leave a Reply

Your email address will not be published. Required fields are marked *