Health Insurance Claims Are Not Contestable After 8 Years of Premium Payment

Health insurance companies won’t contest claims once the premium is paid for a continuous period of 8 years, as per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines. And as per the guidelines, this clause is incorporated only in indemnity- based health insurance plans. Indemnity-based health policies provide hospitalization coverage up to the total sum insured, and this type of health insurance plan can be purchased on an individual or family floater basis. Keep reading this post further to know how it will impact your claim settlement in health insurance.

8 years of Premium Payment Clause in Indemnity-based Health Insurance Plans

A moratorium period of 8 years would apply to the sum insured. As per the IRDAI guidelines on after completion of eight continuous years under the policy, no claim shall be contestable except those which are fraudulent and contain permanent exclusions as specified in the policy contract. Indemnity-based Health Insurance is subject to all limits, sub-limits, co-payments, deductibles as per the policy contract. Let’s know about them in detail –

Deductibles: Under this clause, the insurance company deducts a sum from the claim amount and pays the rest of it. Suppose your health insurance plan offers a sum insured of INR 5 Lakh, and the deductible is INR 2 Lakh. So if a risk arises and the cost of treatment is INR 3 Lakh, your insurer will cover only INR 1 Lakh, while you will have to pay the remaining amount.

Note – All indemnity policies don’t have a deductible clause, and the percentage of deductible may vary from company to company.

Co-payment: In a co-payment clause, a certain percentage of the claim amount will be borne by you, while the rest will be paid by the insurance company.

Note – Senior citizen health insurance policies have the co-payment clause. Also, insurance companies may provide you a discount offer on your premium payout if you voluntarily choose to co-pay.

Advantages of Indemnity-based Health Insurance Plans

An indemnity based health insurance plan provides you the following benefits –

1. Cashless Treatments – Every insurer has a list of network hospitals where you can get medical treatment without any hassle of upfront payment, as the insurance company will pay the expenses directly to the hospital.
2. Reimbursement Facility – If you aren’t able to receive medical treatment at the network hospital due to any reason, don’t worry, you can seek compensation for your medical expenditure via reimbursement. Here, the insurance company pays the claim amount to the insured person directly taking account of treatment, test and medical bills.
3. Tax Advantages – Under Section 80D of the Income Tax Act, 1961, you can claim a tax deduction
4. Family Protection – You can purchase a family floater indemnity-based health insurance and protect all your family members with one insurance. This way, you, your spouse, children, parents will be covered under a single policy

Claim Settlement Clause for Indemnity Health Insurance Plans

If you file a claim under an indemnity-based health insurance plan, you should remember the following clauses –

1. Insurance companies settle or reject claims within 30 days from the date of receipt of the last necessary document. If the company delays in communicating its decision, it will be liable to pay interest to the policyholder. The penalty interest would be 2% depending on the bank rate.
2. The policy will become void and all premium paid will be forfeited in case of misrepresentation, misdescription or non-disclosure of any material fact by you