The finance ministryâ€™s proposal that insurers wonâ€™t be able to question, and as a result, reject claims on the grounds of mis-statement or non-disclosure of facts after three years is a welcome step for policyholders. General insurance companies, especially, have been known to reject health claims from policyholders by saying they have been caused by pre-existing diseases not disclosed earlier. In the new regime, such rejections cannot be made.
The government has set the limit of three years based on the assumption that it is a reasonable time period for the company to do the necessary due diligence and verify if the policyholder has any pre-existing disease. So, it is unfair to refuse a claim after three years after collecting premia from the customer.
â€œCurrently, the waiting period is three years or five years. This means that during this period the insurer can refuse a claim made for any pre-existing disease. With the new guideline, all companies will now have to follow the three-year rule, says Amarnath Ananthnarayanan, MD and CEO, Bharti Axa General Insurance.
But, experts say that there are other ways by which insurers are reject a claim. And many times, policyholders give insurers these opportunities to do so. In case of life insurance policies, intermediaries like brokers, encourage customers to hide facts, like smoking, in order to bring down the premium amount and companies use this as a ruse to reject the claims.
In case of health policies, a cap or limit on the amount for any medical procedure, like a cataract surgery, can be a ground for rejection. Similarly, ailments arising out of congenital conditions are also not covered by many companies. Some companies cover internal conditions, but not external on the grounds that since it is external the policyholder is aware of it. Even a prosthesis or any procedure which may involve an external device may be rejected.
Another technical loophole that companies resort to is to reject the claim if the policyholder has inadvertently left out some columns while filling the application form. So, ensure that the form is filled completely.
If the policyholder is a non-resident Indian, then he must ensure that he was present in India while making the application, or else the claim could be rejected. This could happen in case of investment-oriented policies, since there is no requirement of a medical check-up and the policyholder may have taken the policy while he was overseas. So, be aware of the technical terms and conditions in the product document to avoid rejection, say experts. Policyholders should remember to disclose all details and not hide facts like smoking to avoid heartache later on.