How to minimise waiting period in insurance

Waiting for an insurance cover to kick in may sound benign to the uninitiated. But for those with even a passing knowledge of insurance products, specifically health insurance, the period is a no-man’s land. Insurance purchase is done, cover is yet to provide comprehensive protection, but threat of medical emergency may be looming overhead. Even more disappointing is to face a claim rejection over waiting period challenge from the insurance provider. Unfortunately, waiting period is amongst the top reasons for claim rejection as well.

Some waiting periods are unavoidable, some others are avoidable. We discuss the likely cohort of policyholders who should look to minimise waiting periods, the different ways to achieve it and the costs associated with the same.

The waiting room

The simplest and unavoidable is the first 30-day waiting period after the policy purchase. This is to ensure that insurance is purchased to protect against unknown risks and not the known threat. In most policies, accidents and other such risks are covered in the period, if provided in the policy. Then there are maternity and slowly degenerative disease waiting periods. These can range from two to three years in different policies. The latter addresses knee replacement, hernia, cataract and other slow growing diseases for which claims can be made only after the waiting period.

However, the largest and the primary concern for many is the pre-existing disease or PED waiting period. Any disease prevalent and diagnosed for the policyholder 48 months prior to issuance of a policy is termed as a PED.

Generally, chronic conditions such as diabetes, hypertension, asthma or even conditions with a long treatment timeline such as cancer fall under the category. These PED conditions will be covered by insurance after a waiting period, which classically stands at four years. To assess the complete impact of waiting periods, one must consider the PEDs, the co-morbidities associated with the PED and also any complications from the existing PED in an otherwise approved procedure. A waiting period of four years for such a long list of non-covered diseases can dilute insurance protection quite significantly.

The way around

Increasing competition in health insurance is slowly shifting bargaining power to the policyholders. PED waiting is still pre-dominantly three to four years for many health insurance policies. But with add-ons or as a part of basic plan, PED waiting can be cut down to one year as well.

The PED waiting concern is comprehensively addressed by Star Health. The comprehensive plan for regular policyholders costs ₹13,800 for a ₹10 lakh insurance for a 35-year-old and has a three-year PED waiting period. However, the base policy with a PED buyback rider is available for ₹18,000. The higher cost is to accommodate a lower waiting period of one year. Better, in their Young Star plan which caters to the 18-40 year old age group, the PED waiting period is one year in the base policy itself and costs ₹9,200 for the same cover.

A few other plans, including Tata AIG Medicare and Manipal Cigna Prime Advantage, offer a two-year PED waiting period in the base variant itself and cost around ₹14,500 per year (for a 35-year-old, discussed above). Similarly, Niva Bupa offers policies withlower PED waiting of two years in its Health Premia variant. This variant also lowers the waiting period for slow growing diseases to one year here from two years in standard variants.

Care Health insurance offers an add-on that can reduce PED waiting to one year, which costs ₹1,287 over the base policy cost of ₹10,000 (for the same person).

With the availability of such features, lowering PED implies that one can look for full protection from the product at the earliest of timelines. Existing policyholders can still migrate to plans offering lower PED waiting along with locking in their NCB bonus and years served on PED waiting in existing policies. Such advances, being relatively recent, should be fully utilised by policyholders who may have signed on earlier.

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