Personal Finance

Clearing the air over pre-existing diseases

Rajalakshmi Nirmal | Updated on October 13, 2019 Published on October 13, 2019

There were three sets of regulations issued by IRDAI in September with respect to health insurance. One of them, the ‘Modification Guidelines on Standardisation in Health Insurance’, listed items on which health insurers can give optional covers and, more importantly, amended the definition of pre-existing diseases as given in the original guideline issued in July 2016. The new guideline is applicable to all health insurance products filed here on.

A look at the changes.

Old definition

Pre-existing diseases (PED) refer to medical conditions or diseases that an individual had suffered from before buying the insurance. In the old guideline, it was defined as“any condition, ailment or injury or related condition(s) for which there were signs or symptoms, and/or were diagnosed, and/or for which medical advice/treatment was received within 48 months prior to the first policy issued by the insurer and renewed continuously thereafter”.

The problem here is that it leaves many loose ends unaddressed. One, the term ‘related condition’ is vague. There is no clear indication as to what it actually refers to. Second, going by the definition, all conditions for which the person had signs/symptoms in the 48 months prior to taking the policy, were considered PED.

New definition

In the new definition, the regulator has removed the term ‘related condition’ and clearly specified that the illness should have been diagnosed by a doctor for it to be considered a pre-existing disease. The signs/symptoms, which the insured person has disclosed before buying the policy, will not be considered PED unless they show up as an illness within the first three months of taking the policy.

The definition of PED is, thus, changed to “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 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 or its reinstatement; c) 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”.

Further, here on, any illness that had occurred prior to 48 months before purchase of the policy will not be considered as PED, said Subramanyam Brahmajosyula, Head, Underwriting & Re-insurance, SBI General.

Earlier, the PED definition had a condition that the policy should have been renewed continuously. So, if there was a break in renewal, the insurer had the option of making PED apply again. This is not the case any more.

Waiting period

When a condition/illness is identified as PED at the time of policy issuance, the insurer has three options: either reject the prospect or exclude the identified PED by incorporating it as ‘permanent exclusion’ and cover the person for other illnesses or cover the PED after the waiting period, which is generally two to four years. The option to exclude PED as permanent exclusion comes with the new Guidelines on Standardisation of Exclusions in Health Insurance Contracts.

Rules now let insurers to exclude diseases that are disclosed by a prospective policyholder as permanent exclusion with his/her consent. This is a big positive as it will help people who would have otherwise been denied insurance to get cover for other illnesses. Anyone with, say Parkinson’s or Alzheimer’s disease, has little chance of getting a health cover in India. With the new norms, insurers may come forward to cover such patients — by listing Parkinson’s disease or Alzheimer’s disease as a permanent exclusion and covering them for other illnesses.

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Published on October 13, 2019
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