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For now, hiding a pre-existing disease (PED) from an insurer before buying a health policy might seem to be an advantage with a lower cost premium. However, the reality is that it can lead to rejection of the claim or even policy cancellation. In both cases, the policyholder must pay exorbitant medical bills from his/her pocket.
When one buys cover, he/she is entering into a contract with the insurer. All the medical insurance policies are developed on a legally- binding principle – ‘utmost good faith’ so the insurer and the policyholder must be transparent and honest. While buying the policy, the policyholder has an obligation to disclose all relevant details regarding his/her health conditions, including PEDs. If even a small piece of information on PEDs is not disclosed, it means the policyholder has violated the fundamental legal principle, thereby forcing the insurer to reject claim or even cancel the policy itself. The premium the policyholder has paid till then will go down the drain.
What are PEDs?
A PED is a disease/medical condition existing in an individual even before buying a policy. Insurance Regulatory and Development Authority of India (IRDAI) guidelines say illness/disease is treated as a PED if it was diagnosed within three years (36 months) prior to the purchase of the policy by a recognised doctor. (Previously it was 48 months but IRDAI brought it down to 36 months, effective from April 1, 2024.) In common insurance parlance, if an individual knows he has a health issue before buying the policy, it is considered a PED and must be disclosed.
V. Mangala, senior subject-matter executive, Aionion Insurance Marketing Pvt. Ltd., says, “It must be noted not every visit to a doctor is treated as a PED. For instance, if you consult a doctor for normal fever, cold, cough, etc. you need not reveal these details. PEDs are those ailments that have a major impact on your general health in the long run. Say, for instance, BP, cholesterol, thyroid, asthma, piles, diabetes, lumbar issues, previous surgery or heart attacks, epilepsy etc., these must necessarily be divulged to the insurer.”
Waiting period
Another concept while buying health insurance policy is the waiting period. Most insurers in India cover pre-existing diseases but only after the waiting period gets over. If any medical emergency occurs during the waiting period, especially related to the PED, then in almost all cases, the claim would naturally be rejected by the insurer. Though the concept of wait period is there in all insurers, the wait time might differ across insurers. Generally, majority of the insurance companies provide coverage to PEDs after a waiting period of two to three years.
Ms. Mangala says, “In some insurance companies, riders are sold separately at an additional premium. These riders reduce the waiting period, and some insurance companies also cover PEDs from Day 1 with or without a rider, of course, the premium will be high. Therefore, before buying a policy, whether an individual health insurance policy or a family floater policy, the policyholder must choose a policy that has no/lower waiting period.”
Co-payment clause
Some insurers might offer PED coverage with a ‘co-payment’ clause. Based on the co-payment agreement, the policyholder must pay an agreed portion of the total claim amount; only then will the insurance company settle the remaining claim amount.
Ms. Mangala says that it is always advisable and cost-effective to choose a policy without the ‘co-payment’ condition so that the entire claim amount would be settled by the insurance company.”
(The writer is a NISM & CRISIL-certified wealth manager)
Published – June 30, 2025 05:31 am IST
