The moratorium period is the waiting period imposed by the insurance company in health policy after which insurer cannot reject a claim. If insured does do not claim for period of 5 years; insurance cannot denied any claim on the grounds of non-disclosure, or misrepresentation. Insurers have to establish a case of fraud to reject a claim.
This is a safeguard clause built-in for the policyholders. The moratorium period is mandatory for all health insurance policies in India. The moratorium period is to prevent insurers from denying claims based on discrepancies in the proposal form.
The purpose of moratorium period is to avoid insured from purchasing health insurance only when they need coverage for pre-existing disease. This enforcement by insurance company aims to maintain good health risk pool and avoid unnecessary risky proposal. This also helps in keeping lower premium in health policy.
Moratorium period will start from first inception date of health policy. Hence it is important for insured to declare any known existing medical conditions in health insurance proposal. In health insurance policies pre-exiting disease, specified disease and other conditions is covered after certain period of time. The insured should also renew his health policy every year without any break in policy term.
At the time of claim, insurers scrutinize medical records of insured. They will tend to match these disclosures with any commentary made by the treating doctor in the discharge summary. Any variation in the disclosure can leads to disputes in claim. Once the moratorium period is over, insurers lose the right to reject claims on such grounds. It also increases the onus of insurers to do a thorough underwriting at the proposal stage, before accepting premium payment.
It is necessary to go thoroughly reading and understanding health insurance policy. Understand terms and conditions of health policy; it will be easier in settling health claim. Make sure to maintain continuous coverage in health policy.