Introduction

When it comes to understanding health insurance in India, one of the less talked about—but highly significant—concepts is the moratorium period. Whether you’re purchasing your first policy or switching between insurers, grasping this term can save you a lot of trouble in the long run.

This guide covers everything you need to know about the moratorium period in health insurance—written in a simple, clear, and engaging manner. If you’re a policyholder or planning to become one, keep reading to make an informed decision and avoid nasty surprises at the time of claim.

What is Moratorium Period in Health Insurance?

The moratorium period is the waiting period imposed by the insurance company in health policy after which insurer cannot reject a claim. If policyholder 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. 

Purpose of Moratorium Period

It is to avoid policyholder 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. It ensure policyholder declares any pre-exsiting disease in health insurance proposal.

Need for Moratorium Period

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. Insurance company do thorough underwriting at time of accepting health insurance proposal. This prevents insurer from rejecting any claims due to non-disclosure or misrepresentation. Premium charges are kept lower due to effective medical underwriting of health insurance proposal.

Benefits of the Moratorium Period for Policyholders

The key benefit of Moratorium period is :

• Peace of mind for policyholder honest disclosures of any known pre-existing diseases. The insured is assured that his pre-exisiting diseases is covered after 5 years of continous renewal period.
• Encourages buying health insurance in early age. The benefits of buying health insurance policy at early age is to avoid any long term illness.
• With help of Moratorium period insurance comapny make premium affordable. As it prevent policyholder with pre-existing diseases to wait for 2-4 years to have full benefits of health policy.
• Helps in faster claims processing in later years as health insurance policy will cover any known pre-existing diseases and specified illness. It promotes a healthier relationship between the insurer and the insured by removing the fear of arbitrary claim rejections after long-term loyalty.

Conculsion

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.