'Pre-existing diseases' & health insurance: How it works

In health insurance, the term pre-existing diseases (PEDs) refers to any medical condition, illness, or injury that an individual has been diagnosed with or has shown symptoms of before purchasing a health insurance policy. Pre-existing diseases are a critical aspect of health insurance underwriting as they directly affect how insurers assess risk and determine terms of health coverage.

What is a pre-existing disease?

In simple terms, a pre-existing disease is any health condition that an individual has experienced before purchasing a health insurance policy. This could range from chronic conditions like diabetes, hypertension, and asthma to past surgeries or illnesses that required hospitalisation. According to the guidelines set by the Insurance Regulatory and Development Authority of India (IRDAI), a pre-existing disease includes any medical condition that was diagnosed or treated within 48 months before buying the insurance policy.

Common pre-existing diseases

These include diabetes, hypertension, hyperlipidaemia, heart disease, asthma and thyroid disorders (both hypothyroidism and hyperthyroidism. These are a few examples, and any condition diagnosed or treated prior to purchasing the policy may be classified as a pre-existing disease.

Waiting period

Most health insurance policies include a waiting period for pre-existing diseases, during which claims related to these conditions may not be covered or covered partially. As per the guidelines of the IRDAI, the waiting period for pre-existing diseases is 3 years, effective from April 2024. This implies that any medical treatment or hospitalisation expenses related to the declared ailments can be claimed only after 3 successful years with the insurer.

For instance, if a policyholder has diabetes and they are hospitalised due to a complication related to it within the first two years of the policy, the claim may be rejected. However, once the waiting period is over, any treatment related to the pre-existing condition will be covered as per the policy terms.

Why disclose?

One of the most important responsibilities when purchasing a health insurance policy is the accurate disclosure of any pre-existing conditions. While it may be tempting to hide such information to avoid higher premiums, or one may think a certain condition is not very serious and avoid mentioning the same, the consequences of non-disclosure can be severe. Here’s why it’s crucial to disclose pre-existing conditions:

Prevent claim rejection: If the insurer finds that the claim is related to a pre-existing disease that was not disclosed, they have the right to reject the claim. Even if the condition was minor or controlled, non-disclosure can void the entire claim and policy contract.

Avoid policy cancellation: Non-disclosure of pre-existing diseases can be considered misrepresentation. If an insurer discovers that false information was provided during the policy purchase, they may choose to cancel the policy entirely. This may leave you uninsured and also affect your ability to purchase health insurance in the future.

Transparency for better coverage: By declaring pre-existing diseases, the policyholder ensures transparency, leading to more tailored and reliable coverage. Many insurers provide specific riders or enhanced coverage plans that account for pre-existing conditions, ensuring that you get the care you need once the waiting period is over.

Legal and ethical responsibility: Providing false information in the insurance application is violation of the contract and may lead to legal complications. Insurers have the right to investigate claims, and the discovery of hidden pre-existing diseases can result in penalties beyond the rejection of claims.

Wellness initiatives: Insurers are focusing on preventive initiatives and generally arrange free-check-ups and guidance for their customers with medical conditions. If the customer does not declare his/her condition at proposal stage, the insurer will not be able to provide such wellness benefits to these customers.

How to disclose

When applying for health insurance, insurers typically ask for detailed medical history, including any illnesses, surgeries, or treatments from the past. It is essential to answer these questions truthfully. In some cases, the insurer may request medical tests or reports to verify the pre-existing conditions.

Even if you feel your condition is under control with medication or treatment, it is still considered a pre-existing disease and must be disclosed. Additionally, insurers may provide policyholders with specific add-ons or riders to cover pre-existing conditions after the waiting period, making full disclosure even more important.

Conclusion

In health insurance, pre-existing diseases play a crucial role in determining coverage and claims. While it may seem tempting to hide pre-existing conditions to avoid higher premiums or waiting periods, the risks of non-disclosure far outweigh the benefits. Accurate and complete disclosure ensures that policyholders receive the right coverage, avoid claim rejections, and maintain trust with their insurance provider.

In the long run, being honest about pre-existing conditions not only secures financial protection during health emergencies but also builds a transparent relationship with the insurer, leading to smoother claims processes and better peace of mind.

(The author is Head – Health Administration Team, Bajaj Allianz General Insurance)