Health insurance: Hiding pre-existing diseases can lead to rejection of claims

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Published: December 9, 2016 6:02:13 AM

IF you have ever bought a health insurance policy, you may have come across a section pertaining to pre-existing diseases while filling up the application.

The features of group health insurance plans are usually decided by the employer. They are packaged keeping in mind the interest of a pool of people. (Reuters)Most health insurers do not issue a health policy to an individual who has or has had a pre-existing illness. (Reuters)

IF you have ever bought a health insurance policy, you may have come across a section pertaining to pre-existing diseases while filling up the application. It is one of the most important disclosures that you make while purchasing a health plan. Based on this, the insurer decides on the pricing and whether you are eligible for the insurance cover. People often hide or provide incomplete information in this disclosure that results in rejection of their claims later.

Suppose you are a 35-year-old and have bought a health insurance policy in which you have declared that you have no pre-existing illness. A year before you purchased the policy, you had actually undergone a treatment to get rid of kidney stones but you didn’t bother to mention the same in your application because that medical condition has been taken care of.

Now, two years down the line, you are hospitalised due to some medical emergency. On sending the hospital bill to the insurer, your claim gets rejected. It’s because you did not disclose your pre-existing illness or the operation that you had to undergo to remove your kidney stones. Thus a pre-existing disease clause not only covers any existing medical conditions that you may be having at the time of buying insurance but also any such condition that you may have had before the policy purchase.

Policy denial

Most health insurers do not issue a health policy to an individual who has or has had a pre-existing illness. This is because the chances of falling sick in such cases are higher, thus increasing the risk for frequent claims for insurance companies. For instance, if you are a 40-year-old and suffer from a severe heart ailment, an insurer has the right to reject your request.

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Premium loading

Your pre-existing illness has made you a high-risk customer, thus the insurer manages the increased risk by loading your premium. Premium loading is usually the scenario wherein the insurer increases your premium in order to cover additional costs that may arise due to your existing medical condition.

For instance, for a 35-year-old healthy male, a health cover of R5 lakh would be available at a premium of R4,000-10,000. However, the same cover for a 35-year-old individual with diabetes would cost R6,000-19,000 annually. The substantial increase in premium is called loading as the insurer has calculated the additional cost within the premium.

Waiting period

Unfortunately, policyholders with pre-existing medical conditions cannot depend on their health policies in case they have medical emergencies due to their existing illness. This is because insurers have a buffer period of two to four years, called waiting period, for pre-existing diseases. For a 35-year-old individual with diabetes, the waiting period is four years, which means that the insurer will cover his existing illness only after the policy is renewed in the fifth year.

To conclude, a pre-existing illness hikes your health insurance premiums substantiall. However, it does not mean that you should hide your medical history or condition from the insurer. After all, an insurer has the right to reject your claim if you have not been true to them. The only way to buy a health insurance policy at a cheaper price is to buy it early when the chance of falling ill is minimal.
The writer is co-founder & CEO, PolicyBazaar.com

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