To ensure that you are not taken for a ride or lose out on benefits, go through these clauses in your life and health Health insurance
Contribution clause
The health insurance regulations have done away with the contribution clause. So, if you have multiple health covers, you can choose any policy to make a claim.
“While the contribution clause was earlier an inconvenience for the customer, Irda has given the policyholder the right to select a plan of his choice while making a claim,” says Mukesh Kumar, member, executive management and head, HR, marketing and strategy planning, HDFC ERGO.
Earlier, if you had more than one policy, your approved claim amount had to be split in the ratio of the sums insured. Now, you can decide which insurer to approach for the entire claim amount.
Renewability clause
Many senior citizens had complained about insurers refusing to renew policies on grounds of adverse claim experience at a stage when they needed the cover the most. Now, Irda has made it mandatory for insurers to renew a policy except on grounds of fraud, moral hazard or misrepresentation.
“The insurer has to renew a policy on identical terms and conditions on which the first policy was issued. Any variation requires obtaining the specific written consent of the insured,” says consumer activist Jehangir Gai. Claim-based loading, where premiums were hiked because of a claim made in the previous year, too, stands obliterated.
Insurers can load premium only on the basis of overall age-wise and ailment-wise claims experience, among other parameters.
Reasonability clause
According to insurers, this is one of the most common causes of disputes on claim settlement. The clause states that only ‘reasonably and necessarily’ incurred expenses will be eligible for a claim. Clearly, this is a grey area open to interpretation.
“Reasonable charges are arrived at by insurers by comparing the standard billing by a hospital and comparing the same with the prevailing charges in the same geographical area for similar or identical services. Thus, the primary purpose of the reasonable charges clause is to ensure fair billing by hospitals,” says Subrahmanyam B, senior vice-president and head, health, commercial lines and reinsurers, Bharti-AXA General.
For instance, if your hospital charges Rs 1 lakh for a surgery that typically costs Rs 70,000, the insurer will pay the lower amount. Since insurers use their discretion, it can cause heartburn to policyholders. However, independent industry watchers say customers should not accept the company’s decision blindly.
“The new regulations say any denial of claim has to be accompanied by a medical reason. Hence, reasonability clause must not be accepted by the policyholders,” says civic activist Gaurang Damani.
Before signing up for any health policy, you need to check what is not covered. All policies exclude certain expenses, impose sub-limits within the overall sum insured and insist on the claimant sharing a part of the claim burden.
In case of exclusions—expenses that insurers need not pay for—the scope for ambiguity has shrunk, thanks to the Irda putting out a list of 199 such expenses as part of standardisation norms. You also need to watch out for the waiting period for various conditions.
For instance, policies do not entertain any claims, except the ones related to accidents, in the initial 30 days. “A general waiting period of 24 months is applicable for named surgeries or illnesses, such as cataract, gall bladder stones, kidney stones, and so on.
For all pre-existing conditions declared and accepted at the time of application, the waiting period is 48 months,” says Kumar.
Sub-limits and co-payment clauses limit the insurer’s liability. In case of a co-payment clause, which is typically part of senior citizens’ policies, insurers could agree to pay, say, 80% of the approved claim, with policyholders having to chip in with the rest.
Indisputability clause
This ensures that insurers do not arbitrarily dismiss claims on grounds of inaccurate declaration by the policyholder.
According to Section 45 of the Insurance Act, insurers cannot question a policyholder’s declaration after two years of the date of issuing the policy, citing inaccurate or false statement made in the application or any report of the medical officer.
Free-look clause
The proposition is simple: if you are not happy with the policy that you have been sold, you can choose to return it and get a refund. The clause is meant to be an antidote to mis-selling of policies. Under this rule, you have the option of returning the policy within 15 days of receiving the policy document.
Remember, the period starts from the day you receive the policy documents and not the date of issue. It is applicable to life and health insurance policies with a tenure of three years or more.