How pre existing medical conditions affect your health insurance

A pre-existing medical condition should not be a deterrent for buying your family health insurance and securing their financial future. However, proper disclosure and some precautions ensure that in case if any unfortunate event, you have a smooth and hassle free experience.

Say for instance you’ve been suffering from diabetes from ever since you were in your teens. You are unsure or entirely unaware of the implications of this medical condition on the cost of health insurance policy and as a result, you procrastinate buying it for quite some time.

You wouldn’t be the only one. A multitude of individuals neglect or delay buying health insurance despite having pre-existing medical conditions. Read on to know why ignoring medical conditions is not a prudent financial decision.

Related: Critical illnesses and their financial implications in India 

Meaning of pre-existing medical condition

While many of us know what health insurance is, we may be unclear what a pre-existing medical condition is. Thanks to the 2013 IRDAI guidelines on standardisation of terms in health insurance, all health insurers in India have to follow a common definition of “pre-existing condition” as follows:

Any condition, ailment or injury or related condition(s) for which you had signs or symptoms, and / or were diagnosed, and / or received medical advice / treatment within 48 months to prior to the first policy issued by the insurer.

So, if you are applying for a policy on January 1, 2016, if at any time between Jan 1, 2011 to December 31, 2015, you’ve had signs/were diagnosed/had received medical advice/undergone treatment for any medical condition, it will qualify as a pre-existing condition.

How pre-existing medical condition can affect your health insurance policy

Regardless of which of the health insurance plans in India you choose from, a pre-existing condition can affect it in one or more of the following ways: 

You will be required to make a disclosure at the time of purchase:
In any application form for health insurance, you’ll find a question on this point. One of the basic principles of insurance is “utmost good faith” & here, the onus is on you to disclose honestly details of any such condition. In an event that you misrepresent/do not disclose, the insurer has every right to reject your claim when you make one.

Related: Didn't make a Health Insurance claim this year? Worry not, you haven't lost your money!

Affects the policy issuance decision:
Every health insurance provider has a set of internal underwriting guidelines that they follow when deciding whether and on which terms they can issue the policy to you. In case of a pre-existing medical condition, there can be the following implications:

For an issue on standard terms, insurers can add a waiting period
You may be asked to pay a higher insurance premium(also known as “loading”) to cover the additional risk
Issue subject to life time exclusion to the pre-existing medical condition i.e. your insurer may agree to insure you for events other than those caused by your pre-existing medical condition
The policy can be denied in exceptional cases or in case of chronic illnesses

Related: Top 6 factors that affect how Life Insurance premium is calculated

Waiting period applies for pre-existing condition:
As mentioned above, even if a standard policy is issued, if you closely read the terms and conditions of the policy, it will invariably have a “waiting period” which ranges from 12 months to 48 months. This implies that for a policy issued on Jan 1, 2016, if you are hospitalised due to “diabetes” anytime till December 31, 2019 (assuming a waiting period of 48 months), your insurer is not liable to pay the claim.

Sum assured enhancement:
Insurers give an option to policyholders to increase the sum assured of the policy upon renewal. So, continuing from the above example, suppose on the renewal date Jan 1, 2017, if you decide to raise the sum assured from Rs. 2 lac to Rs. 3 lac, the waiting period for diabetes for the incremental Rs. 1 lac will end on December 31, 2020 (and not December 31, 2019 for the existing sum assured of Rs. 2 lac)

Points to note w.r.t. pre-existing condition

Following are some pointers to note w.r.t. pre-existing medical condition:

While buying a health insurance policy:

Buy health insurance as early as possible as the chances of contracting illnesses increases with age, along with insurance premium
Compare policies from different insurers on the parameter of duration of waiting period for pre-existing condition
Fully disclose the pre-existing condition in the proposal form without fail and do not try to conceal any material facts

Related: How to claim health insurance 

Once you buy a health insurance policy:

In case the waiting period for the policy leaves you uninsured for the following years, ensure you have an emergency medical insurance fund set aside
Renew the policy without letting it lapse due to delay in paying insurance premium, else the waiting periods may start afresh
In case you are planning to change your health insurance provider, opt for portability rather than buying a new insurance policy to preserve built up credit of waiting periods

Conclusion

A pre-existing medical condition should not be a deterrent for buying health insurance and securing your family’s financial future. However, proper disclosure and some precautions ensure that in case you need to make a claim, you have a smooth and hassle free experience.