Tuesday, May 5, 2009

HEALTH INSURANCE TO BECOME BETTER AND MORE TRANSPARENT

From June 1 2009, IRDA has mandated each of the health insurance providers to come clean on the policy renewal terms and conditions. It has laid down certain conditions which will go a long way in making the experience of having health insurance easier,better and more transparent for the end user.The notable changes that will result due to IRDA's instructions are as under:-
1. Insurers will have to clearly indicate the maximum age till which the policy will be renewed - The insurers as of now, only mention the minimum and maximum age of entry, in a plan along with the premium charges. They are however silent on the age till which they will renew the policy. The general understanding is that the company will renew the policy till the insured person achieves the maximum age . However , this does not happen in all cases. And
hence, now IRDA has mandated that all the health insurance providers will have to clearly state the age till which the plan will be renewed in the policy document.
2. Companies can not decline policy renewal on any ground except fraud- This is the biggest change that IRDA has brought about. There were numerous cases of companies declining the renewal of policies to its existing polciholders on grounds which were frivolous at best.They did so to avoid renewing policies where chances of claim were deemed higher. Now every insurer will have to renew the plan unless there is an issue of fraud being committed by the customer/insured person.Now, if the policy document mentions that an insured person can renew the plan till age 75, the insurer can’t refuse him a cover or nudge him into a different plan.
3.Grace period of 15 days to renew the lapsed policy- As of now, there are few companies which provide grace period after the last date of renewal of premium is over. At the same time , some companies still don't provide any such grace period and issue a fresh policy to policyholder after his earlier policy expires. In order to streamline this process, now IRDA has mandated that all the companies will have to provide 15 days grace period for renewing the policy.Here, a renewal would mean continuity in the cover. So, all pre-existing diseases covered under the policy would continue to remain covered after the renewal. Also, other benefits, such as the no-claim bonus and waiver of initial waiting period would continue.
All these changes are meant for health insurers only. This does not apply to life insurance companies or policies.

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