Moratorium reduced for health policy but full disclosure crucial

Use 30-day free-look period mandated by Irdai master circular to assess the policy's coverage

- SANJAY KUMAR SINGH

The Insurance Regulatory and Development Authority of India (Irdai) issued a master circular on health insurance on May 29, 2024, listing 20 provisions. These norms, if properly implemented, will make health insurance simpler, more accessible, and a reliable instrument for protecting customers' interests.

"The master circular encourages insurers to adopt customer-centric policies. This can positively impact insurance penetration. It will lead to a UPI-like movement-deeper penetration and higher adoption-within the health insurance ecosystem,” says Prakash, managing director/chief executive officer designate, Galaxy Health and Allied Insurance.

Proportionate refund of premiums

Previously, if a customer purchased a health insurance policy and decided to discontinue it during the policy term, she would receive a refund based on a 'short-premium scale'. For example, if she had used the policy for three months, the insurer would deduct six months of premium. If she had used it for six months, the insurer would deduct nine months' premium, and so on.

Now, after the free-look period of 30 days, a customer can cancel the policy with a seven-day notice and get a proportionate premium back, unless she has made a claim.

"The insurer will only deduct the premium for the period for which the policy was used. This change provides greater flexibility to people who wish to discontinue their policy," says Kapil Mehta, cofounder, SecureNow.

Reduction in moratorium period

The moratorium period has been reduced from eight years to five. Previously, after eight years, an insurer could not deny a claim except in case of an established fraud.

"This means claim payment will become assured sooner," says Mehta.