Guide to Moratorium Period in Health Insurance

When you purchase a health insurance policy, you expect it to support you during medical emergencies. But did you know there is a waiting period during which some pre-existing health conditions may not be covered right away? This waiting phase is known as the moratorium period.
The moratorium period in health insurance refers to the time during which claims for pre-existing health issues are not accepted. If your policy is still within this period, the insurance company will not cover treatment costs for those conditions. Let’s take a closer look at what this means and how it works.

What is the Moratorium Period in Health Insurance?

The moratorium period refers to a specified timeframe after which insurers can no longer deny claims related to pre-existing conditions, except in cases of proven fraud or deliberate misrepresentation. This rule encourages policyholders to honestly disclose their medical history when applying for coverage.

From April 1, 2024, the IRDAI (Insurance Regulatory and Development Authority of India) has reduced the moratorium period from 8 years to 5 years for all health insurance policies in India.

Why Is the Moratorium Period Important?

The moratorium period helps balance the health insurance system for both insurers and policyholders by serving several key purposes:

• Prevents Misuse of Insurance:

          People might put off purchasing insurance until after receiving a serious medical diagnosis if                  there is no moratorium period. This could lead to a surge in claims, forcing insurers to hike                      premiums for everyone.

• Keeps Premiums Affordable:

          The moratorium encourages early purchase of health insurance, especially by those at higher risk,            which helps insurers spread risk and maintain lower premiums.

• Encourages Honest Disclosure:

          Knowing that pre-existing conditions will be covered after five years motivates applicants to                    accurately disclose their health history during application.

Benefits of the Moratorium Period

• Reduces Risk for Insurers: Prevents people from buying insurance only when they fall seriously ill, protecting insurers from large sudden claims.
• Affordable Premiums: Insurers get time to collect premiums before covering pre-existing conditions, helping keep costs manageable.
• Honest Health Declarations: Encourages policyholders to be transparent about their medical history, reducing claim disputes later.
• Builds Trust: After the moratorium ends, insurers must cover pre-existing diseases unless fraud is involved, improving policyholder confidence.
• Encourages Early Policy Purchase: The earlier you buy insurance, the sooner the moratorium period ends, offering full coverage sooner.
• Peace of Mind: Knowing pre-existing conditions will eventually be covered offers long-term financial security.

How Does the Moratorium Period Work?

• When You Buy a Policy:

           At the time of policy purchase, the insurer checks your medical history. Pre-existing conditions               will not be covered during the moratorium period if they are discovered. However, unrelated                   accidents or health issues are covered right away.

• After the Moratorium Period Ends:

         After the typical 5-year period, pre-existing conditions become eligible for coverage. Keep in                 mind that some insurers may still exclude specific diseases, so always review your policy                         carefully.

Moratorium Period vs. Waiting Period

Basis	Moratorium Period	Waiting Period
Scope	Only pre-existing diseases (PEDs)	All medical conditions
Duration	Minimum of 5 years (60 months)	Typically 30 to 90 days
Medical Review	Insurers check medical history for PEDs	Review of documents may be required
Coverage	PEDs covered after moratorium ends	Most conditions covered after waiting period

Conclusion

The moratorium period acts as a trust-building phase between you and the insurance company. It encourages transparency and helps prevent misleading claims, making future claims easier and smoother. While it may seem like a long wait, this period ensures stronger, more reliable coverage in the long run.

For detailed information about your policy’s moratorium period, check your policy document. If you have any questions or need assistance, the team at Square Insurance is always available to help.